Year: 2021

Less than a year after we put out an initial temperature check survey, it’s clear that specialist investors are even more bullish on edtech. Bears are hard to find right now: the sector, once undercapitalized, has brought in $10 billion in venture capital funding globally in 2020.

As investors told us last week, the biggest consumer opportunity in 2021 and beyond is lifelong learning (and portfolio companies have the profits to prove it).

But despite edtech’s noise, the second installment of our edtech survey shows that VCs think startups haven’t enjoyed parallel gains from a valuation perspective. The sentiment suggests that despite an apparent revitalization, edtech isn’t at the same level of “value” in investor eyes like sectors such as e-commerce, consumer and fintech.

As Mercedes Bent of Lightspeed Venture Partners said, “edtech didn’t tend to have heady valuations before the pandemic, and through 2020 I’m seeing edtech companies raise at valuations that are reasonable for Silicon Valley; still nothing like what we see in fintech.”

Now, valuations aren’t everything — but they aren’t nothing, either. Where edtech lacks in impressive valuations, investors see it gaining in exit opportunities. Many investors think that the exit environment is set to dramatically change in the next few years.

We’ve already seen Nerdy and Skillsoft, two edtech companies, go public via SPACs in the past few months. Private equity ownership is an interesting dynamic to be aware of here, especially as Vista recently scooped up PluralSight for $3.5 billion.

Here are the investors we spoke to, along with their areas of interest and expertise:

• Deborah Quazzo, managing partner, GSV Ventures (an education fund backing ClassDojo, Degreed, Clever)
• Ashley Bittner, founding partner, Firework Ventures (a future-of-work fund with portfolio companies LearnIn and TransfrVR)
• Jomayra Herrera, principal, Cowboy Ventures (a generalist fund with portfolio companies Hone and Guild Education)
• John Danner, managing partner, Dunce Capital (an edtech and future-of-work fund with portfolio companies Lambda School and Outschool)
• Mercedes Bent and Bradley Twohig, partners, Lightspeed Venture Partners (a multistage generalist fund with investments including Forage, Clever and Outschool)
• Ian Chiu, managing director, Owl Ventures (a large edtech-focused fund backing highly valued companies including BYJU’s, Newsela and Masterclass) 
• Jan Lynn-Matern, founder and partner, Emerge Education (a leading edtech seed fund in Europe with portfolio companies like Aula, Unibuddy and BibliU) 
• Benoit Wirz, partner, Brighteye Ventures (an active edtech-focused venture capital fund in Europe that backs YouSchool, Lightneer, and Aula)
• Charles Birnbaum, partner, Bessemer Venture Partners (a generalist fund with portfolio companies including Guild Education and Brightwheel)
• Daniel Pianko, co-founder and managing director, University Ventures (a higher-ed and future-of-work fund that is backing Imbellus and Admithub)
• Rebecca Kaden, managing partner, Union Square Ventures (a generalist fund with portfolio companies including TopHat, Quizlet, Duolingo)
• Andreata Muforo, partner, TLCom Capital (a generalist fund backing uLesson)

Deborah Quazzo, managing partner, GSV

How has edtech’s boom impacted your deal-making? Has the new interest from generalist investors made valuations too bubbly, or is the market growth helping everyone?

We met on Zoom with over 800 founding teams in COVID all over the world. We invested in 14 new companies and are just finishing rounds in two more. Valuation pressures are across tech sectors. I’d argue that education still lags average tech. The question for edtech is whether there is potential for a $100 billion company in the sector — will TAMs support it.

Edtech has traditionally had few exits. When do you expect to see that change? Are you optimistic about the boom in funding lately? On the other hand, what consolidation do you expect to see?

Exit volume is rising already with a wide range of strategic and financial buyers of edtech companies — something that didn’t exist before. You will see numerous high-value exits in the first half of 2021. It’s the public market “exits” that have really lagged and that I hope turns around in 2021 and 2022. There are numerous global companies that could go public and the addition of SPAC IPOs creates another positive dynamic.

Ashley Bittner, founding partner, Firework Ventures

How has edtech’s boom impacted your deal-making? Has the new interest from generalist investors made valuations too bubbly, or is the market growth helping everyone?

The boom has not directly impacted my deal-making. We tend to work with CEOs looking for category expertise and track record in the space. I do worry about overexuberance creating disappointing returns that sour interest in the sector. There are important TAM, business model, pedagogical and regulatory factors to consider in valuation.

Edtech has traditionally had few exits. When do you expect to see that change? Are you optimistic about the boom in funding lately? On the other hand, what consolidation do you expect to see? 

I think that will change shortly … I suspect many of the notable exits will come in future of work/human capital, consumer and in international markets for early education and K-12.

Jomayra Herrera, principal, Cowboy Ventures

How has edtech’s boom impacted your deal-making? Has the new interest from generalist investors made valuations too bubbly, or is the market growth helping everyone?
Edtech has a history of going in booms (when investors find new excitement for the sector) and busts (when investors realize the difficulties in scaling companies in the space). We happen to be going through a boom right now, which I think is an overall good thing for market innovation. While valuations across all sectors are expensive right now, I think more capital going toward innovating a sector that has an impact on everyone’s life will result in a net positive. We have a history of investing in the sector and will continue to do so as we see new, category-defining companies arise.

