Category: UNCATEGORIZED

The private launch industry isn’t showing any signs of slowing down, and a new $172 million Series B round of funding for China commercial launch startup iSpace indicates it could be heating up internationally. The new funding was led by Beijing Financial Street Capital Operation Center, CICC Alpha, Taizhonghe Capital and includes participation from existing shareholders.

The funding will primarily go towards development of iSpace’s planned ‘Hyperbola’ space launch vehicle. The first of these sent satellites into space last July, making iSpace the first private Chinese launch company to mark that achievement. A larger rocket, called Hyperbola-2, is currently in development, and iSpace intends for the first-stage booster of that vehicle to be fully reusable, with vertical landing capabilities similar to those of SpaceX’s Falcon 9.

iSpace is developing reusable rocket engine technology to match, which is another use of the new injection of funding – as well as technical talent hiring to support all of the above. The goal is to perform a first test flight just to the Kalman line that defines the edge of space sometime early next year, using the first-stage booster of the Hyperbola-2 and including a powered landing. After that, it hopes to fly its first fully orbital mission before the end of next year.

Founded in 2016, iSpace previously raised $104.5 million, bringing its total funding to date to $276.5 million.

If 2020 hasn’t been wild enough, there’s an extra special twist going down at Disrupt 2020 beyond the fact that, for the first time ever, the conference will be fully virtual.

It also happens to be the show’s 10th anniversary. Time flies when you’re changing the world, eh?

As part of Disrupt’s 10th anniversary celebration, we’re doing something brand new. So it is with great pleasure that I introduce the TC10.

The TC10 is a group of entrepreneurs, investors, etc. that have been a staple of the Disrupt conference over the past decade. They’ve spoken at the show — either for a fireside chat or on a panel or as a Startup Battlefield judge — at least three times. (Some them have been there more times in the past 10 years than they haven’t.)

The TC10 will all be featured in various ways throughout the show, from fireside chats to Startup Battlefield judges to the Pitch Deck Teardown! This is the piece I’m personally the most excited about.

The Pitch Deck Teardown takes a look at real startup pitch decks submitted by attendees of the show. These world-class investors and entrepreneurs will walk through each deck, slide by slide, and give feedback on what they like, what they don’t, and how they would change it. Not only will this give entrepreneurs a crystal clear look at what investors are looking for in a pitch deck, but it will also show how many investors and entrepreneurs have different opinions on what makes a great deck, giving founders the insight they need to tailor their decks appropriately based on the intended audience.

You can apply to the Pitch Deck Teardown right here.

So without any further ado, I’m proud to announce the Disrupt 2020 TC10:

Aileen Lee

Aileen is the founder of Cowboy Ventures, a seed-stage focused fund. They seek to back exceptional teams building technology that re-imagines work and personal life in large and growing markets – what they call “Life 2.0”. She was formerly a partner with Kleiner Perkins Caufield & Byers, and the CEO of RMG Networks.
A graduate of MIT, Aileen has an MBA from Harvard Business School and is a Henry Crown Fellow of the Aspen Institute.

# of Disrupt Appearances: 9

Charles Hudson

Charles Hudson is the Managing Partner and Founder of Precursor Ventures, an early-stage venture capital firm focused on investing in the first institutional round of investment for the most promising software and hardware companies. Prior to founding Precursor Ventures, Charles was a Partner at SoftTech VC. In this role, he focused on identifying investment opportunities in mobile infrastructure.

# of Disrupt Appearances: 3

Cyan Banister

Cyan is addicted to early stage angel investing. She spends a lot of her time dreaming about what the future could look like and invest in people who do the same but are creating it. Most recently she was at Founders Fund, a top tier fund in SF. Most of her successful investments have a common theme around job creation and flexibility, but I’ve invested in everything from rocket ships to sandwich delivery. She’s currently a partner at Long Journey Ventures.

# of Disrupt Appearances: 6

Drew Houston

Drew Houston is co-founder and CEO of Dropbox. Since founding the company in 2007 with Arash Ferdowsi, Drew has led the company’s growth from a simple idea to a service used by over 600 million people around the world. Drew received his bachelor’s degree in Electrical Engineering and Computer Science from MIT in 2006. After graduating, he turned his frustration with carrying USB drives and emailing files to himself into a demo for what became Dropbox. Today, Dropbox is one of the world’s leading business collaboration platforms, with 15 million paying subscribers and nearly 3000 employees across 12 global offices.

# of Disrupt Appearances: 3

Kirsten Green

Combining a unique and unconventional blend of professional history and acquired investment experience, Kirsten formed San Francisco-based Forerunner Ventures in 2010, where she serves as Founder and Managing Partner. Noticing that emerging purchasing processes were linear and ripe for improvement, Kirsten developed a pacesetter mentality and analytical eye to remain ahead of experience-driven retail trends and identify compelling brand platforms and visionary entrepreneurs.

# of Disrupt Appearances: 3

Megan Quinn

Megan Quinn is the chief operating officer of Niantic where she oversees business operations and international development across the company. In 2015, Megan was a general partner at Spark Capital where she focused on growth stage investments, including Glossier, Handshake, Pendo, Rover, and InVision. During this period, she also led Spark Capital’s investment in Niantic during the company’s Series B funding round where she joined the company’s board. She’s held product leadership positions at Google and Square prior to getting into venture.

# of Disrupt Appearances: 3

Michelle Zatlyn

Michelle Zatlyn is co-founder and COO of Cloudflare, a leading Internet security, performance, and reliability company that was named to CNBC’s Disruptor 50 List, selected by the Wall Street Journal as the Most Innovative Internet Technology Company for two successive years, and named a Technology Pioneer by the World Economic Forum. Before co-founding Cloudflare, Michelle held positions at Google and Toshiba and launched two successful startups. She holds a BS degree, with distinction, from McGill University, and an MBA from Harvard Business School, where she was awarded the Dubliner Prize for Entrepreneurship.

