Year: 2020

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

As global startup markets enter a slowdown — more on that shortly — we’re starting to get notes on when growth-oriented firms are going to run short of cash. Of course, startups around the world are cutting staff and trying to limit costs as macro uncertainty reins, but their efforts won’t save everyone.

This morning, let’s dig into what venture’s impending investment pace may look like over the next year or two, courtesy of Upfront Ventures‘ Mark Suster. Then we’ll parse cash runway data from UK and Belgian startups. The resulting picture is one detailing falling cash accounts for a number of startups that could reach zero before venture trends are expected to recover.

Downturn

With COVID-19 making it unsafe to watch movies in crowded theaters, not to mention traveling for the red-carpet glamor of a film festival, many festival organizers have been looking at online alternatives.

So today, YouTube and Tribeca Enterprises (the organization behind New York City’s Tribeca Film Festival) are announcing a new event called We Are One: A Global Film Festival.

It’s not simply an online replacement for Tribeca, but aims to be a truly global event. The 10-day digital film festival will include programing curated by representatives from most of the major film festivals around the world.

We Are One kicks off on May 29 and is supposed to benefit the World Health Organization’s COVID-19 Solidarity Response Fund, as well as local relief providers.

“We are proud to join with our partner festivals to spotlight truly extraordinary films and talent, allowing audiences to experience both the nuances of storytelling from around the world and the artistic personalities of each festival,” said Pierre Lescure and Thierry Frémaux of the Cannes Film Festival (which will not be taking place this year in its “original form”) in a statement.

While the programming featured during the 10-day event hasn’t been announced yet, participating festivals include:

• the Annecy International Animation Film Festival
• Berlin International Film Festival
• BFI London Film Festival
• Cannes Film Festival
• Guadalajara International Film Festival
• International Film Festival & Awards Macao
• Jerusalem Film Festival
• Mumbai Film Festival
• Karlovy Vary International Film Festival
• Locarno Film Festival
• Marrakech International Film Festival
• New York Film Festival
• San Sebastian International Film Festival
• Sarajevo Film Festival
• Sundance Film Festival
• Sydney Film Festival
• Tokyo International Film Festival
• Toronto International Film Festival
• Tribeca Film Festival
• Venice Film Festival

Amazon is bringing a year’s worth of free, live and on-demand cooking classes to tens of millions of Amazon Fire TV and Fire tablet owners across the U.S., thanks to an expanded collaboration with Discovery’s Food Network Kitchen. The subscription service launched last fall as a flagship app for Amazon’s Alexa-powered Echo Show, bringing daily live classes, step-by-step cooking videos, on-demand video, home delivery of ingredients, and more to Echo devices owners.

While the Echo Show was the first smart-speaker-with-screen to gain access to Food Network Kitchen, the app is also available across devices, including Amazon’s Fire TV, Fire tablets, as well as iOS and Android phones and tablets.

The subscription offering combines episodes of popular Food Network Shows like “30 Minute Meals,” “Barefoot Contessa,” and “Brunch @ Bobby’s” with both live and on-demand cooking classes from culinary experts and top chefs, including Bobby Flay, Rachael Ray, Giada De Laurentiis, Guy Fieri, Martha Stewart, Alton Brown, Ina Garten, Andrew Zimmern, Ree Drummond, Daniel Boulud, Valerie Bertinelli, Sunny Anderson, Jonathan Waxman, Molly Yeh, Nancy Silverton, JJ Johnson and others.

In total, there are over 2,300 on-demand classes, hundreds of step-by-step videos, Food Network episodes, and over 80,000 recipes included in the subscription.

However, the live content is the service’s most compelling selling point, as it allows customers to cook with favorite chefs and then ask questions during the live Q&A portion of the show — essentially, it’s interactive TV.

Currently, Food Network Kitchen is selling for $4.99 per month or $39.99 per year, according to its website. (It launched with introductory pricing of $47.99 per year and $4 per month).

But starting today, Amazon will make the service available for free by offering Amazon device owners a one-year subscription to Food Network Kitchen.

The companies are hoping to capitalize on consumers’ increased interest in home cooking during quarantine, when restaurants are shut down and even takeout comes with a set of risks. With endless hours stuck at home, more people than ever are turning to cooking and baking to pass the time, then enjoying meals as a family. There’s no better time to reach this audience of home cooks with a service like this, the companies understand. And when the year is up, they believe many customers will continue to pay as they’ve experienced the value first-hand.

