Police in Minneapolis obtained a search warrant ordering Google to turn over sets of account data on vandals accused of sparking violence in the wake of the police killing of George Floyd last year, TechCrunch has learned.

The death of Floyd, a Black man killed by a white police officer in May 2020, prompted thousands to peacefully protest across the city. But violence soon erupted, which police say began with a masked man seen in a viral video using an umbrella to smash windows of an auto-parts store in south Minneapolis. The AutoZone store was the first among dozens of buildings across the city set on fire in the days following.

The search warrant compelled Google to provide police with the account data on anyone who was “within the geographical region” of the AutoZone store when the violence began on May 27, two days after Floyd’s death.

These so-called geofence warrants — or reverse-location warrants — are frequently directed at Google in large part because the search and advertising giant collects and stores vast databases of geolocation data on billions of account holders who have “location history” turned on. Geofence warrants allow police to cast a digital dragnet over a crime scene and ask tech companies for records on anyone who entered a geographic area at a particular time. But critics say these warrants are unconstitutional as they also gather the account information on innocent passers-by.

TechCrunch learned of the search warrant from Minneapolis resident Said Abdullahi, who received an email from Google stating that his account information was subject to the warrant, and would be given to the police.

But Abdullahi said he had no part in the violence and was only in the area to video the protests when the violence began at the AutoZone store.

The warrant said police sought “anonymized” account data from Google on any phone or device that was close to the AutoZone store and the parking lot between 5:20pm and 5:40pm (CST) on May 27, where dozens of the people in the area had gathered.

When reached, Minneapolis police spokesperson John Elder, citing an ongoing investigation, would not answer specific questions about the warrant, including for what reason the warrant was issued.

According to a police affidavit, police said the protests had been relatively peaceful until the afternoon of May 27, when a masked umbrella-wielding man began smashing the windows of the AutoZone store, located across the street from a Minneapolis police precinct where hundreds of protesters had gathered. Several videos show protesters confronting the masked man.

Police said they spent significant resources on trying to identify the so-called “Umbrella Man,” who they say was the catalyst for widespread violence across the city.

“This was the first fire that set off a string of fires and looting throughout the precinct and the rest of the city,” the affidavit read. At least two people were killed in the unrest. (Erika Christensen, a Minneapolis police investigator who filed the affidavit, was not made available for an interview.)

Police accuse the Umbrella Man of creating an “atmosphere of hostility and tension” whose sole aim was to “incite violence.” (TechCrunch is not linking to the affidavit as the police would not say if the suspect had been charged with a crime.) The affidavit also links the suspect to a white supremacist group called the Aryan Cowboys, and to an incident weeks later where a Muslim woman was harassed.

Multiple videos of the protests around the time listed on the warrant appear to line up with the window-smashing incident. Other videos of the scene at the time of the warrant show hundreds of other people in the vicinity. Police were positioned on rooftops and used tear gas and rubber bullets to control the crowds.

Law enforcement across the U.S. are increasingly relying on geofence warrants to solve crimes where a suspect is not known. Police have defended the use of these warrants because they can help identify potential suspects who entered a certain geographic region where a crime was committed. The warrants typically ask for “anonymized information,” but allow police to go back and narrow their requests on potential suspects of interest.

When allowed by law, Google notifies account holders of when law enforcement demands access to the user’s data. According to a court filing in 2019, Google said the number of geofence warrants it received went up by 1,500% between 2017 and 2018, and more than 500% between 2018 and 2019, but has yet to provide a specific number of warrants

Google reportedly received over 180 geofence warrants in a single week in 2019. When asked about more recent figures, a Google spokesperson declined to comment on the record.

Civil liberties groups have criticized the use of dragnet search warrants. The American Civil Liberties Union said that geofence warrants “circumvent constitutional checks on police surveillance.” One district court in Virginia said geofence warrants violated the constitution because the majority of individuals whose data is collected will have “nothing whatsoever” to do with the crimes under investigation.

Reports in the past year have implicated people whose only connection to a crime is simply being nearby.

NBC News reported the case of one Gainesville, Fla. resident, who was told by Google that his account information would be given to police investigating a burglary. But the resident was able to prove that he had no connection to the burglary, thanks to an app on his phone that tracked his activity.

In 2019, Google gave federal agents investigating several arson attacks in Milwaukee, Wis. close to 1,5000 user records in response to geofence warrant, thought to be one of the largest grabs of account data to date.

But lawmakers are beginning to push back. New York state lawmakers introduced a bill last year that would, if passed, ban geofence warrants across the state, citing the risk of police targeting protesters. Rep. Kelly Armstrong (R-ND) grilled Google chief executive Sundar Pichai at a House Judiciary subcommittee hearing last year. “People would be terrified to know that law enforcement could grab general warrants and get everyone’s information everywhere,” said Armstrong.

Abdullahi told TechCrunch that he had several videos documenting the protests on the day and that he has retained a lawyer to try to prevent Google from giving his account information to Minneapolis police.

“Police assumed everybody in that area that day is guilty,” he said. “If one person did something criminal, [the police] should not go after the whole block of people,” he said.

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On Friday just past midnight, I stumbled across a Clubhouse room hosted by a well-known figure in the Chinese startup community, Feng Dahui. At half-past midnight, the room still had nearly 500 listeners, many of whom were engineers, product managers, and entrepreneurs from China.

The discussion centered around whether Clubhouse, an app that lets people join pop-up voice chats in virtual rooms, will succeed in China. That’s a question I have been asking myself in recent weeks. Given the current hype swirling in Silicon Valley about the audio social network, it’s unsurprising to see well-informed, tech-savvy Chinese users start flocking to the platform. Demand for invitations in China runs high, with people paying as much as $100 to buy one from scalpers.

Many users I talked to believe the app won’t reach its full potential or even just find product-market fit in China before it gets banned. Indeed, a handful of well-attended Chinese-language rooms touch on topics that are normally censored in China, from crypto trading to protests in Hong Kong.

If it’s of any consolation, Clubhouse clones and derivatives are already in the making in China. A Chinese entrepreneur and blogger who goes by the nickname Herock told me he is aware of at least “dozens of local teams” that are working on something similar. Moreover, voice-based networking has been around in China for years, albeit in different forms. If Clubhouse is blocked, will any of its alternatives go on to succeed?

Information control

A direct Clubhouse clone probably won’t work in China.

A few factors dim its prospects in the country, which has nearly one billion internet users. The major appeal of Clubhouse is the organic flow of conversations in real time. But “how could the Chinese government allow free-flowing discussions to happen and spread without control,” a founder of a Chinese audio app rhetorically asked, declining to be named for this story. Video live streaming in China, for example, is under close regulatory oversight limiting who can speak and what they can say.

The founder then cited a famous online protest back in 2011. Thousands of small vendors launched a cyber attack on Alibaba’s online mall over a proposed fee hike. The tool they used to coordinate with one another was YY, which started out as a voice-based chatting software for gamers and later became known for video live streaming.

“The authorities dread the power of real-time audio communication,” the founder added.

There are signs that Clubhouse may already be the target of censorship. While Clubhouse works perfectly in China without the need for a virtual private network (VPN) or other censorship-circumvention tools (at least for the moment), the iOS-exclusive app is unavailable on China’s App Store. Clubhouse was removed there shortly after its global release in late September, app analytics firm Sensor Tower said.

Currently, in order to install Clubhouse, Chinese users need to install the app by switching to an App Store located in another country, which further limits the product’s reach to users who have the means of using a non-local store.

It’s unclear whether Apple preemptively delisted Clubhouse in anticipation of government action, given that any later removal of a major foreign app in China could stir up accusations of censorship. Alternatively, Clubhouse might have voluntarily pulled the app itself knowing that any form of real-time broadcasting won’t go unchecked by Chinese regulators, which would inevitably compromise user experience.

Entering China could be way down on Clubhouse’s to-do list given the traction it is gaining elsewhere. The app has seen about 3.6 million worldwide installs so far, according to Sensor Tower estimates. The majority of its lifetime installs originate in the United States, where the app has seen nearly 2 million first-time downloads, followed by Japan and Germany both with over 400,000 downloads.

Clubhouse elites

The improbability of uncensored and open discussions on the Chinese internet may explain why the market hasn’t seen its own Clubhouse. But even if an app like Clubhouse is allowed to exist in China, it may not reach the same massive scale across the country as Douyin (TikTok’s Chinese version) and WeChat did.

The app is “elitist,” sort of like a voice version of Twitter, said Marco Lai, CEO and founder of Lizhi, a NASDAQ-listed Chinese audio platform. So far, Clubhouse’s invite-only model has confined its American user base largely to the tech, arts and celebrity circles. Herock observed that its Chinese demographics mirror the trend, with users concentrated in fields like finance, startup and product management, as well as crypto traders.

Even among these users though, there is the question of free time. The other night, I was up at midnight eavesdropping on a group of ByteDance employees. In fact, I’ve mostly been on Clubhouse in the late evenings after work, because that’s when user activity in China appears to peak. “Who in China has that much time?” said Zhou Lingyu, founder of Rainmaker, a Chinese networking community for professionals, when I asked whether she thinks Clubhouse will attract the masses in China.

While her remark may not apply to everyone, the tech-centric, educated crowds in China — the demographic that Clubhouse appears to be targeting or at least attracting — are also those most likely to work the notorious “996” schedule, the long hours practice common in Chinese tech companies. The type of “meaningful conversations” that Clubhouse encourages is desirable, but the app’s real-time, spontaneous nature is also a lot to ask of 996 workers, who likely prefer more efficient and manageable use of time.

Moderators may also need material incentives to remain active aside from the pure passion in connecting with other human beings. One potential solution is to turn quality conversations into podcast episodes. “Clubhouse is for one-off, casual conversations. Those who produce high-quality content would want to record the conversation so it could be for repeatable consumption later on,” said Zhou.

Chinese counterparts

In China, audio networking has played out in slightly different shapes. Some companies place a great deal of focus on gamification, filling their apps with playful, interactive features.

Lizhi’s social podcast app, for example, is not just about listening. It also lets listeners message hosts, tip them through virtual gifts, record themselves shadowing a host who is reading a poem, compete in online karaoke contests, and more.

Interaction between hosts and listeners happens in a relatively orchestrated way, as Lizhi’s operational staff design campaigns and work with content creators behind the scenes to ensure content quality and user engagement. Clubhouse growth, in comparison, is more organic.

“The Chinese products focus more on spectatorship and performance, not so much translating natural social behavior in real life into a product. Clubhouse features are simple. It’s more like a coffee shop,” Lai said.

Lizhi’s other voice product Tiya is considered a close answer to Clubhouse, but Tiya’s users are young — the majority of whom are 15-22 years old — and it focuses on entertainment, letting users chat via audio while they play games and watch sports. That also feeds the need for companionship.