# of Disrupt Appearances: 3

Niko Bonatsos

Niko Bonatsos is a managing director at General Catalyst, a venture capital firm with approximately $5 billion in total capital raised. Working from the firm’s San Francisco Bay Area offices, Niko focuses his investment strategy on finding first-time technology founders with strong product instincts, a robust appetite for learning, and a desire to create innovations with the potential to benefit millions. In his nine years with GC, Niko has been instrumental in the firm’s investments in Atrium, Audius, Cover, Hive, HubHaus, ClassDojo, Paribus (acquired by CapitalOne), Sleeper, and Snap (NYSE: SNAP) among others.

# of Disrupt Appearances: 4

Roelof Botha

Roelof F. Botha has spent over 15 years building companies in Silicon Valley. He began within the walls of nascent PayPal, where he joined in March 2000 while completing his MBA at Stanford. He became CFO in 2001 and led the company through both its IPO in early 2002 and the subsequent acquisition by eBay. Roelof joined Sequoia Capital in 2003 to help founders build enduring businesses. In addition to leading the US office and serving as one of three Stewards of the global Sequoia Partnership, Roelof focuses on internet, services and software investments.

# of Disrupt Appearances: 8

 

Susan Lyne

Susan Lyne is co-founder and General Partner of BBG Ventures, an NYC-based, early-stage fund leading investments in companies built by underestimated founders that are transforming our collective and lived experiences. Since 2014, the fund has invested in 60 companies including Zola, The Wing, Modsy, Lola, KiwiCo, Glamsquad, HopSkipDrive, Spring Health, and Blueland. Before founding BBG Ventures Susan held leadership positions at media, technology, and entertainment companies of all sizes and stages, from startups to public companies.

# of Disrupt Appearances: 6

Join us and the TC10 at Disrupt 2020 from September 14-18 by getting your Digital Pro Pass today! Prices are discounted for just 72 hours during our flash sale so if you’ve been on the fence, now’s the time to act!

The last couple of years have been tough on the smartphone industry, as sales plateaued and eventually eroded. But nothing could have prepared manufacturers for 2020. This was supposed to be the year numbers began bouncing back, courtesy of 5G and some radical new designs. But the real figures have been utterly dismal.

According to new numbers out of Gartner, worldwide sales dropped 20.4% for the second quarter. The numbers are in keeping with the drops seen in Q1. The culprit is, of course, COVID-19. Global lockdowns and slowed economies have led to a further decreasing interest in smartphones. As many users have shifted disposable income to upgrading their home offices, they’ve understandably deprioritized mobile device, accelerating recent trends.

Samsung was the hardest hit of the top five, dropping a massive 27.1% year-over-year. “Demand for its flagship S Series smartphones did little to revive its smartphone sales globally,” Gartner Senior Research Director Anshul Gupta said in a release tied to the news. The company is no doubt banking on the recent Galaxy Note 20 launch to help reverse course.

Samsung’s decline puts it in a virtual tie with Huawei for first place, with the two companies accounting for 18.6 and 18.4% of the overall market, respectively. While Huawei sales actually decided 6.8% overall, its figures were still strong enough to see an increase in the overall marketshare for the quarter. The company also saw a rise in sales of 27.4% between Q1 and Q2. Apple, meanwhile, experienced a slight y-o-y dip of 0.4% — a relatively strong showing, all things considered.

In terms of markets, China dipped 7% for the quarter. India, meanwhile, saw the largest drop — down 46%, courtesy of lockdown protocols.

Manasi Vartak, founder and CEO of Verta, conceived of the idea of the open source project ModelDB database as a way to track versions of machine models while she was still in grad school at MIT. After she graduated, she decided to expand on that vision to build a product that could not only track model versions, but provide a way to operationalize them and Verta was born.

Today, that company emerged from stealth with a $10 million Series A led by Intel Capital with participation from General Catalyst, who also led the company’s $1.7 million seed round.

Beyond providing a place to track model versioning, which ModelDB gave users, Vartak wanted to build a platform for data scientists to deploy those models into production, which has been difficult to do for many companies. She also wanted to make sure that once in production, they were still accurately reflecting the current data and not working with yesterday’s playbook.

“Verta can track if models are still valid and send out alarms when model performance changes unexpectedly,” the company explained

Vartak says having that open source project helped sell the company to investors early on, and acts as a way to attract possible customers now. “So for our seed round, it was definitely different because I was raising as a solo founder, a first time founder right out of school, and that’s where having the open source project was a huge win,” she said.

Certainly Mark Rostick, VP and senior managing director at lead investor Intel Capital recognized that Verta was trying to solve a fundamental problem around machine learning model production. “Verta is addressing one of the key challenges companies face when adopting AI — bridging the gap between data scientists and developers to accelerate the deployment of machine learning models,” Rostick said.

While Vartak wasn’t ready to talk about how many customers she has just yet at this early stage of the company, she did say there were companies using the platform and getting models into production much faster.

Today, the company has 9 employees, and even at this early stage, she is taking diversity very seriously. In fact, her current employee makeup includes 4 Indian, 3 Caucasian, 1 Latino and 1 Asian for a highly diverse mix. Her goal is to continue on this path as she builds the company. She is looking at getting to 15 employees this year, then doubling that by next year.

One thing Vartak also wants to do is have a 50/50 gender split, something she was able to achieve while at MIT in her various projects, and she wants to carry on with her company. She is also working with a third party, Sweat Equity Ventures, to help with recruiting diverse candidates.

