Year: 2021

Nearpod, the Miami-based edtech company, is being acquired by Renaissance Holding Corp., a group that develops education technology. While Nearpod isn’t announcing the news until later this month, the information leaked to Yahoo! Finance yesterday, and a source inside the company confirmed the sale with TechCrunch this morning. The acquisition price, and further details, have yet to be disclosed.

Nearpod offers an edtech platform that K-12 teachers use in the classroom to create interactive slides filled with videos, quizzes, questions and other activities. Students can use any device to participate in the lessons in real-time; there is also a student-paced learning mode. In response to the pandemic, Nearpod now also offers remote learning, too.

It’s been a busy year for Nearpod. The company, which was founded in 2012 by three Argentinian entrepreneurs, is now led by Pep Carrera who was brought on in early 2020 just as the pandemic gained traction. The company has raised more than $30 million in venture capital according to Crunchbase, and we last profiled the startup in 2017 when it raised its Series B.

In a previous interview, Carrera told me “My first day on the job, I’m driving to the office [near Dania Beach] and talking to the management team on the phone, and we decided that we needed to close the office due to the pandemic. This was in March.” Nearpod currently employees about 250 employees, most of which are at their Dania Beach HQ.

While the pandemic has posed many questions around remote work, under the leadership of Carrera, Nearpod has seen explosive growth in 2020. While Nearpod was primarily designed to be used in the classroom, the team was able to turn it into a remote-learning platform, too, making it a forerunner in K-12 distance education.

Nearpod is used in all 50 states, and in more than 1,800 school districts. In 2020 alone, the company grew by about 50% with more than 1 million teachers using the product, and 2-3 million students online per day. In a December 2020 interview, Carrera told me that all the money being generated right now is being put back into the company to propel its growth, which has been organic. Nearpod spends very little ad dollars on marketing. The real marketing, he said, is by word of mouth.

A teacher uses Nearpod to deliver digital curriculum to students’ mobile devices, during class. Photo via Nearpod.

Prior to joining Nearpod, Carrera was president of ProQuest Books, where he led a team focused on providing innovative software that made the acquisition, management, and delivery of books to academic learners, researchers, and librarians efficient and impactful. And even prior to ProQuest, as president and COO, Carrera grew VitalSource Technologies, the digital learning division of Ingram Conte Group, serving more than 20 million learners per year globally, by 10x over his six years there.

M&A activity in edtech has accelerated as VCs have splurged funding into the space. As my colleague Natasha Mascarenhas wrote recently, edtech M&A is leading to mass consolidation in the space. Nearpod joins a number of other edtech companies like Symbolab and Woot Math that have exited in recent months.

Just because there are no short cuts to startup success doesn’t mean you have to reinvent the wheel. At TechCrunch Early Stage 2021, a virtual bootcamp experience in two distinct parts, you’ll learn from leading experts across the startup spectrum — including prominent founders ready to share their personal experiences and hard-won advice to help you avoid costly missteps.

Early-bird pricing for passes to Early Stage part one (April 1-2) — or dual-event passes (Early Stage part 2 takes place July 8-9) — remains in effect for just one more week. Be a savvy shopper — save up to $250 — beat the deadline and buy your Early Stage passes by Feb 27 at 11:59 p.m. (PT).

While both Early Stage bootcamps focus on startups in the very early innings, each event will feature different topics, content and experts. You’ll learn or strengthen the core entrepreneurial skillsets every startup founder needs to master — legal issues, fundraising, marketing, growth, product-market fit, tech stack, recruiting, pitch deck teardowns and more.

What’s more, you’ll learn from the best of the best. Here are just two of the featured speakers ready to download serious knowledge in April. We’ll be adding even more (and posting the agenda) in the weeks to come.

Melissa L. Bradley: Co-founder of venture backed Ureeka (a community where small businesses gain unprecedented access to the expertise needed to grow their business), Melissa is also founder and Managing Partner of 1863 Ventures. A professor at Georgetown University, she teaches impact investing, social entrepreneurship, P2P economies and innovation.

Neal Sáles-Griffin: Managing Director of Techstars Chicago and a Venture Partner for MATH, Neal is an entrepreneur, investor and teacher. In 2011, he co-founded the first beginner-focused, in person coding bootcamp. He is active in non-profit and civic engagement across Chicago and in 2018 he ran for mayor. Neal has an undergraduate degree from Northwestern University, where he is an Adjunct Professor teaching entrepreneurship.

We love highlighting the best startups, and we’re devoting day two to that noble cause in the form of an Early Stage Pitch-Off! We’re looking for 10 founders who will pitch live on stage for five minutes followed by a five-minute Q&A with a panel of prominent VC judges. The top three founders pitch yet again to a new set of judges — and engage in a more intensive Q&A. Talk about awesome exposure!

Get the essential Pitch-off 411 here (like who qualifies and what the winner receives). Whatever you do, apply here before the deadline: February 21 at 11:59 p.m.

Don’t grind your gears reinventing the wheel. Join us at TechCrunch Early Stage 2021 on April 1-2. You have just one week left to score the best possible price. Buy your early bird pass before the deal ends on Feb 27 at 11:59 p.m. (PT).

Is your company interested in sponsoring or exhibiting at Early Stage 2021 — Operations & Fundraising? Contact our sponsorship sales team by filling out this form.

Financial institutions are falling behind the tech curve in delivering on the convenience consumers demand, leaving the door wide open for Big Tech companies like Apple, Amazon and Google to become our bankers. In November, Google redesigned its contactless payments service Google Pay, merging the services of traditional banks with the seamless, convenient experience users expect from the likes of Big Tech.

But there’s a catch.

Despite the elaborate smoke and mirrors that Google has put up, one fact remains: Google is an advertising company with ads representing 71% of its revenue sources in 2019.

One must ask: What happens when an advertising company — armed with the terabytes of data points it has harvested from our personal emails, location data, song preferences and shopping lists — now wants to be our bank? The answer is potentially unsettling, especially considering the extraordinary neglect Big Tech has shown for user privacy, as seen here. And here. And here.

As the marketplace is poked by yet another technocrat tentacle, this time in the heart of financial services, traditional banks that consumers and businesses once relied on find themselves at a crossroads. To retain market share, these institutions will need to continue investing in fintech so they can level up with convenience and personalization provided by new competitors while preserving trust and transparency.