Dizhua, which launched in 2019, is another Chinese app that’s been compared to Clubhouse. Unlike Clubhouse, which relies on people’s existing networks for room discovery, Dizhua matches anonymous users based on their declared interests. Clubhouse conversations can start and die off casually. Dizhua encourages users to pick a theme and stay engaged.

“Clubhouse is a pure audio app, with no timeline, no comment, et cetera,” said Armin Li, an expert in residence with a venture capital firm in China. “It’s a kind of casual and drop-in style for the scenarios where user needs are not clear like hangout or multitasking … Its high community participation, content quality, and user quality are unseen in Chinese voice products.”

The bottom line is: The conversations that happen on Chinese platforms are monitored by content auditors. User registration requires real-name verification on internet platforms in China, so there’s no real anonymity online. The topics that users can discuss are limited, often leaning towards the fun and innocuous.

Why do people in China join Clubhouse anyway? Some, like me, joined out of FOMO. Entrepreneurs are always scouring for the next market opportunity, and product managers from internet giants hope to learn a thing or two from Clubhouse that they could apply to their own products. Bitcoin traders and activists, on the other hand, see Clubhouse as a haven outside the purview of Chinese regulators.

Technical support

One thing I find impressive about Clubhouse is how smoothly it works in China. Even when a foreign app isn’t banned in China, it often loads slowly due to its servers’ distance from China.

Clubhouse doesn’t actually build the technology supporting its enormous chat groups that sometimes reach thousands of participants. Instead, it uses a real-time audio SDK from Agora, two sources told me. The South China Morning Post also reported that. When asked to verify the partnership, Agora CEO Tony Zhao said via email he can’t confirm or deny any engagement between his company and Clubhouse.

Rather, he emphasized Agora’s “virtual network,” which overlays on top of the public internet running on more than 200 co-located data centers worldwide. The company then uses algorithms to plan traffic and optimize routing.

Noticeably, Agora’s operations teams are mainly in China and the U.S., a setup that inevitably raises questions about whether Clubhouse data are within the scope of Chinese regulations.

With real-time voice technology providers like Agora, opportunists are able to build Clubhouse clones quickly at low costs, Herock said. Chinese entrepreneurs are unlikely to copy Clubhouse directly due to local regulatory challenges and different user behavior, but they will race to crank out their own interpretations of voice networking before the hype around Clubhouse fades away.

Everyone knows YouTubers and other creators are popular with internet users of all ages. But today, these influencers also have real businesses powered by a range of software tools and service providers who help weave videos, pictures, clips, memes and other types of content into sustainable success.

The pandemic added fuel to existing trends pushing growth in this category. Today, the platforms are bigger and more diverse than ever and many creators have years of experience growing audiences and monetizing online. Parallel to this industry, the rapid overall growth of enterprise technologies allow for many new types of creator-focused products to be built. Top investors in the space are seeing new opportunities for startups to build tools that help creators monetize and grow or solve needs that are specific to creator subverticals like gaming or coaching/education. 

For this particular investor survey, we dug through notes from the following:

• Benjamin Grubbs, founder, Next10 Ventures
• Li Jin, founder, Atelier Ventures
• Brian O’Malley, general partner, Forerunner Ventures
• Eze Vidra, managing partner, Reimagine Ventures
• Josh Constine, principal, SignalFire

The blank spaces in the creator economy

As with many industries that fall under the broad banner of tech, digital creators saw an acceleration from COVID-19, investors said. The simple fact that millions of us are inside and on our phones a lot has helped creators expand their audiences. (More on this in our digital media investor survey from the other week.)

More people also became creators. Jin noted that the pandemic has led to “people experimenting with creative hobbies and passions,” which smells like rising creator TAM from our perspective.

A broader definition of what constitutes a creator means more potential customers for startups looking to serve them, and perhaps a greater total revenue in the market could be an impact of COVID.

There are ample places for building in the creator economy, including discovery, which O’Malley cited as a key issue. “The best content doesn’t always rise to the top,” he said, adding that “incentives remain to create content that will be viral and get eyeballs” and to nab the content of others over creating net-new material.

Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.

The app industry is as hot as ever, with a record 218 billion downloads and $143 billion in global consumer spend in 2020.

Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.

Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.

This week, we’re taking a look at Clubhouse’s breakout moment — or moments, to be fair. Also, the App Store’s rules were updated, Parler’s CEO was fired and other companies began raising their own red flags about Apple’s privacy changes.

This Week in Apps will soon be a newsletter! Sign up here: techcrunch.com/newsletters

Top Stories

Clubhouse goes mainstream

The invite-only audio platform has been on a roll, and has already hosted big names in tech, media and entertainment, including Drake, Estelle, Tiffany Haddish, Kevin Hart, Jared Leto, Ashton Kutcher, and others in the Silicon Valley tech scene. But this week was a breakout if there ever was one, when on Monday, Tesla and SpaceX founder Elon Musk showed up on Clubhouse, topping the app’s limit of 5,000 people in a single room. With others unable to get in, fans livestreamed the event to other platforms like YouTube, live-tweeted, and set up breakout rooms for the overflow. Musk was later joined by “Vlad The Stock Impaler,” aka Robinhood CEO Vlad Tenev, who of course talked about the GameStop saga — and was then interviewed by Musk himself.

Then on Thursday, Clubhouse saw yet another famous guest: Facebook CEO Mark Zuckerberg, who casually went by “Zuck23” when he joined “The Good Time Show” talk show on the app, as Musk had done before him.

The format of the social media network allowed the execs to informally address a wide audience of listeners with whatever they want to talk about — in Musk’s case, that was space travel, crypto, AI and vaccines, among other things. Zuckerberg, meanwhile, used the time to talk about AR/VR and its future in business and remote work. (If you thought Zoom meetings were bad…).

(And who knows, maybe he wanted give the app a try for other reasons, too.)

There is something unsettling about this whole arrangement, of course. Soft-balled questions lobbed at billionaires, journalists blocked from rooms, and so on — all on an app financed by a VC firm, Andreessen Horowitz (a16z), that’s said to be interested in cutting out the media middleman, to “go direct” instead. (Not coincidentally, the room inviting the big name guests was co-hosted by a16z’s Andreessen and its new GP, Sriram Krishnan, who is described as having an “optimistic” outlook — perhaps a valuable commodity when much of the media does not.)

Regardless of the machinations behind the scenes that made it happen, it’s hard to ignore an app where the biggest names in tech show up to just chat — or even interview one another.

Where is all this going?, is a valid question to be raised. Some have described Clubhouse as the late-night talk show equivalent. A place where interviews aren’t about asking the hard questions, but rather about whatever the guest came there to say or promote. And that’s fine, of course — as long as everyone understands that when big names arrive, they may do so with an agenda, even when it seems they’re just there for fun.

In any event, Clubhouse proved this week it’s no longer a buzzy newcomer. For now, at least, it’s decidedly in the game.

Companies (besides Facebook) warn investors about Apple’s privacy changes

So far, it may have seemed as if the only two businesses taking real issue with Apple’s privacy changes, including the coming changes to IDFA, were Facebook and Google. Facebook took out full-page ads and weighed lawsuits. Google delayed iOS app updates while it figured out privacy labels. But as other companies reported their fourth-quarter earnings, IDFA impacts were also topping their list of concerns.

In Snapchat CEO Evan Spiegel’s prepared remarks, he alerted investors to the potential disruption to Snap’s ad business, saying that the privacy changes “will present another risk of interruption” to advertising demand. He noted that it was unclear what the long-term consequences of those changes may be, too. Unity, meanwhile, attached a number to it: IDFA changes would reduce its revenue by about 3%, or $30 million, in 2021.

It may be that no one really knows how damaging the IDFA update will be until it rolls out. These are only estimates based on tests and assumptions about user behavior. Plus, there are reports poking holes in Facebook’s claims, which had said that small businesses would suffer a 60% cut in revenues. Those are surely overstated, Harvard Business Review wrote, saying Facebook had cherry-picked and amplified its numbers.

Nevertheless, Facebook is already testing ways to encourage users to accept its tracking. The company on Monday began showing some users prompts that explained why it wants to track and asked users to opt in so Facebook can “provide a better ads experience.” Users could tap “allow” or “don’t allow” in response to the prompt.

Apple updates its App Store Rules

Apple said these were moderate changes — just clarifications and tweaks that had been under way for some time. For example, the new App Store Guidelines now include instructions about how developers should implement the new App Tracking Transparency rules. Another section details how developers can now file an appeal upon an app review rejection.

Other changes are more semantic in nature — changing person-to-person experiences to “services” to broaden the scope, for example, or to clarify how gaming companies can offer a single subscription that works across a variety of standalone apps.

To see what actually changed, go here.

Parler CEO fired

Parler — the app banned from the App Store, Google Play, Amazon AWS, using Okta, etc., etc. — fired its CEO, John Matze, this week after struggling to bring the app back online. According to reports from NPR and others, the firing was due to his disagreement with conservative donor Rebekah Mercer, who controls Parler’s board. Matze argued the app would need to crack down on domestic terrorism and groups that incite violence in order to succeed, he says, but claims he was met with silence. Parler, meanwhile, said those statements were misleading.

After Parler’s rapid deplatforming following the events at the Capitol, other alternative social networks climbed up the charts to take its place. But these apps have not proven themselves to have much staying power. Instead, the top charts are once again filled with the usual: Facebook, Instagram, YouTube, TikTok, Snapchat, etc.

Maybe it’s actually no fun yelling about the world when no one is around to challenge you or fight back?

Weekly News

Apps with earnings news

• Snap beats with revenue of $911 million in Q4, up 62% YoY, versus $857.4 million expected. Snap’s DAU’s climbed 22% YoY to 265M. But stock dropped over a weak Q1 forecast.
• PayPal reported stronger-than-expected, pandemic-fueled earnings with EPS up 25.58% YoY to $1.08, beating the estimate of $1.00. Revenue was $6.12 billion up 23.28% YoY year, which beat the estimate of $6.09 billion. The company added 16 million net new accounts, bringing the total to 277 million.
• Related, Venmo’s TPV grew 60% year over year to $47 billion, and its customer base grew 32%, ending just shy of 70 million accounts. The company expects its revenues will approach $900 million in 2021.
• Spotify reports revenue growth of 17% YoY to €2.17 billion; 345M MAUs, up 27% YoY; and paid subs to 155 million, up by 24%.

Platforms: Apple

• The iOS 14.5 beta arrives with a number of notable new features, including most notably, ATT and the ability to unlock your iPhone when wearing a mask, as long as you’re also wearing an Apple Watch. Other changes include worldwide dual-SIM 5G support, AirPlay 2 support for Apple Fitness+, support for PlayStation 5 DualSense and Xbox Series X controllers, support for T-Mobile’s standalone 5G network, a new Siri feature for calling emergency services, a toggle to disable emergency alert sounds, emoji search for iPad, and other small changes in the Reminders, News and Podcasts apps, and more.

