Andreessen, Khosla and Altman Team Up
It’s hard to avoid being impressed by the vision of Worldcoin. Sam Altman wants to create a human-centric coin that can be distributed to every person on earth regularly. It is Universal Basic Income using a new currency.
- Universal Crypto Income
- Venture Capital is Evolving Fast
- Essay of the Week
- Data is Gold
- Apple and Spotify
- Startup of the Week
- Tweet of the Week
It’s hard to avoid being impressed by the vision of Worldcoin. Sam Altman wants to create a human-centric coin that can be distributed to every person on earth regularly. It is Universal Basic Income using a new currency. This week, thought leaders in venture capital, Andreessen Horowitz and Khosla Ventures, joined others in investing in Worldcoin and valuing it at $3 billion. That is $0.40c for every person on the planet, the future beneficiaries.
If Worldcoin can execute its vision it will be sending hundreds of dollars a month, or more, to these people. And if merchants start accepting Worldcoin as payment, the company will become the biggest company on earth.
The key to success is validating each human and ensuring that only humans get the coins and that they only get each distribution once. Worldcoin’s site explains how a retina scanner called the Orb will be key to that, as will smartphone ownership.
Eventually, we plan to produce more than fifty thousand devices per year.
This is where Worlcoin’s vision clashes with its execution plan.
Fifty Thousand Orb’s a year will not be enough, or fast enough, to fulfill the exciting and audacious vision of the company. And the $100m raised this week is far from enough to change that. It’s a great start and wouldn’t lead me to that thought were it not for the “eventually” and “50,000 a year”. Those words imply the real plan and the vision are quite far apart.
I may be alone but Sam, please raise several $billion and do this fast and at scale. It can be done. The core has to be merchants globally being happy to take WorldCoin as payment, otherwise owning it will be meaningless. The real value is the value to exchange for tangible needs like food, housing, clothing, education, leisure, and health. As automation accelerates and removes the need for many kinds of human labor, a universal method of delivering needs to people will become a pressing human puzzle. Worldcoin holds a possible solution to the future of humanity. It doesn’t make sense to underplay that hand, because success demands “bigness”.
Applause is the right response to Andreessen and Khosla for backing WorldCoin and to Sam Altman and Alex Blania for having the audacity to think this big. The next few steps will be crucial to the end game.
It was another big week in venture capital. Sequoia Capital announced a startup accelerator program called Arc. Giving $1m to 15 startups, initially in Europe. Teaching them the Sequoia way of how to build a company. A lot to unpack there.
And in this week’s Tweet of the Week Beezer Clarkson from Sapphire Ventures focuses on the issue of pro-rata rights. She spells out the pros and cons of a seed manager retaining some % of their funds for follow-on investing into their portfolio as the companies go on to do B, C, and D rounds of financing.
It is a well-known fact that great fund managers invest in companies that grow faster and bigger than ever. The fund that owns 10% of a startup at the A round, when confronted with a B round valued at $500m and raising $100m, has the opportunity to write a $10m check into the B round.
For most seed stage managers that is too big for their fund, and so they have to raise a new fund, called an SPV, to be able to do it. The SPV will normally be hard to fill in the time required (often only days). And so most pro-rata opportunity is unfulfilled.
According to the data we have at SignalRank, my startup, that may be as much as $13 billion for the B, C, and D rounds of 2021 companies that became unicorns in the year. The current value of that $13 bn would be $76 bn — almost 6x. If you go back a little further, so the unicorns have had time to exit or grow the numbers are even better. The 2017 unicorns had $$2.7 bn of pro-rata available at the B, C, and D rounds. If that cash had been invested it would have a current value of $36 bn or 20x.
So the discussion of pro-rata is about whether seed managers benefit from the growth of the companies they invest in early. The reward for their early risk can be good, but if they did their pro-rata it can be a lot better. If they do not do it then the reward goes to others who invest later.
Clearly, Beezer is a highly relevant viewer of this landscape as she is an LP investor in many of the best seed funds. For a point of view that wants pro-rata to be denied early-stage managers I also link to a TechCrunch article this week.
This will become a very important area for all seed managers. What they really need is:
- A source of capital for their pro-rata to make SPVs easy.
- Partnership with their existing LPs and partners to avoid conflicts
- Economic terms that pay them the same 20% of the profit that they get from their core fund.