Traditional banks miss the digital mark

Fintech holds the potential to fundamentally transform the financial services industry, enabling financial institutions (FIs) to operate more efficiently and deliver superb user experiences (UX).

But there’s a digital gap holding FIs back, especially small community banks and credit unions. Many have long struggled to compete with the deep pockets of national banks and the tech savvy of neo and challenger banks, like Varo and Monzo. After investing more than $1 trillion in new technology from 2016 through 2019, the majority of banks globally have yet to see any financial boost from digital transformation programs, according to Accenture.

Never before has this gap been more prevalent than amid the pandemic as customers migrated online en masse. In April 2020 alone, there was a 200% uptick in new mobile banking registrations and total mobile banking traffic jumped 85%, according to Fidelity National Information Services (FIS).

Data is the grand prize for Big Tech, not revenue from financial services

Naturally, Big Tech players have recognized the opportunity to foray into financial services and flex their innovation muscles, giving banks and credit unions a strenuous run for their money. Consumers looking to digitize their finances must heed caution before they break up with traditional banks and run into the arms of Big Tech.

It’s important to bear in mind that the venture into payments and financial services is multipronged for Big Tech players. For example, in-house payments capabilities would not just provide companies focused on retail and commerce an additional revenue stream; it promises them more power and control over the shopping process.

Regulations in the U.S. might restrain this invasion to an extent, or at least limit a company’s ability to directly profit. Because let’s face it: the Big Tech players certainly aren’t asking for the regulatory “baggage” that comes with a bank charter.

But tech companies don’t need to profit directly from offerings like payments and wealth management, so long as they can hoard data. Gleaning insights on users’ spending patterns offers companies significant ROI in the long term, informing them how a user spends their money, if they have a mortgage, what credit cards they have, who they bank with, who they transact with, etc.

Financial behavior also potentially includes highly personal purchases, such as medications, insurance policies and even engagement rings.

With this laser sharp view into consumers’ wallets, imagine how much more valuable and domineering Google’s advertising platform will become.

Banks must lead the charge in ethical data

When it comes to the digitization of financial services, the old adage “with great power comes great responsibility” rings true.

Customer data is an incredible tool, allowing banks to cater to all consumers wherever they fall on the financial spectrum. For example, by analyzing a customers’ spending habits, a bank can offer tailored solutions that help them save, invest or spend money more wisely.

However, what if being a customer of these services means you’re then inundated with ads that respond directly to your searches and purchases? Or, even more insidiously, what if your bank now knows you so well that they can create a persona for you and proactively predict your needs and desires before even you can? That’s what the future looks like if you’re a customer of the Bank of Google.

It’s not enough to use customer data to refine product offerings. It must be done in a way that ensures security and privacy. By using data to personalize services, rather than bolster revenue behind the scenes, banks can distinguish a deeper understanding of consumer needs and gain trust.

Trust could become the weapon that banks use to defend their throne, especially as consumers become more aware of how their data is being used and they rebel against it. A Ponemon study on privacy and security found that 86% of adults said they are “very concerned” about how Facebook and Google use their personal information.

In an environment where data collection is necessary but contentious, the main competitive advantage for banks lies in trust and transparency. A report from nCipher Security found that consumers still overwhelmingly trust banks with their personal information more than they do other industries. At the same time, trust is waning for technology, with 36% of consumers reportedly less comfortable sharing information now than a year ago, according to PwC.

Banks are in a prime position to lead the charge on ethical data strategy and the deployment of artificial intelligence (AI) technologies, while still delivering what consumers need. Doing so will give them a leg up on collecting data over Big Tech in the long term.

Looking toward a customer-centric, win-win future

The financial services industry has reached a pivotal crossroads, with consumers being given the choice to leave traditional banks and hand over their personal data to Big Tech conglomerates so they can enjoy digital experiences, greater convenience and personalization.

But banks can still win back consumers if they take a customer-centric approach to digitization.

While Big Tech collects consumer data to support their advertising revenue, banks can win the hearts of consumers by collecting data to drive personalization and superior UXs. This is especially true for local community banks and credit unions, as their high-touch approach to services has always been their core differentiator. By delivering personalized interactions while ensuring the data collection is secure and transparent, banks can regain market share and win the hearts of customers again.

Big Tech has written the playbook for what not to do with our data, while also laying the framework for how to build exceptional experiences. Even if a bank lacks the technology expertise or the deep-pocket funding of Facebook, Google or Apple, it can partner with responsible fintechs that understand the delicate balance between ethical data usage and superior UXs.

When done right, everybody wins.

We’re excited to announce another terrific panel for our stacked TechCrunch Early Stage event on April 1 & 2. Marlon Nichols will be joining us to discuss securing seed funding.

Nichols is intimately acquainted with the topic — as a founding managing partner of MaC Venture Capital (nee Cross Culture Ventures), he has been involved in helping more than 100 early-stage startups receive seed funding. Previously, Nichols served as a Kauffman Fellow and Investment Director at Intel Capital, focusing on media and entertainment.

He has had a hand in a number of high-profile investments, including Gimlet Media, MongoDB, Thrive Market, PlayVS, Fair, LISNR, Mayvenn, Blavity and Wonderschool. His accolades include the MVMT50 SXSW 2018 Innovator of the Year and Digital Diversity’s Innovation & Inclusion Change Agent awards.

He will be discussing ways to get on investors’ radar and how to raise that early round. Per the panel description:

Right now, there is more seed-stage fundraising than ever before, and Marlon will speak on how to get noticed by investors, how to grow your business and how to survive in the crowded, competitive space of tech startups. He will provide insights on how to network, craft a great pitch and target the best investors for your success.

The panel is part of the two days of events that explore seed and Series A fundraising, recruiting and more for early-stage startups at TC Early Stage – Operations and Fundraising on April 1 & 2. Grab your ticket now before prices increase next week!

