Venture capitalists react to Visa-Plaid deal meltdown

Congratulations, you’re no longer selling your company for billions of dollars!

As strange as it sounds, that’s the leading perspective from venture capitalists concerning Plaid, now that its much-touted sale to Visa has fallen apart.

The $ 5.3 billion deal would have seen banking API startup Plaid join consumer payments and credit giant Visa. But the American government took a dim view of the deal, and according to Axios reporting, Plaid felt like it could be worth more money in time.

The TechCrunch team has collected views from venture capitalists, analysts and Anshu Sharma, CEO of another API-powered startup and a former VC to get a better view on the perspectives in the market concerning the blockbuster breakup.

From the venture capital side of things, most takes we received were bullish regarding Plaid’s chances now that it’s no longer being taken over by Visa. Amy Cheetham, for example, of Costanoa Ventures, said that the result is “good for the company, ultimately.” She added that Plaid may now see better “talent acquisition,” faster product decisions and a better eventual valuation.

“There is so much left for them to build in fintech infrastructure,” Cheetham said in an email, adding that she sees “Stripe-like scale potential” in Plaid. Stripe is reportedly raising capital at a valuation that could reach $ 100 billion.

Cheetham is not alone in her bullish perspective. Nico Berandi of Animo Ventures wrote to TechCrunch to say that he “still wishes” that his firm had been “around back then to have invested” in Plaid, adding a smiley face at the end of his missive.

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Venture capitalists have found a new home to brag and debate: PrimeTime VC

Last week, we talked a bit about how investors are seeking new techniques to bring humanity back to their deal flow and sourcing mechanisms, beyond the boring Zoom call. The newest strategy I’ve seen is PrimeTime VC, a game show that pits venture capitalists against each other to debate on topics like TikTok to Y Combinator Demo Day to Snowflake’s IPO.

With ESPN-like graphics, investors are led through a series of questions by host Charlie Stephens, who runs his own live show interviewing tech executives. Its tag line? “The show of accredited banter.”

Yes, you read that right. Here’s the latest episode:

PrimeTime VC launched its pilot episode on August 17 and is releasing episodes every two weeks. It is eyeing weekly releases in 2021. In terms of production, it uses Zoom, After Effects and Final Cut Pro.

The show has racked in 30,000 views and sponsorships from First Republic Bank, TechDay, and Entre to help with production costs. It still has a lot of room to grow. (At time of publication, the Youtube channel has 63 subscribers, and the Twitter account has 15 followers).

The show came together after Tyler Kelly, founder of Pitch Madness, teamed up with Leaders Live hosts Charlie Stephens and Nidal Harvey. The trio put together a founder debate competition online to raise money for frontline workers. Then, they saw an opportunity to grow the show.

Investors who want to sign up can submit a form. Participants on the show include Nihal Mehta of Eniac VC, Jenny Friedman of Supernode Ventures, Paul Martino of Bullpen Capital, Lo Toney of Plexo Capital, Sydney Thomas of Precursor Ventures and John Frankel of FF VC.

“The show is also an outlet for VC’s to casually promote their portfolio companies in a relevant way, but if they go overboard with it, that’s when the point deduction comes into play,” Kelly said. The real deal sweetener, though, might be what the winner gets: 30 to 45 seconds of a monologue at the end of the show.

“You can’t stop VCs talking about their companies,” Mehta said. That’s part of our job.”

The last winner, Bullpen Capital’s Paul Martino used his time to urge startups to build.

“I can’t wait for this to be a big successful thing like some of our startups,” Martino said.

Down the road, Kelly hopes PrimeTime programming could become premium content and partner with a “large streaming network.”

Until then, let the “accredited banter” roll.

Startups – TechCrunch

Six things venture capitalists are looking for in your pitch

Founders pitch venture capitalists at every available chance, which is why most of them quickly develop the skills required to identify whether someone is offering them an opportunity or wasting their time.

At TechCrunch Early Stage, I chatted with NFX Managing Partner James Currier about how founders can find the right investors and what they need to show to win an investment. Currier has been on both sides of the deal table and founded several startups before devoting himself to early-stage investing, where he has backed companies like Lyft, Houzz and Houseparty .

“One of the ways that investors are similar is that whenever they look at all the companies coming to them, most of them get into a quick ‘no’ situation, some of them get into the ‘maybe’ and very few get into the quick ‘yes,’ ” Currier says.

He shared six reasons investors might give a founder the rare and highly coveted “quick yes,” an effort to lock down a deal that’s either perfect for them or too enticing to pass up. Realizing what exactly investors are seeking can help founders understand how to pitch at the first meeting and what they should leave for follow-ups. For those who couldn’t virtually attend TechCrunch Early Stage, check out the link below.

This interview has been lightly edited for clarity. 

1. Traction

“So the first thing that they’re looking for is traction. Look, even if they don’t like you, if they don’t like the market, but you’re making a ton of money, what are they going to say? Like if it’s growing really quickly and you’re profitable, you’ve got high margins and everyone wants to work for you, and there’s this buzz around you. What are they going to say? They’re gonna have to invest because you’ve got traction.”

Startups – TechCrunch

13 Boston-focused venture capitalists talk green shoots and startup recovery

Welcome back to the second half of our two-part Boston investor survey.

Catching you up, TechCrunch reached out to a host of Boston-area venture capitalists to get their take on the current state of their market, and what they think might be coming up in the future. More VCs than we initially anticipated got back to us, so we broke the survey into two pieces so that there was enough room to include everyone.

Today, in contrast, we’re looking a little further ahead: Are they seeing green shoots? When is a recovery likely to begin? What’s making them feel hopeful in this tenuous era? Here’s who took part:


Boston VC’s vision of tomorrow

Recovery is going to be slow, but most importantly, the comeback is not going to look like one, sole aha moment for any startup or entrepreneur. After poring through dozens of responses, we distilled that Boston-focused VCs think that recovery will favor Boston-area companies to some degree, as the areas they are working on, or the problems that they are working to solve, will still matter after COVID-19.