She says that she likes to work iteratively to build the platform, while experimenting with new features, even with her small team. Right now, that involves interoperability with different machine learning tools out there like Amazon SageMaker or Kubeflow, the open source machine learning pipeline tool.

“We realized that we need to meet customers where they are at their level of maturity. So we focused a lot the last couple of quarters on building a system that was interoperable so you can pick and choose the components kind of like Lego blocks and have a system that works end to end seamlessly.”

Firefly is expanding its ad business in New York City by acquiring the out-of-home business of Strong Outdoor, as well as by becoming the advertising partner for fleet operator Sally.

Firefly launched in 2018 by offering Uber and Lyft drivers a digital display that they could place at the top of their vehicles, making extra money by running ads that can be targeted based on geography, time of day, demographics and more. It expanded into advertising on regular cabs last year, an expansion accelerated by the acquisition of Strong’s digital business.

Firefly co-founder and CEO Kaan Gunay explained that with this new deal, the startup is also taking control of Strong’s non-digtal taxi-top advertising.

The plan is to eventually transition those ad units to digital, but he suggested that the timing will depend on how quickly the ad business returns. After all, out-of-home advertising is a lot less appealing when everyone’s stuck at home. In the meantime, Gunay said he’s happy to selling traditional ad inventory as well.

He also said that even though Firefly’s business slowed with the pandemic, he’s confident that the company’s more targeted digital approach can bring new customers to taxi-top advertising (brands advertising with Firefly in New York have included Puma, Dunkin’, Truly, Colgate, Stella Artois, 7-Eleven, Papa Johns and Postmates). And Firefly is still expanding and investing, as shown by this acquisition.

Asked whether these moves into traditional advertising put Firefly at risk of becoming just another taxi landscape, Gunay said, “Absolutely not.” He said Firefly is still very much a technology company, while also pointing to the appeal of traditional taxi-top ads, which he described as “New York institution.” He added that these deals give Firefly 42% marketshare in New York.

 

Global communications startup Kymeta has raised a new $85.2 million funding round, led by Bill Gates . The Redmond-based company has developed a new type of smart, powered flat panel antenna that can be used to to vastly improve satellite and cellular connection signal strength.

Kymeta’s new funding is intended to help it continue with new product development efforts, and also to speed the commercialization of its technology. Since its debut in 2015, Kymeta has productized its technology and added a significant number of customers, particularly in industries like defense, mobility and public safety.

The company’s tech is electronically steered and requires no moving parts to operate, which is a huge advantage over traditional satellite reception dishes – particularly in applications like on aircraft, on ships and in other transportation methods where having a satellite dish attached to the outside of your vehicle doesn’t make any sense or is impossible.

Kymeta’s tech also has significant potential advantages when it comes to working with the new generation of low Earth orbit communications satellite constellations the are coming online today and in the near future. Because of the dynamic nature of its flat panel antennas, it can track and adjust position when maintaining connection with these satellites as they move across the sky – a task that requires more flexibility when compared to maintaining connections with the large, fixed-position geostationary communications satellites that form the backbone of legacy satellites internet networks.

Fitbit would be the first to admit it was late to the smartwatch game. When it did finally launch a proper smartwatch with the Ionic, it was something of a misfire. But the Versa helped the wearable pioneer make up for some lost ground, courtesy of a solid, Android-compatible device at a good price.

In fact — recent years have seen both Apple and Samsung exploring lower-cost alternatives to their own flagships, as these device become increasingly mainstream. Not to mention the fact that consumers have grown a bit weary of ever-increasing device costs. In spite of that, however, Fitbit is taking a swing at the premium end of the market with the new Sense smartwatch.

The device isn’t designed to replace the popular Versa line. In fact, today also sees the release of the Versa 3. Instead, the Sense is designed to be a premium alternative to the Versa line — the “company’s most advanced health smartwatch,” according to Fitbit. It’s an interesting new dimension for the company, though it comes as Fitbit has already proven that it can make a solid smartwatch, so perhaps asking people to pay a bit more isn’t entirely out of the realm of possibility, especially when the brand continues to have some cache among wearable users.

Those new features largely revolve around additional sensors, including ECG and skin temperature detection. Fitbit is strongly invested in the notion of stress detection as the next big milestone for wearable health. Certainly there’s a lot to be said for the feature in what’s already proven to the most stressful year on record for many. And plenty of wearable and app designers have already invested a good deal in the notion of reducing stress through technology, as evidenced by the popularity of meditation apps and breathing reminders.

The feature is built around the inclusion of an EDA (electrodermal activity) sensor. It’s a pretty new concept for this class of device. To use it, the wearer places the palm of their hand over the watch’s face. The system then scans for electric changes in skin sweat levels. In all, stress levels are measured by a combination of 10 biometric inputs that also include sleep quality, heart rate and exercise level.

I can’t really say much about the efficacy of these measurements at this point. I suspect stress is significantly more difficult to quantify, though it certainly does have physical manifestations. At the very least, such a system may go a ways toward detecting changes over time worth observing.

Here’s a quote from UCSF Assistant Professor Dr. Helen Weng, “Meditation is exercise for your mind. Just like physical exercise, you need a consistent practice to cultivate your mental capacity for it. Finding a meditation practice that works for you is important for building long-term health and wellness benefits. Fitbit can help you achieve this through its mindfulness and measurement tools, including the new Stress Management Score and EDA Scan app, so that you can see your progress and build a personalized meditation practice that is impactful and sustainable.”