• Code in the iOS 14.5 beta also suggests new financial features like Apple Card Family for multiuser accounts and a new framework FinHealth that gives automated suggestions to improve your finances.
• Apple rolls out new and updated design resources for building apps across its platforms, including iOS 14 and iPad OS 14, tvOS 14 and macOS Bir Sur. On mobile, the new design resources for Sketch have been rebuilt to support color variables, and include numerous minor improvements and bug fixes.
• Apple’s services saw a significant outage this week that impacted, among other things, the App Store, leading to blank pages, broken search results and more.

• Certain U.S. states will allow casino, sports and lottery games from March 1, 2021. Google already announced a change to Play Store policies, to allow these. In Apple’s updated App Store Guidelines, out this week, it also added “gambling” as one of the app categories that had to be submitted by a legal entity — an indication that it was opening its doors, too.
• App Store growth hit a six-month high in January 2021, Morgan Stanley said, citing Sensor Tower data that indicated App Store net revenue grew 35% YoY in the month. In Japan and Germany, growth reached 60% and in the U.S. it was 42% YoY, due to pandemic impacts.
• Some users are saying third-party apps have been crashing after syncing an iPad or iPhone with an M1 Mac.

Platforms: Google

• Huawei’s HarmonyOS is being pitched as an original in-house creation, but Ars Technica took a deep dive and found it was really just an Android fork.
• “Millions” of Ford vehicles will use Google’s Android OS to power their infotainment systems, starting in 2023.

• Google is said to be exploring its own alternative to Apple’s new anti-tracking feature, which may seem counterintuitive, as Google is in the ads business. But according to a report from Bloomberg, the company is looking into a solution that’s “less stringent” than Apple’s. That could provide some pushback in terms of setting an industry standard.

Gaming

• YouTube launches Clips, a short-form video feature that lets users clip 5 to 60 seconds of a video and share with others, similar to Twitch’s clips feature. The feature is in limited alpha testing.
• Epic Games is warning Australia’s market regulator to take action against Apple for using its market power to force developers to pay a 30% commission on paid apps and IAP. Epic is suing Apple in the country, but wants the regulator to step in now.
• In the U.S., a judge orders a 7-hour deposition from Tim Cook in the Epic vs. Apple lawsuit.
• Google hasn’t killed game streaming service Stadia yet, but it did announce this week it’s stepping away from first-party games. The company also announced the Stadia Games and Entertainment head Jade Raymond was leaving the company, while the existing staff would be moved to other projects.
• Amazon Luna’s game streaming service expands to more Android devices, including Pixel 3, 3XL, 3a, 3a XL; Samsung S9, S9+, Note 9. The service was already available on new Pixel, Samsung and OnePlus devices, among others.

Augmented Reality

• Color of Change launches The Pedestal Project, an AR experience on Instagram that allows users to place statues of racial justice leaders on the empty pedestals where confederate leaders once stood (or anywhere else). At launch, there are three featured leaders included: Rep. John Lewis, Alicia Garza and Chelsea Miller.
• TikTok partners with WPP to give WPP agencies access to ad products and APIs that are still in development, including new AR formats.

Security & Privacy

• YouTube adds its App Store privacy label, detailing the data it uses to track users. This includes your physical address, email address, phone number, user and device ID, as well as data linked to you for third-party advertising and for app functionality, product personalization and more.

Fintech

• Venmo is turning into a financial super app with additions that include crypto, budgeting, saving and shopping with Honey — all of which are planned for this year.
• Robinhood CEO Vlad Tenev has been asked to testify before the House Financial Services Committee on February 18, over the GameStop debacle. The app still hasn’t recovered its reputation — Play Store reviews have gone back down to 1.0 stars, even after a purge.
• Reddit has its best-ever month in terms of installs, thanks to the “meme stocks” frenzy driven by users of the r/wallstreetbets forum. The app gained 6.6 million downloads in January 2021, up 43% month-over-month, growing its total installs to date to 122.5 million across iOS and Android.
• Cash App also this week had to halt buying meme stocks like GameStop, AMC, and Nokia after being notified by its clearing broker of increased capital requirements.
• Robinhood raises another $2.4 billion from shareholders after its $1 billion raise from investors to help it ride out the meme stock trading frenzy.
• Joompay, a European rival to Venmo and TransferWise, has now launched in the market after obtaining a Luxembourg Electronic Money Institution (EMI) license.

Social & Photos

• Snapchat’s TikTok rival “Spotlight” now has 100 million MAUs, the company said during earnings, and is receiving an average of 175,000 video submissions per day. But Snap is heavily fueling this growth by paying out over $1 million per day to the top-performing videos — everyone wants to be TikTok, it seems.
• TikTok says it will now downrank “unsubstantiated” claims that fact checkers can’t verify. The app will also place a warning banner overtop these videos and discourage users from sharing them with pop-up messages.
• TikTok owner ByteDance sues Tencent over alleged monopoly practices. The suit claims that Tencent’s WeChat and QQ messaging services won’t allow links to Douyin, the Chinese version of TikTok.
• Instagram confirms it’s developing a “Vertical Stories” feed that will allow users to flip through users’ stories vertically, similar to TikTok.
• IRL, an events website and mobile app, has topped 10 million monthly users as it revamps itself into a social network for events, now including user profiles, group events, and chat.

• Instagram bans around 400 accounts linked to hacker forum OGUsers, where members buy and sell stolen social media accounts. The hackers used SIM-swapping attacks, harassment and extortion to take over the accounts of  “OG” Instagram users who have coveted short usernames or those with unique words. Twitter and TikTok also took action to target OGUsers members, the companies confirmed.

• Instagram adds “Recently Deleted,” a new feature that lets you review and recover deleted content. The company says it added protections to stop hackers from accessing your account to reach these items. Deleted stories that are not in your archive will stay in the folder for up to 24 hours. Everything else will be automatically deleted 30 days later.
• Triller ditches its plans to do a Super Bowl ad and will now host a fan contest instead. The app has struggled to present a challenge to TikTok in the U.S. market.
• Daily Twitter usage remained consistent despite Trump ban, according to data from Apptopia.

Communication and Messaging

• Element, a client for federal chat protocol Matrix, was removed from the Play Store this week, for abusive content. But Google made a mistake. This was a third-party client, not the content’s host. And it had already removed the content, based on its own rules. For those unfamiliar, Element is an open network that offers both unencrypted public chatrooms as well as E2EE content. Eventually, the developer got a call from a Google VP who helped the app get reinstated. But the situation, which resulted in 24 hours of downtime, raised a question of how well app stores are prepared to moderate issues that crop up in decentralized platforms and services.
• Clubhouse CEO Paul Davison confirmed the company will introduce a subscription tool that will allow creators to make money from their rooms.
• Telegram, benefitting from the shift to private messaging and the WhatsApp backlash, became the most-downloaded app overall in January 2021, across both app stores and on Google Play. On the App Store, it was No. 4 and TikTok was No. 1.

Streaming Services and Media

• Apple-owned Shazam adds iOS 14 widgets for the first time, allowing you to quickly ID any song that’s playing and see your history.
• Spotify adds new playlists, podcasts and takeovers for Black History Month, and creates a new “Black History Is Now” hub in the app.
• The U.S. version of the Discovery+ mobile app gets more first-month downloads (3.3 million) than HBO Max did (3.1 million), Apptopia found. But it’s not an apples-to-apples comparison, as existing HBO NOW users were upgraded to Max.

Health & Fitness

• The Google Fit app on Pixel devices is getting an update that will allow your phone’s camera to measure pulse and breathing rates.

Productivity

• Microsoft rebrands its document scanner app Office Lens to Microsoft Lens and adds new features, including Image to Text, an Immersive Reader, a QR Code Scanner and the ability to scan up to 100 pages. Lens also now integrates with Teams, so users can record short videos to be sent through Team chats. Uh, TikTok’s about documents, I guess?

Government & Policy

• Myanmar’s military government orders telecoms to block Facebook until February 7, following coup. The government, which seized power following an election, said the social network is contributing to instability in the country.

• TikTok will recheck the age of every user in Italy, following an emergency order from the GPDP issued after the January 22 death of a 10-year-old girl who tried the “blackout challenge” she saw on the app. On February 9, every user will have to go through the TikTok age-gate again.

Funding and M&A

• Uber buys alcohol delivery service Drizly for $1.1 billion. Drizly’s website and app let users order alcohol in markets across the U.S. but is often hampered by local liquor laws. Gross bookings were up 300% YoY, ahead of the deal.
• Vivino, a wine recommendation and marketplace app, raises $155 million Series D led by Sweden’s Kinnevik. The app now has 50 million users and data set of 1.5 billion photos of wine labels.

• Mobile ad platform and games publisher AppLovin acquires Berlin-based mobile ad attribution company Adjust in what’s being reported as a $1 billion deal, but is reportedly less. The deal comes at a time when the ad attribution market is being dramatically altered by Apple’s ATT. Mobile Dev Memo explains the deal will give Applovin visibility into which games and driving conversions for Adjust customers, to benefit its own ad campaigns.
• Latitude, a startup that uses AI to build storylines for games, raises $3.3 million in seed funding. Its first title is AI Dungeon, an open-ended text adventure game.
• Chinese social gaming startup Guangzhou Quwan Network Technology raises $100 million Series B from Matrix Partners China and Orchid Asia Group Management. The company provides instant voice messaging, social gaming, esports and game distribution and operates voice chat app TT Voice, which has over 100 million users.
• Consumer trading app Flink, a sort of Robinhood for the Mexican market, raises $12 million Series A led by Accel.
• Commuting platform Hip, which offers both an online dashboard and mobile app, raises $12 million led by NFX and Magenta Venture Partners. The app works with bus and shuttle providers to plan routes for commuters and offers COVID-19 tracing services.
• Bot MD, a Signapore-based app that offers doctors an AI chatbot for looking up important information, raises $5 million Series A led by Monk’s Hill Ventures. The funds will help the app to expand elsewhere in the Asia-Pacific region, including Indonesia, the Philippines, Malaysia and India.

• Meditation and sleep app Expectful raises $3 million in seed funding for its app aimed at new mothers. The company plans to expand the app to become a broader wellness resource for hopeful, expecting and new parents.

• Brightwheel, an app that allows preschools, daycare providers and camps to communicate with parents raises $55 million in a round led by Addition, valuing the business at $600+ million. Laurene Powell Jobs’s Emerson Collective and Jeff Weiner’s Next Play Ventures also participated.
• ELSA, a Google-backed language learning app co-founded in 2015 by Vietnamese entrepreneur Vu Van and engineer Xavier Anguera, raises $15 million a round co-led by Vietnam Investments Group and SIG.
• Financial super app Djamo gets Y Combinator backing for its solution for consumers in Francophone Africa.