On the slowness of recovery, NextView’s Rob Go provided TechCrunch with the most vivid prognostication, saying that “while it’s difficult to predict” when the post-COVID recovery will begin, he anticipates “a swoosh-shaped recovery is more likely” than anything V-shaped. “The recovery is likely to be painfully slow,” the VC added.

It’s perhaps unsurprising then that green shoots and fruitful deals are thinner on the ground in Boston today than its startup community probably would have hoped. Momentum through dollars or deals will lead to more sustained recovery. Flare Capital’s Michael Greeley said that it is “still too early” to see green shoots, while other VCs noted that, on a sector-by-sector basis, there are some positive signs that give hope.

Glasswing is an AI-focused fund, making the following comment from its Rudina Seseri interesting, if niche. On the question of green shoots, Seseri said that her firm has “been surprised by the number of companies that are leveraging AI to drive automation, cost savings, optimization and higher performance.” The result of that surprise has been that “over the last five months these companies have beaten their pre-COVID budgets and forecasts for growth.”

The other side of that coin is startup areas that touch on travel or food. It’s hard to find recovery there, for obvious reasons.

The Victress Capital team put the dynamic well: “We’ve also been encouraged by the increased pace in innovation that we’ve seen across sectors where innovation has been slow in the past. From edtech to telehealth to food and beverage and more, we are seeing nimble entrepreneurs pivot or change their businesses to respond to the needs of today.”

Our broadest takeaway is that VC firms have not fully written off any sectors given today’s turbulence. The future, largely according to Boston-focused VCs, is startups that are important after the world opens again and focus on the next generation of businesses. It means that investments might look a bit like a risky game of hopscotch. They’re all trying to land on the deal that accounts for the next generation of businesses.

With that, let’s get into full questions and answers.


Lily Lyman, Underscore VC

When do you expect a startup recovery to begin?

“Recovery” is hard to speak to. We’ve been evaluating different phases of behavior and how that will affect the economy and the startup ecosystem. We have been thinking in terms of (1) lockdown opening up (summer 2020); (2) period of remaining social distancing behavior, likely with intermittent periods of lockdowns (into spring 2021); and (3) new normal (spring/summer 2021). But this changes and we are constantly reassessing it. For startups, we remain believers that great companies with great leadership can not only survive but find ways to thrive in this new environment.

Are you seeing green shoots regarding revenue growth, retention or other momentum that you didn’t expect a few weeks ago?

Again, it varies by industry. We have seen a surge in demand for players in the cloud infrastructure space such as CloudZero or for remote collaboration software (an investment not yet announced).

Tell us about the most interesting, Boston-based company you’ve invested in recently.

We are really excited about Popcart and how they are positioned as the world rapidly migrates to e-commerce. The founding team is a pair of engineer leaders from Endeca. Popcart offers consumers price and availability transparency across retail platforms (Amazon, Target, Walmart, etc.). The cross-platform capabilities are particularly unique. When COVID-19 hit, the team quickly created the Supply Finder to help consumers find goods that are in short supply and ensure they are protected against price gouging.

What is a moment that has given you hope in the past 30 days? This can be professional, personal or a mix of the two.

I’m inspired by the great leadership I’ve seen our founders display. They’ve made hard decisions with imperfect information and managed a difficult time with both empathy and conviction.

I’m also appreciating the humanizing reality that working from home and operating in uncertainty brings that unites people. My hope is that pieces of this uniting and empathy will persist.

Startups – TechCrunch

Freada Kapor Klein warns of ‘vulture capitalists’ during pandemic

The tech industry experienced turmoil before during the dot-com bust and again during the 2008 economic downturn. But this time it’s a bit different, according to Kapor Capital founding partners Freada Kapor Klein and Mitch Kapor.

“What’s different this time is that it is society-wide,” Kapor Klein said during an Extra Crunch Live appearance this week. “It’s not just the dot-com bust or its not just financial services. It is much more widespread. But again, as you point out, tech is in a much better position because tech is related to the things that are thriving.”

Kapor, formerly a partner at a Sand Hill Road VC firm during the dot-com bust, said it’s similar in that it’s an “enormous disruption with great uncertainty about what will be on the other side of it.”

The details, however, are very different. Assuming there will eventually be a vaccine, Kapor said he believes things will be able to get back to some sort of normal, “notwithstanding the irrecoverable disruptions of permanently-closed small businesses.”

In the two previous downturns, there was something inherently wrong with the economy, but that’s not the case right now, he added.

“The good news is that, to the extent to which the pandemic gets under control, the economy should restart,” said Kapor. “The question, though, is on what basis and do we use this as an opportunity to rethink some fundamentals. Are we actually serious about treating essential workers better, really having a safety net and paid sick leave and universal health benefits and childcare — where we can see and feel now the absence of that is hurting the people we depend on four our lives. But it is not a certainty. This is the other thing about these great disruptions. We have some agency about what happens next. And so it’s almost a cliché now, but it’s terrible to waste, you know, a crisis. Our hope is that coming out of this, as a society, we make some different decisions about how we allocate resources and what we think the baseline is that everybody is entitled to.”

But while we’re all still knee-deep in the pandemic, there are ways to ensure employers treat workers fairly and VC firms treat founders with respect and don’t take advantage of them during these vulnerable times.

Below you’ll find some more stellar insights from the duo that touch on making tough decisions to layoff or furlough employees and how to do it in an equitable way, as well as the rise of what Kapor Klein refers to as “vulture capitalists.”

Equitable layoffs

Startups – TechCrunch