As a generally high-stress person living through an extremely high-stress time, I’m interested in checking this out as part of our review. The feature makes extensive use of Fitbit’s software offerings, as well. The company clearly sees its premium content play as a big part of its future (either as part of Google or not). As with other devices, this will come with a free year of Fitbit Premium. That subscription service also includes meditation content from third parties, including Aaptic, Aura, Breeth and Ten Percent Happier.

The device features ECG detection (pending FDA approval), putting it more in line with premium Apple and Samsung models, for detection of things like AFib. There’s also on-board GPS (previously the realm of the Ionic), and the company will begin to surface SpO2 blood oxygen levels.

The new watch starts shipping in late September.

Fitbit’s big news for today was the launch of the Sense, a new, more premium smartwatch line designed to compete directly against the likes of Apple and Samsung. But Fitbit has never been one for solitary product launches. As such, two of its biggest lines are also getting key updates.

First off is the Versa. The popular low-cost smartwatch played a key part in helping bring the company back from the edge. Almost a year to the day after the launch of the Versa 2, Fitbit’s back with a followup that’s taking a bit of a back seat to the launch of the higher-end model. The price discrepancy means the Versa is lacking some of the key Sense features, including ECH and EDA detection. It does, however, join its younger sibling in adding GPS to the mix.

The watch also features built-in Alexa and Google Assistant (introduced in an earlier version), along with the ability to answer calls. Active Zone Minutes is coming to both watches, offering a more in-depth take on fitness tracking than the standard step count. The squircle design has been updated a bit too, with smoother edges that put it more in line with the new Sense. And like the Sense, it promises a hearty six+ days of battery life on a single charge.

The Inspire 2 is also getting Active Zone Minutes, while offering an even more impressive 10 days of life on a charge — the longest of any Fitbit product. The tracker features a more streamlined design, coupled with a brighter screen. It can do a whole bunch of different tracking, per Fitbit:

20+ goal-based exercise modes, advanced sleep tools, 24/7 heart rate tracking, menstrual health tracking, and see your food and hydration intake, along with your weight, all with daily encouragement right on your wrist

All of the new trackers come with a free year of Fitbit premium. The Versa 3 runs $230 and the Inspire 2 is $100. They’re up for pre-order starting today and will be available globally in late September.

Accessory maker Nomad has a long history of delivering great accessories for iOS and Android devices, using great quality materials and craftsmanship. Now, the company is partnering with wireless charging technology startup Aira to debut the later’s premiere product: FreePower, a position-free wireless charging technology. Nomad’s new Base Station Pro ($229) is the first product on the market with Aira’s FreePower tech, and I got the chance to check it out for the past week to see how it measures up.

The basics

Nomad’s Base Station Pro is a wireless charging pad that can charge up to three devices simultaneously. It works with all Qi-capable devices, which includes the latest iPhone models and most of the latest Android phones, as well as numerous accessories including AirPods Pro and other headphones. In many ways, it’s very similar to what Apple was promising with the AirPower multi-device charger it debuted and then subsequently canceled – but it doesn’t work with the Apple Watch, because that uses Apple’s own proprietary wireless charging tech.

The Nomad Base Station Pro is just under 9 inches long, and about 5.5 inches wide. It’s less than half-an-inch thick, which is especially impressive given that it has so much charging flexibility hidden within (there are 18 coils inside). As mentioned, it can support charging up to three devices simultaneously, and has an LED indicator on the side with three lights to let you know how many devices are actively drawing charge at any time. Nomad includes one USB-C to USB-C cable in the box, along with a 30w USB-C PD power adapter to connect it.

There are plenty of multi-device wireless chargers out there (Nomad even makes a few) but the real advantage that Aira’s FreePower tech brings to the table is the freedom to place devices on the pad in virtually any orientation and have them automatically charge. Most Qi chargers require you to place devices within a very specific range of area relative to the coil or coils contained within the charger – and being off by even a bit can either cause a device not to charge, or make the charging process much less efficient.

Design and performance

The Nomad Base Station Pro is larger than most wireless chargers out there, but all that surface area is usable space. And Nomad’s signature dark metal and leather finishes are both attractive and practical here. With its single-cable design, this is a much less cluttered and more physically attractive solution to charging than a mess of cables and a multi-USB adapter, for instance.

Inside, Aira’s technology is the beating heart of the Nomad Base Station Pro. There are 18 overlapping coils contained with the charger, along with a layer of controllers on a circuit board that provide the smarts that make its position-free placement charging possible. Basically, Aira’s technology automatically detects what kind of charge any device placed on the pad can accept, and then directs the necessary juice its way, while also optimizing the magnetic field between the device’s built-in charging coil and the coil array found within the Base Station Pro for optimal power delivery.

[gallery ids="2035186,2035185,2035184"]

In testing, it worked just as advertised, detecting my iPhone XS Pro Max no matter what orientation or where I lay it on the pad (provided the phone’s own coil was fully on the pad, of course). Ditto when I added a second iPhone, as well as AirPods Pro, and another set of wireless earbuds I have that feature a Qi-enabled charging case. You can even slide the iPhone along the surface of the pad and it will continue to charge, without losing the connection as the field tracks the device.

What’s ironic about this is that even though it feels like magic, it’s really what I had always imagined wireless charging would be like before I’d actually used any wireless charging devices. Current standard Qi-based charging is much more like having a slightly more convenient, but still essentially fixed dock, whereas Aira’s FreePower tech truly allows you to toss down your device and have it charge reliably.

Bottom line

There are some caveats to keep in mind with this tech: First, it’s not officially Qi-certified – but that’s only because there’s no current existing standard for free position, according to the company. They’ve done extensive testing to confirm that it adheres to Qi standards for compatibility, heat management and more, and Aira is working with the Wireless Power Consortium (WPC) that owns and manages the Qi standard to create a standard that covers free position charging.