“When Food Network Kitchen came to Fire TV and Alexa last year, we saw how much customers love cooking with, and learning from, their favorite chefs,” said Marc Whitten, VP of Amazon Entertainment Devices and Services, in a statement about the subscription offer. “Many of us are spending more time cooking at home during these challenging times and are in need of a little inspiration. That’s why we are excited to offer all of our new and existing Fire TV and Fire Tablet customers a free year of access to Food Network Kitchen,” he added.

To coincide with the free subscription, Amazon and Discovery are also launching a “We Cook Together” initiative on May 2nd and 3rd, which will bring back-to-back live classes for two days straight, allowing Food Network Kitchen consumers to cook in real-time alongside their favorite chefs.

This feature will include 10 new cooking classes from thhe personal kitchens of Valerie Bertinelli, Scott Conant, Bobby Flay, Tyler Florence, Amanda Freitag, Alex Guarnaschelli, Marc Murphy, Michael Symon and Jet Tila

“During this unprecedented time, I know my first instinct as a chef is to turn to my kitchen, to cook something nourishing for those I care most about,” said Bobby Flay, about his participation in the live-streamed event. “Suddenly being faced with the task of cooking for yourself and family, multiple times a day, can be daunting, and we hope the Food Network Kitchen app and our #WeCookTogether weekend of live classes offer the assistance and motivation needed to plate something delicious for your loved ones,” he said.

Details on the offer are here.

Startup founders who are fundraising in this climate should expect venture investors to take a huge chunk out of their valuation expectations.

“What we’re seeing across the board is discounts,” says Mike Janke, co-founder of early-stage cybersecurity investment firm Datatribe.

Investors are still committing to new deals, he says, but they’re adding new terms and demanding lower valuations from companies as the cost of raising capital during the downturn. Janke, whose firm has several deals in the pipeline, says entrepreneurs should expect VCs to demand concessions like more frequent board meetings and large price cuts compared to what they’d previously seen.

“If you look at 2000 and 2008, venture always views [downturns] as the time to get good deals,” Janke says. “We’re looking at a 15% to 25% discount to do deals.”

In one instance, a company that turned down a $900 million acquisition offer is now in the process of raising a new round at a $500 million valuation, he says. “In 2019 it was just generally accepted that this company was worth over $1 billion.”

Deals are getting done, though. As the pandemic began to spread, Janke says most firms began triaging their portfolios to determine who would need to raise cash and who could remain afloat without an infusion. Now, firms are looking out and seeing what kind of opportunities there are in the broader market — if they can.

“Some of our peers in the Valley have up to 40% of their companies that need an infusion or some sort of bridge to get through,” says Janke. “These companies that had higher valuations that came out of the Valley have had to do more drastic cuts.” Startups that raised cash in markets outside the Bay Area have not had as much difficulty, he says, because they’re more efficient.

Good morning and welcome back to TechCrunch’s Equity Monday, a jumpstart for your week.

Regular Equity episodes still drop each and every Friday morning, so if you’ve listened to the show over the years, don’t worry — we’re only adding to the mix. You can catch last week’s show with Danny Crichton and Natasha Mascarenhas right here if you haven’t yet.

Unlike some weeks when the weekend’s crop of news and thought runs fallow, our recent interlude was stuffed with things to talk about:

• Sequoia China and Starbucks are tying up, which is especially notable after the Luckin Coffee story came crashing back to Earth.
• A survey concerning UK startups showed cracks in the EU’s largest startup market, measured by VC activity.
• It’s earnings week, with everyone from Apple to Microsoft, Alphabet, Amazon, Facebook, Spotify and Tesla reporting. Strap in for the busy week. It’s going to be a lot, but should help us figure out what has been going on in the stock market.
• Codota raised $12 million, and we think that its product is neat.
• A new pre-seed/seed fund has raised €50 million in fresh capital, which is notable given the global economic slowdown.

And then, finally, this essay from Founder’s Fund John Luttig, which I encourage you to read. It’s something that everyone is reading, and thus you must even if you don’t want to. We chat about it on the show, but read it yourself anyways. If it’s right, we’re in for a sea change in the startup world. For good, or at least until there’s a new leap forward in tech or technology product distribution. (You can read more on the idea of a SaaS slowdown here.)