The COVID-19 vaccine developed by Pfizer and BioNTech now has less stringent and extreme transportation requirements than it debuted with. Originally, the mRNA-based vaccine had to be maintained at ultra-low temperatures throughout the transportation chain in order to remain viable – between -76°F and -112°F. New stability data collected by Pfizer and BioNTech, which has been submitted to the U.S. Food and Drug Administration (FDA) for review, allow it to be stored at temps between 5°F and -13°F – ranges available in standard medical freezers found in most clinics and care facilities.

The vaccine should remain stable for up to two weeks at that temperature, which vastly improves the flexibility of its options for transportation, and last-mile storage in preparation for administration to patients. To date, the vaccine has relied largely on existing “cold-chain” infrastructure to be in place in order for it to be able to reach the areas where it’s being used to inoculate patients. That limitation hasn’t been in place for Moderna’s vaccine, which is stable at even higher, standard refrigerator temperatures for up to a month.

This development is just one example of how work continues on the vaccines that are already being deployed under emergency approvals by health regulators across the U.S. and elsewhere in the world. Pfizer and BioNTech say they’re working on bringing those storage temp requirements down even further, so they could potentially approach the standard set by the Moderna jab.

Taken together with another fresh development, study results from Israeli researchers that found just one shot of the ordinarily two-shot Pfizer-BioNTech vaccine could be as high as 85 percent effective on its own, this is a major development for global inoculation programs. The new requirements open up participation to a whole host of potential new players in supporting delivery and distribution – including ride-hailing and on-demand delivery players with large networks like Amazon, which has offered the President Biden’s administration its support, and Uber, which is already teamed up with Moderna on vaccine education programs.

This also opens the door for participation from a range of startups and smaller companies in both the logistics and the care delivery space that don’t have the scale or the specialized equipment to be able to offer extreme ‘cold-chain’ storage. Technical barriers have been a blocker for some who have been looking for ways to assist, but lacked the necessary hardware and expertise to do so effectively.

The COVID-19 pandemic didn’t just upend the transportation industry. It laid bare its weaknesses, and conversely, uncovered potential opportunities.

Electric bikes sales spiked as public transit ridership evaporated. The public, and investors, began to recognize the utility of autonomous sidewalk delivery bots, which had once been viewed as mere novelties; the rising popularity of on-demand delivery prompted major retailers like Walmart to put more resources towards meeting consumers needs and was one of the driving forces behind Uber’s decision to dump nearly every business unit and acquire Postmates.

The upshot? The transformation isn’t over. Following up on our May of 2020 survey of the sector and about the impact of COVID-19 in particular, TechCrunch spoke with 10 investors about the state of mobility, which trends they’re most excited about and what they’re looking for in their next investments. They see opportunities within software, particularly around mobility-as-a-service ventures and fleet management, continued demand for delivery and the push for electrification and batteries as well as the financial instrument — SPACs — that so many startups turned to in 2020. But there’s a lot more; they even see tailwinds for eVTOLs.

Here’s who we interviewed:

• Clara Brenner, co-founder and managing partner, Urban Innovation Fund
• Shawn Carolan, partner, Menlo Ventures
• Dave Clark, partner, Expa
• Abhijit Ganguly, senior manager, Goodyear Ventures
• Rachel Holt, co-founder and general partner, Construct Capital
• David Lawee, founder and general partner, CapitalG
• Sasha Ostojic, operating partner, Playground Global
• Sebastian Peck, managing director, InMotion Ventures
• Natalia Quintero and Rachel Haot, Transit Innovation Partnership/Transit Tech Lab

Clara Brenner, co-founder and managing partner, Urban Innovation Fund

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed and the autonomous vehicle industry went through a consolidation. What sectors will recover in 2021 and where are the new and unlikely opportunities to invest?

COVID has exposed how rickety, insolvent and inequitable transit is in the U.S. Tools that empower cities to get compensated for private enterprise monetizing public infrastructure, and that ensure more equitable mobility access are exciting to me. Companies like Ride Report that help cities wrap their arms around all of the various public and private transit happening on their streets are exciting to me.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

Autonomous vehicles still have a long way to go, and there is still lots of room for new startups to make their mark on this space. In particular, we’ve been interested to see new entrants working on software tools to facilitate regulation and parking.

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production?

We are very interested in the emerging fleet management space — and this is reflected in a number of our recent investments, including Electriphi (software to help fleets transition to electric) and Kyte (activating underutilized fleets to deliver a magical car rental experience). There are so many efficiencies that come from the fleet model for transportation — we think this will be an increasingly important area in the coming years.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

Transportation is important to basically all people and is a real mess, so it will likely continue to be a hot topic and a source of investor interest for years to come. However, for capital intensive transportation companies, the rounds have gotten so huge and expensive that they often make little sense for early-stage funders to participate in (they get diluted down hugely). Not that this seems to be dissuading many investors at the moment.

At the Urban Innovation Fund, we are spending a lot of time looking at software tools that enable larger hardware systems to work more efficiently. In terms of longer-term liquidity, SPACs represent a good option for many companies. That said, consolidation/mergers seems the most logical outcome for most companies in the transportation space — where strategic partnerships and integrations represent critical competitive advantages.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

I’d like to see the Biden administration invest in our urban public transit systems — we know those systems can work beautifully. This may not accelerate “innovation,” but it will accelerate progress. This is a fundamental confusion in the VC space — innovation does not always equal progress.

Shawn Carolan, partner, Menlo Ventures

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed, and the autonomous vehicle industry went through consolidation. What sectors will recover in 2021, and where are the new and unlikely opportunities to invest?

Pretty much all aspects of transportation will show recovery in 2021 with the population’s strong desire to get closer to normal, daily infections dropping, better mask compliance and increased vaccinations. The slowest will be commute-to-work use cases where the “new normal” for many will be 50%-100% fewer trips to the office on a monthly basis.

Personal above shared movement: The psychological aftermath of the pandemic will persist for some time; people do and will continue to prefer more distance from others. This will lead to an acceleration of personal e-mobility solutions, both outright purchase and subscription models, including scooters and e-bikes (Unagi, where we are investors), asset-sharing models where riders aren’t in close proximity to strangers (GetAround, Turo, Lime, Bird), and single-ridership Ubers and Lyfts over UberPools and the like.