- Rapid decision-making and draw-down of the required capital.
More in this week’s video.
Universal Crypto Income
Worldcoin, the cryptocurrency startup co-founded by former Y Combinator president Sam Altman, is raising $100 million from investors including Andreessen Horowitz, a previous backer, and Khosla Ventures through the sale of its Worldcoin tokens, according to two people with direct knowledge of the matter.
The new investment values the total supply of the company’s tokens, blockchain-based digital currencies that are often issued by crypto startups, at $3 billion, two people said. Just five months ago, the startup, which offers free tokens to individuals who get their irises scanned with a custom-made device, said it raised $25 million at a $1 billion valuation.
Worldcoin is a digital currency that launches by giving away a piece to every person in the world
The internet is powerful because of large networks. Email, social apps, and marketplaces are examples of such networks. The more participants they have, the more powerful they become. For the first time, Web3 and cryptocurrencies make it possible to distribute ownership and control of those networks to their users, rather than a single entity.
If a cryptocurrency were adopted at scale, it would vastly increase access to the internet economy and make applications possible that are now unimaginable. Unfortunately, less than three percent of the world’s population currently participates in cryptocurrency networks.
To rapidly get its new currency into the hands of as many people as possible, Worldcoin will allow everyone to claim a share of it for free. For this to happen, we first had to solve one major challenge: ensuring that every person on Earth can prove that they are indeed human (not a bot), and that they have not claimed their free share of Worldcoin already. This challenge is the longstanding problem of proving “unique-humanness” without intruding on privacy: how can you prove you are you, without having to tell us anything about yourself?
To address it, we built a new device called the Orb. It solves the problem through biometrics: the Orb captures an image of a person’s eyes, which is converted into a short numeric code, making it possible to check whether the person has signed up already. If not, they receive their free share of Worldcoin. The original image will not need to be stored or uploaded. In contrast to many centralized services we use today, no other personal information is required. Through modern cryptography, this numeric code is also not linked to the user’s wallet or transactions, further preserving user privacy.
We are only a few months away from a global launch and are currently running field tests in many locations around the world. In these field tests, some people are waiting hours to receive their free share of Worldcoin, and local entrepreneurs are building whole businesses around the Orb. Currently, a single device can onboard, on average, around seven hundred new people per week. Eventually, we plan to produce more than fifty thousand devices per year. It is still early, but the results of these field tests make us optimistic that Worldcoin will soon connect the first billion users in one commonly owned crypto network.
Nothing like this has ever been done before and the outcome is uncertain. But we are obsessed with the idea that revolutionary new technologies like blockchain and cryptography can let us do something collectively that even governments have not been able to: increase individual empowerment and equality of opportunity on a global scale.
Worldcoin is launching by giving as many people as possible a share of a new currency.
This post explains how privacy will work after field testing is complete. Currently, we expect field testing to continue through 2022. We will update this section should anything change. To find out how privacy works during field testing, click here.
Venture Capital is Evolving Fast
Today we are excited to introduce Arc, a seed-stage catalyst for outlier founders. It is an open-call to anyone actively working on an idea or product and with the ambition of building a category-defining company that will endure.
Over the course of 8 weeks, seed-stage founders in the program will learn Company Design, the Sequoia way to start, build and scale enduring companies. You will get access to a best-in-class community of Sequoia founders and operators. And, your company will receive a $1M up-front investment to jump start your business.
A commitment to company building has always been Sequoia’s hallmark. It is reflected in our mission to help the daring build legendary companies and is rooted in the belief that it takes more than capital to create enduring impact. Many times and over decades, we’ve seen what works. Just as important, we’ve seen what doesn’t. Mindsets, foundations, networks and community are what make the difference between companies that stand the test of time and those that don’t. These are the principles of Company Design, which will be central to the Arc experience. Establishing these fundamentals early is critical. We think of it as a compass: adjust your direction at the start of a journey and the impact to the arc you travel will compound over time. With Arc, you will learn what it takes to build for the next decade, not just the next quarter.
The first cohort of Arc will cater to European companies, with curriculum and experiences tailored to the unique demands of company building in Europe, including regionally specific perspectives on market expansion, remote hiring and more. A US cohort will launch later this year.
If you are a seed-stage founder building a company headquartered in Europe, we want to hear from you. Applications will be accepted until April 8th. The program will kick-off on May 23rd and run through July 15, 2022. Learn more and apply here.