SpaceX has been developing its next-generation Starship rocket for some time now, but the large-scale prototypes it’s building in Boca Chica, Texas, have thus far always encountered a fatal error during an important part of testing called “cryo” – or filling the fuel tank to full pressure in conditions that simulate the vacuum of space. The latest prototype, called ‘SN4’ for ‘serial number 4,’ has finally passed this test however, and that clears the way for an engine fire test followed by a short flight.

SpaceX’s SN4 prototype resembles what its final rocket will look like, unlike the Starhopper sub-scale demonstrator that the company originally flew just to show off what its new Raptor engine could accomplish. The SN4, like the Starhopper, is equipped with a single Raptor engine, which will make it possible for the vehicle to make short flights for testing purposes. The next version, SN5, will have three raptor engines according to SpaceX CEO and founder Elon Musk, which is still less than the six that the full, functional version of Starship is intended to have, but that will allow it to perform longer test flights in preparation for an orbital launch demonstration.

Testing and developing a new rocket and launch system is always going to have hiccups, since all the simulation in the world can’t replicate real-world use conditions and physics. But Starship’s prior failures at the cry testing phase were beginning to look like they could be a more fundamental problem – it’s what laid low SN1 through SN3, after all.

SpaceX will now perform a static test fire of the Raptor engine installed on the prototype, which could happen as soon as sometime later this week, and then the development craft will look to do a flight of around 150 meters (around 500 feet), which is the same height as the Starhopper performed. That’s nowhere near as high as it’ll need to go to fly orbital missions, of course, but it’s a test that will show how a full-scale vehicle performs at low-altitude, which is key info that SpaceX needs before developing its high-altitude and orbital prototypes.

The latest budget iPhone arrived this month to largely positive reviews. The next flagship, on the other hand, may have to wait. The COVID-19 pandemic is having all manner of knock-on effects on the global economy, and the supply chain is certainly not immune.

The Wall Street Journal this morning is reporting that the iPhone 12 may be among the devices impacted by unexpected issues. Apple is “pushing back the production ramp-up” of the new devices, per the report, owing to manufacturing issues in Asia and “weakened global consumer demand.”

This follows a number of similar reports of delays, with some putting the flagship smartphone’s launch at December, instead of the usual September/October timeframe. The current report, would likely put the phone’s release at around November — in line with that of the iPhone X. The company, unsurprisingly, hasn’t commented on the matter. The company doesn’t often comment on supply issues for released products, let alone those that are months away.

Asia was the first to be hit by the pandemic, and while a number of areas have returned to some semblance of business as usual, issues still remain. Beyond that, Apple (like all manufacturers) will have to grapple with the changing face of consumer wants/needs in the face of a pandemic and widespread stay-at-home orders. For many areas, those are expected to continue at least until the summer. 

Those are compound overall slowing smartphone demand, putting manufactures in a tough spot. Prior to COVID-19, however, Apple was no doubt anticipating an uptick in demand with the expected arrival of its first 5G handset. For now, however, it seems best to expect the unexpected. 

Back in 2018 Templafy — which had come up with a way for enterprises to more easily make templates out of standard documents (yes, it’s a thing) — raised an additional $15 million from existing investors as an extension of its earlier Series B round taking it to $40.2 million raised. The company integrates with enterprise infrastructure to provide corporate content assets, document templates, and automatic validation of created documents for all kinds of clients. On this journey it has used its cash to acquire SlideProof in Berlin, then Veodin and iWRITER in 2019, and opened an office in NYC. 

It’s been quite a journey since they started in 2014, and today the journey continues with the news that it’s closed a $25 million Series C funding round led by Insight partners. With additional funding from Dawn Capital, Seed Capital and Damgaard Company, bringing the total external capital raised to almost $70 million.

Templafy plans to use this latest round to boost its M&A activity; advance its product roadmap; and double staff from 200 to 400 full-time employees.

Jesper Theill Eriksen, CEO of Templafy said in a statement: “We set out to establish a new market category and create a high return on investment for companies streamlining their document creation workflow through our platform.”

He says the COVID-19 pandemic’s effect on remote working means “now more than ever, we see the need of global enterprises to support their distributed workforce with solutions that ensure productivity and compliance when documents are created.”

