We’re excited to announce that Extra Crunch is now available to readers in Argentina, Brazil and Mexico. That adds to our existing support in the U.S., Canada, UK, and select European countries.
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Latin America has always caught the eye of big tech. For companies like Facebook, Amazon, and Uber, Latin America has represented a massive growth opportunity. But it’s not just big tech that’s investing in Latin America. The startup scene is booming. According to Crunchbase, VCs invested billions into Latin America in 2018 and 2019.
In 2018, the TechCrunch team took a trip to Sao Paulo, Brazil to host Startup Battlefield Latin America. We knew about the hot startup scene and massive investments, and wanted to meet the founders fueling the fire in person.
The excitement, wit, creativity, and energy of the entrepreneurs in Latin America was impressive. We were dazzled by the pitches from budding startup teams, and we were enlightened by the investors sharing their wealth of knowledge about the ecosystem. What we saw in person helped us tie the funding to the faces of the teams building the future. The entrepreneurial mentality of Silicon Valley doesn’t have borders; it’s alive and well across Latin America.
We wanted to bring Extra Crunch to Latin America to help support the startups and investors in this market because community has always been our top priority. We hope that Extra Crunch’s deep analysis and company building resources will help the Latin America tech community grow even stronger than it is today.
We’ve been polling our audience about expanded country support for over a year now, and Argentina, Brazil and Mexico have always been near the top of the list. Now, we’re delivering on the promise to bring Extra Crunch to everyone that asked for it.
We’re optimistic that Extra Crunch will be a big hit in Latin America, and we hope entrepreneurs and investors in the region who have not yet heard of TechCrunch will give it a try.
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What is Extra Crunch?
Extra Crunch is a membership program from TechCrunch that features research and reporting, reader utilities, and savings on software services and events. We deliver over 100 exclusive articles per month, with a focus on startup teams and investors.
Our weekly Extra Crunch investor surveys will help members find out where startup investors plan to write their next checks. Extra Crunch subscribers will be able to build a company better with how-tos and interviews from experts on fundraising, growth, monetization and other key work topics. Readers can also learn about the best startups through our IPO analysis, late-stage deep dives and other exclusive reporting delivered daily.
Here’s a taste of the articles you can expect to see in Extra Crunch:
- Women are the secret ingredient in Latin America’s outsized returns
- You need a minimum viable company, not a minimum viable product
- 6 strategic stages of seed fundraising in 2020
- Latin American startup deals see major drop in COVID-19 era
Beyond articles, Extra Crunch also features a series of reader utilities and discounts to help save time and money. This includes an exclusive newsletter, no banner ads on TechCrunch.com, Rapid Read mode, List Builder tool and more. Committing to an annual or two-year Extra Crunch membership will unlock discounts on TechCrunch events and access to Partner Perks. Our Partner Perks can help you save on services like AWS, Brex, Canva, DocSend, Zendesk and more.
Thanks to all of our readers who voted on where to expand support for Extra Crunch, and thanks to all that participated in the Extra Crunch Beta in Latin America. If you haven’t voted and you want to see Extra Crunch in your local country, let us know here. We’re actively working on expanding support to more countries, and input from readers is greatly appreciated.
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Today, Paris-based insurtech Koala announces an investment of €1.6 million, led by London based incubator and fund Insurtech Gateway alongside Playfair Capital, Techstars Ventures, and private investors.
Koala (2018) is reinventing travel insurance. Their data-driven products proactively alert travellers to any disruption and pay-out instantly, no forms, no exclusions, no questions asked.
As countries start to tentatively open up their borders, holidaymakers face some big decisions. With COVID-19 travel has never been so unpredictable. Now, with Koala, there is finally some reassuring certainty. Tracking all journeys in real-time, Koala instantly informs passengers as disruption occurs and issues cash compensation on the spot, whatever the cause of the delay might be.
Ugo Weyl, Co-Founder and CEO at Koala said: “Every year, hundreds of millions of passengers suffer flight disruptions and face an uphill battle to claim compensation. Travellers face antiquated claims procedures, with only 15% of customers receiving a pay-out. We felt this was unfair, a delay is a delay and customers should be compensated 100% of the time.”