Edtech has traditionally had few exits. When do you expect to see that change? Are you optimistic about the boom in funding lately? On the other hand, what consolidation do you expect to see?
Edtech has had plenty of exits, but they are usually smaller and typically to PE firms or companies that have large distribution channels. There are very few large IPOs. I think we will start to see larger exits for three primary reasons: (I) accelerated consumer adoption of online and hybrid learning will increase market sizes, (II) as educators and institutions get more comfortable with leveraging technology in their practice we may see shorter sales cycle and more budget available, (III) many larger exits tend to be platforms as opposed to content providers (e.g., Canvas, 2U, Instructure) and with a higher standard for infrastructure there is a space for new competitors.
I expect even more consolidation in the bootcamp space. We’re already seeing it with Flatiron, Thinkful, General Assembly, Bloc and many others having already been acquired.

John Danner, managing partner, Dunce Capital

Services like video streaming, gaming, media-intensive advertising and marketing technology are putting more strain on bandwidth and backend latency than ever before due to the surge of online traffic in the last year. But for most organizations in today’s usage-based cloud world, that can represent a huge cost in compute power — or a major investment in a company’s own latency technology — to try to address that.

This has created an opportunity for startups building optimization tools. Today, one called Granulate — which has built software for organizations to handle those loads more intelligently and cost-effectively — is announcing a round of funding after seeing a huge boost in business in the last 10 months, with customer growth up 360% and revenues growing 570%.

The Tel Aviv startup has picked up $30 million, a Series B, led by Red Dot Capital Partners, with previous backers Insight Partners, TLV Partners, and Hetz Ventures, and new backer Dawn Capital also participating.

The timing of this Series B speaks to the demand in the market right now: it comes on the back of Granulate closing a $12 million Series A only in April last year. Investors say that its business growth is what prompted them to re-up so soon.

“Granulate’s unique technology and impressive growth since their last funding round reflects a rising market demand for their game-changing optimization solution,” said Yaniv Stern, Managing Partner at Red Dot Capital Partners, in a statement. “For companies facing rising infrastructure costs or focusing on operating cost reduction, Granulate offers a solution that can drive additional improvement regardless of any other solutions already deployed by their clients.”

Granulate is not disclosing its valuation with this latest round, which brings the total raised by the startup to $45 million. 

The opportunity in the market that Granulate is targeting is the fact that media-heavy content, and services like e-commerce that rely on efficient responsiveness on sites and apps to keep people from abandoning their shopping carts, are all on the rise.

But as companies look to keep customers happy with better quality services, they are also trying to keep an eye on margins and therefore want to keep infrastructure and computing costs low.

Granulate’s solution is software that sits at the server layer — either in the cloud or on-premises, as a customer prefers — that uses AI to detect workloads that a customer tags as important and prioritize them so that they work more efficiently. Granulate said that its software can improve response times by up to 40%, and throughput up to five times, while reducing costs by up to 60%. The company today has partnerships with AWS and Microsoft’s Azure and is in the “early stages” of talks with Google Cloud Platform.

Bigger tech companies like Netflix, Google and Amazon typically invest huge sums to build their own optimization technology, but it’s an area that smaller organizations (and you can still be huge while still being smaller than companies like Google) will not have the bandwith — pun intended — to address in the same way.

“We are aware of similar things going on inside of Netflix as what we have built,” Asaf Ezra, co-founder and CEO of Granulate, said in an interview. “But to us, it’s a testament of how large you need to be to address this issue and the talent you need to hire to address the lowest level issues.”

The company’s customers include at least one major retailer (which it can’t name), AppsFlyer, Period and PicsArt.

What will be interesting to watch is how the growth of 5G will affect the bigger problem: as Ezra notes, it will undoubtedly improve front-end latency.

“5g will not cannibalize Granulate,” he said. “In fact, when it becomes standard, the round trip time will be reduced for data, but the front end will be less of the ratio of the time, while the back-end latency will become more of the problem. 5g would solve only the access to your server, but not latency at the server itself.”

Longer term, it’s likely that Granulate will add more optimization and management solutions around those it already offers for latency, Ezra said, while also looking for ways to stand out apart from others in the same space. Competitors are in the process of some consolidation — witness Spot acquired by NetApp last June — so features based around a wider platform will likely be a key way to keep customers interested.

Amazon has started making deliveries to customers in Los Angeles using electric vans designed and built by Rivian.

The electric vans, which are part of Amazon’s 2040 climate pledge, won’t go into series production until the end of the year, according to an update Wednesday by the company. Amazon declined to reveal how many electric vans were in the test fleet.

The customer deliveries are part of continuous testing being conducted by Amazon and Rivian to measure performance as well as safety durability in various climates and geographies. Road tests first started more than four months ago. The current fleet of vehicles was built at Rivian’s headquarters in Plymouth, Michigan and can drive up to 150 miles on a single charge. Rivian engineers will continue to refine the vehicles for the start of production at its Normal, Illinois factory.

Image Credits: Amazon

In the meantime, these electric vehicles will continue to pop up on delivery routes in up to 15 additional cities in 2021. Eventually, Amazon plans to deploy at least 100,000 electric vans — the size of its order with Rivian — over the next several years.

Amazon and Rivian began testing vehicles four months prior to making customer deliveries, as part of the testing and development process. Amazon is also starting to modify its buildings to accommodate the new fleet of vehicles and has installed thousands of electric vehicle charging stations at its delivery stations across North America and Europe, the company said.