E-commerce supply chain: E-commerce has experienced a step-function in demand that will persist. Many shippers, trucking companies, manufacturers, distributors, etc., are still poorly connected, inefficient, and managed with paper and manual labor. The entire supply chain is ripe for Amazon-like efficiency and clarity; this will be driven by factory/warehouse level automation, robotics, best-of-breed fulfillment, and logistics software like our investments in Alloy, Fox Robotics and ShipBob.

Local delivery: Instacart, DoorDash, UberEats, etc. have brought local delivery mainstream. This trend will continue, and the larger incumbents will be working hard to get their act together for streamlining fulfillment rather than let the delivery fleets capture all of the upsides. Here companies like AnyCart that streamline ordering for grocery and recipes can partner versus compete with large grocery chains to deliver a compelling user experience and more reasonable prices.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

Until there is a teleporter, opportunities will always exist to make transportation better, faster and cheaper for a given distance. The big levers coming are:

Electric propulsion (on ground and air) yields a much lower cost per mile with lower opex motors and lower cost of recharge versus burning fuel. Opportunities exist here mostly for component companies making better batteries, motors and quiet propellers.

Better asset utilization: More efficient routing of vehicles (via routing software), higher capacity utilization (via more efficient marketplaces), and less downtime (through better scheduling and optimization algorithms) bring prices down.

Autonomy: Drivers are a big part of both the cost structure of transportation and also accidents. Human-level autonomy is still several years off, but we see lots of opportunity for autonomy in constrained environments (vehicles moving in repetitive patterns with few obstacles) and through the air.

What are the overlooked areas that you want to invest in? Now that legacy automakers are shifting their portfolios to electric, and new EV manufacturers are preparing to start production, what are the overlooked areas that you want to invest in?

We believe there are many transportation options beyond the car. Electric scooters, bikes, eVTOLs and others will keep growing in popularity for both utility and fun.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

Transportation will be a perennial sector of opportunity given how large a piece of consumer spend it occupies. Till the late 2000s, Silicon Valley barely touched transportation; this has, of course, changed dramatically since that period, particularly with the rise of Tesla.

It’s often quite capital intensive, though. Proving solid unit economics at a small scale before scaling will become more of a mandate given the machinations in the shared scooter market and how it showed that rapid growth doesn’t solve all woes.

We’d love to see better debt financing for electric vehicle companies. With their much lower operating costs and the low-interest macro environments, we find ourselves in, if there were large pools of clean transportation debt capital that could get more vehicles in consumers’ lives via modest monthly fees that would go a long way in accelerating adoption. For example, Unagi all-access subscription offers a beautiful personal scooter for $30-$40 per month with great ROI given the usage patterns and reliability. If the debt markets line up to finance these at scale, it could be a nice win-win.

SPACs prove to be a good option for companies with high R&D costs and a long horizon to reach traditional IPO milestones (i.e., >$100 million ARR). Some of these projects aren’t going to work out, though and retail investors will be left holding the bag when the stocks crater. This will be the kickstarter “failed launch” phenomenon at a much larger scale, and there will be some nasty fallout.

Corporate venture capital, mainly industrial and automative focused companies, are getting more aggressive as the industry recognizes their need to adapt.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

We’d love to see aggressive policies to further the acceleration of clean technology. Aside from the obvious environmental imperative to reduce carbon emissions, it makes good economic sense. Some examples would be personal and corporate tax credits for investing in anything that offers lower environmental impact. Electric vehicles of all sorts (scooters, bikes, cars, boats, etc.), installing solar for home and utility plants, using EVs for materials handling, etc.

Make the U.S. the testing ground for AVs by making regulation more favorable relative to competitors like Europe and China both on the ground and in the air.

Own the future of lithium-ion extraction and manufacturing. This is the “white oil” of our generation.

Aggressive funding of R&D initiatives at universities and commercial research labs that have a shot at changing the cost equations for batteries, motors, propellers, the power grid, etc. that can improve the fundamental building blocks.

Dave Clark, partner, Expa

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed and the autonomous vehicle industry went through a consolidation. What sectors will recover in 2021 and where are the new and unlikely opportunities to invest?

I believe ride sharing will recover.

Food delivery now has a much stronger network that will support it moving forward. This has forced supply online and compelled existing supply to improve product and packaging. We are seeing delivery times continue to come down. There are more cloud kitchens in the market and an exploration of dark stores across major cities that are positioned to meet consumer expectations during this e-commerce boom. There is still a long way to go here. Grocery delivery still needs improvement. The online grocery shopping experience is fundamentally different from the traditional offline experience.

Alcohol delivery is another big opportunity. Continue to track Go Puff and international equivalents.

At a high level, there are several sectors of note that are thriving even amid the ongoing volatility and market disruption caused by the pandemic. I like what I’m seeing in esports, edtech, biotech and telemedicine, enterprise SaaS with accelerated digital transformation, e-commerce and grocery services, as well as investment platforms.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

Don’t give the incumbents too much credit. As technology becomes commoditized we’ll see new competitors push their way into the market, especially around new designs more suitable to an autonomous and shared system.

A few specific examples for your readers:

EVs are approaching price parity with gas-powered cars with the improvements to carbon-neutral/negative-emission tech, energy storage, microgrids and battery tech.

We’re about to see drone infrastructure and service business models scale as we approach an inflection point in consumer adoption and industry regulation.

Finally, as autonomous vehicle tech approaches commoditization, there will be plenty of opportunities in the software layers that optimize routes and orchestrate resources across supply chains.

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production, what are the overlooked areas that you want to invest in?

EVTOL. Cars are all stuck on one axis and congestion is only getting worse. We need to take to the skies.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

There are 139 SPACs currently looking for a target. Twenty-nine new SPACs emerged in January alone. This is not sustainable. That’s a lot of competition and we’re going to see some bad deals made out of desperation.

Transportation is a massive problem to solve. If a company gets it right, the success could have no ceiling. Given these conditions, I believe these early-stage rounds for strong teams will remain competitive.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

We need regulatory acceptance and support of autonomous and eVTOL.

We are developing autonomous vehicles because so many people are killed in car accidents each year. People are terrible drivers. If regulators slow down the speed of innovation in this sector, we will continue to see an unacceptable number of accidents on an annual basis. Autonomous systems will greatly reduce the number of deaths each year. We need to focus on saving the lives of drivers rather than the occasional errors of autonomous testing and development.