• Bumble IPO filing sets price range for up to $1B. The dating app makers aims to sell 34.5 million shares at $28 to $30 apiece, valuing the business potentially at $6.46B.

Downloads

Reese’s Book Club

Actress and producer Reese Witherspoon’s media company Hello Sunshine has launched an app for Reese’s Book Club — the book club that focuses on diverse voices where women are the center of their stories. The book club today has nearly 2 million Instagram followers and 38 book picks that made The New York Times bestseller list. Its books have also been adapted into film and TV projects, including Hulu’s “Little Fires Everywhere,” upcoming Amazon series “Daisy Jones and the Six, Netflix’s “From Scratch,” and forthcoming film “Where the Crawdads Sing.”

The new app lets users keep track of the new monthly picks, browse past selections, join community discussions with fellow readers, hear from authors, compete for prizes and, soon, buy exclusives items that will help fund The Readership, a pay-it-forward platform aimed at amplifying diverse voices and promoting literacy, which may include efforts like installing book nooks in local communities and supporting indie booksellers.

The app is a free download on the App Store and Google Play.

Carrot Weather

Everyone’s favorite snarky weather app received a major overhaul toward the end of January, which includes a redesigned interface, new icons, tools to design the UI how you want it (an “interface maker”), new “secret locations” (a fun Easter egg) and more. The app has also switched to a vertical layout that fills the screen with information, which also includes smart cards that bubble up with weather info when it’s needed. Carrot Weather is also now a free download with subscriptions, instead of a paid app.

According to a recent report on Greece’s startup ecosystem by management consultants Found.ation, venture capital and venture debt have continued to grow in the country, although its angel scene remains low-key.

Oddly enough, 2020 was a banner year, with the sale of InstaShop to Delivery Hero valuing the company at $360 million, making it the largest exit for a Greek-founded startup with operations in Greece.

The pandemic has meant Greek investors and startups realize that if they can work from anywhere and hire from anywhere, then Greece is not such a bad place to be. And the Greek VC market benefits as the diaspora returns from the mega cities of the West. The nation’s startup ecosystem is also attracting more outside investors, who see low capital costs, an educated workforce and the move to remote working/hiring.

Bessemer Venture Partners, Insight Venture Partners and FJ labs are all backing Greek startups, and Microsoft completed its first acquisition in the country.

Greek startups and investors are also extending collaboration with near neighbors in Cyprus, Romania, Albania and Bulgaria.

Investors in our survey said they were excited by sectors such as infrastructure, agtech, cybersecurity, proptech, efficient software, renewable tech and platforms aimed at helping the recovery of blue-collar jobs.

Were they seeing green shoots after the worst of the pandemic? Yes, but still small.

Investors are spreading their wings outside of Greece “as location becomes irrelevant and work-from-anywhere the new standard” although “the local ecosystem is always a priority.”

Here’s who we spoke with:

• Panos Papadopoulos, partner, Marathon Venture Capital
• Dimitris Kalavros-Gousiou, founding partner, Velocity Partners
• Aristos Doxiadis, partner, Big Pi Ventures
• Pavlos Pavlakis, principal, VentureFriends
• Yorgos Mousmoulas, partner, Metavallon
• Myrto Papathanou, founding partner, Metavallon
• George Dimopoulos, founding partner, VentureFriends
• George Karantonis, partner, Metavallon
• Katerina Pramatari, founding partner, Uni.Fund

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Subscribe to Extra Crunch for access to all of our investor surveys, company profiles and other insider coverage for startups everywhere. Save 25% off the cost of a one-year Extra Crunch membership by entering discount code GREEKSURVEY. Offer valid until March 31, 2021.

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Panos Papadopoulos, partner, Marathon Venture Capital

What trends are you most excited about investing in, generally?

Infrastructure, agtech, cybersecurity, efficient software.

What’s your latest, most exciting investment?

Hack The Box (the largest cybersecurity playground in the world).

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

Infrastructure software is far from being optimized and resulting in huge bills. There is a lot to be done to leverage modern hardware architecture to make things cheaper and easier to operate.

What are you looking for in your next investment, in general?

Industry people fixing their industry.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

Data management/analytics is oversaturated.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

More than 80%, we operate in underserved market and enjoy preferential pricing.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?

Shipping is an obvious one but we don’t think venture returns can be accomplished in this space.
Our portfolio company Netdata is changing IT monitoring. Huge OSS community and $30 million raised so far from Marathon, Bain and Bessemer.

How should investors in other cities think about the overall investment climate and opportunities in your city?

Get to know the people first and where they are coming from (culturally).

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

Yes absolutely, big expensive cities will drain talent to their peripheries (not going very far TBH).

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Travel is the obvious answer.

We see a lot of opportunity in software rebuilding, consolidation. There is truly too much software duct taped together. It’s expensive, difficult to run and creates silos.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

It hasn’t changed anything really, we just want founders to be able to use exclusively online channels. Companies with a hardware component are more challenged but even they have to innovate on support, which becomes a net positive if/when achieved.
Advise to startups: If you can find money sweep it.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Remote work could become a great equalizer or at least give more opportunities to people living far from the big hubs.

Any other thoughts you want to share with TechCrunch readers?

I think investing in local/geographical ecosystems is not so much about the law/economies of the ecosystem but rather the culture. Actually I was working on an article about that I wanted to share with TC :)

Dimitris Kalavros-Gousiou, founding partner, Velocity Partners

What trends are you most excited about investing in, generally?
Future of work, enterprise software, edtech, AI.

What’s your latest, most exciting investment?

Intelligencia.ai — supporting drug discovery with ML and Big Data.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

Edtech is a hugely untapped market, especially in vertical education and non-English-speaking content.

What are you looking for in your next investment, in general?

Given the stage we invest in (pre-seed and seed), we are always looking to find founders with a unique perspective, market insights and understanding.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

Although we are an Athens-based fund, we are location-agnostic. Half of our portfolio companies are based overseas, with the majority being in the U.K., where there is a strong community of Greek expats and diaspora.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

Given the size of the local market, which is relatively small, I believe by reality our country is better positioned for B2B and enterprise software ventures. The most recent exit of RPA startup Softomotive to Microsoft (May 2020) validates just that. Two companies I’m excited about are Intelligencia.ai, which helps big pharma companies predict and accelerate clinical development of new drugs, and Netdata. Netdata is an open-source system for monitoring applications, servers, containers and devices in real-time.

How should investors in other cities think about the overall investment climate and opportunities in your city?

Greece has recently started to get more traction and headlines in international publications, Softomotive’s exit as mentioned were good news for the local ecosystem, together with a few up rounds for Athens-based startups such as TileDB, Plum and others.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

Absolutely, as location becomes irrelevant and work-from-anywhere the new standard we expect more founders to emerge from less profound places. Brain-regain will also be a significant driver, as more and more people will go back to their home countries.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Travel tech is profoundly negatively affected by the pandemic and while it’s really early to tell when and how travel will reemerge, I see little opportunities there for the next 12 to 18 months.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

For our post-revenue investments, cash flow and its impact on runaway is the biggest challenge. Our pre-market, pre-revenue startups are less affected. Fundraising for the next round is a major concern and challenge for all. We strongly recommend continued monitoring and cost-cutting where and if needed. For their fundraising strategies, we recommend raising more money, effectively extending their runway to 18-24 months. In cases where their ideal fundraising scenario is no longer a viable option, we suggest smaller rounds — emergency financing driver primarily by existing investors — that will support the companies until the market is less volatile.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

We are seeing interesting areas for growth as some of our companies decided to partially pivot their core product offering or market segment focus. A great example is MyJobNow a local blue-collar marketplace startup. Their initial product was targeting blue-collar workers using classifieds. Just before the COVID pandemic, the company introduced a second product, staffing on-demand service for delivery and last-mile transportation. The product faced significant and accelerated adoption by retail clients and e-commerce ventures as the need for last-mile delivery was significantly and positively affected by the lockdown.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Most founders showed a mix of good reflexes, empathy and business clarity during the first months of the pandemic.

Any other thoughts you want to share with TechCrunch readers?

A key parameter that will greatly affect the next phase of the local scene is for new first-time founders to be able to attract initial angel and pre-seed investment, as access to €50,000-200,000 tickets is still problematic and limited. We need to enhance the investment numbers on this stage in order to enlarge the footprint of the ecosystem and create a strong bottom-up startup funnel.

Aristos Doxiadis, partner, Big Pi Ventures

What trends are you most excited about investing in, generally?

I most like to invest in radically better solutions to very basic problems, such as preventing disease, or food provision, or increasing productivity in small firms. This is the social context of the fourth industrial revolution, and where some of the great success stories of the next 10 years will be.

What’s your latest, most exciting investment?

It’s a tough choice, but I pick 2bull MeDiTherapy. They have developed a unique blood test for prognosis and diagnosis of aortic aneurysm. These is a very common “silent killer,” that could only be diagnosed up to now by cumbersome and expensive imaging techniques. Once the test gets the required CE mark, we hope it will be widely adopted as a screening method across Europe and the U.S.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

In agritech, I haven’t seen much that would help small farms in rough terrain to increase productivity, secure quality or exploit unique niche varieties. This is potentially a big opportunity in many emerging economies as well as in the Mediterranean.

What are you looking for in your next investment, in general?

Ideally, a tool that can solve a fundamental production bottleneck across several industries, and that is based on years of research and has strong IP. An example from our portfolio is Navenio, which has location solution for people and equipment in large indoor spaces, that is infrastructure-free and requires no physical mapping. This has applications in hospitals, shopping malls, logistics centers, railroad stations, etc.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

We see too many applications for e-commerce and service marketplaces. Most are copycats, but even if there is a new concept somewhere, network effects and economies of scale are prohibitive for almost all new teams.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

By our mandate, we invest only in companies that have a substantial presence in Greece. This usually means an R&D center and/or product development team. Within Greece we have no specific preference for Athens, our home base, but most of the good deals we see are there.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

Greece has strong research teams in biomedical science, and a large number of doctors with international experience and networks. I expect that health tech and medtech will be a big growth sector. Another area is HR tech: Workable (a leading applicant tracking system), Epignosis (learning technology for corporate users) and Bryq (a new bias-free candidate assessment platform) have all started in Athens. The first two already have nine-digit valuations, while Bryq is just taking off.

How should investors in other cities think about the overall investment climate and opportunities in your city?

The greatest advantage of Athens and some other Greek cities is the number of highly skilled Greeks in their thirties, who are working in technology or research in the rest of Europe and are looking to return home. Tech employers can easily attract such talent if they offer an exciting and/or well-paid job. These experienced people can train many of the excellent engineering and science grads that come out of local universities. Almost every company in our portfolio has done this. Investment climate is also rapidly improving under the current government, especially for knowledge industries, via various tax incentives, but also by encouraging the research community to open up to business.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

Yes, I expect that, and we are already seeing this in Greece, as one of the places of origin of such founders, but also as a destination for talent that is leaving expensive and crowded cities.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Travel and hospitality will be hurt. Big Pi has not invested in the sector (by chance, not by design) but some very good Greek teams were in there, and inevitably some will have to move to other things. Great opportunities arise in remote provision of sophisticated services (health, entertainment, education and also equipment maintenance and repair).

