Category: UNCATEGORIZED

The early-stage venture firm NFX is launching a seed-funding initiative today that invites founders to apply for seed funding of $1 million to $2 million in exchange for 15% of their company.

Why is this interesting? It’s not because of the size stake that NFX is taking, though 15% is notable for remaining fair in a market where founders are suddenly facing serious headwinds.

The special catch is that NFX says founders who apply will receive a commitment in nine days or less.

It’s a touch gimmicky. It’s also a smart stance for a firm to take so publicly, during what’s surely a trying period for founders who aren’t already connected to venture firms.

As we’re written before, the public markets have tanked, making it harder for the money behind venture capitalists to get excited about seeing more money funneled right now into highly illiquid startups.

As many VCs have noted in recent weeks, it’s also a challenge for them to adjust to a world without the face-to-face meetings on which they are so reliant. Neil Sequeira of Defy Capital, for example, recently told us his firm has been actively investing since early March, but he readily admitted that, “In every case when we’ve been able to move really quickly, we’ve actually known the founders for the most part for a decade.”

Ellie Wheeler, an investor with Greycroft, echoed the sentiment during a panel discussion last week, asking, “How do you mimic what you pick up from spending time together casually and formally [with a founder seeking capital]? I don’t think people have figured that out.”

Even with some taking to Twitter to advertise that they are, indeed, open for business, others say they’ve been busy in recent weeks, trying to find soft landings for, or extend the runway of, existing portfolio companies. (The startup industry has also been grappling with how to extract funding from the government’s $349 billion paycheck protection program.)

Enter NFX with a new initiative that firm swears it was going to roll out anyway but that’s timed especially for this very moment in time.

Here’s how it works. Last year, NFX — founded by James Currier, Pete Flint and Gigi Levy-Weiss, operators who’ve been involved, respectively, in the founding of the social network Tickle, the home buyers’ site Trulia, and the online travel site Lastminute.com — closed its second fund with $275 million.

It has since used that capital to fund between 15 and 20 companies per year. Now, NFX — which is based both in the Bay Area and in Israel, where Levy-Weiss lives — is carving out $20 million from that fund for this new enterprise, which will almost double its investing pace. “We’re really leaning into this environment,” said Flint yesterday from his home.

How it will invest that $20 million isn’t so unique to NFX, which, because of its own, distributed team, is accustomed to working with, and meeting founders, remotely.

As Currier explains it, “A lot of this is just carving out enough time to talk on Zoom with the founder about who they are, and how they think.” The firm also calls others who can talk about the individual’s strengths and weaknesses, and it talks with more of the startup’s team online, which Currier believes can be a richer and more informative experience than merely meeting with a founder who has flown up from L.A. or New York by himself or herself to pitch investors.

In fact, by Flint’s telling, VCs may soon discover that there are advantages to seeing a founder at home.

“Remote work from home has the consequence of getting to understand the full person — not just how they [present] at the office but how they spend their time and what their kids are doing,” he says. “You avoid this manufactured pitch process and you can have more authentic conversations about what they want to do with the next 10 years of their life. If a kids barges in, that’s just fine. It reduces the fundraising theater we [as an industry have] built up over the years.”

Unsurprisingly, some sophisticated software should also help the firm, which in the past has indexed heavily on internal platforms that help its portfolio companies (and thus the firm).

This time, says Currier, NFX has built something that makes it simple for founders to clearly and quickly convey information that’s often hard to pull out of a pitch meeting.

More specifically, they need only upload a deck (here), answer 12 questions, and record a one-minute video of themselves and their team.

After that, NFX promises feedback within three business days and a final investment decision within nine days.

Whether or not it leads to the Next Big Thing can only be answered in time. In the meantime, NFX may well see a lot of interesting ideas.

If they see some terrible business plans, too, presumably that’s also okay, given the goodwill the move is likely to generate.

“Other investors are pausing or saying they’re pausing,” says Flint. “But we’re increasing the rate at which we’re investing and putting structure around [our investments] and making it easier for founders to get money quickly.