In testing, it works well however, and charges Qi-enabled devices reliably, with the added convenience of allowing you to place them anywhere on the pad. That may not seem like a huge deal, but it really vastly improves the experience. Add three-device support to that, and Nomad’s Base Station Pro quickly becomes a unique (if somewhat expensive) wireless charger that’s hard to beat.

Aira, meanwhile, has big plans for FreePower, which includes providing the tech to a number of partners across consumer and commercial markets. It’s easy to imagine how well this could work in situations like coffee shop counters that are fully wireless charging surfaces, for instance, or in cars with charging center consoles. The company has big plans, but if this debut is any indication, those should pay off with big advantages across daily life for consumers.

Chicago has a long history of creating industry-leading companies and it doesn’t seem COVID-19 is slowing down the city. TechCrunch surveyed Chicago venture capitalists who remain optimistic despite the current crisis. COVID-19 could be good for Chicago, they told TechCrunch throughout their survey responses.

It’s clear from the responses below investors in Chicago are interested in startups in and out of the city. As explained in the responses, the partners and associates are happy to invest in worthwhile companies no matter where the company is located. That said, they see Chicago as a fantastic place to experience big city life with a much lower cost of living than what’s available in NYC, San Francisco or Seattle.

Here’s who we surveyed:

• Guy Turner, partner, Hyde Park Venture Partners
• Constance Freedman, founder and managing partner, Moderne Ventures
• Katie McClain, partner, Energize Ventures
• Bess Goodfellow, principal, Hyde Park Angels
• Rachel Stillman, associate, 7WireVentures

VCs are optimistic that COVID-19 will result in a win for Chicago

Guy Turner sees a possible outcome where Chicago and other cities in the region benefit from the COVID-19 fallout. He said, “In this sense, COVID could reaccelerate Chicago and other midcontinent cities’ startup communities with more availability of talent and cheaper operating costs. Might COVID result in tech flight to ex-urban or suburban communities around the midcontinent, or otherwise in third- and fourth-tier cities around the country?” He later notes this warning: “Related to the 2020 COVID recession, I would expect the availability of local capital for seed and post-seed stage financing to reduce somewhat.”

Constance Freedman of Moderne Ventures notes on COVID-19: “I think Chicago is poised to come out well. The city is affordable to begin with … like 50% more affordable than the West or East Coast hubs … Chicago has long been known for banking, real estate, health care and insurance. I think these sectors and others are poised to do well. The largest opportunity for us (and any major city) is how to close the education gap, which leads to closing the income gap and from there — the sky is the limit!”

Rachel Stillman of 7WireVentures is optimistic, too, in part saying, “We believe that Chicago will remain a technology hub and may actually stand to benefit from the shift to more remote work. As talent recruitment becomes democratized through location-agnostic roles, many of the functions that have been characterized by scarce talent pools (e.g., engineering, data science, product) will benefit from national recruitment capabilities. Additionally, strong candidates that prefer to remain in the Midwest were historically pushed to move to the coasts for career advancement.

Chicago VCs to continue regional and national focus

Nearly all the investors surveyed stressed their firms focus is not on just Chicago, but startups nationwide. None expect COVID-19 to change that mission.

Katie McClain of Energize Ventures said, “We expect to maintain a balance of investing in companies across geographies that are not limited to Silicon Valley. With many more firms going remote and relocating to areas outside of the West Coast since the start of the pandemic, we see a big opportunity for non-Bay Area companies to emerge. We’re excited about what that could mean for cities like Chicago and the Midwest in general.”

Guy Turner sees a similar outcome, noting, “We expect to maintain the same geographic focus after COVID, however, we are likely to be more open to teams and companies with a remote or partially remote working structure. In the past, we mostly avoided ‘virtual’ teams, but the last six months have proven at scale that companies can be innovative and productive with a largely remote culture.”

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Guy Turner, partner at Hyde Park Venture Partners

How much is local investing a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We are geographically focused on the “midcontinent” — in which we include the Midwest, Toronto and Atlanta. We are indeed investing remotely right now, but are maintaining our geographic lens so that we sustain a focused sourcing, talent and co-investing network post-COVID. Early-stage investing is a very personal and network-driven business, so we want to be near and accessible to find and work with the best founders. Focusing on specific geographies has allowed us to do this and will again after COVID. Chicago represents about 40% of our activity historically and will likely continue to.

Long term, do you expect to be more or less locally focused?

We expect to maintain the same geographic focus after COVID, however, we are likely to be more open to teams and companies with a remote or partially remote working structure. In the past, we mostly avoided “virtual” teams, but the last six months have proven at scale that companies can be innovative and productive with a largely remote culture. Most “virtual” companies still have an HQ with several key leaders, and we seek companies that call a city in our geography HQ. The best way we’ve found to filter for the center of mass of a remote or virtually run company is to ask the question, “Where do you hold your holiday party or off-sites?” This usually coincides with the city where one or more founders live.

What do you expect to happen to the startup climate in Chicago longer term, with the shift to more remote work, possibly from more remote areas. Will it stay a tech hub? (Will there be tech hubs? What is a tech hub now?)

We remain optimistic that the decade of progress in Chicago’s march toward “tech hub” status will not be interrupted by COVID. Indeed, it was the higher unemployment and dropping rents of the financial crisis that helped spark the growth of the Chicago startup community, in what is otherwise a fairly traditional and conservative business community. One of the first companies we invested in paid $12/square foot/month in the Chicago Merchandise Mart in 2012. Depending how you count, that space reached $40 to $60/square foot in the 2019 peak.