Airlines are also suffering, with flight disruption costing the industry €4 billion every year – an average of 5% of their total operating costs. Koala’s products benefit both operators and consumers. Their win-win solution is already in high demand across the travel industry and over the next 3 months, will go-live in the booking journeys of 2 airlines and 4 travel agencies.
Peter Davies, CEO of investor Airline Management Group and former CEO of four airlines including Air Malta, Caribbean Airlines and Brussels Airlines said: “Koala offers a unique way for airlines to save money and overcome one of their most significant customer service challenges, while at the same time offering an excellent experience to their travellers. Watch this space, Koala is on the way to becoming the next travel essential.”
Stephen Brittain, co-founder of Insurtech Gateway said: “We had seen several flight disruption startups before Koala. Their positioning to work directly with the airlines was bold, different and clearly learned the hard way. We’re excited to support them as they launch their beta product and to be a part of their future success. They are going to be one to watch.”
Ugo Weyl, Co-Founder and CEO at Koala said: “We are very excited to have Insurtech Gateway joining the Koala family, bringing their unique insurance expertise to the team. We are looking forward to having their support as we launch our product at Falcon 9 speed and scale internationally.”
This raise will be used to support Koala’s rapid growth plans, team expansion and new product development. Flight disruption insurance is just the beginning. Koala is dreaming big, going way beyond insurance, to become the ultimate travel companion from the moment you leave your front door to the moment you safely arrive back home.
Ugo Weyl, Co-Founder and CEO at Koala said: “We want to bring travel insurance into the 21st century, removing uncertainty and providing the invisible but ever present layer of protection that today’s consumers demand. With Koala you never fly alone.”
This is my story of how I got into YC twice, with 2 different ideas in back-to-back years. My style of entrepreneurship is different from most because I launch companies in spaces where I start with 0 domain knowledge. Here's my process.
Edit 1: Moderators removed my original post because I added some names; I removed the names .
Note 1: Thank you moderators for the helpful feedback.
From 2018 to 2020, I launched 2 companies. Both were accepted into YCombinator. The first company was a computational drug-discovery company for Alzheimer's Disease (accepted YC S18, but now dead). The second company was a CRM for construction trade contractors (accepted YC S19). I launched both companies while I worked at Uber ATG as a software engineer building self-driving cars. In both cases, I started with 0 experience in the healthcare or construction industry.
Here's my personal process for discovering ideas and getting ideas off the ground.
Talk to people
A startup succeeds by building a product that solves a problem so most first-time founders will start by asking
What problem do I solve?
Actually that's the wrong question to start with. The right question is
What process can I follow to discover interesting problems?
The first question is difficult to answer for founders with 0 insights about an industry. To see this, try to answer the following questions for an unfamiliar industry like pest-control or waste management.
- What are the interesting problems in this space?
- Which problems will people pay money for?
- Why do people care are about these problems?
- What is the root-cause of these problems?
- What do potential solutions look like and why haven't they been built?
- How might you launch a solution and generate initial traction?
Most people are stuck. The takeaway is that without insight, there cannot be innovation.
To get unstuck, talk to people.
To find problems, talk to people.
To generate insights, talk to people.
When we founded our construction tech company, my cofounder and I had 0 construction experience. To start, we sourced 20 conversations with construction experts in our network. We talked to owners, general contractors, project managers, estimators and superintendents and asked them simple questions.
- What does your day-to-day look like?
- What was something that frustrated you last week, last month?
- Why did that process frustrate you?
- What tools and processes do you use to get around those frustrations?
Very quickly, we started hearing things like
"I hate arguing with subcontractors over percentage completed"
"I have to drive 3 hours each week to inspect the site because I'm paranoid people will slack off and take shortcuts"
"I enter in the same deadline in 3 different spreadsheets"
Over time, we heard the same stories from multiple people and these stories surfaced themes in construction: cost disputes, late payments, excessive data-entry. These same themes would go on to inspire our initial ideas.
It turns out the process for identifying promising startup ideas is not complicated. Talk to lots of people and let those conversations inspire you. This works because conversations are raw-unfiltered looks into how an industry operates. They will contain stories of day-to-day frustrations that industry experts face; these frustrations are clues for possible areas for innovation. Think of each conversation as a puzzle piece and the job of a founder as compiling those pieces into a promising startup idea.