Jonathan Rosenbaum, vice president at Insight Partners said: “Templafy’s software represents a unique nexus of both end-user productivity and document compliance. This is what allows its customers to see real efficiency gains across an entire employee base.”

Templafy says it has more than doubled its revenue in the past year and has now sold over 2 million Templafy licenses worldwide

The total addressable market for Templafy’s document assembly software, in theory, extends to anyone that has to use traditional desktop software. The company’s Microsoft integration, means there are north of 1 billion Microsoft Office users for which Templafy could be used.

Christian Lund, co-founder and CPO at Templafy explained over email to TechCrunch that: “Being a horizontal document production infrastructure, Templafy is agnostic to the type of business document created (presentations, reports, contracts, proposals, pitches, emails, internal / external etc.) This is a key reason why many of the world’s largest enterprises use the platform company-wide.”

Templafy has plenty of competition across all the vertical categories it covers – for example in Template Management (Litera); Creative Content (Frontify, Bynder), Sales Enablement (Showpad, Seismic),  Proposal management (Conga, PandaDoc), Email Signature Management (Exclaimer, Xink).

But Templify takes a horizontal approach rather than vertical approach.

Microsoft founder Bill Gates spoke to the Financial Times (via Fast Company) about how the work of the Bill & Melinda Gates Foundation has shifted “almost entirely” to working on addressing COVID-19, in the interest of making the post impact possible in the ongoing effort to contain and combat the global coronavirus pandemic. Gates told the FT that the spread of COVID-19 could have dire economic consequences which will result in more suffering globally than anyone could’ve anticipated, hence the need to address it with the full weight of the resources of one of the world’s most well-capitalized charitable organizations.

The Bill & Melinda Gates foundation has been funding vaccine trials, clinical studies and basic research related to drug and therapy development for COVID-19 since basically the disease debuted on the world scene. It means that the exiting mandate of the foundation, which includes seeking to eradicate polio and AIDS worldwide, will be temporarily slowed or paused while the organization focuses its resources on the pandemic, but Gates’ decision to focus the group’s significant resources here should only emphasize the seriousness of the situation.

The foundation’s temporary shift is actually, long-term, the best way it can serve its core goals, since the global impact of the coronavirus crisis is likely to have repercussions for every aspect of human life, including access to medical care, testing and therapies, not to mention food and basic necessities. Curbing the disease’s spread early could have the most significant impact in economies ill-prepared to deal with the fallout, and any impact there will eventually result in better ability to work on eradicating those other diseases in a reasonable timeline, instead of undermining local infrastructure and allowing them a longer foothold.

In a 2015 TED talk, Gates predicted the coming of a global outbreak and urged global health organizations and governments to come together to prepare for what to do in case of a large, widespread contagion. Gates was working mostly from the perspective of the 2014 Ebola outbreak, which exposed many of the existing gaps and flaws in the system, but his advice seems prescient in retrospect.

Unfortunately, Gates has been subject to a lot of spreading misinformation and bogus conspiracy theory nonsense owing to heightened paranoia and activity among groups that normally peddle in this kind of falsehood. Based on this interview, Gates seems to essentially expect that as something of a matter of course for high-profile individuals, however, and it doesn’t appear to be impacting the foundation’s ability to focus on potential fixes.

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

“Dear Sophie” columns are accessible for Extra Crunch subscribers; use promo code ALCORN to purchase a one or two-year subscription for 50% off.

Dear Sophie:

The president said he would stop immigration due to COVID-19. I work at a biotech firm that’s doing research on a coronavirus treatment. I’m currently in the U.S. on an H-1B visa, and my company is sponsoring me for a green card. How will this affect me?

— Scientist in South San Francisco

Dear Scientist:

Thank you for everything you do! As you mentioned, the president tweeted last week that immigration would be suspended. However, the crazy thing is that the proclamation has been issued, and it’s really just a rehashing of the status quo. However, a lot of people haven’t learned this yet, so they’re scared. I just recorded a video about how immigration is still possible. So employers and immigrants can take a deep breath, things are ok.

The proclamation that President Trump signed last Wednesday falls far short of the outright suspension of immigration he tweeted about on Monday. The order places a very limited 60-day moratorium on issuing green cards to individuals seeking to come to the U.S. from abroad. Aimed at protecting job opportunities for unemployed Americans and relieving U.S embassies and consulates of the green-card processing workload, this “temporary suspension” has already begun. It’s possible that it could be extended beyond 60 days.