“There are a ton of great founders out there and a ton of great ideas,” he continues. “We think it’s a great time to start or scale a company, and we want to be that partner right now.”

Bruce Springsteen once wrote, “We’re living in the future and none of this has happened yet.” It seems that the world is changing before our eyes as COVID-19 has sent us all home and forced us and our institutions to change the way we operate overnight.

As Box CEO Aaron Levie pointed out on Twitter recently, we are seeing a level of digital creativity right now that we have never witnessed before, as people look for ways to stay connected and keep going in the face of a virus that has forced us all to be apart.

“The ingenuity we’re seeing right now is awesome. Airbnb offering virtual experiences. Chefs doing live cooking classes. Passover seders on video conference. Drive-in Easter services and churches shifting to streaming,” Levie tweeted recently.

Think about the changes we have seen since February, February! In the course of a couple of months, we have seen schools shift online for millions of students from K-12 to college and grad school. We have seen professors who didn’t use email suddenly teaching on Zoom.

We have seen companies move from a workflow designed around offices, to ones centered around video conferencing and cloud collaboration tools like Slack, Microsoft Teams and Google Hangouts.

We have seen conferences a year in the planning move from the glitz and glamour of a Las Vegas stage to the houses of executives, and we have seen these companies pivot on the fly in spite of contracts, in spite of months of planning, because they had to do it. They had no choice.

We have seen families separated for the holidays, for birthdays and funerals, for anniversaries and life’s ups and downs, suddenly coming together in FaceTime and Zoom to support and celebrate and mourn in the only way that the current situation allows — in a digital context.

We have seen all this and more, and what’s amazing is that we have done this rather seamlessly and without years of planning and training. We have simply adapted to our new digital reality because we had to.

We have demonstrated the power of the digital world through SaaS tools and the amazing resilience of cloud infrastructure, but we’ve also see the power of the human spirit. What we are witnessing right now in the world is pretty amazing and we should stop for a moment and just appreciate it. Take a moment and consider that all of this technology has allowed our economy, our education and our emotional selves to keep going in an impossible situation.

The COVID-19 virus has pushed us collectively into a digital future, and it’s happening right now, not some day. Companies and people have gone through a 90-day flash digital transformation. If there is one positive thing we can take away from this crazy situation, it’s that we have embraced this digital world, and we are never turning back.

The COVID-19 outbreak has not only caused global disruption, it has also changed the cybersecurity threat landscape. We are observing changing patterns of behaviors from threat actors and noticing waves of coronavirus-related cyberattacks.

To be clear, this trend is not unique to the global pandemic. Hackers have typically preyed on victims shortly after disasters or high-profile events around the world. Over the course of my career, I tracked notable global disasters that have been used as lures, such as the 2004 Indian Ocean earthquake and tsunami, the mass shooting events in Las Vegas and the Zika virus outbreak. Malicious actors notoriously exploit human emotions for financial gain. Today, COVID-19 is not off-limits.

As threat actors continue adapting to exploit the coronavirus pandemic, the global workforce continues to change dramatically. With much of the world ordered to practice physical distancing, an unprecedented number of people are working remotely, many for the first time. Companies are rushing to provision laptops to employees with desktops, deploy collaborative software and implement VPN infrastructure to access internal tools. So, if you were a hacker, what would this opportunity look like for you?

Attack methods logically exploit changes in the global environment. Mass working over remote connection leads to mass remote login activity. This activity is mostly over private, insecure machines with user accounts that have not done so before — therefore making remote login credentials an easy target for attackers.

Since Italy declared a state of emergency on January 31, 2020, information security professionals have recorded an escalation of cyberattacks in Italy reflecting this pattern. Breach protection company Cynet tracked a spike in phishing attacks in the last month in Italy, while non-quarantined countries withstood an unwavering number of attacks.

Nintendo just released the 10.0.0 firmware for its Switch gaming console and finally added a feature users have wanted since the system launched. The update allows downloaded games to be transferred to an SD card, giving users flexibility and freedom.