My experiences with launching both companies have taught me that a rigorous process for learning matters far more than any single idea. A reliable process for learning enables founders to be deliberate about iterating towards good ideas, rather than leave this process to chance.
What makes launching in non-familiar industries so difficult is the chicken-and-egg problem of "how do I get people to talk to me and share their wisdom even if I don't have anything to offer immediately?". I wish I had a playbook for this problem. Unfortunately, I don't because sourcing conversations is more art than science – an art that changes based on industry, a founder's network and circumstances.
Just find any reason to launch
At some point, learning stagnates from conversations alone and you have to launch a product to actually build a company.
While visionary founders can design products based on empathy for a specific problem and the users that face that problem, non-visionary founders must build products for unfamiliar audiences.¹ As a result, the first product a non-visionary founder launches is often misguided, especially if the product is based solely on intuition from conversations. There are simply product insights that cannot be intuited from conversations alone.
- Is this problem actually painful to the user or do they just think that it is?
- Does the product solve an industry problem or just a company-specific problem?
- Does the product solve the pain-point effectively?
- Is the product easy to use?
- Can the product overcome entrenched processes and gain adoption?
Early-on, non-visionary founders need a sandbox that enables them to launch products (potentially multiple), iterate and learn from users in the industry. This is another chicken-and-egg problem; you need a sandbox to learn, but it is difficult to build a sandbox if you don't have much to offer upfront.
To build sandboxes for both companies, I relied on a technique called a minimum launchable reason, which just means find any reason to launch a product/service/collaboration/project in your target industry.
I used the following playbook
- Use conversations to identify a industry problem
- Look for industry partners to collaborate on solving that problem
- Cold outreach to industry partners pitching a project
It does not matter what reason enables you to launch. All that matters is that you launch because launching enables you to learn 10x faster.
For the drug-discovery company, I launched by volunteering to do research with a computational biology lab at Carnegie Mellon University. For construction-tech company, I launched by collaborating on a robotics project with a large construction company in Pittsburgh. Building sandboxes is an art so I copied the original emails I used to build these sandboxes
(To comply with Reddit rules, I'm excluding those emails in this post)
In my case, launching a research project the computational biology lab unlocked rich insights about designing a drug for Alzheimer's because I was able to tour biology labs, discover how data pipelines are created in biology and hear first-hand the challenges lab members had when running Alzheimer's experiments. Collaborating with a real construction company exposed me to real construction sites. I saw actual construction photos and witnessed the common spreadsheet templates that the construction industry used to document progress. If conversations are the ember sparks for startup ideas, then a sandbox ignites a raging inferno for startup ideas. With a sandbox in place, the process around innovation becomes straight-forward.
- Look for problems by talking to experts and observing their day to day
- Identify a problem
- Launch a product
- Gather feedback
- Move fast and repeat until you get traction (e.g. signed LOI, revenue)
What is non-obvious is how often early ideas will be wrong. Even more non-obvious is just how inconsequential being wrong really is. What matters is building a process around shipping products quickly because shipping unlocks learning and learning leads to good outcomes (e.g. discovering a product that is impactful). My cofounder and I did 3 product launches across 6 months before arriving at what our construction company is currently building – a CRM for trade contractors. It took us 4 months to launch our first idea (autonomous robots to scan construction sites). It took us 1 month to launch our second idea (a construction analytics platform). It took us 1 weekend to launch our third idea (a CRM for trade contractors).
We didn't necessarily get smarter each time.The key skillset we developed was shipping faster and figuring out creative ways to learn faster. Hence, the central question to ask is not
Is this a good idea?
What can I do to learn faster so that I can position myself to find a good idea?
100% Founder Conviction
The startup world points to product-market-fit as the single most important milestone for a company. I actually think the most important milestone is a concept called 100% founder conviction and it refers to the moment when the founders develop unshakable conviction that their idea will work. I didn't have 100% founder conviction for drug-discovery company, but I do for our construction company. While I cannot describe this feeling, I remember the exact moment it happened.
For months, we struggled to generate traction for our first two construction ideas. Demos were hard to come by, despite 100s of emails. I always felt like the reception to our product was lukewarm during demos. Even when we generated revenue, I felt like construction companies gave us pity deals, where the money came out of a small innovation budget used to experiment with new technologies.