“We’re loving the enthusiasm from customers so far–from the photos we see online to the car fans who stop our drivers for a first-hand look at the vehicle,” Ross Rachey, director of Amazon’s global Fleet and products, said in a statement. “From what we’ve seen, this is one of the fastest modern commercial electrification programs, and we’re incredibly proud of that.”

The exterior of Rivian-built electric vans share some the same design features found in today’s gas-powered versions. There are a few more rounded edges and an overall sleeker look to the electric vans.

The real difference is in the electric architecture and the custom features that have been integrated into the vans, including, highway driving and traffic assist features; exterior cameras that can provide a 360-degree view for the driver via a digital display, a larger interior floor space in the cabin to help with drivers getting to and from the cabin compartment, surround tail lights for better braking visibility and three-level shelving and a bulkhead cargo compartment separating door. Amazon’s Alexa voice assistant is also an embedded feature.

Scratchpad is an early stage startup that wants to make it easier for sales people to get information into Salesforce by placing a notation layer on top of it. Today, it announced a $13 million Series A led by Craft Ventures with participation from Accel.

The company has now raised a total of $16.6 million including the $3.6 million seed round we covered in October. Co-founder and CEO Pouyan Salehi says that he wasn’t really looking to add capital, but the investors understood his vision and the money will help accelerate the product roadmap.

“To be honest, it actually wasn’t on our radar to raise again so soon after we raised what I consider a substantial seed. We had plenty of runway, but we started to see a lot of bottom-up user growth, this bottom-up motion just really started to take hold,” Salehi told me.

He says that lead investor David Sacks, who has built some successful startups himself, really got what they were trying to do, and the deal came together fairly easily. In fact, the company caught the attention of Craft because they were hearing about Scratchpad from their portfolio companies.

The bottoms up approach is certainly something we have seen with developer tools and with software for knowledge workers, but companies often take aim at sales through the sales manager, rather than trying directly to get salespeople to use a particular tool. This approach of getting the end users involved early allows them to gain traction with members of the sales team before approaching management about paid versions.

Traditionally, sales teams don’t like the tools that are thrust upon them. They are essentially databases and even with a visual interface, it doesn’t really match up with the way they work. Scratchpad gives them an interface like a spreadsheet or notes application that they are typically using to hack together a workflow, but with a direct connection to Salesforce.

What the paid tiers provide is a way to bring all this data together and get a bigger picture view of what’s happening on the sales team, and it helps ensure that people are using Salesforce because the data in Scratchpad links to the Salesforce database automatically.

The company has completed the initial work of building the individual salesperson’s workspace, but the next phase, and part of what this capital is going to fund, is building the team workspace and seeing how this data can flow from individuals to a team view to give management more insight into what their individual reps are doing. This includes notes, which usually don’t make it into Salesforce, but provide a lot of context about interactions with customers.

It’s resonating with thousands of users (although Salehi didn’t want to share an exact customer number just yet). Customers include Autodesk, Brex, Lacework, Snowflake and Twilio.

Sacks says that he liked the viral way the product has been spreading. “Once a rep starts using Scratchpad, two things tend to happen: it becomes a daily habit, and they share it with their teammates. This phenomena of viral spread is rare and indicates a very strong product-market fit,” he said in a statement.

Training AIs is essential to today’s tech sector, but handling the amount of data needed to do so is intrinsically dangerous. DARPA hopes to change that by tapping the encryption experts at Duality to create a hardware-accelerated method of using large quantities of data without decrypting it — a $14.5 million contract.

Duality specializes in what’s called fully homomorphic encryption. Without descending into the technical details, the main issue with everyday encryption methods — though it’s also sort of the point of them — is that they render the encrypted data totally unreadable, essentially noise unless you have the key to reverse the process. Doing that is computationally expensive with large datasets, and of course once the data is in the clear, it’s vulnerable to hackers, abuse, and other dangers.

There are methods, however, of encrypting data such that it can be analyzed and manipulated without decrypting it, and one of those is fully homomorphic encryption. Unfortunately FHE is even more computationally intense than ordinary encryption, ruling it out for applications where gigabytes or terabytes of data are called for. There are other methods of accomplishing the same ends but no one would cry if FHE suddenly became ten times easier.

DARPA is as interested as anyone else in this field, though it has considerably deeper pockets than your garden variety encryption wonk. This contract is part of a broader effort called DPRIVE, or Data Protection in Virtual Environments, and the stated goal is to develop a special purpose chip — an ASIC pre-assigned the code name TREBUCHET — to accelerate FHE by, hopefully, an order of magnitude or more.

The Duality team will bring in experts from USC, NYU, CMU, SpiralGen, Drexel University, and TwoSix Labs. The company has been in the game for a long time and has actually worked with DARPA before, so this is not new territory for them.

“Duality team members have been supporting DARPA-funded innovation and application of FHE for over a decade. Some members of our team developed the first ever prototype HE hardware accelerators under the DARPA PROCEED program starting in 2010 and are lead developers for the PALISADE open source FHE library, first developed for the DARPA SAFEWARE program in 2015,” said Duality Labs director and principal investigator for the contract, David Bruce Cousins, in a press release.

As you can see, they’re not short on acronyms either.

It’s not totally clear what the timeline is on this, but considering the state of the technologies involved I wouldn’t expect results before at least two or three years from now.

Apple is facing calls to beef up enforcement against fake reviews and rating scams after a developer took to social media to shine a light on unfair practices he’s forced to compete with as a result of fraudulent activity on the App Store not being rooted out by the tech giant.