Abhijit Ganguly, senior manager, Goodyear Ventures

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed and the autonomous vehicle industry went through a consolidation. What sectors will recover in 2021 and where are there new and unlikely opportunities to invest?  

At Goodyear Ventures, we are watching out for secular growth trends in the transportation industry. Digitalization trends were already taking hold in our industry pre-pandemic. We expect those trends to be accelerated by the pandemic. We are seeing this in our portfolio companies such as Starship who are experiencing rapid growth in the contactless delivery space.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

We see several opportunities in the autonomous space despite the recent consolidation. Recent advances made by TuSimple, a Goodyear Ventures portfolio company, are testimonies to these opportunities. High value-added use cases where drivers can be taken out of specific routes are areas where startups can be additive. While presenting scalability issues, those use cases also offer a faster path to a viable business model. Startups that can manage this dichotomy are likely to succeed.

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production, what are the overlooked areas that you want to invest in?

The secular trend toward electrification presents opportunities to OEMs, Tier 1 vendors and aftermarket participants alike. We continue to see opportunities in EV fleet management, aftermarket solutions for improving uptime, and reducing cost of operations and supportive infrastructure development (software and hardware) for easy deployment. Envoy, a Goodyear Ventures portfolio company, is capitalizing on these opportunities through its shared mobility EV platform.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

We believe every startup is different, and their needs should eventually be the crucial deciding factor on what path of financing they choose. Our focus is to find startups that are on course to transform mobility. Financing preferences will have cycles, but what we believe and invest in are startups who create value and ride strong underlying trends, irrespective of the financing models they choose.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

We have seen early moves from the administration to advance the usage of EVs in government fleets. This is a positive sign. But the underlying trends of autonomous and electric have their roots in moving societies forward productively. For example, autonomous vehicles address a critical issue of driver shortage and demand spikes in priority shipping. These trends can be helped by policy. But they are more market-driven and inevitable.

Rachel Holt, co-founder and general partner, Construct Capital

COVID-19 disrupted virtually every sector of the transportation industry. What sectors will recover the fastest in 2021 and where are there new and unlikely opportunities to invest?

Solo travel will recover fastest. Micromobility should recover really nicely this summer too; rethinking “public transit” will be a key area. A lot of interesting ideas in various bussing solutions are definitely hot.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

EV is definitely going to have a lot of activity. Also a lot of interesting startups featuring far more accurate location tracking.

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production?

We invested in a really interesting company building the software operating layer to help EV hardware manufacturers “connect;” the software layer of EV is going to be a very interesting space.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

Disruptions like COVID create a natural point for rethinking the space. There are still a lot of areas within transportation that haven’t seen a ton of innovation.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

Continuing to invest in rethinking how our cities and streets are used.

David Lawee, founder and general partner, CapitalG

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed and the autonomous vehicle industry went through a consolidation. What sectors will recover in 2021 and where are there new and unlikely opportunities to invest?

The industry will continue its evolution toward transportation as a service, as the cost-benefit trade-offs of car ownership continue to decline and increasing portions of the population opt out of car ownership. Covid temporarily slowed the trend, but the long-term shift is unstoppable. Ride-sharing services like Lyft and Uber that have built up premium user experiences and highly defensible moats, as well as car-sharing services like Turo and Getaround, will continue to thrive, with massive spikes in usage after the pandemic ends.

This shift is helping to lay the groundwork for adoption of autonomous technologies. While few people will be able to pay $100,000 for a fully self-driving car, many will eventually be interested in renting one for an hour or two a day.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

There’s still a massive opportunity for innovation in autonomy. Many fundamental technologies are still in their infancy, such as lidar and other sensor technologies, and core challenges around data processing still need to be addressed.

Despite what will continue to be intensified investment from all of the big tech companies, opportunities to compete will actually increase as resources like ride data become commercially accessible.

We should expect to see fully self-driving vehicles on highways and main arteries shortly. The technology is already there. However, getting to full autonomy in the sense that you can take your self-driving car literally anywhere will take a lot longer — possibly as long as 10 years.

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production?

I’m focused on autonomous deep tech, meaning the complex, foundational technologies that will ultimately unlock the promise of autonomy. I’ve been a part of autonomous technologies for over a decade since I first oversaw some of Google’s early self-driving initiatives, and I know unequivocally that we are still in the sector’s early days. At CapitalG we’re able to engage as highly involved, long-term strategic investors. Alphabet is an incredibly patient LP, which frees us to invest our time and resources in the technologies with the greatest potential for transformational impact, no matter how long it takes. I’m excited to meet the visionary technologists who will unleash autonomy’s next wave of innovation.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

Great technical teams are always in high demand and short supply. Startups in the autonomous space will continue to garner interest from VCs, as well as the big tech firms and the big automakers. There will be a small number of fully integrated automotive companies offering autonomous ride-sharing as a service. Many more companies will try to succeed by partnering across both the technology and service layers.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

There’s incredible innovation happening in the U.S. transportation tech sector today. As regulations unfold, it’s important to acknowledge that it’s hard to do effectively, and there are risks to getting it wrong. I hope that whatever follows will be based on well-researched, fact-based risk assessments that maintain the ability of transportation tech companies to continue their impressive pace of innovation.

Sasha Ostojic, operating partner, Playground Global 

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed and the autonomous vehicle industry went through a consolidation. What sectors will recover in 2021 and where are there new and unlikely opportunities to invest?

I don’t expect a full recovery, in the sense that we will not get back to the 2019 levels, but I do expect improvements compared to 2020 across the board (ride-sharing, business and leisure air travel, public transit, etc.). I think there are new opportunities in the logistics transportation space. FedEx, UPS and USPS were stretched to the max in December proving that the legacy transportation logistics space is ripe for new entrants that can take advantage of new technologies to build the next generation of package delivery services to deliver on consumer instant gratification expectations.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

At this point, it is clear that the marathon to autonomous driving is a very costly endeavor and is the playground for those who can (and are willing to) continue to pour billions of dollars into R&D. The best-case scenario for anybody unable to raise at least a $100 million round is to be acquihired.