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

There have been delays in enterprise sales, and in the supply chain for hardware products. We have set aside capital to support longer runways, but beyond that we don’t anticipate much damage. Our advice to founders is to focus all resources on achieving targets that will enable them to raise the next equity round.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

The Greek government designed and implemented in record time a logistics system for COVID vaccines, and, most impressively, a very user-friendly appointment platform for the vaccinations that is working seamlessly. For a state that until recently was very slow and inefficient, this was a great leap ahead and bodes well for future digital public services.

Who are key startup people you see creating success locally?

All six VC teams that were funded by Equifund in 2018 have done a very good job (Marathon, Venture Friends, Uni.Fund, Metavallon, Velocity and Big Pi) and have given a big boost to the ecosystem. Founders from Greek diaspora have been instrumental (e.g., Stavros Papadopoulos of TileDB, Vergetis and Skaltsas of Intelligencia, Masouras of Saphetor).

Pavlos Pavlakis, principal, VentureFriends

What trends are you most excited about investing in, generally?

Proptech, fintech and marketplace models, interested in both B2C and B2B startups.

What’s your latest, most exciting investment?
Influ2 (Person Based Marketing startup — B2B SaaS).

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

Some investors shy away from capital intensive models e.g., that need a lot of debt fundraising and many prefer B2B SaaS startups. We like B2C a lot, we like operational plays i.e., not pure tech necessarily, plus we are comfortable with models that require a lot of debt raising in parallel to equity.

What are you looking for in your next investment, in general?

Founders with global aspirations that execute well a scalable model. The team and the market size are the two most important factors, and then a number of other factors: competition, timing/market trend, short- and long-term defensibility/USP, etc.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

Many markets/areas are oversaturated or would be too hard to compete — this however can vary on geography as well e.g., we have seen some great opportunities in LatAm for example that are “copy cats” of other models.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

The local ecosystem is always a priority. Also apart from local startups we are looking for Greek founders across the globe e.g., recently invested in a U.S.-based Greek founder. However given the size of our fund and opportunities out there we do not restrict our investments only in the local ecosystem. So far more than 50% has been in the local ecosystem (company or founder) however because we are an international (European mostly) VC more and more of our investments are from outside of the local ecosystem.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

Blueground is a great example that we are excited about. It is a proptech portfolio company of VentureFriends. It is a Greek company that we were first institutional investors in. Blueground has expanded globally (13 cities in U.S., Europe and Middle East) and raised more than $100 million so far.

How should investors in other cities think about the overall investment climate and opportunities in your city?

Athens and Greece in general is definitely an up-and-coming market. Each year there are more and large success stories that inspire the next generation of entrepreneurs. Capital availability is no longer a large issue (given the presence of multiple funds) and Greek has great and relatively cheap human capital — and great weather :)

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

I do not necessarily expect this kind of change i.e., more founders coming from geographies outside major cities. However Greek talent — as mentioned, relatively cheap while of high quality plus the surge of remote work — indeed has created more demand and an increase in certain wages (e.g., developers).

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Travel tech is by far the most exposed vertical. In terms of opportunities given that startups are incumbents and digital solutions typically most verticals can present opportunities. Some obvious ones are edtech, delivery/logistic solutions, e-commerce, etc.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

No major change in our investment strategy whatsoever. Only slight change would be not to pursue travel tech opportunities (even though it depends on a case by case basis — we were very close in investing in a new startup in this sector amid the pandemic — they were doing amazingly well :) The advice to startups that are impacted is to weather the storm by trying to be cautious on burn on the one hand, but preserve as much as possible and build/work on things they have now more time to do so (housekeeping, product, etc.)

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

Of course, many if not most of them! Apart from our travel tech startups all others have grown in 2020 and recovered from the first major wave of the pandemic. Some specific ones from our portfolio even tippled in size (benefited from the pandemic) — this is the example of InstaShop that was sold to Delivery Hero for $360 million in 2020.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Even though 2020 was an extremely bad year on a health and economic basis, life goes on and many friends and family are getting married, having babies. I became an uncle for the third time, so there are some very happy and hopeful parts of life always.

Who are key startup people you see creating success locally?

Founders are by far the most important ones, and then investors are important to support and finance them. But without founders there is nothing :) Blueground, Beat, eFood, Workable, Softomotive, Skroutz, Epignosis and of course InstaShop are some great examples with successful founders who have played an important role in inspiring the ecosystem.

Any other thoughts you want to share with TechCrunch readers?

There seems to be a general move from U.S. to Europe and from Europe to Eastern Europe, and from there to emerging markets e.g., LatAm and Asia. Undiscovered and less competitive ecosystems that are on the rise, like Greece, are expected to play a more significant role in the years to come :) We are excited about this.

Yorgos Mousmoulas, partner, Metavallon

What trends are you most excited about investing in, generally?

Data/AI/analytics; renewable tech; mostly B2B.

What’s your latest, most exciting investment?

Valk, a secure platform for trading unlisted assets on the Corda blockchain.

What are you looking for in your next investment, in general?

Great team; proprietary, defensible technology; first signs of traction.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

Marketplaces, B2C, food delivery, etc.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

About 50%. We also invest heavily in startups elsewhere in Europe (and beyond) having some connection to Greece, e.g., founders/investors/advisors, or having it among its target markets.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

Maritime; anything related to data and analytics.

Perceptual Robotoics (Kostas Karachalios)
Ferry Hopper (Christos Spatharakis)
Valk (Antoine Loth)

How should investors in other cities think about the overall investment climate and opportunities in your city?

This is a rapidly growing ecosystem with quite a few exits in the past year (including our portfolio company Think Silicon, acquired by Applied Materials. We’re starting to see the familiar pattern of second-generation founders from the first-generation success stories. Connections to a worldwide diaspora are a strong plus. Operating/personnel costs are low for same quality.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

A lot of people from the Greek diaspora are basing themselves in Greece again, as they realize they can work from anywhere; also starting to attract international tech workers due to favorable climate, low costs, etc.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Tourism; anything requiring on-premises presence.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

We have continued to invest at the same pace, are just more cautious/selective vis-a-vis impacted sectors e.g., tourism, transportation. We have supported portfolio companies as needed with bridge rounds, etc.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

Yes. CreatorUp is doing tech-enabled remote video training and are seeing tremendous revenue growth under the circumstances.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Some of our companies continuing to close follow-on rounds, despite the COVID climate. Even in adversely affected sectors like tourism — that’s validation of the fundamental soundness of their business model.

Who are key startup people you see creating success locally?

The NBG Seeds initiative by National Bank of Greece is a major organizer of events, get-togethers, etc. helping startups in the very early stages achieve some visibility — and not just in the major couple of cities.

Myrto Papathanou, founding partner, Metavallon

What trends are you most excited about investing in, generally?

We mainly invest in early-stage B2B companies and are sector agnostic. Over 80% of our portfolio is from companies developing proprietary [technology] mainly using ML, AI, cloud, SaaS and analytics. So far we have invested in health, energy, security, logistics, media and enterprise software and tools companies.

What’s your latest, most exciting investment?

We just closed a follow on round led by Berlin-based Fly Ventures for one of our portcos, Better Origin. The bio startup is Cambridge- and Athens-based and developing the world’s first insect minifarm that converts local food waste into high-quality animal feed in the form of insect larvae. It’s solution combines automation and AI to replicate nature’s recycling system. Following impressive client demand, the recent funding will accelerate its operations and deploy their scalable solution to hundreds of farms across the U.K. and the world. We are very excited about what the company is developing and how fast they are progressing.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

Europe and Greece in particular are amazing places to develop deep companies. The highly qualified and loyal workforce, value for money engineering, availability of nondilutive finance and newly introduced product skills, business acumen and entrepreneurial ambition are making it an exciting place for B2B startups. I would like to see more startups tackling energy and sustainability problems through technology, I think there is opportunity and the right momentum.

What are you looking for in your next investment, in general?

We are looking for articulate, highly qualified engineers with a business acumen that can execute. Founders that have deep expertise in an industry and have identified the broken elements that their technology can disrupt.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

On the B2C space, where we are not active, it seems that there are many teams working on very narrow, niche problems. Even if successful, a lot of those in my humble opinion are very hard to create significant VC-type returns.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

We are very focused on Greece and also believe there is an amazing opportunity in the diaspora. People who left the country last decade, gained experience and know-how from other markets and are now seeing the opportunity to start their technology companies back home.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

We are excited about Athens-based Useberry, Prosperty and Loctio.

How should investors in other cities think about the overall investment climate and opportunities in your city?

The landscape for technology startups and investment in Greece has completely changed the last three years. The value of exits and unrealized value quadrupled in 2020 alone and there is great momentum at the moment. The presence of early-stage VCs on the ground also helps in terms of access to initial finance, validation of the business model and its scalability and a global outlook of the businesses. At Metavallon we are happy to have already co-invested with 20+ VCs, local, regional and international and over 40 angels, usually with vertical expertise and strategic interest in our portcos. There is still a lot of space. Finally some companies created last decade are scaling up and adding to the virtuous cycle of introducing previously missing skills, like product and biz dev and sales ops, in the market. The entire southeast of Europe is an overlooked market, which international investors are now waking up to.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

Yes, for two reasons. First, the world is now flatter and access to capital and talent is location independent, as long as the technology built has global relevance. The pandemic has in fact created a mini-brain gain in Greece, with technology professionals coming back here and getting involved in startups as founders, executives and investors. Second, access to global talent and efficient remote work are making it hard to justify the costs mainly in human capital, but also peripheral like professional services and even real estate, that the traditional hubs demand. So I expect to see a surge in companies coming up from previously looked over locations.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Hospitality and travel are in for the long game in terms of weathering the effects of the pandemic. These sectors will need patient capital and a prolongment of their business plans. We were impressed to see one of our portcos, Ferry Hopper, that runs a ferry booking engine switch its operations overnight during the pandemic to focus on local customers and commuters as opposed to tourists. These companies will need quick reflexes and adaptability.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

We have had little impact in our investment strategy as we did not focus on B2C. In a way, investment in very early stages is affected the least as time to a large extend is spent on product and getting to product-market fit. Founders were initially worried about their runway and access to capital, a fear that didn’t really materialize. There is an opportunity on the business development side for B2B companies as clients have more urgency to digitalize, innovate and improve efficiencies. We are asking our companies to stay focused, keep an ear to the ground and their customers and be ready to adapt.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

With the exception of the first two months of the pandemic, retention and growth have not seemed so problematic. What we are seeing in cases are longer cycles in B2B sales, especially when clients are larger corporations in industry, health or the financial sector.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Schools reopened in Athens.