Kosta Eleftheriou, one of the founders of the Fleksy keyboard app (who was acquihired by Pinterest in 2016), has — since March 2018 — been applying his expertise in autocorrect algorithms to make typing on the Apple Watch’s tiny screen not only possible but “simple, enjoyable and highly effective”, as Forbes’ reviewer put it.

His app, FlickType, has also been described by app reviewers as “astonishingly accurate”, a “fundamentally better keyboard” and “way faster” than the letter-by-letter scribble method Apple supports natively.

User reviews also include a large amount of glowing five-star ratings. The overall rating from users currently is 3.5 because a number of lower scores have pulled down the average. But if you take the time to dig in the developer can be seen responding consistently and constructively to issues being raised by users who leave lower scores.

Sometimes complaints are related to Watch platform issues outside his control (as Apple limits how third party text input can be accessed). Missing features are another common issue — and in many responses Eleftheriou responds by saying he’s added the setting the person was after (such as the ability to disable Auto-Correction) or highlighting a “brand new look & feel to make typing even easier”. Other times he thanks users for raising bugs that he says have now been fixed.

Anyone reading how specifically each complaint is addressed would be confident the developer of FlickType is working hard to make sure the app meets customers expectations. Even though the overall rating means other Watch keyboard apps are ‘rated’ higher overall.

The problem for Eleftheriou is all his genuine hard work is being undercut by copycat app makers who are able to leverage weak App Store enforcement to profit unfairly and at his expense.

The scam goes like this: A bunch of Watch keyboard apps are published that purport to have the same slick features as FlickType but instead lock users into paying eye-wateringly high subscription fees for what is, at best, a pale imitation.

You might expect quality to float to the top of the App Store but the trick is sustained by the clones being accompanied by scores of fake reviews/ratings which crowd out any genuine crowdsourced assessment of what’s being sold.

Fake reviews outnumber the real deal. It’s only if you take the time to read through the comments that alarm bells might start ringing…

“Wish I read the reviews before buying. I can’t even get it to work on my watch,” runs a one-star review of WatchKey, one of the rival apps Eleftheriou has complained about — which nonetheless has a higher overall rating than his app owing to also having a very large proportion of five-star reviews.

“We are so sorry for any inconvenienced caused. Please kindly email us to describe more about your scenario so that we can support you as soon as possible,” is WatchKey’s generic response to the one-star review.

“Terrible,” writes another one-star reviewer. “I bought this app to use T9 on my watch. I haven’t been able to get T9 to work on my watch, I’ve also reached out to the customer service email that’s listed on the app. But I haven’t gotten a response, I would advise to find a different app.”

WatchKey’s response to another abysmal verdict on its software? More platitudes: “Thank you for your feedback. Unfortunately, we haven’t received your email yet. Please kindly email us once more via support@vulcanlabs.co to describe more your scenario so we can support you as soon as possible.”

The pattern repeats across negative reviews. Even one of the ‘five’ star reviews warns: “You need to pay if you want to use the T9. They make you write a review to ‘unlock’ and then they ask for a payment.”

One component of the manipulation involves posting generic platitudes to do the bare minimum required by Apple to manage (genuine) negative reviews. The other is flooding listings with fake five star reviews to ensure the app’s overall rating remains high. Step 3: Profit.

Eleftheriou’s Twitter thread highlights some of what he says are “hundreds” of fake five star reviews which are being used to drive Watch owners toward downloading the malicious clones — using wording that refers to non-existent features or references things you’d be doing on other types of devices (suggesting the text may have been cut and pasted from genuine reviews elsewhere).

A quick Google search for ‘buy ios reviews’ returns a staggering 643M results — including ads for companies touting “app reviews, installs and ratings [as] the best way to improve the rank of your apps at Appstore and Google Play” and selling “high quality iOS app reviews with ratings for $2.5… from 100% Real Users”.

Clearly selling fake reviews is a booming business — which in turn speaks to the woeful lack of effective enforcement.

In an extra fake kicker, Eleftheriou found that one of the scammy competitors had even ripped off his own app promo video — which was demoing the features offered by FlickType — and used it in ads targeting app consumers on Facebook and Instagram.

Facebook does have policies against third-party infringement (under section 4 of its prohibited content policy) — but you might as well whistle for pro-active enforcement from the adtech giant. It only acts when it gets a complaint of infringement so preventing abuse of his marketing materials would require Eleftheriou to spend even more of his time hunting for and reporting the malicious ads ripping off his stuff. (“I did report and Facebook did eventually take it down. But… I knew this was not going to be any sort of lasting relief,” he confirms.)

Of course the really big kicker here is that Apple’s rules for developers clearly stipulate that submitting fraudulent reviews is a violation of the developer program licence agreement.

Its App Store review guidelines also warn that developers who attempt to cheat the system (such as by manipulating ratings) may only have their apps removed from the App Store — and could be expelled from Apple’s developer program entirely.

So — to put it politely — it’s not a good look for Apple that an indie developer with proven expertise and reputation is having to spend so much resource fighting App Store scams because its own enforcement has failed to stamp them out. To the point where he feels the only path forward is to resort to a public call out on social media to highlight systematic enforcement failures.

Eleftheriou tells TechCrunch he decided to raise the complaint on social media after what he describes as “simply depressing results” from engaging with Apple’s official ‘app dispute’ channel.