Our CRM idea was different. Within a week of launching, we booked a demo through a cold call with an electrical contractor! A week later, we demo'd the product and got our first signed contract. In the first month, we signed 3 customers. This was more deals than we had ever booked for all our previous ideas combined. Each sale was smooth and I felt this "aha" reaction from each of customer, where they nodded and said "this is pretty useful". Unlike our previous ideas, none of these early customers paid attention to how small we were as a company or how ugly our initial solution looked (and trust me it was ugly). All that mattered was that we solved a painful business problem and they wanted that business problem solved immediately.
I suspect the 100% founder conviction for basis stems from my personal belief that basis is solving a real problem and that many, many people in the world have this problem. This doesn't mean that we don't face challenges.
- We might fail to sell our product fast enough before we run out of money
- We might not convince investors to give us seed capital
- We might have trouble inspiring employees to join us
The difference is that all those challenges feel tractable. Like product-market-fit, 100% founder conviction is not quantifiable, but it's this special moment when the mindset shifts from
Will this idea work?
This idea will work. We just need to generate the proof points that will convince the world of such.
Focus on finding 100% founder conviction because the moment you find it, you'll find a way to will your company into existence regardless of obstacles.
Some advice to my younger self
For the first 7 years of my startup journey, I could never be sure if I were making progress. Lots of sleepless nights. Lots of moments where I felt like a loser, chasing impossible dreams. I'm sure a lot of founders feel this way. I'm sure a lot of successful founders once felt this way. So much of what makes startups difficult in the beginning is the psychological burden of uncertainty.
- Am I making progress on my startup?
- How should I define progress for my startup?
- When will a promising idea appear?
- How do I get initial traction?
If I could go back in time, I'd tell my younger self to just focus on 2 things.
- Rate of learning: Am I learning quickly about my space and idea?
- 100% founder conviction: Have I found 100% founder conviction?
Looking back, I wish I spent less time reading TechCrunch articles featuring big fundraises or VCs discussing post-PMF concepts (network effects, sales efficiencies, LTV/CAC) because none none of that matters in the early days. If anything, that content is detrimental for early-stage founders.
I wrote this because I always wished more founders wrote about how they discovered ideas and how they generated early-traction. I wish more founders wrote about their origin stories. These stories move people and I sometimes think a dearth of these stories prevents a lot of talented people from building startups, people who could otherwise have outsized impacts on the world.
The world is becoming less receptive to advertisements that ruin the user experience, and privacy is becoming more of a concern. However, the majority of people still wouldn't register for new "social" platforms if they had to pay.
If you were building a social media platform in today's world, what business models would you explore, and what strategies would you use to monetise from your userbase?
Databases have always been a complex part of the equation for developers requiring a delicate balance to manage inside the application, but Fauna wants to make adding a database a simple API call, and today it announced $ 27 million in new funding.
The round, which is technically an extension of the company’s 2017 Series A, was led by Madrona Venture Group with participation from Addition, GV, CRV, Quest Ventures and a number of individual investors. Today’s investment brings the total raised to $ 57 million, according to the company.
While it was at it, the company also added some executive fire power, announcing that it was bringing on former Okta chief product officer Eric Berg as CEO and former Snowflake CEO Bob Muglia as Chairman.
Companies like Stripe for payments and Twilio for communications are the poster children for the move to APIs. Instead of building sophisticated functionality from scratch, a developer can use an API call to a service, and presto, has the tooling built in without any fuss. Fauna does the same thing for databases.
“Within a few lines of code with Fauna, developers can add a full featured globally distributed database to their applications. They can simplify code, reduce costs and ship faster because they never again worry about database issues such as correctness, capacity, scalability, replication, etc,” new CEO Berg told TechCrunch.
To automate the process even further, the database is serverless, meaning that it scales up or down automatically to meet the needs of the application. Company co-founder Evan Weaver, who has moved to CTO with the hiring of Berg, says that Stripe is a good example of how this works. “You don’t think about provisioning Stripe because you don’t have to. […] You sign up for an account and beyond that you don’t have to provision or operate anything,” Weaver explained.
