The slow burn standardization of venture capital

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Welcome to Startups Weekly, a closer look at this week’s startup news and trends from senior reporter and equity co-host Natasha Mascarenhas. To get it delivered to your inbox, subscribe here.

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Took me a while, but I’m realizing that my startup love language is discussing any attempt to standardize the opaque and often informal world of venture capital. The obvious tension is one that fascinates me: How do you automate a process like writing a check, which requires human buy-in and the art of trust, in a way that makes both parties happy.

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There are funds that invest purely based on data. Or tools that help startups view all their funding options at the drop of a profile. Or, as I covered this week, a tool for startups that lets companies blast a single application — or pitch — to multiple angel and pre-seed investors at once.

Launched by pre-seed firm Afore Capital, the tool is based on the Common App, which sends an application to multiple colleges and universities. The idea of ​​Afore is to help founders pitch to expert investors faster, while also helping those investors get different deal flow on a consistent basis. While it appears to be a low-stakes tool – free for both parties to use – it can sometimes ease the side in question. Is Afore very altruistic and sharing his wisdom? Does Blast Warm provide the same cues as the intro?

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Afore general partner Anamitra Banerjee thinks a funding-focused version of the Common App would solve a classic conundrum: what happens when a startup isn’t a good fit for your firm, but is still a smart company that’s committed to your climate-focused business. Might make sense for budding. Fund manager friend? Sometimes, those smart companies get lost in the cracks — think of the number of companies that didn’t get into Y Combinator by razor-thin margins — rather than being passed on to another firm.

Originally, Afore was looking to send companies that didn’t make it into its accelerator program to its network of outside investors. But Banerjee said that now Afore startups send applications to the network as soon as they are submitted, which means Afore treats it like any other pre-seed investor.

“We are running the risk of exposing it to everyone else in the group and maybe losing deals and allocations and things like that… gone,” Banerjee said.

You can read my full piece on TechCrunch+: “Is it time for a generic app for startup founders?” dm me Twitter Or Instagram if you want a discount code for TC+.

In the rest of this newsletter, we’ll talk about Carta, the secret workflow of the investor, and when the Kardashian strategy doesn’t quite work.

Litigation and retrenchment in Carta

Carta is suing its former CTO, Jerry Talton, alleging that he “sent sexually explicit, offensive, discriminatory and harassing messages to at least nine women during work hours and including on Carta’s systems.” sent and received.”

Here’s why it’s important: Carta isn’t the only sign indicating how to deal with internal conflict. The company confirmed that it had to cut 10% of its employees in its second known workforce cut over the pandemic.

It doesn’t help that many users of Carta’s services, which range from cap table management to fund administration, have been less than impressed with the platform in recent months. TechCrunch spoke to a fund manager who was moving away from the platform and who claims that his team had four different account managers in less than two years who “definitely didn’t care about our funds and needs.” Didn’t help with consistency and understanding.”

Image credit: Carta

sbfstack

Sam Bankman-Fried, the infamous founder and former CEO of FTX, launched Substack this week. As my colleague Mary Ann Azevedo said, this is “a very unusual move for someone who was recently arrested and is facing eight counts of felony US charges.”

Here’s why it’s important: As we discussed equity, the Kardashian method of distraction isn’t going to work for this former billionaire. There’s an odd sense of humor lately around SBF’s actions, whether it’s calling him smart for not pleading guilty or laughing at his subterfuge. It adds lightness to a situation that ultimately needs to be taken quite seriously.

It’s no different to start the substack; We are all talking about it, thinking about him bypassing his lawyer. But what if it’s not as radical as we think? What if the SBF sees that every time he speaks his noisy, extraneous conversation is noticed, covered and amplified, simply because no one else has in the first place? It’s a distraction; One that we may see until his expected trial in October.

NEW YORK, US - JANUARY 03: Former FTX CEO and founder Sam Bankman-Fried arrives at Manhattan Federal Court on January 03, 2023 in New York City.  (Photo by Fatih Aktaş/Andolu Agency via Getty Images)

Image credit: Fatih Aktas/Anadolu Agency/Getty Images

follow up

You’ve probably been reading a lot about ChatGPT, OpenAI’s artificial intelligence tool that has gained virality with its intelligent messaging capability. The device, which has only recently been made available to the general public, is smart enough to answer serious and silly questions about deep topics, which has landed it in debates led by writers, teachers, artists and more.

But beyond the initial excitement surrounding the tool, I wanted to follow up on whether it’s actually making its way into people’s workflows. So, I explored how investors are using ChatGPT for TC+ with Kyle Vigers and Christine Hall.

Here’s why this is important: Some investors expressed that ChatGPT could be used for fact-checking purposes regarding claims of market size or growth potential; At the same time, Google could too. The rationale for AI, of course, would be that the content would be original and perhaps more targeted to one’s exact questions, whereas a typical Google search might require the extra effort of sifting through and linking different articles together.

Alluding to the beginning of this newsletter, ChatGPT can be seen as another way the enterprise tries to automate itself. It just depends on whether investors think it’s smart enough to reject startups, or if feedback is valued as the key currency of network building.

Artificial Intelligence - Chatbot concept

Image credit: Carol Yepes / Getty Images

Talking Points Non-exhaustive list of other news to note this week:

spotted on techcrunch

Dungeons & Dragons content creators are fighting to protect their livelihoods

Tesla cuts prices by up to 20% this time

What happened at CES, will stay at CES?

As Digitel shows, our passion for pets means startups aimed at vets are booming

Users say third-party Twitter apps are facing problems

spotted on techcrunch+

You are not going to grow in your 2021 valuation

Pitch Deck Teardown: Mint House’s $35M Series B Deck

Why there were no unicorns in Africa last year despite record fundraising

Web3 could help make fashion more sustainable

Pittsburgh’s AI expertise could fuel an already growing startup market

With that, I’m off to enjoy the weekend in Providence with some old friends. New England, how I’ve missed you, your indulgently cozy weather and nostalgic roads.

chat soon,

Ann





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