The death of pro-rata starts with founders holding their investors to the same standards as a highly engaged team member.
A performance-rata clause will look different for each investor on a founder’s cap table. Larger firms might be able to offer a suite of services, whereas solo GPs and smaller funds might specialize in a particular business function like marketing, sales, design, engineering or PR.
Below are a few ideas founders can use to identify and reward investors who work for their pro-rata:
- Identify three support functions that lead investors need to complete each quarter. Before each board meeting, evaluate whether they have met those requirements and refresh them for the next quarter.
- Make one request of non-lead investors each quarter, but insist that every investor at the cap table — regardless of size — complete some mutually agreed upon task each quarter.
- Provide your cap table to your head of sales or the equivalent. Ask them to add all of your investors on LinkedIn and identify mutual connections that may become qualified leads. Track the investors who make introductions to those leads.
- Provide your cap table to your head of recruiting so they can work directly with each of your investors on potential hires. Track the investors who do not engage and note the investors who make qualified introductions within their network.
- Invite investors to internal company events like hack-a-thons, email updates, company all-hands or board meetings. Measure attendance and engagement. If you want to get granular, you can even measure open email rates.
That last suggestion isn’t as fanciful as it sounds. In fact, Coda CEO Shishir Mehrotra has spoken openly about making every board meeting open to all employees and investors. TechCrunch
Venture capital firms still dominate as investors in Series B rounds, with growth equity taking on a larger presence as rounds get bigger and bigger at this stage.
In a recent Crunchbase News analysis of the 2021 U.S. market, we found some big changes in Series B funding. Specifically, the data revealed that 1,200 unique startups raised funding at Series B this past year — about a third more than in each prior year since 2017. The amounts were also larger, more than doubling from $25.4 billion in 2020 to $55.9 billion in 2021.
Here’s what else we found when we dug deeper into the investor group most active during Series B, which is sometimes viewed as a proxy for the broader venture market overall since it’s at this stage that a startup often has proven technology or market traction and is poised to scale.
Forge Global will begin to trade on the New York Stock Exchange today, having completed its merger with Motive Capital Corp as part of a SPAC combination. TechCrunch covered the blank-check tie-up when it was announced last September. Our first look at the deal’s metrics is here.
To say that the IPO market has changed since last September is an understatement; the pace of public offerings from tech startups has slowed to a crawl in the wake of a sharp repricing of the value of technology stocks since late-2021 highs. Richly valued private companies that might have targeted IPOs have pulled back on plans and the rate of new S-1 filings is de minimis.
This makes the timing of Forge’s public debut illustrative. The company’s combination and flotation will at once provide a data point regarding market appetite for such deals, and the company’s stock price will also reflect, to some degree, the level of investor optimism in other companies not going public.
Silicon Valley’s Wealthiest Russian Is Carefully — Very Carefully — Distancing Himself From Putin
Yuri Milner built a $3.9 billion fortune, thanks to early funding from Kremlin-connected sources. He says that’s all in the past.
Starting in the early 2010s, getting an invitation to Yuri Milner’s château in Los Altos, Calif., meant you’d made it into Silicon Valley’s most exclusive of exclusive circles. Milner is known for placing what proved to be extremely lucrative bets on Airbnb, Alibaba, Twitter, Facebook, and other startups — and for being a prolific patron of the sciences. He was friendly with the late Stephen Hawking and is known to socialize with Mark Zuckerberg and actor Ed Norton. When Milner hosted a watch party for the HBO series Westworld, Google co-founder Sergey Brin showed up.
Milner is also an exceedingly wealthy Russian who started his venture capital career with help from Alisher Usmanov, an Uzbek-born metals magnate close to Russia’s president, Vladimir Putin. Most people who know Milner have shrugged off his connection to a pro-Putin oligarch. Milner’s business — early-stage tech investing — is far removed from the world of the Russian oligarchs who got rich by acquiring state assets at dirt-cheap prices. And the money from Usmanov, as well as from state-controlled VTB Bank PJSC, came during the presidency of Dmitry Medvedev, when the Obama administration was urging a “reset” of Russian-American relations.