Unfortunately, this also leads to a shrinking customer base for autonomy startups to sell into. One opportunity that comes to mind is on the data ingestion and management side. While a huge amount of data is generated by autonomous R&D fleets, a similar trend is happening with fleets and soon consumer cars as well. Automotive OEMs do not have the infrastructure nor the know-how for a sophisticated and efficient data back end.

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production, what are the overlooked areas that you want to invest in?

There seems to be an overlooked opportunity with consumer automotive apps. We have apps to manage our homes (cameras, speakers, sensors, etc.) so it’s only natural that our cars should join that ecosystem. At first it will be OEM-specific apps (like the Tesla app or the terrible GM app), but I expect an evolution of open APIs where you can add any car to your “garage” (like adding a device to Google Home).

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

Early-stage funding for transportation startups stopped being hot a while ago :). GM paid $1 billion for ~40 Cruise engineers in 2016. That level of exuberance is unlikely to come back. Archer going public through a SPAC is probably the peak of air taxi exuberance.

At this point, there are too many SPACs chasing too few quality companies, so it would be rational for people to realize that it makes no sense to buy stock in zero billion dollar companies that will have zero revenue for the next 3-5 years. In that sense, these high-tech SPAC bets are looking a lot more like biotech bets that eventually end up in the penny stock range living from press release to press release. That said, if you were a rational investor in the past year, you were likely at the bottom of every investor ranking list.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

I would like to see more focus on public-private initiatives and an opening of city/municipality APIs to enable integration of transportation services with city infrastructure. Cities want to take back their streets and are motivated to find new sources of revenue and actually take part in the growth of new transportation business models.

There are encouraging signs of this happening at the Los Angeles Department of Transportation and how they deployed a platform to manage Uber/Lyft at LAX or scooters in Santa Monica. The federal government can help by driving standards such that these models can be easily replicated across the U.S.

Sebastian Peck,  managing director, InMotion Ventures

COVID-19 disrupted virtually every sector of the transportation industry. E-bike demand spiked, shared scooters initially struggled with some rebounding, ridership dwindled in ride-hailing and plummeted in public transit as consumers turned to cars and other alternatives. Meanwhile, demand for delivery skyrocketed and the autonomous vehicle industry went through a consolidation. What sectors will recover in 2021 and where are there new and unlikely opportunities to invest?

Ride-hailing and micromobility will rebound. There is still a lot of untapped growth potential for micromobility in particular. Consolidation in the autonomous vehicle industry will continue. Companies that do not have strong OEM relationships in place at this point will face an uphill battle. The real story for 2021, however, is the decarbonization of transport, and closely related to this the digital supply chain. Expect a lot of investment activity in battery chemistry, smart and rapid charging technology, hydrogen and green supply chains.

What are the remaining opportunities for new startups, now that the autonomous vehicle industry is maturing with unprecedented consolidation, billion-dollar funding rounds and even a few low-volume commercial operations kicking off?

Breakthrough technologies that demonstrably accelerate the decarbonization of transport will be able to take their pick among investors. This sector is more R&D-led and therefore trickier to navigate for investors, but the rewards are potentially enormous. We also see very significant opportunities in areas such as battery recycling and sustainable materials (e.g., for vehicle interiors), where the sheer addressable market size creates space of high-growth companies that deliver innovation to these sectors. We also see massive potential in connected car insurance (and other business models enabled by connected car data) and services (e.g., vehicle maintenance and repair).

What are the overlooked areas that you want to invest in, now that legacy automakers are shifting their portfolios to electric and new EV manufacturers are preparing to start production, what are the overlooked areas that you want to invest in?

I think the market may not have fully appreciated the vast potential of connected vehicle data yet, in part because that data is currently still hard to access for developers. We see more OEMs making APIs available in 2021 and we expect this will become a very dynamic space with a lot of innovation benefitting consumers and commercial fleet managers.

What is the fundraising model of success for transportation startups of the future? Do you expect early-stage funding in this sector to stay hot indefinitely? Do you see SPACs as the path to liquidity long term for a large number of startups in this sector?

There is at this point no sign that the momentum around SPACs is dying down, and we expect this to remain an important path to liquidity for some time to come. We expect a higher degree of concentration of early-stage capital in a smaller number of deals, which is a trend we have seen in 2020 and expect to continue. This means that certain deals will be incredibly competitive, but first-time founders might also find that raising capital is not necessarily getting easier.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

I think the U.S. can generally benefit from a commitment to decarbonizing transport, open sharing of data and breaking down walled gardens to help mobility as a service grow.

Natalia Quintero and Rachel Haot, Transit Innovation Partnership

COVID-19 disrupted virtually every sector of the transportation industry. What sectors will recover the fastest in 2021 and where are the new and unlikely opportunities to invest? 

The impacts of covid will continue through 2021. There are significant opportunities for the digitization and application of AI to public transit, including the movement of subway train cars, buses and shuttles.

This will be spurred by infrastructure funding and congestion pricing financing. Opportunity will also continue to grow for micromobility providers across shorter distances as cities transform from central business district domination to decentralized commercial hubs.

What do you want to see from the Biden administration to accelerate innovation in the transportation sector?

The Biden administration can create opportunity by funding public transit and approving transformative urban infrastructure initiatives like New York City’s congestion pricing implementation — the first in the country and a model for other cities.

Congestion pricing will help to finance public transit infrastructure improvements – this represents an enormous opportunity for the digitization of transit infrastructure and the applications of underlying AV tech to transit: computer vision, AI and lidar. Internet of things/ connected infrastructure is also a major opportunity. The Biden administration can also incentivize and fund electronic vehicles, EV charging infrastructure and clean energy sources.

Yesterday’s House Financial Services Committee hearing about GameStop and Robinhood wasn’t great. Reuters has a good summary of one its few interesting bits, a scrap between the elected inquisitors and Robinhood CEO Vlad Tenev regarding whether or not his firm had to raise additional capital to continue operations during the GameStop saga; TechCrunch has reported on the matter since its inception, though learning a little bit more was useful.

Lawmakers also managed to extract an interesting, if expected data point: the company generates more than half of its revenues from payment for order flow (PFOF), a controversial practice in which Robinhood is paid by market makers for executing customer trades.