Previously, Switch owners had few options if their console ran out of storage space. The best option was to delete a game and tell the system to redownload it but onto an SD card rather than the internal memory. This process was clunky. Now, with the update, if storage is running low, a person can transfer a game directly to an SD card.

Only “downloadable software, update data, and DLC” are supported at this time, and some user save points and update data cannot be transferred.

This move is a welcomed addition to the Switch, where physical media and downloaded data coexist. This gives users the peace of mind of backing up data to physical media while still utilizing local storage and the ability to purchase games online.

The update also added the ability to remap controller buttons and save up to five different button layouts.

The 10.0.0 update is now available. Users can access the update through the Switch’s settings.

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

Earlier today, PwC and CB Insights dropped a sheaf of data concerning the global and domestic Q1 venture capital market, something we’ll be yanking data points from here and there for a few days. What matters is that our continuing hunt to understand what’s going on with VC and its investment habits (some of our recent work here and here) can take another step forward today.

We’re talking about three trends this morning: The sharp decline in Q1 U.S. seed rounds, how mega-rounds ($100 million and larger funding events) are holding up the sky for domestic venture totals, and what March might tell us about what’s going on with COVID-19 and VC activity today.

Ready? This is going to be quick and easy and fun.

So much for Seed

According to the report, domestic Seed rounds, in slow decline since peaks in 2017, have sharply fallen since Q3 2019.

The story behind Frame, the startup aiming to be the nation’s gateway into the world of therapy and mental wellness, seems like a tailor-made story of American entrepreneurial success.

Its co-founders, Kendall Bird and Sage Grazer, ran their first business in the Pacific Palisades neighborhood of Los Angeles years ago, selling out their entire inventory of lemonade to a captive audience of eager parents.

Years later, after Grazer graduated from Columbia and embarked on a career as a therapist, and Bird, a longtime proponent of therapy since her teens, had moved on to a job at the LA-based social media giant, Snap, the two reunited.

Frame was born from their shared belief that therapy was a tool that could be harnessed by every American for self-improvement and self-care, and that providing a window into the breadth of problems that therapy could address would be a way to popularize the process.

Frame aims to do both. Like SonderMind, another startup which raised a pile of cash recently, the company offers services matching therapists with patients on the front-end and providing a billing and telemedicine solution for mental health practitioners on the back-end.

But it also has another component — a recorded “workshop” between a therapist and a patient or a tutorial to illustrate the kinds of services that a patient could receive from therapy or explain what different conditions may be. These discussions and lessons — which the company emphasizes are not therapy sessions — are meant to frame how potential customers could view the types of things they could talk about with their therapists.

“The workshops for us are a way for a larger audience to open up their minds and understand the different topics that they can cover,” says Bird.

Scene from a Frame workshop.

The goal is to give a millennial audience a window into how therapy works in an effort to popularize and de-stigmatize the process.

If there’s one thing that Bird knows, it’s how to reach a millennial audience. The former Snap product marketing executive was with the company through its public offering and now serves as one of a small cohort of former Snap employees that are beginning to launch their own companies — building on the success, and wealth that Snap’s public offering afforded them.

“There was no brand that was representing what it means to be a modern therapy goer and that’s why we started Frame,” says Bird. 

The company is launching today with around 12 videos of the pseudo-sessions with therapists and a small pilot matching program for the 100 therapists it counts on its roster of service providers.

Given that the company’s approach to its sessions straddles the line between therapy and entertainment, it was important to find therapists that would work well on camera for its workshops, said Bird.

“We really focused in on therapists that are really passionate about what they do and ones that felt more comfortable being on camera and adapting to this because it’s not therapy,” says Bird.  

Frame, which the two co-founders began building nearly a year ago, was hoping to have a bit more real estate to support its launch, but like other companies including Real, Silver Health, the European startup, Mindler, and even the sexual health focused startups like Hims, the company accelerated its launch in an effort to respond to the mental health needs stemming from the COVID-19 epidemic.