In this sense, COVID could reaccelerate Chicago and other midcontinent cities’ startup communities with more availability of talent and cheaper operating costs. Might COVID result in tech flight to ex-urban or suburban communities around the midcontinent, or otherwise in third- and fourth-tier cities around the country? The new virtual work trend may enable more of that at the margin, but it’s hard to see it taking off at scale. In the long run, startups will still have to fly to sell their products or have employees fly in for HQ events post-COVID. That means most startups will want to have some center near a top 10 or top 20 airport. Young people (founders, tech talent, etc.) still want to date, experience nightlife and have fun with lots of other young people — i.e., city life.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Chicago has always been a logistics hub and is now becoming a logistics tech hub with companies like FourKites, Shipbob and Forager. COVID highlighted the fragility and importance of our food supply chains, making the role and potential of these companies increasingly visible. This will be good for Chicago and the broader Midwest.

In the short term, what challenges are facing Chicago’s startup scene?

Related to the 2020 COVID recession, I would expect the availability of local capital for seed and post-seed stage financing to reduce somewhat. While we were fortunate to raise our third fund late last year, some of our peer funds were still raising or planning to raise their next fund. A few are likely to come out smaller or to be significantly delayed in their next raise given the effects of COVID on most venture portfolios’ valuations and exit horizons. This means seed and post-seed rounds will probably be harder for local startups to raise for a few years. On the other hand, angel activity remains very strong given the rebound of public markets, and coastal funds continue to show strong interest and deployment in Series A and later in Chicago.

Likewise — as in every other geography — COVID has significantly slowed down the growth of most startups while aiding a small few. Chicago is no exception, though there are some restaurant tech startups (Tock, Chowly, etc.) and logistics startups (FourKites, Shipbob, Forager) that have come out on top. This is my mental model for what the startup opportunity set looks like during COVID versus normal times — but just as true anywhere else as here:

Less related to COVID, Chicago has always been strong in sales talent but weaker on product and product-led growth talent. This is improving with each successive generation of successful startup outcomes like Grubhub, Cleversafe, Braintree, GoHealth, etc. But it’s a long journey.

Who are some founders (who you’ve invested in or otherwise) that are leaders in the community?

• Garry Cooper at Rheaply: Series A stage and has been very involved in social justice efforts locally.
• Amanda Lannert at Jellyvision: late stage and very active angel.
• Mike Evans at Fixer: co-founder of Grubhub and now runs a startup B-corp.

A lot of Bay Area founders and developers are looking to relocate. Why Chicago or even the Midwest?

The answer is pretty simple. The cost of living in Chicago — in particular housing — is about half or less that of the Bay Area/SF and NYC. If you go to a Minneapolis, Indianapolis or Cincinnati, you’re talking a quarter or a third. If you are starting a startup or a career in tech, that is a massively different paradigm under which to build a nest egg. You just can’t in most major coastal cities. Chicago is also a beautiful place with all the benefits of a top three U.S. city — culture, arts, career opportunities, education, accepting culture, etc.

Constance Freedman, founder and managing partner at Moderne Ventures

I think as a society we do not quite know how COVID is going to impact us all long term but what is becoming clear is that we are going to need to all figure out how to live with COVID for the foreseeable future, which could be many more months or, more likely, years.

What does that mean for the startup scene in Chicago? First, what does it mean for cities broadly? There will be a repositioning of sorts as workplaces everywhere evaluate what “work from home means” and where, when and how we go back to the office.

We are social people and we need social interaction so there will be a return of some kind — how and when is unclear.

Where do people want to live? Data is showing us that migration to the suburbs and second home markets are up — all those millennials who would never buy a home and move to the suburbs are buying homes and moving to the suburbs (or moving back in with their parents as the case may be); moves into the expensive first-tier cities are down. People who say, “Why am I living in a 300 square foot apartment with four roommates in NYC [or SF or insert equally crazy expensive city here] when I can’t even enjoy the city I am in?” are asking the right question. COVID has provided an opportunity for those who are still employed to reassess their quality of life and make changes.

I think this has big impact on the most expensive cities in the world and less impact on the secondary and tertiary markets. Short term, there is not much change but long term, as the Silicon Valley startups expand work-from-home, headquarters may also move.

World-class startups still need world-class feeders, so I don’t expect expansion to reach all that far, but perhaps density or proximity to work becomes less important for those who work there. This may give more cities a change to rise, including Chicago.

So what does this mean for Chicago startup ecosystem? I think Chicago is poised to come out well. The city is affordable to begin with … like 50% more affordable than the West or East Coast hubs. If I live in Chicago I can afford space, I can enjoy my city and I have good transportation if I want to bail out of the city and move to the suburbs. Chicago has a strong ecosystem of universities and capital that can sustain it and may become more appealing to those (tech people and investors) who moved out to go to the coasts in the first place and now realize they don’t need to be there. As people migrate to live where they really want to live, with the lifestyle they want to have, near family they want to be with, they begin to look for more local opportunities and that may bring some great talent back to Chicago and other markets outside of the coasts.

Chicago has long been known for banking, real estate, health care and insurance. I think these sectors and others are poised to do well. The largest opportunity for us (and any major city) is how to close the education gap, which leads to closing the income gap and from there — the sky is the limit!

Katie McClain, partner at Energize Ventures

How much is local investing a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

When we look at investments, we focus on diversifying our portfolio — and that includes diversity across geographies. While we don’t necessarily have a filter for local founders, we are intentional about making sure about half of our investments are in companies outside of the Bay Area. Our portfolio includes startups based in Chicago, Austin, Boston, New Jersey and Switzerland, just to name a few. For us, it’s important to be closer to the customer – and we love it when we can find them close to our hometown. We’ve actually just recently invested in a Chicago-based company that we’re very excited to announce soon, so stay tuned!

Long term, do you expect to be more or less locally focused?