“They put you in contact with the other developer in question, and oversee the thread while they hope you will resolve the issue with the other party directly,” he explains. “The scammers I complained about in that dispute weren’t even the bigger scammers I mention in my Twitter thread. Yet, the complaint I had with them barely got addressed, and there was no response from Apple whatsoever on the issue of the fake ratings and reviews. Simply a ‘if we don’t hear back from you very soon we consider the matter resolved’. We even reached out to Apple privately after that but got no response.”

“What was most impressive to me, was that in the presence of the Apple legal team, the scammers did not feel threatened one bit — almost as if they know Apple is unlikely to do anything,” he adds. “In my view, Apple simply does not devote enough resources on this area.”

Since raising the issue on Twitter, Eleftheriou has reported a partial win — in that some of the apps he had complained about have been taken down from the App Store. (At the time of writing Apple has not made any public statement confirming any action.)

However the developer accounts do not appear to have been banned at this time. “It’s astounding that even pulling a scam like that, doesn’t get your developer account revoked!” Eleftheriou told us. “I mean if that didn’t do it, what would??”

We reached out to Apple about this issue and it provided some background information related to its developer policies — which forbid attempts to cheat the system (such as by trying to trick the review process, steal user data, copy another developer’s work, or manipulate ratings or App Store discovery), among other relevant provisions.

We also asked Apple if it’s considering any policy changes in light of the issues raised by Eleftheriou — and will update this post with any response.

“The main issue in my view is not the cloning here. I didn’t even care that they were using my name, or made their screenshots similar to mine etc. If only there was a system to better prevent fake ratings and reviews, none if this would matter,” Eleftheriou also told us. “People would be able to collectively protect themselves through their 1-star ‘votes’ but when that system is allowed to get rigged, everything else goes out the window.

“The promise of ratings and reviews you can trust does not exist any more which erodes consumer trust at an ever accelerating pace,” he adds. “I did a Google search to see what those ‘companies’ look like, if you want to buy ratings and reviews. These are proper, full blown companies, with support systems, and claims that their ratings won’t get deleted by Apple, unlike their competitors. It was shocking to see that this is an industry that is thriving.”

The issue of fake reviews certainly goes far beyond Apple’s App Store. And is a very insidious one.

Fake reviews are pretty much a universal experience across the Internet — whether you’re trying to buy stuff on Amazon, looking at places to visit on Tripadvisor or trying to find a local dentist with the help of reviews on Google Maps (in short; don’t) — given how many platforms now incorporate user reviews.

But the issue does look especially toxic for Apple.

A core part of the USP for its App Store is the claim that Apple’s review process sums to a higher quality, more trustworthy experience than alternative marketplaces that aren’t so carefully overseen.

So a failure to do more to enforce against review scams and rating manipulations risks taking a lot more shine off Apple’s brand than Cupertino should be comfortable with.

Simply put: Consumers expect a higher standard from Apple. That’s why they’re willing to pay a premium for its products. Under-resourcing App Store review and enforcement thus looks like a false economy — not least because it risks driving quality developers like Eleftheriou away.

If a developer with so much pedigree can’t reliably sell his wares on the App Store what does that say about Apple’s ‘premium’ marketplace?

The issue is also likely to be increasingly on the radar of consumer watchdogs and regulators in the coming years. The European Union, for example, is planning to bake binding transparency and reporting requirements into incoming platform regulations — as it seeks to promote fairness and accountability in digital businesses.

While an EU Omnibus Directive that came into force at the start of last year — with a two year deadline for Member States to transpose it — aims to beef up consumer rights through enhanced enforcement and transparency requirements — including directly addressing the issue of fake reviews by placing an obligation on traders to take ‘reasonable and proportionate’ steps to ensure reviews are genuine, among other measures.

In the EU platforms will therefore start being required to ‘justify’ their enforcement failures vis-a-vis fake reviews. And if they can’t, well, the regime includes tough ‘GDPR-level’ fines for breaches of consumer protection law. So the costs won’t only be reputational, as currently.

The UK’s Competition and Markets Authority, meanwhile, has also been cracking down on the trade in fake reviews — specifically targeting Facebook, Instagram and eBay in recent years. Further attention to the issue from UK oversight bodies, which are now operating independently of the EU, also seems likely.

Consumer payments is by no means a solved problem (I’ll trigger one hundred blockchain people if I say otherwise), but it sure as heck a pretty improved one. Checkout is a breeze with modern tools ranging from Stripe and PayPal to Fast and Rapyd to Apple and Google Pay. If you happen to need financing, on-the-spot lending platforms like Affirm, which recently debuted on NASDAQ and is currently valued at $26 billion, will extend that financing nearly instantaneously.

Then you head over to B2B payments … and you recoil in horror as you migrate away from a utopian future of promise to the ruins of an antiquated past. A mash-mash of payment methods from paper checks to wire transfers get sent against invoices, none of which are automatically synchronized across financial information systems. Financing is complicated and offered by a bank through — gasp — an actual phone call. Shudder, because there probably involves a fax machine somewhere in that loop.

Balance is looking to modernize all of it, as fast as possible.

Balance offers efficient B2B payments that allows merchants to offer a variety of payment methods including ACH and bank wires as well as a variety of payment terms including payment on delivery, net payment terms, and payment by milestone. Behind the scenes, Balance underwrites the terms of those transactions requiring financing by evaluating the risk of the customer, the merchant, and the specific payment terms selected. Balance is built on top of Stripe and offers all of Stripe’s credit card payment options, but then extends far beyond them.