But now, as Putin’s army is shelling Ukrainian cities, Usmanov and VTB are on sanction lists. And Milner is on the defensive. “I cannot go back and change history,” he says during several hours of Zoom interviews with Bloomberg Businessweek. “I cannot change the fact I was born in Russia. I cannot change the fact we had some Russian funds.”
It’s a significant raise for a few reasons: It may be the largest fund ever raised by a solo general partner, as Axios noted, and by a woman.
Haun is no stranger to the world of crypto, though. During her career as a federal prosecutor, she created the government’s first cryptocurrency task force. She later became a board member of Coinbase and invested in companies including OpenSea and Chain.
Her fund is among a growing number of new funds dedicated to investing in cryptocurrency. Andreessen Horowitz announced its $2.2 billion Crypto Fund III in June 2021, Coinbase has its own investment arm with Coinbase Ventures, and Paradigm last year announced a $2.5 billion crypto fund.
According to Axios, Haun raised $500 million for an early-stage fund and $1 billion for an “accelerator” fund.
Data-driven VC firm SignalFire has hired Stripe’s former chief marketing officer as the latest bet that its bench of operating vets will beat out the large rosters of support staff cropping up around Silicon Valley.
Jim Stoneham departed Stripe in October after a two-year stint leading marketing functions at the $95 billion valuation payments company during a pandemic-powered boom in e-commerce. During his tenure, Stoneham scaled the marketing team fivefold and established a practice of targeted outreach to drive enterprise customer demand. Stoneham also amassed operating experience in the same position at IT firm New Relic, and as CEO of Opsmatic (acquired by New Relic) and Payvment (acquired by Intuit), two other startups that built backend technology. His hire is the latest big-name get in the venture capital industry arms race to build “value add” support for portfolio companies.
SignalFire launched in 2013 as an early mover in using data to source talent, deals and market intelligence and now argues it’s among the first in sourcing operational staff as well. Tawni Cranz, Netflix’s former chief talent officer, joined the firm in 2017 to help on human resources, and former TechCrunch editor Josh Constine came onboard in 2019 to helm content. Forbes
In the ever-growing investment landscape, funds are multiplying and diversifying, and for startups there is more to raising investment than the money and the media moment. With #QVCS Maddyness profiles different funds to give founders and entrepreneurs the information they need to choose the right investor. Today we speak to Julia Hawkins, General Partner at LocalGlobe about budding investors who are curious about venture capital.
Essay of the Week
Every business starts with an entrepreneur and a great idea. But in order to bloom, they need money to grow. Not only do successful startups need capital to build a solid foundation, they must also have funds to cover everything from hiring staff to marketing. So how can businesses start building this well of cash?
Seed funding is capital that comes from any source. Unlike loans, seed funding for startups generally doesn’t need to be returned. Here’s everything you need to know about seed money, types of seed fundraising, and how to go about raising a seed round.
What is seed funding?
There are several misconceptions regarding raising money. So what is seed funding and how does it differ from other funding options?
Businesses that seek out this type of capital have already proven a market need for their product. They simply need the money to get that product to market and obtain a foothold in their industry.
One of the biggest distinguishers of seed funding is that seed investors are not providing loans. They expect a share in the future of the business. Entrepreneurs embarking on fundraising must be comfortable giving away part of their business.
Unless entrepreneurs already have savings, they need to look into a seed round, or their startups won’t stand a chance.
Data is Gold
Over a decade after the idea of “big data” was first born, data continues to be one of the most important and furiously growing innovation drivers across both large enterprises and new startups. From providing pulse checks that are foundational to business operations to intelligently automating daily tasks through machine learning, data has become the… Read More
What’s the price of spice? If you’ve never seen a data app, that’s the question you should be asking yourself. Data apps are living documents that weave narratives around data and charts to explain, persuade, or empower.
Imagine your future self. You work for a large company selling spices and you’re tasked with exploring the impact of pricing changes. Most importantly, you’ll present the results to executives who will no doubt pepper you with questions about what-ifs.
You toss aside the presentation software, opting instead for a data notebook because this won’t be the last time you’ll be asked to analyze prices. With a notebook, you’ll be able to reuse your work.
First, you plot the historical revenues of the company on the Imperial Market: $189B solari is no small amount of spice. Revenues are flattish though.
Next, you unmask the reason for the tepid growth: prices have been static for the past six months or so, even though high-value customers transact just as frequently as smaller spice buyers.