George Dimopoulos, founding partner, VentureFriends

What trends are you most excited about investing in, generally?

Proptech, fintech, B2C and travel tech.

What’s your latest, most exciting investment?

Spotawheel, an online used car sales business! First team of this category to have expanded successfully to a second market (Greece and Poland).

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

I wish I was able to see more fintech and especially insurtech startups coming from Greece. Insurance is a space that is long overdue for disruption.

What are you looking for in your next investment, in general?

Amazing team, huge market and a product that solves an actual problem i.e., the company to be able to offer a “must-have” type of solutions not “nice to have.”

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

It would be really hard to compete for a hardware startup since we don’t have the necessary background knowledge/expertise and our goal is not to bring just our checkbook at the table. We want to utilize our network, know-how and past experience for every investment we are being involved.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

As VentureFriends we are quite an outward-looking team having team members in other ecosystems also (U.K. and Poland). We will continue supporting Greek startups since we can’t afford to miss out on an amazing company from our own backyard but we will be investing actively across Europe and opportunistically even outside of Europe.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

We are big fans of B2C companies. Greek founders have demonstrated that they can use the Greek market as a sandbox and then expand internationally to bigger markets. Blueground (Greece, Turkey, UAE, USA) and Spotawheel (Greece, Poland) are just two recent examples.

How should investors in other cities think about the overall investment climate and opportunities in your city?

I wrote the first check as an angel back in 2011 to a Greek startup. Back then a round of $200,000 or an exit at $10 million was a big deal. Today these round sizes or exits below $50 million are not even raising an eyebrow. The aspirations and the confidence of Greek founders have changed dramatically, fueled by big rounds and quite notable exits that have taken place over the last couple of years. We believe that we are only a couple of years away from the first Greek unicorn!

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

Not really. When it comes to the Greek ecosystem I think that the main 2-3 hubs will continue to churn out the majority of exciting and interesting Greek companies. The pandemic will be just a bad memory in 1-2 years from now. The need to surround yourself with other driven and capable people and the obvious benefits that come with this, will pretty much pull founders and talent at the cities where already there is a vibrant/active startup community. In the case of Greece these cities are Athens, Thessaloniki and Patra.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Travel tech has been and continues to be of interest to us. As you can imagine it has been hit very hard over the last year. We do believe though, that as soon as a meaningful percentage of the population gets vaccinated and life returns back to normal, travel will resume. First for leisure and eventually even for business reasons. The people who will have managed to weather these difficult 2019-2020 years will benefit a lot!

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

COVID-19 hasn’t really impacted our investment strategy. Investing in startups at seed stage is a quite long-term type of investment and commitment. Even if a company as we speak is facing some difficulties, the way we approach it in order to evaluate it is by looking at how the company will perform in a more stable environment and/or in a steady state.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

Somehow our portfolio seemed to have achieved a natural hedge. Indeed we had some companies that faced some difficult times while we had some others that were growing by high double-digit percentages month over month. The most obvious example was InstaShop (groceries on demand), our UAE investment into Greek founders where we saw the company triple in size in a matter of months and eventually bringing forward by 2-3 years our exit to Delivery Hero for $360 million.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

The exit of InstaShop to Delivery Hero for $360 million for sure has been the highlight of this year for us. It pretty much launched us to another level both as a fund and to an extent as a Greek ecosystem since it has set the precedent for current and future founders and has cemented the belief that a Greek team can indeed register a big international success.

Who are key startup people you see creating success locally, whether investors, founders or even other types of startup ecosystems roles like lawyers, designers, growth experts, etc. We’re trying to highlight the movers and shakers who outsiders might not know.

The local office of Endeavor is definitely a group of people who someone must be connected to. They are very well-connected across the ecosystem of startup and with players of the traditional economy. They can really add value to a young company that is seeking ways to get in touch with more traditional business people.

Any other thoughts you want to share with TechCrunch readers?

If someone had told me in January 2019 that end of 2019 and the whole 2020-2021 we would be dealing with a pandemic, I would probably have tried to find a way to get access to antidepressants. However here we are today sort of getting a glimpse of the light at the end of the tunnel. On a global level, I think that overall governments and central banks have managed the situation better than expected and given the situation we are doing OK. On a more regional level, Greece beat expectations in terms of managing the pandemic while supporting the economy. We have had an excellent performance during the first wave and now during the second wave we are among the countries with the lower cases/population. The government has launched 4-5 rounds of supporting initiatives while also making Greece an attractive investment destination for direct investments. All these are very promising of what to expect from this country when things somehow normalize.

George Karantonis, partner, Metavallon

What trends are you most excited about investing in, generally?

We are a horizontal fund understanding better the B2B biz model and focus in teams with a relation to Greece.

What’s your latest, most exciting investment?

Biopix-T.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

We would like to have invested in startups active in the wide blue economy sector.

What are you looking for in your next investment, in general?

We are looking for more experienced teams with complete plans for aggressive market expansion.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

Tourism/hospitality has turned into a problematic sector these days — also most of the marketplace find it difficult to maintain customer traction.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

Well above 50% due to the nature of the funds under management (80% comes from GR structural funds and the EIF). Exception is companies founded abroad from members of the Greek diaspora, or they have/want to build some kind of activity in Greece.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?

Everything that has to do with logistics, remote collaboration and training, health tech, as well as fintech.

How should investors in other cities think about the overall investment climate and opportunities in your city?

An ecosystem in an early accelerating growth stage with good quality of technical skills.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

This sounds like a reasonable scenario.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Tourism/hospitality, marketplaces. I believe founders should focus now more than ever on real/needs and problems.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

The concern is how difficult it would be to close rounds in this business environment. so far, we have made it, but as the crisis is prolonged it becomes more of a challenge. The advice is to start fundraising as soon as possible with more than usual reserves/runway.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

Yes — SaaS/cloud companies, health tech and digital productions companies are doing great.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

That we managed to have an exit and close one seed and two Series A rounds within the pandemic.

Who are key startup people you see creating success locally, whether investors, founders or even other types of startup ecosystems roles like lawyers, designers, growth experts, etc. We’re trying to highlight the movers and shakers who outsiders might not know.

The difference here is that for the first time we have 4-6 funds focusing in early-stage tech startups.

Katerina Pramatari, founding partner, Uni.Fund

What trends are you most excited about investing in, generally?

Tech-transfer and broader tech space, retail tech, AI, analytics, IoT, SaaS.

What’s your latest, most exciting investment?

Kinvent.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?

Climate, environmental sustainability.

What are you looking for in your next investment, in general?

Passionate team with strong IP that has generated (limited) revenues to test the market.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?

B2C, especially in travel, tourism, culture.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?

More than 80%.

Which industries in your city and region seem well-positioned to thrive, or not, long term?

Retail, tourism, shipping industry, agrofood. Companies I’m excited about: Kinvent, BibeCoffee, Flexcar, ExitBee, Tekmon, BeSpot, Cyrus, Nanoplasmas.

How should investors in other cities think about the overall investment climate and opportunities in your city?

Great momentum, ecosystem really growing, a lot of untapped potential especially around the universities and research space.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?

Yes, already happening.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?

Travel and tourism for sure. E-commerce and new service models from the positive direction.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?

We were following a “cash-flow positive growth” strategy already before COVID and COVID had little impact on our portfolio. Some companies were seriously affected but turned this into an opportunity by unlocking new revenue streams. The overall sentiment among all our founders has been positive. Total portfolio revenues have increased by 4x since the start and 2x during COVID.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?

We foresee a 5x revenue increase in the total portfolio in 2021, mainly driven by six companies.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Significant contracts (of above $1 million value) signed by two companies, term sheet of above $1 million rejected, buy-out offer rejected, partial exit to a multinational consulting company of a small portion for great value, significant traction entering the U.S. market.

Who are key startup people you see creating success locally, whether investors, founders or even other types of startup ecosystems roles like lawyers, designers, growth experts, etc. We’re trying to highlight the movers and shakers who outsiders might not know.

Apostolos Apostolakis, Marco Veremis, Sotiris Papantonopoulos, Aristos Doxiadis, George Karantonis, myself for my role around universities and the research space, Angeliki Karagiannaki, Spyros Arsenis, Roula Bachtalia, George Nounesis, Dimitris Tsingos.

Any other thoughts you want to share with TechCrunch readers?

Greece is now developing its startup ecosystem and there is great momentum in the country. Apart from great people with high skills, big smiles and resilience, the country offers ideal conditions for the new model of working from home (sea, sun, great food and, hopefully soon after the pandemic, culture).

Venture funds have historically counted on a few types of investors — or limited partners — for their investing capital. One of these groups is institutional investors — think pension funds, university endowments, hospital systems and the like. Another is corporations. A third bucket centers on the family offices of wealthy individuals.

It’s a fairly small universe, in other words, but two new initiatives, both announced this week and both very different, are looking to change the equation — and could usher in similar efforts soon.

Arlan Hamilton came out with her news first. Hamilton is the founder of Backstage Capital, a venture firm focused on investing in startups founded by people of color, women, and teams with members from the LGBTQ community. In short, diversity is at its very core. But Hamilton, who is herself Black, isn’t interested in funding diverse founders alone; she is also interested in enabling more people from diverse backgrounds — including socioeconomically — to invest in venture capital as an asset class.

Toward that end, earlier this week, on the private investing platform Republic, she opened a new fund that anyone — including unaccredited investors — could back under a Securities and Exchange Commission rule called Reg CF, or Regulation Crowdfunding.

Hamilton hit the upper boundary of what Reg CF allows an outfit to raise — $1,070,000 within a 12-month period — in what seemed like hours from 2,790 investors who were invited to invest as little as $100. But more could be coming. The reason why: that rule underwent a change in November under former SEC chair Jay Clayton, and will next month begin allowing outfits to crowdsource up to $5 million. The process could be slowed down by the incoming SEC chief. (President Biden has appointed former regulator and former Goldman partner Gary Gensler, who must now receive Senate confirmation.) If it’s not, however, it’s easy to imagine more unaccredited investors being invited to fund other, and larger, venture funds soon.

Subhead

A second initiative this week has similar objectives to Hamilton — bringing more diverse investors into the ranks of limited partners — though it has a different approach and it’s targeting accredited investors only, which basically means individuals who are earning $200,000 a year and/or have a net worth of $1 million or more.

Launched by Acrew Capital — a Palo Alto- and San Francisco-based early-stage venture spearheaded by veteran VC Theresia Gouw — the firm revealed yesterday that it’s currently raising a traditional growth-stage fund with a twist. In addition to giving its current, mostly institutional investors a crack at investing in the new fund, it is also opening the vehicle to women, people of color, and others who may not have had a chance historically to invest in a later-stage private vehicle.