Balance’s checkout flow includes options to pick financing terms and means of payment. Photo via Balance.

Take, for instance, your typical SaaS offering. Typically, employees will buy individual seat licenses to the software with their corporate cards (managed maybe with Brex), a payment facilitated through Stripe or PayPal. As a company spends more and more on that particular software, one of the two parties will reach out and negotiate a comprehensive enterprise rate for single payment. It is here that Balance becomes key. That full payment could be done on Balance, with net 30 payment terms using a bank wire all automatically synced against an invoice offered by the service to the customer.

B2B payments is a massive market measured in the tens of trillions globally, which is perhaps one reason why Balance has an all-star fintech investing syndicate behind its seed round. It raised $5.5 million from Tal Morgenstern of Lightspeed, Stripe and Max Levchin through his SciFi VC. Lightspeed previously backed Levchin’s Affirm. Balance was part of the summer 2020 batch of Y Combinator, although declined to appear at demo day and remained in stealth as its seed round had already been locked in. UpWest Labs, which invests in Israeli companies heading to the U.S. market, also invested.

Balance was founded by Bar Geron and Yoni Shuster in late 2019 to early 2020 and came through their experience working at PayPal together. “PayPal is a key part of the story,” Geron said, describing how the duo learned about the consumer payments world. Shuster stayed on at PayPal, while Geron headed to Behalf, a company that also works on B2B financing and cash flow management. Geron said that Behalf was a “pain point solution” to the challenge of offering net payment terms, but that the company didn’t attempt to digitize the mostly analog model of payments. Geron saw an opportunity and linked up with Shuster to take a more expansive approach to the problem.

Balance founders Bar Geron and Yoni Shuster. Photo via Balance.

Our dream is to “make B2B payments as easy as car payments,” Geron said. “What we wanted to do is to make it as easy as Stripe … take a snippet of code and just put it on your site.” With that in place, Balance’s other features like invoice syncing and financing become instant features.

Through Y Combinator, the team learned that other tech companies constantly confronted these problems, and that they would serve as useful first customers. The critical customers though in Geron’s mind are B2B marketplaces where there are few solutions to synchronize the complexities of marketplace transactions. Geron says that “we have several customers in that space.” Another key customer segment are service providers who work on milestone-based payments, such as 20% upfront and 80% on delivery. “We automated [all that] and put it online,” he said.

Balance makes money on what is known as a “factoring fee” where it pays the merchant ahead of the payment from the customer. Geron noted its 2%, although the actual rate varies based on the risk involved.

The two founders are based in Israel, although like most startups these days, they have a distributed workforce.

Beam has raised a $9.5 million Series A round. The company is working on a new web browser that completely rethinks the way you start a web session and browse the web. The startup is founded by Dom Leca and Sébastien Métrot. Dom Leca previously worked on Sparrow, an email app with an opinionated design.

Pace Capital is leading today’s funding round. Several business angels are also participating, such as Christan Reber, Harry Stebbings and Albert Wenger. Existing investors Spark, Amaranthine, C4V and Alven are also investing once again.

Beam is also announcing that it is acquiring RadBlock, an ad blocker for Safari.

If you’re not familiar with Beam, I encourage you to read my previous article on the company — I describe how the product is going to work and the reasoning behind it.

In short, Beam is a web browser focused on knowledge. Many people spend a ton of time mindlessly browsing the web. When you close the last tab, you realize that you didn’t learn much and you don’t have any note.

You can bookmark stuff, but chances are you either don’t use bookmarks or you never check them. And if you want to find something again, you often end up entering a Google query and starting from scratch.

With Beam, every time you search for something, it creates a new session. Each session is represented by a note card. When you’re done browsing, the note card summarizes your findings. Your search query is the title of the card, the most important sites appear near the top of the note. Irrelevant content is listed at the end of the note.

You can then add text, remove links, reorganize stuff and create a full-fledged note. Basically, you end up creating comprehensive notes without even realizing it.

Beam is an ambitious project and the company will have to iterate on that initial idea. But it sounds like a great way to start using the web as a kid. You get to learn more about your passions based on what you do on the web.

Right now, there are seven people working for Beam. The company is going to hire machine learning and natural language processing experts as well as more developers.

The rush of founders and investors from the West Coast to states like Texas and Florida are the precursor for something bigger, a movement decades in the making.

The future of startups is a decentralized, global ecosystem. Where wealth and knowledge isn’t concentrated, but shared and open. Where there aren’t capitals, but networks.

Miami has had a head start.

Let’s set the scene. Miami already ranks among the world’s most prominent (nontraditional) startup hubs, and 2020 saw more big names in tech migrate to Florida. Miami Mayor Francis Suarez has been spurring on the influx with an extremely popular Twitter campaign.

These are signs of what globally minded business savvies already know is true. The world is ready for Miami as the pioneer of future tech hubs. Because the city isn’t just a launching pad for U.S. startups with interests in Latin America. It’s a strategic landing pad for global startups who want a presence in the Western Hemisphere.

Across the globe, international opportunities for founders are growing: There is greater connectivity and greater potential for emerging market entrepreneurs to produce life-changing products.

Where will those entrepreneurs want to have a presence? At the heart of global investor and entrepreneur networks, in true melting pots, and at crossroads between mature and emerging markets.