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Those skeptical of PFOF contend that the setup effectively transforms users of neotrading services that monetize their order volume into the product being sold, leaving retail investors susceptible to poor trade execution pricing. Robinhood has gotten into trouble regarding trade pricing in the past. But those in who don’t find PFOF to be an inherent issue contend that it allows for low-cost consumer access to the equities markets. That’s fair enough.

Regardless of where you land between — or even on — those two poles is immaterial. PFOF doesn’t appear to be in material danger of being regulated out of existence, and Robinhood’s use of the business model allowed it to generate huge growth in 2020. For perspective, Robinhood’s PFOF revenues rose from a little over $90 million in Q1 2020 to around $220 million in Q4.

How many users did it take to generate those PFOF sums? Tenev also told Congress in his written testimony that Robinhood has more than 13 million “customers,” though we lack clarity on precisely who counts as customer. But those millions do not monetize equally. Some of those 13 million users are more lucrative than others.

To understand that, let’s start with working to learn what fraction of Robinhood users trade options. Here’s Tenev, via his testimony:

[A]s of the end of 2020, about 13 percent of Robinhood customers traded basic options contracts (e.g., puts and calls), and only about two percent traded multi-leg options. Less than three percent of funded accounts were margin-enabled.

This, combined with the fact that Tenev allowed that PFOF incomes comprise the majority of its revenue, comes to an interesting conclusion: A somewhat small fraction of Robinhood’s users are responsible for the vast bulk of its incomes. We can tell that that is the case by recalling that when we examine PFOF data, Robinhood’s revenues from trades in S&P 500 stocks are modest, its incomes from trades involving non-S&P 500 stocks a bit larger, and its incomes from options’ order flow comprised the majority of the revenue reported in recent periods.

For example, in the months of October, November, and December, TechCrunch calculates that Robinhood’s PFOF revenues were around 67%, 64%, and 63% options-derived, respectively.

For reference, 13% of 13 million is 1.69 million. That’s the number of Robinhood users we estimate have traded options. The multi-leg options number is a far smaller 260,000 users.

As of 2019, the majority of venture firms — 65% — still did not have a single female partner or GP at their firm, according to All Raise.

So naturally, anytime we hear of a new female-led fund, our ears perk up.

Today, New York-based Avid Ventures announced the launch of its $68 million debut venture capital fund. Addie Lerner — who was previously an investor with General Catalyst, General Atlantic and Goldman Sachs — founded Avid in 2020 with the goal of taking a hands-on approach to working with founders of early-stage startups in the United States, Europe and Israel.

“We believe investing in a founder’s company is a privilege to be earned,” she said.

Tali Vogelstein — a former investor at Bessemer Venture Partners — joined the firm as a founding investor soon after its launch and the pair were able to raise the capital in 10 months’ time during the 2020 pandemic.

The newly formed firm has an impressive list of LPs backing its debut effort. Schusterman Family Investments and the George Kaiser Family Foundation are its anchor LPs. Institutional investors include Foundry Group, General Catalyst, 14W, Slow Ventures and LocalGlobe/Latitude through its Basecamp initiative that backs emerging managers. 

Avid also has the support of 50 founders, entrepreneurs and investors as LPs — 40% of whom are female — including Mirror founder Brynn Putnam; Getty Images co-founder Jonathan Klein; founding partner of Acrew Capital Theresia Gouw and others.

Avid invests at the Series A and B stages, and so far has invested in Alloy, Nova Credit, Rapyd, Staircase, Nava and The Wing. Three of those companies have female founders — something Lerner said happened “quite naturally.”

“Diversity can happen and should happen more organically as opposed to quotas or mandates,” she added.

In making those deals, Avid partnered with top-tier firms such as Kleiner Perkins, Canapi Ventures, Zigg Capital and Thrive Capital. In general, Avid intentionally does not lead its first investments in startups, with its first checks typically being in the $500,000 to $1 million range. It preserves most of its capital for follow-on investments.

“We like to position ourselves to earn the right to write a bigger check in a future round,” Lerner told TechCrunch. 

In the case of Rapyd, Avid organized an SPV (special-purpose vehicle) to invest in the unicorn’s recent Series D. Lerner had previously backed the company’s Series B round while at General Catalyst and remains a board observer.

Prior to founding Avid, Lerner had helped deploy more than $450 million across 18 investments in software, fintech (Rapyd & Monzo) and consumer internet companies spanning North America, Europe and Israel. 

When it comes to sectors, Avid is particularly focused on backing early-stage fintech, consumer internet and software companies. The firm intends to invest in about 20 startups over a three-to-four year period.

“We want to take our time, so we can be as hands-on as we want to be,” Lerner said. “We’re not looking to back 80 companies. Our goal is to drive outstanding returns for our LPs.”

The firm views itself as an extension of its portfolio companies’ teams, serving as their “Outsourced Strategic CFO.” Lerner and Vogelstein also aim to provide the companies they work with strategic growth modeling, unit economics analysis, talent recruiting, customer introductions and business development support.

“We strive to build deep relationships early on and to prove our value well ahead of a prospective investment,” Lerner said. Avid takes its team’s prior data-driven experience to employ “a metrics-driven approach” so that a startup can “deeply understand” their unit economics. It also “gets in the trenches” alongside founders to help grow a company.

Ed Zimmerman, chair of Lowenstein Sandler LLP’s tech group in New York and adjunct professor of VC at Columbia Business School, is an Avid investor.

He told TechCrunch that because of his role in the venture community, he is often counsel to a company or fund and will run into former students in deals. Feedback from numerous people in his network point to Lerner being “extraordinarily thoughtful about deals,” with one entrepreneur describing her as “one of the smartest people she has met in a decade-plus in venture.”

“I’ve seen it myself in deals and then I’ve seen founders turn down very well branded funds to work with Addie,” Zimmerman added, noting they are impressed both by her intellect and integrity. “…Addie will find and win and be invited into great deals because she makes an indelible impression on the people who’ve worked with her and the data is remarkably consistent.”

SailPoint, an identity management company that went public in 2017, announced it was going to be acquiring Intello today, an early stage SaaS management startup. The two companies did not share the purchase price.