Most people with U.S. immigration needs are not affected by this proclamation, such as people who are:

• Adjusting status from a temporary visa to a green card while in the U.S. (Form I-485)
• Coming to the U.S. on temporary visas for work or travel subject to the existing travel restrictions (such as travel to China or the Schengen area in the last 14 days).
• Filing for a non-immigrant status extension in the U.S., such as H-1B.
• Beginning the green card process in the U.S. with PERM, I-140 and I-130
• Changing status from one non-immigrant status to another within the United States.

What this new policy actually means is that no employment- or family-based green cards will be issued to candidates living outside of the U.S. except for spouses and dependent children of American citizens, physicians, nurses, or other healthcare professionals who are coming to the U.S to perform research or work to combat COVID-19 in the next couple of months. The Migration Policy Institute estimates 26,000 individuals will be blocked from getting green cards for each month the order remains in effect.

However, to me it seems like there’s not really that much of a marginal effect, since all the U.S. consulates around the world have been closed anyway for weeks due to COVID-19 concerns and visas are only being issued in emergency (think life-or-death) situations.

Also exempt from this proclamation are foreign nationals who are:

• Applying for an EB-5 investor green card.
• Members of the U.S. armed forces and their spouses and dependent children.
• Deemed to have skills or knowledge that is in the national interest.
• Important in helping U.S. law enforcement.
• Prospective adoptees.
• Seeking asylum.
• Iraqi or Afghan nationals who have worked for the U.S. government and qualify for special green cards.

Legal challenges to the new policy are expected and a temporary stay could occur.

Even before Trump’s latest order, the issuance of both visas and green cards has temporarily stopped due to coronavirus-related closures and travel restrictions. U.S. embassies and consulates have been closed to routine visa and green card processing and travel bans from some countries are in effect through at least June 30. In addition, U.S. Citizenship and Immigration Services (USCIS) offices have been closed to the public due to COVID-19, effectively canceling all green-card interviews. An interview with an immigration official is required for all green cards. USCIS announced last week it may reopen offices as early as June 4.

The good news for you is that the temporary policy will not impact your prospects for getting a green card. Your employer will still be able to submit a green-card petition on your behalf including PERM and the I-140.

The U.S. Department of Labor is expected to continue processing labor certifications (PERM), which is the first step your employer needs to take in the green-card process. Before the COVID-19 pandemic, the Labor Department took anywhere from four to seven months to review labor certifications, so you and your employer should take that timing into consideration. Remember your employer should submit an I-140 green-card petition and labor certification at least one year before the sixth year of your H-1B so you can qualify for AC21 extensions.

Additional immigration restrictions may be coming down the pike: Trump’s order calls on the Secretaries of Labor, Homeland Security, and State to review temporary visa programs and recommend changes that would “stimulate the United States economy and ensure the prioritization, hiring, and employment of United States workers.” Earlier this week, Trump said another, more restrictive executive order on immigration is under consideration. He didn’t offer any details other than saying that migrant farmworkers would not be affected. We’ll continue to monitor the situation and keep our readers updated.

Remember: Immigration still remains possible. The U.S. is a democracy with checks and balances. The president’s authority to change immigration policy is limited and any overreaching is sure to prompt additional legal challenges.

Despite the current climate of uncertainty and unpredictability, one thing remains crystal clear: Immigrants are key to maintaining and restoring America’s physical and economic health. More than three million immigrants work in the health care system in the U.S. as doctors, nurses, researchers, and health-care workers, according to a research article published last year. That means about 1 in 4 health-care workers are immigrants. Moreover, immigrant-owned businesses employed more than 7.9 million workers, according to data from the U.S. Census Bureau’s 2017 American Community Survey analyzed by the New American Economy. In 2017 alone, households led by immigrants contributed more than $400 billion in tax revenues to federal, state, and local governments. Most unicorn startups have at least one international founder. Immigrants create a plethora of jobs for U.S. workers.

Be well, do good work and keep in touch.

— Sophie

Have a question? Ask it here; we reserve the right to edit your submission for clarity and or space. The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer here. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major podcast platforms; if you’d like to be a guest, she’s accepting applications!