That’s why Miami is in focus right now, but it’s only the first of many cities that will soon be a part of this global trend.

Here’s why Miami is spearheading this new global grid of startup ecosystems.

1. Global tech is no longer concentrated — it’s fragmented across the world

Two-thirds of the world’s top startup ecosystems are outside of North America. Not only that, but 70% of professionals believe that technology power is dispersing away from Silicon Valley. The Bloomberg Innovation Index bumped the United States down from top spot in 2013, to No. 9 in 2020. Tech knowledge and power is growing in Europe and Asia, flourishing in cities like Shanghai and Berlin.

Similarly, microbusinesses will increase (we’re already seeing a surge in new businesses being created around the world), and less of them will have zip codes.

So, when big businesses or VC firms leave/explore outside Silicon Valley, or the United States entirely, they’re not building more of the same, they’re showing us that Silicon Valley is no longer the only M.O. The emerging M.O. is borderless and connected: an inclusive network. It gives investors greater access to more distant business opportunities. It allows entrepreneurs to choose the most convenient place to build a company — and save huge amounts of overhead — while also sharing more expertise.

2. You can build global companies from emerging hubs

Startups in emerging markets have always received a mere fraction of the funding available to U.S. startups. Which means that when money dries up across the board, they are under even more pressure to come up with the most innovative solutions just to survive.

Empowering these local entrepreneurs is the fact that today’s problems need local solutions — from health to logistics, these verticals all require inherent knowledge of domestic infrastructure and services.

The potential here is huge. Emerging markets house the greatest world populations — China, India, Brazil, Mexico, Nigeria… — and language and connectivity barriers are slowly melting away, with mobile internet use surging.

Investors are already perking up to the enormous value of emerging markets, from Asia to Latin America, especially as the strength of the U.S. dollar drops. Just in Q4 2020, VC investment in Latin America saw a 93% growth over Q4 2019, according to Pitchbook.

What does this mean for emerging tech hubs? First, there will be more of them, more distributed and with more funding. Second, we’re going to see a stronger flow of emerging market startups serving customers in the United States to offer services with proven traction, rather than vice versa.

The disruptive products these companies develop and test on millions of users back home find fertile markets not only in the United States, but in other emerging markets with similar needs. Many such companies will want to use the United States as a strategic operating base while keeping the engineering teams in their HQs.

That’s because our founders, accelerators, investors and support organizations have historic experience in internationalization, as well as connections across the globe. So where will these foreign companies land — will they be interested in Denver or Austin, or rather a well-connected city that has made a name for itself as an international hub?

Miami is a landing pad where foreign startups can access both the United States and emerging markets with comparable trends. The city has made strides to position itself at the intersection between mature and emerging markets, creating an ecosystem that is inclusive (half of the population is foreign-born), prioritizes collaboration over individualism and encourages the arrival of newcomers. As such, it will be a (working) model for diverse startup cities.

3. The money will follow

Amid talks of a Silicon Valley “exodus,” some have been quick to point out that the hub has always held strong because of a key feature: access to capital.

But investors will follow the best opportunities. Which means that tech investment will only become more global. Put simply, the concentration of wealth in Silicon Valley is incompatible with the growing demand for tech across the globe. Silicon Valley isn’t going to die, but the pie is getting bigger. And more of that capital is already going to emerging tech hubs.

The symptoms include U.S. VC giants branching into emerging regions — like Sequoia opening its first European office, and SoftBank funneling billions into Latin America.

This means U.S. investors will favor regions where they can easily connect with global opportunities, like Miami. Last year, VC investment in the Miami region rose to over $2.2 billion, despite the pandemic (compared to $1.4 billion in all of Spain). But not only that — there is a lot of funding coming from investors in emerging markets.

In Latin America, local funders play a huge role in supporting promising companies. In 2019, almost 40% of the record-breaking $4.6 billion VC dollars invested in Latin America involved a co-investment with at least one Latin American investor. And from what we’re seeing, regional investors are increasingly funding U.S.-based organizations.

They — and others like them — will want to find ecosystems where they can connect with local and foreign founders with whom they can foster partnerships across markets.

Places like Miami need to house these kinds of networks. South Florida already has globally minded accelerators and startup programs like 500 Startups, Plug & Play and TheVentureCity; and VC firms with international networks, such as Ocean Azul, Endeavor Catalyst, Starlight Ventures, Level VC and now SoftBank.

4. Miami is better positioned for the future needs of startups

I’m going to end by underscoring the case for Miami as the U.S. pioneer of international connector startup hubs.

Startups build more with less every five years, and going international from day one, allows them to test their products in more markets straight away. This is feasible given worldwide level of connectivity, and helps to be in an environment that is constantly looking outward, beyond our borders.

It also helps to be in a time zone that is shared by much of South America and is only five hours behind London (San Francisco is only in the same time zone as the rest of the United States and Vancouver).

People who uproot their entire lives to seek success elsewhere want to be welcomed. They appreciate that the mayor of the city is happy to meet them for a “cafecito,” and that other founders are genuinely enthusiastic at their arrival. They don’t want to land in an expensive city where making it big tends to require connections, money and background.

Miami is reflective of the future of global startup hubs. It won’t be the next Silicon Valley, because we don’t need another one. As the entrepreneurial world flourishes in every corner of the globe, emerging market companies will be conquering markets across the United States and Europe, and fortress cities will make way for international networks.