Like most API companies, it’s working at the developer level to build community and developer consensus around it. Today, they have 25,000 developers using the tool. While they don’t have an open source version, they try to attract developer interest with a generous free tier, after which you can pay as you go or set up a fixed monthly pricing as you scale up.
The company has always been 100% remote, so when COVID hit, it didn’t really change anything about the way the company’s 40 employees work. As the company grows Berg says it has aggressive goals around diversity and inclusion.
“Our recruiting and HR team have some pretty aggressive targets in terms of thinking about diversity in our pipelines and in our recruiting efforts, and because we’re a small team today we have the ability to impact that as we grow. If we doubled the size of the company, we could shift those percentages pretty dramatically, so it’s something that is definitely top of mind for us.”
Weaver says that fund raising began last year before COVID hit, but the term sheet wasn’t signed until April. He admits being nervous throughout the process, especially as the pandemic took hold. A company like Fauna is highly technical and takes time to grow, and he worried getting investors to understand that, even without a bleak economic picture, was challenging.
“It’s a deep tech business and it takes real capital to grow and scale. It’s a high risk, high reward bet, which is easier to fund in boom times, but broadly I think the best companies get built during recessions when there’s less competition for talent and there’s more focus on capital.”
Jason Geter, who previously co-founded Grand Hustle Records, told me that he’s looking to “redefine what a record label is today” with his new startup Heavy Sound Labs.
Geter said he sees Heavy Sound — which is part of startup studio Science Inc. — as an extension of the work he’s been doing for decades: Before co-founding Grand Hustle with T.I., Geter signed on as the rapper’s manager back when T.I. was only 18. He said he also signed Travis Scott back when Scott only had 500 views on YouTube.
“For me, I want to continue doing what I’ve always done, which is prepare [artists] to go to major labels,” Geter said.
Of course, the music business has changed dramatically since Grand Hustle was founded in 2003, a change that’s only accelerating as the coronavirus pandemic has brought in-person concerts and tours to a halt.
For one thing, Geter argued, “Traditional labels, they’re pretty much not in the development business anymore” — in other words, they’re not interested in finding young, undiscovered artists and nurturing their careers. At the same time, he suggested that musical subcultures (like the Atlanta hip-hop scene that he calls home) are no longer tied to specific cities.
“Lil Nas X stayed online,” he said. “By the time I found out about him, everyone else did too. It all happened at once.”
As a result, he suggested that finding the next up-and-coming artist no longer means focusing on a geographic scene: “I wanted to be able to put myself out there in a way that someone in Memphis, Houston, Kentucky, Seattle — they really truly are disconnected from the music industry, but they can come to Heavysound.com and it’s available for everyone [to apply] without any gatekeepers.”
Heavy Sound Labs has an open application process on its website, and it’s already signed artists including AllStarrDaGreat (ADG), 47 Gino and Ralph Weah. The goal is to help those artists build their audience and get them signed to a major label within 24 months.
Geter said he also wants the incubator to avoid what he sees as one of the main structural issues of a traditional label — namely, its exclusive focus on music. Instead, he said Heavy Sound can also help artists explore other avenues, whether that’s fashion or cannabis. The specific contracts will differ from industry to industry, but Geter said the goal is to always partner with the artist in a 50-50 split.
“The music business is traditionally very linear,” he said. “Whether you’re talking about record sales or streams, it’s always one kind of vertical. If you want to talk publishing, they’ll send you to the next floor to talk about publishing, which I’ve never understood.”
Geter added that he’s hoping to reinvent industry internships at the same time. Heavy Sound has already recruited 1,200 people to what it calls its Heavy Crew. Those Crew members gets access a special Slack channel and to industry talks, and they’re then called upon to help promote Heavy Sound artists.
As for how Heavy Sound became part of Science, Geter said he met the startup studio’s co-founder Peter Pham at South by Southwest last year, who quickly suggested that Geter meet with Science co-founder and managing partner Mike Jones.
“Heavy Sound pairs Jason’s unmatched ability to identify and grow talent at the earliest stages of development with the Heavy Crew, a powerful digital network of creatives and fans who can help the artists gain cultural traction,” Jones said in a statement. “The music incubator’s focus on empowering artists and providing a supportive community sets it apart from anything else in the industry. We’re thrilled to work closely with Jason and help Heavy Sound scale this new model in music.”