SailPoint believes that by helping its customers locate all of the SaaS tools being used inside a company, it can help IT make the company safer. Part of the problem is that it’s so easy for employees to deploy SaaS tools without IT’s knowledge, and Intello gives them more visibility and control.

In fact, the term ‘shadow IT’ developed over the last decade to describe this ability to deploy software outside of the purview of IT pros. With a tool like Intello, they can now find all of the SaaS tools and point the employees to sanctioned ones, while shutting down services the security pros might not want folks using.

Grady Summers, EVP of product at SailPoint says that this problem has become even more pronounced during the pandemic as many companies have gone remote, making it even more challenging for IT to understand what SaaS tools employees might be using.

“This has led to a sharp rise in ungoverned SaaS sprawl and unprotected data that is being stored and shared within these apps. With little to no visibility into what shadow access exists within their organization, IT teams are further challenged to protect from the cyber risks that have increased over the past year,” Summers explained in a statement. He believes that with Intello in the fold, it will help root out that unsanctioned usage and make companies safer, while also helping them understand their SaaS spend better.

Intello has always seen itself as a way to increase security and compliance and has partnered in the past with other identity management tools like Okta and Onelogin. The company was founded in 2017 and raised $5.8 million according to Crunchbase data. That included a $2.5 million extended seed in May 2019.

Yesterday, another SaaS management tool, Torii, announced a $10 million Series A. Other players in the SaaS management space include BetterCloud and Blissfully, among others.

A new study underway at Toronto’s University Health Network (UHN), a group of working research hospitals in the city, could shift our approach to treatment in an area of growing concern in human health. The study, led by Dr. Heather Ross, will investigate whether the Apple Watch can provide early warnings about potentially worsening health for patients following incidents of heart failure.

The study, which is aiming to eventually span around 200 patients, and which already has a number of participants enrolled spanning ages from 25 to 90, and various demographics, will use the Apple Watch Series 6 and its onboard sensors to monitor signals including heart rate, blood oxygen, general activity levels, overall performance during a six minute walk test and more. Researchers led by Ross will compare this data to measurements taken from the more formal clinical tests currently used by physicians to monitor the recovery of heart failure patients during routine, periodic check-ups.

The hope is that Ross and her team will be able to identify correlations between signs they’re seeing from the Apple Watch data, and the information gathered from the proven medical diagnostic and monitoring equipment. If they can verify that the Apple Watch accurately reflects what’s happening with a heart failure patient’s health, it has tremendous potential for treatment and care.

“In the US, there are about six-and-a-half million adults with heart failure,” Ross told me in an interview. “About one in five people in North America over the age of 40 will develop heart failure. And the average life expectancy [following heart failure] is still measured at around 2.1 years, at a tremendous impact to quality of life.”

The stats point to heart failure as a “growing epidemic,” says Ross, at a cost of some “$30 billion a year at present in the U.S.” to the healthcare system. A significant portion of that cost can come from the care required when conditions worsen due to preventable causes – ones that can be avoided by changes in patient behavior, if only implemented at the right time. Ross told me that currently, the paradigm of care for heat failure patients is “episodic” – meaning it happens in three- or six-month intervals, when patients go into a physician’s office or clinic for a bevy of tests using expensive equipment that must be monitored by a trained professional, like a nurse practitioner.

“If you think about the paradigm to a certain degree, we’ve kind of got it backwards,” Ross said. “So in our thinking, the idea really is how do we provide a continuous style monitoring of patients in a relatively unobtrusive way that will allow us to detect a change in a patient status before they end up actually coming into hospital. So this is where the opportunity with Apple is tremendous.”

Ross said that current estimates suggest nearly 50% of hospitalizations could be avoided altogether through steps taken by patients including better self-care, like adhering to prescribed medicinal regimens, accurate symptom monitoring, monitoring dietary intake and more. Apple Vice President of Health Dr. Sumbul Desai echoed the sentiment that proactivity is one of the key ingredients to better standards of care, and better long-term outcomes.

“A lot of health, in the world of medicine, has been focused on reactive responses to situations,” she said in an interview. “The idea to get a little more proactive in the way we think about our own health is really empowering and we’re really excited about where that could take us. We think starting with these studies to really ground us in the science is critical but, really, the potential for it is something that we look forward to tackling.”

Desai, has led Apple’s Health initiatives for just under four years, and also spent much of her career prior to that at Stanford (where she remains an associate professor) working on both the academic and clinical side. She knows first-hand the value of continuous care, and said that this study is representative of the potential the company sees in Apple Watch’s role in the daily health of individuals.

“The ability to have that snapshot of an individual as they’re living their everyday life is extremely useful,” she said. “As a physician, part of your conversation is ‘tell me what’s going on when you’re not in the clinic.’ To be able to have some of that data at your fingertips and have that part of your conversation really enhances your engagement with your patients as well. We believe that can provide insight in ways that has not been done before and we’re really excited to see what more we’re learning in this specific realm but we already hearing from both users and physicians how valuable that is.”

Both Ross and Desai highlighted the value of Apple Watch as a consumer-friendly device that’s easy to set up and learn, and that serves a number of different purposes beyond health and fitness, as being key ingredients to its potential in a continuous care paradigm.

“We really believe that people should be able to play a more active role in managing their well-being and Apple Watch in particular, we find to be — and are really proud of — a powerful health and wellness tool because the same device that you can connect with loved ones and check messages also supports safety, motivates you to stay healthy by moving more and provides important information on your overall wellness,” Desai said.

“This is a powerful health care tool bundled into a device that people just love for all the reasons Sumbul has said,” Ross added. “But this is a powerful diagnostic tool, too. So it is that consumer platform that I think will make this potentially an unstoppable tool, if we can evaluate it properly, which we’re doing in this partnership.”

The study, which is targeting 200 participants as mentioned, and enrolling more every day, will span three months of active monitoring, followed by a two-year follow up to investigate the data collected relative to patient outcomes. All data collected is stored in a fully encrypted form (Ross pointed to Apple’s privacy track record as another benefit of having it as a partner) and anyone taking part can opt-out at any point during the course of the research.

Even once the results are in, it’ll just be the first step in a larger process of validation, but Ross said that the hope is to ultimately “to improve access and equitable care,” by changing the fundamental approach to how we think about heart failure and treatment.