Events — when they haven’t been cancelled altogether in the last 12 months due to the global health pandemic — have gone virtual and online, and a wave of startups that are helping people create and participate in those experiences are seeing a surge of attention, and funding.

In the latest development, New York video startup TouchCast — which has developed a platform aimed at companies to produce lifelike, virtual conferences and other events without much technical heavy-lifting — has picked up funding of $55 million, money that co-founder and CEO Edo Segal said the startup will use to build out its services and teams after being “overrun by demand” in the wake of Covid-19.

The funding is being led by a strategic investor, Accenture Ventures — the investment arm of the systems integrator and consultancy behemoth — with Alexander Capital Ventures, Saatchi Invest, Ronald Lauder and other unnamed investors also participating. The startup up to now has been largely self-funded, and while Segal isn’t disclosing the valuation he said it was definitely in the 9-figures (that is, somewhere in the large region of hundreds of millions of dollars).

Accenture has been using TouchCast’s technology for its own events, but that is likely just one part of its interest: Accenture also has a lot of corporate customers that tap it to build and implement interactive services, so potentially this could lead to more customers into TouchCast’s pipeline.

(Case in point: my interview with Segal, over Zoom, found me speaking to him in the middle of a vast aircraft hangar, with a 747 from one of the big airlines of the world — I won’t say which — parked behind him. He said he’d just come from a business pitch with the airline in question.)

A lot of what we have seen in virtual events, and in particular conferences, has to date has been, effectively, a managed version of a group call on one of the established videoconferencing platforms like Zoom, Google’s Hangout, Microsoft’s Teams, Webex, and so on.

You get a screen with participants’ individual video streams presented to you in a grid more reminiscent of the opening credits of the Brady Bunch or Hollywood Squares than an actual stage or venue.

There are some, of course, who are taking a much different route. Witness Apple’s online events in the last year, productions that have elevated what a virtual event can mean, with more detail and information, and less awkwardness, than an actual live event.

The problem is that not every company is Apple, able to afford much less execute Hollywood-level presentations.

The essence of what TouchCast has built, as Segal describes it, is a platform the combines computer vision, video streaming technology and natural language processing to let other organizations create experiences that are closer to that of the iPhone giant’s than they are to a game show.

“We have created a platform so that all companies can create events like Apple’s,” Segal said. “We’re taking them on a journey beyond people sitting in their home offices.”

Yet home office remains the operative phrase: people (the organizers and the on-stage participants) still use basic videoconferencing solutions like Zoom and Teams — in their homes, even — but at the back end, TouchCast is taking those videos, using computer vision to trim out the people and place them into virtual “venues” so that they appear as if they are on stage in an actual conference.

These venues come from a selection of templates, or the organiser can arrange for a specific venue to be shot and used. In addition to the actual event, TouchCast then also provides tools for audience members to participate with questions and to chat to each other. As the event is progressing, TouchCast also produces transcriptions and summaries of the key points for those who want them.

And while Segal said that TouchCast is not planning to make this a consumer-focused product, not even on the B2B2C side, it’s preparing a service so that when business conference organisers do want to hold a music segment with a special guest, those can be incorporated, too.

TouchCast’s growth into a startup serving an audience of hungry event planners has been an interesting pivot that is a reminder to founders (and investors) that the right opportunities might not be the ones you think they are.

You might recall that the company first came out of stealth back in 2013, with former TechCrunch editor Erick Schonfeld one of the co-founders.

Back then, the company’s concept was to supercharge online video, by making it easier for creators to build in interactive elements and other media into their work, to essentially make videos closer to the kind of interactivity and media mix that we find on webpages themselves.

All that might have been too clever by half. Or, it was simply not the right time for that technology. The service never made many waves at all, and one of my colleagues even assumed it had deadpooled at some point.

Not at all, it turns out. Segal (a serial entrepreneur who also used to work at AOL as VP of emerging platforms — AOL being the company that acquired TechCrunch and eventually became a part of Verizon) notes that the technology that TouchCast is using for its conferencing solution is essentially the same as what it built for its original video product.

After launching an earlier, less feature-rich version of what it has on the market today, it took the company about six months to retool it, adding in more mixed reality customization via the use of Unreal Engine, to make it what it is today, and to meet the demand it started to see from customers, who approached the startup after attending events held by others using TouchCast.

“It took us eight years to get to our overnight success story,” Segal joked.

Figures from Grand View Research cited by TouchCast estimate that virtual events will be a $400 billion business by 2027, and that has made for a pretty large array of companies building out experiences that will make those events worth attending, and putting on.

They include the likes of Hopin and Bizzabo — both of which have recently also raised big rounds — but also more enhanced services from the big, established players in videoconferencing like Zoom, Google, Microsoft, Cisco and more.

It’s no surprise to see Accenture throwing its hat into that ring as a backer of what it’s decided is one of the more interesting technology players in that mix. The reason is because many understand and now accept that — similar to working in general — it’s very likely that even when we do return to “live” events, the virtual component, and the expectation that it will work well and be compelling enough to watch, is here to stay.

“Digital disruption, distributed workforces, and customer experience are the driving forces behind the need for companies to transform how they do business and move toward the future of work,” said Tom Lounibos, managing director, Accenture Ventures, in a statement. “For organizations to harness the power of virtual experiences to deliver business impact, the pandemic has shown that quality interactions and insights are needed. Our investment in Touchcast demonstrates our commitment to identifying the latest technologies that help address our clients’ critical business needs.”