You anticipate the CFO will ask questions about a particular customer or two, to test the integrity of the data. No problem. Type in any customer name into this section of the app to plot historical purchasing behavior. This customer’s pricing is clearly suboptimal.
Today, Hex announced their $52m Series B, an important milestone for the company leading the data apps movement. Congratulations to the team. If you’re interested in building software that empowers the next generation of spice analysts and all technical analysts, join Hex.
Your iPhone wallet now negates the need for an actual wallet — at least in Arizona.
Apple announced Wednesday that users will now be able to add their driver’s license and state ID to their iPhone wallets, with Arizona being the first state to get access.
The new ID feature will be available on both iPhones and Apple Watches, and will work similarly to how users can store their boarding passes on their phones. The feature will be supported at TSA security checkpoints at select airports, starting with the Phoenix Sky Harbor International Airport. Around a dozen other states and territories, including Georgia, Colorado, Hawaii, Mississippi, Ohio and the territory of Puerto Rico, will support driver’s licenses and state IDs next. Apple first announced the feature last September.
“We look forward to working with many more states and the TSA to bring IDs in Wallet to users across the US,“ Jennifer Bailey, Apple’s vice president of Apple Pay and Apple Wallet, said in a statement.
When setting it up, users will need to take a selfie, scan the front and back of their driver’s license or state ID card, and do a series of facial and head movements for “additional fraud prevention,” Apple said in its announcement. The states are responsible for verifying and approving user’s requests to add their IDs to the Apple Wallets.
After users add their IDs to their Apple Wallets, they can use the feature by tapping their phone or Apple Watch on the TSA identity reader. They will then be shown which information TSA is requesting and can consent to give it with Face or Touch ID, without needing to unlock their phones. The digital ID will only present the information needed in each transaction. The feature will be available on iPhone 8 or later running iOS 15.4 and Apple Watch Series 4 or later running watchOS 8.4 or later.
It may only be a matter of time before the Berlin Wall of the mobile app ecosystem, Apple’s rigid App Store rules, falls. Google’s announcement today that its Google Play app store will allow a “dual billing option” in U.S. apps, starting with Spotify, puts pressure on Apple to follow suit. …
In addition to music and podcasts, Spotify may soon offer live audio within its primary streaming app. According to Bloomberg, the company plans to integrate Greenroom into its mainline app. In the process, Spotify will reportedly also rename the platform to Spotify Live. All of this could happen before the second half of the year, according to Bloomberg.
The outlet was tipped off on the impending move by iOS developer Steve Moser, who found evidence of it in the beta version of Spotify’s iPhone app. As for the ultimate fate of Greenroom, in a separate tweet, Bloomberg reporter Ashley Carman said the app would live on as a kind of backend for creators to record and upload their content to Spotify.
We’ve reached out to Spotify for comments.
Speaking to Spotify’s potential motivations behind the plan, Bloomberg suggests Greenroom has “struggled to take off.” By integrating live audio into its very popular streaming app, the company would be elevating the format to a place where it would be more accessible — even if some users would complain about the app becoming even more crowded.
In a way, it’s strange the company may only now be considering integrating the two together. When Spotify first announced its plans for Greenroom, CEO Daniel Ek said he saw live audio as something that every platform would eventually feature. “Just like Stories with video where every major platform has them as one way for its audience to communicate with each other, I see live audio similarly,” he said at the time. “I expect all the platforms to have it.”
Startup of the Week
Whether you’re in an office or remote, getting and keeping your co-workers’ attention in meetings is one of the biggest challenges out there. But what if your presentations looked like Instagram stories? Introducing Tome, a new presentation tool. It launched today, announcing $32 million in funding from Greylock and Coatue.
Tome calls itself a “modern storytelling tool for work,” and its pitch in a nutshell is to make building workplace presentations as intuitive as social media. Co-founders Keith Peiris and Henri Liriani both come from the consumer social media world: Peiris worked on Instagram’s augmented-reality camera, and Liriani helped redesign Facebook Messenger. Peiris said the two always felt that Meta’s rich storytelling products didn’t match the way employees presented information internally.
“The stuff that we’re building for our users is pretty incredible,” Peiris said. “But when we were making decisions inside of Instagram, we were using the slide format from the ‘80s.”
Tome isn’t the only tool that’s sick of the slide deck. It’s entering an already crowded race for the future of workplace presentations.