Much of this is predicated on virtual non-therapy sessions that Hims and Hers are calling discussions and that Real calls “Group Salons” and “Group Events”.

For Frame, building its library of recorded non-sessions required pre-recording thirty to forty sessions with volunteers — many pulled from the Snap community, according to Bird.

And the Snap community has also rallied to back the company. Imran Khan, the former Snap executive, is a seed investor along with several others from the company.

Another backer is Founders Capital, the New York-based accelerator that’s backed by Johnson and Johnson and other corporations to find new startups that fit within strategic areas of interest.

“There are over 700,000 behavioral healthcare professionals in the United States, yet 80% of millennials with mental health concerns never expect to receive treatment,” wrote Frame seed investor and founder of Struck Capital, Adam Struck, in an email. “We see an opportunity for Frame to make therapy more approachable for the millions who could benefit from access to high-quality mental health resources, building a valuable business that helps create a healthier society.”

There’s no doubt that the coronavirus has had a monumental impact on the way we view technology’s relationship with education. For now, students are learning from home. But what happens when they return to school?

Picking up where we left off in last week’s survey, we asked top investors in the space for their predictions on what is ahead once life resumes to its new normal. One investor mentioned how in March, they spent a third of their time in edtech. Now, they’re spending almost all their time vetting startups there. Another said that the sector has always been underfunded. Time will tell if venture capitalists become more bullish on the sector, and more importantly, if adoption from schools with strict budgets becomes more lenient.

A harsh statistic sums the dynamic of adoption and investment pretty well: according to Tetyana Astashkina and Jean Hammond of Learn Launch, less than 5% of the $1.6 trillion spent on education in the U.S. is attributed to edtech. Let’s see if other investors think that percentage will shift forward after the pandemic ceases.

• Jenny Lee, GGV
• Tetyana Astashkina, LearnLaunch
• Jean Hammond, LearnLaunch
• Marlon Nichols, MaC Venture Capital
• Mercedes Bent, Lightspeed Venture Partners
  
• Jennifer Carolan, Reach Capital
• Shauntel Garvey, Reach Capital
• Jan Lynn-Matern, Emerge Education
• Tory Patterson, Owl Capital
• Ian Chiu, Owl Capital
• Tony Wang, 500 Startups

Their responses have been edited for length and clarity.

A startup that created a dedicated gadget to help ensure the safety of electrical industry workers has turned their talents to addressing the need for similar workplace protections in the face of another threat: COVID-19. Vancouver-based Proxxi is launching Halo, a wrist-worn wearable device that can provide a vibration notification to alert someone of the presence of another band within 6 feet – the recommended span of separation to ensure proper social distancing.

Proxxi explains that the device is designed to help ensure compliance with social stance guidelines while on a job site or at a workplace, where essential work might need to continue despite the ongoing global coronavirus pandemic, but where it can also be tricky to maintain proper distance between workers without a reminder system.

The wearable uses low-power Bluetooth to communicate with other bands, and the bands also retain a log of which other bands they’ve been in contact with to provide internal contact tracing capabilities in case of positive coronavirus case diagnoses. The startup says that the bands don’t include location tracking, however, and they’re not tied to any specific personal identity information for any respective employee who wears them in terms of sharing info between bands or back to Proxxi itself, for the purposes of privacy protection.

We’ve seen other similar efforts, including Estimote’s contact tracing wearable for workplace use. Proxxi’s approach differs in a couple of respects, including in that its primary focus is on active monitoring and awareness round appropriate social distancing. Estimote’s wearable is also more focused on providing a visual alert system regarding potential contacts.

Proxxi says its Halo system can be set up and implemented quickly and easily, and notes that they don’t require connection with, or setup through any kind of smartphone to operate.

Per-band pricing is set at $100, and the company will begin shipping them out on May 4. Deployment includes both mobile app and web-based dashboards for monitoring contact tracing and tracking compliance and efficacy of social distancing measures on-site.