We expect to maintain a balance of investing in companies across geographies that are not limited to Silicon Valley. With many more firms going remote and relocating to areas outside of the West Coast since the start of the pandemic, we see a big opportunity for non-Bay Area companies to emerge. We’re excited about what that could mean for cities like Chicago and the Midwest in general.

From that, what do you expect to happen to the startup climate in Chicago longer term, with the shift to more remote work, possibly from more remote areas. Will it stay a tech hub? (Will there be tech hubs? What is a tech hub now?)

We believe the shift away from traditional tech hubs like New York, Boston and San Francisco presents a great opportunity for Chicago as people are discovering they can be efficient, innovative and collaborative in other pockets of the world. This could play out positively for our city in a number of ways, from creating jobs to enabling new opportunities for investors to back Chicago-based companies. It’s important to note that we believe certain sectors with centers of gravity in Chicago — like energy, industrials and manufacturing – are here to stay. However, how far that reach might extend beyond the Loop and into the broader ecosystem is still a work in progress.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

There are several industries that have a particularly strong presence in Chicago — namely finance, renewable energy, manufacturing and industry (it’s no coincidence that Energize plays in a bit of each of these arenas!). On the finance side, I think it is easier for that sector to transition to a more remote, distributed environment. For more asset-based industries like energy, manufacturing and commodities, we see this as more of a challenge. However, the highly distributed nature of our new world is accelerating adoption of digital technologies in these sectors, and this is what we’re most excited about!

For example, a company like Beekeeper, which provides a digital communication and collaboration tool for frontline workers, presents a compelling value proposition for energy and industrial businesses in Chicago that have had to entirely alter on-the-ground operations due to COVID-19. Another example of this is a drone software provider: DroneDeploy has seen five times as many flights among its energy customers this year given the spike in demand for remote services. There is a strong presence of “essential” industries in Chicago that we believe are here to stay, but how they operate will be different — and that is where technologies like these can play an important role in shaping the future of work and driving innovation.

In the short term, what challenges are facing Chicago’s startup scene?

Not having as strong of a reputation for its startup scene as cities on the coasts, Chicago can sometimes be overlooked by big-name investors who tend to stay local. In addition, now that many coastal VCs are retrenching, early-stage Chicago companies that would typically rely on them will need to find other sources of capital to fill the gap. That said, it’s more important than ever to raise awareness about rich and diverse startup ecosystem we’ve developed here.

Who are some founders (who you’ve invested in or otherwise) that are leaders in the community?

We haven’t invested of any of these founders, but if you would like intros we could possibly arrange: Jennifer Holmgren (LanzaTech), Matt Silver (Forager), Michael Polsky, the leading local energy entrepreneur who founded Invenergy (our anchor investor) and chairs Energize’s investment committee.

A lot of Bay Area founders and developers are looking to relocate. Why Chicago?

Chicago offers access to a high-quality, diverse pool of corporates and potential customers, particularly in industries like energy, critical infrastructure and manufacturing that are beginning to adopt emerging technologies at an accelerated pace. You also can’t beat those Midwestern values — stereotypes aside, we’re proud to be among neighbors who bring a grounded, get-it-done mentality! We believe Chicago is the perfect nexus of talent, grit and opportunity upheld by a committed community of investors and operators.

Any other thoughts you want to share with TechCrunch readers?

Energize is very bullish about the digital transformation we see happening right now. Companies in established industries are adopting technologies faster than ever before, and that’s not constrained to the West Coast. The core of our thesis is “accelerating digital innovation in energy and heavy industry,” and we’re seeing that play out across the globe. Innovation at scale is happening right here in Chicago, and we’re excited to be a part of that ecosystem. Lastly: If you’re building a company that provides software or business model innovation to help propel this exciting transformation, we’d love to hear from you!

Bess Goodfellow, principle at Hyde Park Angels

How much is local investing a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

HPA focuses on the Midwest, so the pandemic hasn’t altered that focus; however, we certainly have engaged remotely with entrepreneurs more than before. We’ve completed 13 new deals this year already. Three deals were announced the past few weeks (Chowbus, Cohesion and Dispatch) and another new deal will be announced next week.

Long term, do you expect to be more or less locally focused?

The same.

What do you expect to happen to the startup climate in Chicago longer term, with the shift to more remote work, possibly from more remote areas. Will it stay a tech hub?

Absolutely. The macro trends are favoring many of the tech companies helping to accelerate growth, which is essential for the health of the tech community. We are optimistic that the companies that are hitting headwinds will be supported by those growing rapidly. Thankfully, we are seeing that already in our portfolio.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

Digital health, direct-to-consumer and e-commerce are doing really well in Chicago.

Any other thoughts you want to share with TechCrunch readers?

We’ve seen recent success with Sprout Social and GoHealth going public. Other Chicago-affiliated companies like Tempus, Livongo and FourKites are emerging as clear industry leaders in their respective categories. We expect to see more of our portfolio and those throughout Chicago continue to do what hardworking Chicagoans do, and fight through this pandemic to emerge even stronger!

Rachel Stillman, associate at 7WireVentures

How much is local investing a focus for you now? If you are investing remotely in general now, are you filtering for local founders?

We have been and remain supporters of the Chicago community and continuously advise and meet with entrepreneurs in this ecosystem. With that said, we continue to have a national geographic focus as we are interested in growing great founders and teams first and foremost.

Long term, do you expect to be more or less locally focused?

Our focus long term with regard to local investments will remain the same, and we will continue to be actively engaged and supportive of the Chicago early-stage health care and technology ecosystem. We acknowledge that travel restrictions and adherence to social distancing guidelines may inhibit our ability to conduct onsite visits with founders outside of our local market, but we will continue to be creative about conducting remote diligence of management teams.