The key here is its emphasis on growth stage investing. While more women and people of color are breaking into the ranks of seed-stage investing, it takes a long time to make money with early-stage funding. Meanwhile, growth stage funds are more exclusive because the companies they back are closer to an “exit” typically. That makes them very appealing to institutions — including mutual funds and hedge funds — which doesn’t leaving a lot of room for  individuals to build wealth.

Like Backstage, diversity is in DNA of Acrew, which Gouw cofounded with Laura Kolodny, Vishal Lugani and Mark Kraynak, colleagues from their previous fund, Aspect Ventures. It’s little surprise that the firm — which says 88% of its overall team is female and 63% comes from underrepresented backgrounds —  would be the first to publicly focus on pulling more women and people of color who are angel investors, board members, and C-level execs into the world of later-stage deals.

But it’s also strategic on the part of Acrew, which focuses largely on fintech and cybersecurity, and which has stakes in the highly valued challenger bank Chime, and the big data security analytics company Exabeam, among many others. As Kolodny explains it, a growing number of companies is focused on enhancing diversity in the board room, and having an LP base filled individuals from underrepresented groups (with highly vetted networks), works out well for everyone involved.

It’s an approach that they hope won’t distinguish the firm for long, says Kolodny. “Our hope is that  five years from now, a venture firm helping companies to add diverse independent board members and diverse executives won’t be a unique strategy.”

The hope,” she adds, “is [this effort] gets people to embrace a new standard around what is what is expected of venture firms.”

Pictured above: the members of Acrew Capital who are part of its first growth fund, which it has dubbed its Diversity Capital Fund.

Venture funds have historically counted on a few types of investors — or limited partners — for their investing capital. One of these groups is institutional investors — think pension funds, university endowments, hospital systems and the like. Another is corporations. A third bucket centers on the family offices of wealthy individuals.

It’s a fairly small universe, in other words, but two new initiatives, both announced this week and both very different, are looking to change the equation — and could usher in similar efforts soon.

Arlan Hamilton came out with her news first. Hamilton is the founder of Backstage Capital, a venture firm focused on investing in startups founded by people of color, women, and teams with members from the LGBTQ community. In short, diversity is at its very core. But Hamilton, who is herself Black, isn’t interested in funding diverse founders alone; she is also interested in enabling more people from diverse backgrounds — including socioeconomically — to invest in venture capital as an asset class.

Toward that end, earlier this week, on the private investing platform Republic, she opened a new fund that anyone — including unaccredited investors — could back under a Securities and Exchange Commission rule called Reg CF, or Regulation Crowdfunding.

Hamilton hit the upper boundary of what Reg CF allows an outfit to raise — $1,070,000 within a 12-month period — in what seemed like hours from 2,790 investors who were invited to invest as little as $100. But more could be coming. The reason why: that rule underwent a change in November under former SEC chair Jay Clayton, and will next month begin allowing outfits to crowdsource up to $5 million. The process could be slowed down by the incoming SEC chief. (President Biden has appointed former regulator and former Goldman partner Gary Gensler, who must now receive Senate confirmation.) If it’s not, however, it’s easy to imagine more unaccredited investors being invited to fund other, and larger, venture funds soon.

Subhead

A second initiative this week has similar objectives to Hamilton — bringing more diverse investors into the ranks of limited partners — though it has a different approach and it’s targeting accredited investors only, which basically means individuals who are earning $200,000 a year and/or have a net worth of $1 million or more.

Launched by Acrew Capital — a Palo Alto- and San Francisco-based early-stage venture spearheaded by veteran VC Theresia Gouw — the firm revealed yesterday that it’s currently raising a traditional growth-stage fund with a twist. In addition to giving its current, mostly institutional investors a crack at investing in the new fund, it is also opening the vehicle to women, people of color, and others who may not have had a chance historically to invest in a later-stage private vehicle.

The key here is its emphasis on growth stage investing. While more women and people of color are breaking into the ranks of seed-stage investing, it takes a long time to make money with early-stage funding. Meanwhile, growth stage funds are more exclusive because the companies they back are closer to an “exit” typically. That makes them very appealing to institutions — including mutual funds and hedge funds — which doesn’t leaving a lot of room for  individuals to build wealth.

Like Backstage, diversity is in DNA of Acrew, which Gouw cofounded with Laura Kolodny, Vishal Lugani and Mark Kraynak, colleagues from their previous fund, Aspect Ventures. It’s little surprise that the firm — which says 88% of its overall team is female and 63% comes from underrepresented backgrounds —  would be the first to publicly focus on pulling more women and people of color who are angel investors, board members, and C-level execs into the world of later-stage deals.

But it’s also strategic on the part of Acrew, which focuses largely on fintech and cybersecurity, and which has stakes in the highly valued challenger bank Chime, and the big data security analytics company Exabeam, among many others. As Kolodny explains it, a growing number of companies is focused on enhancing diversity in the board room, and having an LP base filled individuals from underrepresented groups (with highly vetted networks), works out well for everyone involved.

It’s an approach that they hope won’t distinguish the firm for long, says Kolodny. “Our hope is that  five years from now, a venture firm helping companies to add diverse independent board members and diverse executives won’t be a unique strategy.”

The hope,” she adds, “is [this effort] gets people to embrace a new standard around what is what is expected of venture firms.”

Pictured above: the members of Acrew Capital who are part of its first growth fund, which it has dubbed its Diversity Capital Fund.

Myanmar’s government extends its internet crackdown, Microsoft’s lobbying arm blacklists presidential election objectors and Dublin’s Frontline Ventures raises a new fund. This is your Daily Crunch for February 5, 2021.

The big story: Myanmar blocks Twitter and Instagram

The military government in Myanmar recently told telecom operators and internet service providers to block access to Facebook. Now it’s doing the same thing to Twitter and Instagram.

This comes after the military staged a coup in Myanmar to take power from the civilian government. The new government claims that Twitter and Instagram were being abused to spread propaganda and misinformation, posing a threat to the country’s stability.

Telenor Group, one of the country’s largest telecom providers, said in a statement that it is “gravely concerned with this development in Myanmar” and that “freedom of expression through access to communication services should be maintained at all times, especially during times of conflict.”

The tech giants

Microsoft PAC blacklists election objectors and shifts lobbying weight towards progressive organizations — After “pausing” political giving to any politician who voted to overturn the 2020 election, Microsoft has clarified changes to the lobbying policy of its employee-funded PAC.

Peloton will pump $100M into delivery logistics to ease supply concerns — Peloton has announced that it will invest more than $100 million in air and ocean freight deliveries due to “longer-than-acceptable wait times for the delivery of our products.”

PayPal is shutting down domestic payments business in India — It’s been less than four years since PayPal kickstarted local operations in the world’s second-largest internet market.

Startups, funding and venture capital

Dublin’s Frontline Ventures raises new $83.8M seed fund for European B2B startups — The firm is aiming to invest in up to 45 companies over the next four years.

BeGreatTV to offer MasterClass-like courses taught by Black and brown innovators — The courses are designed to teach folks how to execute and succeed in a particular industry.

Why these co-founders turned their sustainability podcast into a VC-backed business — These podcast co-hosts are turning validation from listeners into the blueprint for a standalone business called Brightly.

Advice and analysis from Extra Crunch

Lightspeed’s Gaurav Gupta and Grafana’s Raj Dutt discuss pitch decks, pricing and how to nail the narrative — The duo explained how they came together for Grafana’s Series A … and eventually, its Series B.

How the GameStop stonkathon helped Robinhood raise $3.4B last week — Robinhood has shown an impressive ability to raise enormous amounts of capital.

TechCrunch’s favorite companies from 500 Startups’ latest demo day — Startup picks from Alex Wilhelm and Jonathan Shieber.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Everything else

House punishes Republican lawmaker who promoted violent conspiracy theories — As the House moved to vote on the highly unusual resolution, Marjorie Taylor Greene claimed that her embrace of QAnon was in the past.

‘Orwellian’ AI lie detector project challenged in EU court — This suit highlights questions of ethics and efficacy attached to the bloc’s flagship R&D program.

Learn about the importance of accessible product design at TechCrunch Sessions: Justice — At our event on March 3, we will examine the importance of ensuring accessible product design from the beginning.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Demo days at startup accelerators are a pretty big deal around here.

These events aren’t just a chance to review the latest cohort of hopeful entrepreneurs — they also showcase the technology, products and services that will compete for VC and consumer attention over the next few years.

You never know where a hit will come from, which is why these events capture our attention. Here’s just one example from Y Combinator’s Summer 2013 Demo Day:

Positioning itself as the “FedEx of today,” it hopes to provide a logistics framework that goes beyond food and can be used for any type of on-demand order.

That startup was DoorDash, by the way.

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Full disclosure: In 2016, I was 500 Startups’ Journalist-in-residence. I covered one demo day in person, spending most of my time backstage where founder teams practiced their pitches.

It was quite a scene: Several people literally jumped up and down to shake off their nervous energy, but I also recall one who calmly recited their lines while gazing through a window.

Yesterday, Jon Shieber and Alex Wilhelm covered 500 Startups’ 27th virtual demo day and selected eight companies as their favorites:

• Stack
• Adapty
• MightyFly
• Omnitron Sensors
• AWSM
• Memechat
• Ryu Games
• Apothecary

Thank you very much for reading Extra Crunch this week! I hope you have a safe, relaxing weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

TechCrunch’s favorite companies from 500 Startups’ latest demo day

How the GameStop stonkathon helped Robinhood raise $3.4B last week

I’ve never used “stonkathon” in a headline before, but it’s been that kind of week.

The war between hedge funds and day traders over GameStop vaulted discount trader Robinhood into the headlines for days.

But how did it affect the company’s financial health?

This morning, Alex Wilhelm examined why Robinhood’s investors were willing to inject $3.4 billion more into the company in just one week.

“More trades means more PFOF (payment for order flow) revenue,” says Alex. “And Robinhood effectively doubled in size.”

Udemy’s new president discusses the reskilling company’s future

Reporter Natasha Mascarenhas interviewed Greg Brown, new president of digital learning platform Udemy, after his company announced that it surpassed $100 million ARR.

A new arm of the company, Udemy for Business, just secured a 100,000-employee contract with Cisco Systems to offer software, business and technology courses.

“The opportunity that the company sees has really forced us to reallocate resources and strategy,” said Brown.

Why one Databricks investor thinks the company may be undervalued

After scaling its ARR to $425 million and reaching a valuation of $28 billion, data analytics company Databricks is clearly IPO-ready.

Battery Ventures has backed Databricks since 2017, so Alex Wilhelm interviewed General Partner Dharmesh Thakker to understand why he thinks the company may be undervalued.

“Whether it’s digital transformation, whether it’s analytics, data is everywhere,” said Thakker. “So the TAM is massive.”