Stackery, a 4-year old Portland startup, wants to help development teams deliver serverless resources on AWS more easily, and today it announced several enhancements to the platform.

With serverless applications, the development team outlines a set of trigger events and the cloud infrastructure vendor — in this case AWS — provides the exact amount of required resources to run the event and no more. This frees developers from having to worry about provisioning the proper amount of resources to run the application.

“Stackery is a secure serverless platform for AWS. We’re geared toward teams who are moving from laptop through production, and [we provide the tools] that they need to design, develop, and then deliver modern applications for those teams,” Stackery CEO Tim Zonca told TechCrunch.

In general, the product helps create a virtual whiteboard, where development teams can build serverless applications in a highly visual way, then it helps with testing and deployment of the app on AWS. Zonca says that the updates they are announcing today focus on building in security and governance into the platform, while offering a full set of continuous delivery tools in a modern git-driven delivery system.

“We realized that we could fill in some of the gaps [for developers] and help them take what we have developed as a set of best practices around securely delivering applications over the course of the last year, and just bake them into the product, so that those teams don’t have to think about those practices in a serverless world,” Zonca explained.

For starters, they are offering a code review for known vulnerabilities as they pop the application into their git repository, whether that’s Bitbucket, GitLab or GitHub. “We’ve introduced the ability to audit function code for known vulnerabilities, and we do this by just using common tooling out there,” he said.

The company is also helping test that code, which gets a bit tricky when ephemeral serverless infrastructure is involved. “We allow people to automate the spinning up of temporary ephemeral testing environments, and then help them plug in the automation for their system testing or integration testing or unit testing, and even provide an environment associated with this pull request for humans to go in and actually log on and do usability testing,” Zonca said.

When an application has passed all the testing, and is ready to be deployed to staging or production environments, Stackery can automatically promote that change set. Companies can then choose to do a final review before deployment or simply allow it to deploy automatically once the application passes all the contingencies the team set up.

Stackery was founded in 2016. It has raised $7.4 million, according to Crunchbase data.

Four months after breaking ground, the Lucid Motors factory in Arizona sits  — its new roof and sign emblazoned on its side— waiting for construction to resume.

The electric vehicle company released Tuesday new photos of the factory located off Interstate 10 between Phoenix and Tucson. Construction was “well ahead of schedule” when Gov. Doug Ducey imposed a stay-at-home order due to COVID 19, according to Peter Hochholdinger, the vice president of manufacturing who was hired away last year from a similar post at Tesla. The factory will produce the Air, the company’s first electric vehicle.

Despite the pause in construction, Lucid Motors doesn’t expect a significant delay in its completion even with current events, Hochholdinger said. Construction crews were able to finish the roof as well as most of the siding on the building. Tooling and machinery for the factory was “well underway” before the current crisis, according to the company.

Lucid Motors’ latest timeline was to start production of the Air, beginning in late 2020. The company did not adjust its production timeline, despite the COVID-19 related closure.

Image Credits: Lucid Motors

Shipments from suppliers have already started, according to Lucid Motors. The company said some of these shipments are expected to be received later this month.  Lucid Motors indicated that move-in activities are expected to start in May.

The Arizona factory, once it opens, will be the culmination of more than decades-long pursuit. Lucid Motors was founded 11 years ago with a different name and mission. The company, called  Atieva at the time, was focused on developing electric car battery technology. It then shifted to producing electric cars and changed its name in 2016.

The company seemed to have momentum at the time. Lucid Motors had successfully raised money, unveiled the Air, announced plans to build a $700 million factory in Arizona, signed a deal with Samsung SDI to supply it with lithium-ion batteries and moved into spacious new digs. However, building a factory is expensive, and the company fell silent for nearly a year as it sought funding to produce the Air.

In 2018, Lucid Motors secured $1 billion in funding from Saudi Arabia’s sovereign wealth fund. Lucid said at the time that the $1 billion in funding would be used to complete engineering development and testing of the Lucid Air, construct its factory in Arizona, begin the global rollout of its retail strategy starting in North America and enter production.