From that, what do you expect to happen to the startup climate in Chicago longer term, with the shift to more remote work, possibly from more remote areas. Will it stay a tech hub? (Will there be tech hubs? What is a tech hub now?)

We believe that Chicago will remain a technology hub and may actually stand to benefit from the shift to more remote work. As talent recruitment becomes democratized through location-agnostic roles, many of the functions that have been characterized by scarce talent pools (e.g., engineering, data science, product) will benefit from national recruitment capabilities. Additionally, strong candidates that prefer to remain in the Midwest were historically pushed to move to the coasts for career advancement. Decentralized (and remote) work will now allow for more investment in Chicago talent, both in recruitment efforts and capital investments. Chicago will continue to have strong universities and innovation ecosystem drivers — 1871, Matter Health, the Polsky Center for Entrepreneurship — that will produce and attract exciting technology companies. Entrepreneurs will still seek a sense of community and a place to ideate and engage with like-minded creators, and Chicago will continue to fulfill that need within the technology ecosystem.

Are there particular industry sectors that you expect to do uniquely well or poorly, locally?

We have seen a rise in the quantity and growth of companies across digital health and health care IT. Exits and liquidity events of successful digital health companies such as Livongo will drive a new wave and generation of technology founders equipped with capital and domain expertise. Ecosystem aggregators and incubators such as Matter Health will continue to support early growth from ideation to creation of healthcare solutions. Therefore, we remain bullish on the local healthcare ecosystem and believe it has yet to reach its full potential.

In the short term, what challenges are facing Chicago’s startup scene?

Historically, Chicago has received a lower amount of venture capital dollars relative to competing major metropolitan cities. With less initial funding, founders in Chicago may focus more on pragmatically growing companies with financially sound strategies (versus the “growth at all cost” mentality of the coasts). Additionally, less capital makes it harder to recruit talent in some cases, as companies located in coastal cities may have the financial resources to offer very attractive packages, particularly to technologists, who then will leave the Chicago market. Given the workforce changes driven by COVID-19, we have started to see a shift in companies’ willingness to recruit from remotely located talent pools. Companies located in coastal markets with deeper capital pools will be able to afford to pay a higher premium for quality talent in Chicago, enabling these top talent recruits to remain in the city. Over the past two years, Chicago has attracted an increased amount of venture dollars and incited the development of new venture firms and additional funds, with venture capital deployed to Chicago companies exceeding $2 billion in 2019. With Chicago reported to be one of the strongest cities for venture capital returns, we believe that firms seeking opportunities to maximize ROI will continue to invest in Chicago and further fuel the growth we’ve observed in the city.

Who are some founders (who you’ve invested in or otherwise) that are leaders in the community?

There are several prominent founders across the Chicago startup community; we have highlighted two across our portfolio but note that these alone certainly do not capture the full market of founders across this highly impressive ecosystem.

Across 7wireVentures investments, Stephen Smith, founder and CEO of NOCD, is a leader we are incredibly proud to have within our portfolio. Faced with the challenges of receiving appropriate obsessive compulsive disorder (“OCD”) treatment himself, Stephen was inspired to found NOCD, a specialty telehealth platform that identifies and manages people with OCD by delivering personalized therapy. In addition to servicing people with NOCD, the company has scaled to create high-profile local jobs in the Chicago market and the Midwest.

Additionally, we are incredibly proud of two of our co-founders, Dave Jacobs and David Greenberg, who built and scaled Homethrive alongside our team through the 7wireVentures hatch model. Homethrive is a tech-enabled platform supporting aging-in place by providing seniors and their caregivers personalized insight, advice and validated resources for key nonclinical services. The company has created over 40+ jobs in Chicago and supported hundreds of family caregivers across Chicago, the Midwest, and the country. The “Dave’s” (as they are referred to at 7wire) have been pivotal in the ideation, development and successful growth of the company.

I would also be remiss not to mention my long-time business partner, Glen Tullman, executive chairman and founder of Livongo. Despite the success we have had over the years exiting multiple companies, Glen and I both have committed to remain in Chicago, a city and technology ecosystem we both believe in. Glen has committed his career to improving the safety, empathy and efficiency of the U.S. health care system. His vision and efforts to bring together health and technology were pivotal in scaling Livongo to what is now a $13 billion+ company and as a result, created hundreds of jobs across the Chicago health care and technology ecosystem.

A lot of Bay Area founders and developers are looking to relocate. Why Chicago?

While other major cities may offer a concentrated hub of technology experts, Chicago uniquely embodies the culture of strong “Midwestern work ethics.” The city attracts and grows talent pools influenced by Midwestern values and humility, with an unwavering willingness to work thoughtfully. As a result, the Chicago technology community is tightknit but still welcoming to outsiders, and deeply values collaboration and shared ideation. For founders and developers looking to relocate, Chicago offers a community of bright-minded individuals at a cost of living discount relative to its large metropolitan city companions.

In addition to the strong culture, Chicago offers a unique talent pool characterized by a combination of corporate-bred individuals bringing institutional knowledge, and a growing pipeline of employees raised in startups. Illinois is home to 66 of the Fortune 500 companies (the number four state in the U.S.), while a new wave of successful Chicago-based technology companies have complemented the candidate pool with technology talent from the likes of Salesforce, Groupon, Livongo, Grubhub and Braintree.

Finally, founders located in Chicago stand to benefit from the proximity and local access to their target customers, many of which are not residing in the coastal cities but here in the Midwest. In the early stages of building a company, it is fundamental to intimately understand and know the problems of your customer. There is no better strategy to learn and share the values of your target clients than to live among them in the Midwest.