4 strategies for deep tech founders who are fundraising

Deep tech founders face special challenges when pitching investors: they usually don’t have a product, customers or revenue.

It’s difficult enough to ask a stranger for a check when there’s a beta product, but how do you drum up interest in an unproven idea that may exist largely in your imagination?

“Early-stage investors are in the business of funding dreams,” says angel investor Jessica Li.

“Investors are less interested in the intricacies of your technology and more interested in what impact it can create.”

Step one: use storytelling to highlight your big vision.

Edtech valuations aren’t skyrocketing, but investors see more exit opportunities

Investors funded edtech startups with $10 billion last year as the pandemic forced widespread adoption of remote learning.

The valuations of these companies aren’t rising at the same rate as SaaS or fintech startups, but “where edtech lacks in impressive valuations, investors see it gaining in exit opportunities,” writes Natasha Mascarenhas.

For this edtech investor survey, she interviewed:

• Deborah Quazzo, managing partner, GSV Ventures (an education fund backing ClassDojo, Degreed and 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 and Duolingo)
• Andreata Muforo, partner, TLcom Capital (a generalist fund backing uLesson)

Deep Science: AIs with high class and higher altitudes

In his latest recap of recent breakthroughs in applied science, Devin Coldewey looked at how researchers are using AI to:

• Categorize thousands of pieces of classical music
• Read MRIs to spot patients with schizophrenia
• Track elephant herds via satellite
• Improve accessibility on mobile phones

Spotify Group Session UX teardown: the fails and their fixes

In the latest of a series of articles that examines user experiences for consumer apps, UX expert Peter Ramsey and TechCrunch reporter Steve O’Hear studied Spotify Group Session, the shared-queue feature that permits users to create playlists collaboratively.

“Many of these lessons can be applied to other existing digital products or ones you are currently building,” such as the need to add context for important decisions and how to best use “react and explain” prompts.

Lightspeed’s Gaurav Gupta and Grafana’s Raj Dutt discuss pitch decks, pricing and how to nail the narrative

Extra Crunch Live returned this week with two guests: Lightspeed Venture Partners’ Gaurav Gupta and Raj Dutt, co-founder and CEO of Grafana Labs.

In addition to walking us through the presentation that encouraged Lightspeed to invest in Grafana’s Series A, the duo also gave direct feedback to audience members about their pitch decks.

Watch a video with our complete episode, or read highlights from the chat to get Gupta and Dutt’s insights on what goes into a successful pitch deck.

New episodes of Extra Crunch Live drop each Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT.

Here’s a breakdown of the complete episode with Gaurav Gupta and Raj Dutt:

• How they met — 2:00
• Grafana’s early pitch deck — 12:00
• The enterprise ecosystem — 25:00
• The pitch deck teardown — 32:00

Subscription-based pricing is dead: Smart SaaS companies are shifting to usage-based models

Some IT managers may still be debating the merits of usage-based pricing versus subscription-based models, but SaaS investors have made up their minds.

Compared to their rivals, companies that employ usage-based pricing trade at a 50% revenue multiple premium. You can argue with success, but seven out of the nine IPOs since 2018 with the best net dollar retention offer usage-based models.

If you’re a founder who hopes to break into the $100M ARR club, this guest post can help you identify the right usage metrics for creating a sustainable customer journey.

For more actionable advice regarding SaaS pricing and sales, see these previously published Extra Crunch stories:

• Should your SaaS startup embrace a bottom-up GTM strategy?
• How should SaaS companies deliver and price professional services?

Bumble IPO could raise more than $1B for dating service

How many dating networks can the public market support?

In Tuesday’s column, Alex Wilhelm examined the latest IPO filing from relationship-finding service Bumble.

The company set a range of $28 – $30 per share, so Alex set out to find its simple and diluted valuations, how much it expects investors to pay and “how those stack up compared to Match Group’s own numbers.”

Robinhood’s Q4 2020 revenue shows a return to growth

Discount brokerage Robinhood stayed in the news last week as it became a proxy battlefield for institutional and retail investors, but its backers “put in another billion just last week,” says Alex Wilhelm.

Why were investors so bullish after days of screaming headlines?

In yesterday’s column, Alex unpacked Robinhood’s Q4 2020 numbers, “which shows a return to sequential-quarterly growth at the trading upstart.”

Trading app Public drops payment for order flow in favor of tips

Before Redditors came after GameStop, zero-cost trading service Public says it was seeing “steady ~30%” month-over-month growth.

Last week, however, “new user signups went up 20x,” founders Leif Abraham and Jannick Malling told TechCrunch.

After closing a $65 million Series C, Public announced yesterday that it would “stop participating in the practice of Payment for Order Flow,” replacing PFOF with an “optional tipping feature.”

Customer advisory boards are a gold mine for startup brand champions

Startups that don’t directly engage their earliest customers with purpose and intention are leaving money on the table.

Creating a Customer Advisory Board (CAB) is a proven method for soliciting product ideas, testing marketing plans and turning early users into loyal brand advocates.

Before you call a CAB, read this post to find out how to identify customers who’ll contribute real insights, establish goals and “pick members who play well together.”

Best practices as a service is a key investment theme to watch in 2021

Identity and access management company Okta announced in a study last week that its largest customers use an average of 175 different applications to manage their operations.

Managing Editor Danny Crichton says this “explosion of creativity and expressiveness and operational latitude” offers widespread benefits, but it’s “also a recipe for disaster,” since many end users aren’t well-trained when it comes to using these tools.

This enterprise version of the Tower of Babel creates an opening for companies that offer “best practices as a service,” says Danny. “The next generation of SaaS software has to take those abecedarian building blocks and forcibly guide users to using those tools in the best possible way.”

This week, flexible workspace operator (and one-time unicorn) Knotel announced it had filed for bankruptcy and that its assets were being acquired by investor and commercial real estate brokerage Newmark for a reported $70 million.

Knotel designed, built and ran custom headquarters for companies. It then managed the spaces with “flexible” terms. In March 2020, it was reportedly valued at $1.6 billion.

At first glance, one might think that the WeWork rival, which had raised about $560 million since its 2016 inception, was another casualty of the COVID-19 pandemic. 

But New York-based Knotel was reportedly in trouble – facing a number of lawsuits and evictions – before the pandemic had even hit, according to multiple reports, such as this one in The Real Deal.

Jonathan Pasternak, a partner in the bankruptcy, restructuring and creditor rights group at New York-based Davidoff Hutcher & Citron, believes the company’s Chapter 11 filing was inevitable despite it reaching unicorn status after raising $400 million in Series C funding in August 2019.

“In addition to being grossly overvalued on the market, the company overextended itself with long term leases and lavish build-outs, leaving the company in significant debt while failing to ever turn a profit,” Pasternak wrote via email. “The pandemic exacerbated their vacancy situation, resulting in more than 35% vacancies in their 2.4 million square-foot NYC portfolio. The company overextended and likely ran out of cash.”

Newmark’s purchase of Knotel’s assets is an effort to recoup some of its investment, according to Pasternak.

Anytime a company that has raised more than half a billion dollars basically implodes, it’s worth taking a look at the roller coaster ride it was on before it got to that point.

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2016

Virgin Mobile co-founder Amol Sarva and former VC Edward Shenderovich founded Knotel, essentially reversing the WeWork model. There’s hype around the company in its early days.

2017

Knotel raised a Series A round of $25 million in February from investors such as Peak State Ventures, Invest AG, Bloomberg Beta and 500 startups. It marketed its offering as “headquarters as a service” — or a flexible office space that could be customized for each tenant while also growing or shrinking as needed. 

2018

In April, Knotel announced the close of a $70 million Series B financing led by Newmark Knight Frank and The Sapir Organization. In August, the company told me that it was operating over 1 million square feet across 60 locations in New York, London, San Francisco and Berlin, and that it was on track to reach 2.5 million square feet and $100 million in revenue by year’s end. Revenue growth had increased by 300 percent year over year, according to the company. Customers and users and clients ranged from VC-backed startups Stash and HotelTonight to enterprise customers such as The Body Shop. 

“What they’re doing is different,” said Barry Gosin, CEO of Newmark Knight Frank, in a press release, at the time of the round. “It’s a new category the industry hasn’t seen and is rapidly adopting. We’ve watched their ascent from a distance and are now thrilled to join them on the journey. It marks a shift in how owners and tenants are coming together.”

2019

In August, Knotel announced the completion of a $400 million financing, led by Wafra, an investment arm of the Sovereign Wealth Fund of Kuwait. With the round, the company had achieved unicorn status and was being touted as a formidable WeWork competitor. At the time, Knotel said it operated more than 4 million square feet across more than 200 locations in New York, San Francisco, London, Los Angeles, Washington, D.C., Paris, Berlin, Toronto, Boston, São Paulo and Rio de Janeiro. 

In a statement at the time, CEO Sarva said: “Knotel is building the future of the workplace, and we are excited to welcome a group of investors who believe passionately in our product, vision and ability to execute. Wafra will help us continue our rapid global expansion and solidify our position as the leader in a fast-growing, trillion-dollar flexible office market.”

2020

In late March, Forbes reported that Knotel had laid off 30% of its workforce and furloughed another 20%, due to the impact of the coronavirus. At the time, it was valued at about $1.6 billion. 

The company had started the year with about 500 employees. By the third week of March, it had a headcount of 400. With the cuts, about 200 employees remained with the other 200 having either lost their jobs or on unpaid leave, according to Forbes. 

“Business as usual is over,” Amol Sarva, Knotel’s CEO and co-founder, said in a statement to Forbes. “Knotel has decided to take sharp action to prepare for the worst case — a long health and economic crisis.”

In the second quarter, Knotel’s revenue slipped by about 20% to about $59 million compared to the first quarter, reported Forbes. Multiple landlords had filed lawsuits against the company.

By July, Forbes had reported that Knotel was attempting to raise as much as $100 million, according to various sources “familiar with the matter.”

2021

Knotel filed for bankruptcy, agrees to sell assets to investor Newmark for a reported $70 million after being valued at $1.6 billion less than one year prior.

“Newmark’s commitment offers a path forward amidst this challenging climate,” CEO Sarva said in a statement. “We are optimistic that, through a successful restructuring, we can refocus on our mission of providing state-of-the-art, tailored flex space in key U.S. and international markets.”

To facilitate the transaction under Section 363 of the United States Bankruptcy Code, an affiliate of Newmark agreed to provide Knotel with about $20 million in cash as DIP financing to support Knotel through the bankruptcy process.

Just as the startup and VC world watched as WeWork lost a significant amount of value over the past two years, we’re paying attention to the demise of Knotel and wondering what this means for the flexible workspace sector. As much of the world continues to work from home and office buildings remain mostly vacant as this pandemic rages, our guess is that things will only get worse before they get better.