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This Week in Apps: Apple slashes commissions, Twitter launches Fleets, warnings about Parler

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Welcome back to This Week in Apps, the TechCrunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry is as hot as ever, with a record 204 billion downloads and $120 billion in consumer spending in 2019. People are now spending three hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

Top Stories

Apple reduces App Store commissions to 15% for ‘vast majority’ of developers

The changes apply to developers with less than $1 million in revenue.

app store icon 2

Image Credits: TechCrunch

Apple this week announced a major shakeup to its App Store commission rate. The company, as of January 1, 2021, will only charge App Store developers 15% on paid apps and in-app purchases if their business has not exceeded $1 million in proceeds during 2020 for all their apps combined. Qualification for the new App Store Small Business Program, as it’s called, will be re-assessed revenues on an annual basis going forward.

The changes arrive at a time when Apple has been under increased regulatory scrutiny over how its App Store operates, which includes antitrust investigations in the U.S. and E.U. It has also waged war with developers throughout the year over in-app purchases, leading the company to revise its already complex rules even further, and spell out how and when it gets to charge its so-called “Apple tax.” And it’s in the middle of a nasty legal battle with Fortnite maker Epic Games, which doesn’t want to be forced to use Apple payments or even, necessarily, the App Store.

The commission changes may help silence some disgruntled voices from the wider app development community, while giving Apple a way to show regulators that it’s enabling fair competition.

However, several of Apple’s largest and harshest critics reacted negatively to the news.

The advocacy group, the Coalition for App Fairness, which includes Epic, Basecamp, Deezer, Match Group, Spotify and many others, said: “developers want a level playing field from Apple, not a symbolic gesture.” They argued that Apple still owns the customer relationship, the threshold of $1M is arbitrary, and they said the majority of developers who “generate livable revenue,” won’t benefit.

Match, Spotify and Epic separately echoed these sentiments in statements of their own.

Apple, though, had claimed the change would benefit the “vast majority” of the App Store development community. Today its App Store hosts 1.8 million apps that reach more than 1.5 billion Apple devices.

Individual developers we spoke to, including those who would qualify for the program, weren’t complaining. And many were fairly surprised by Apple’s move.

“I think it’s fair to say that this change wouldn’t have happened without either the impending antitrust investigations, or the Epic lawsuit. But something can be both a very clever piece of political manoeuvring, and still genuinely welcome and beneficial to the vast majority of developers out there,” said indie developer James Thomson, maker of the PCalc app and others.

“We fall significantly under the million dollar threshold, so we’re looking at roughly a 20% increase in our income under the new system. We’re in a much better position than most businesses under the pandemic, in that our sales are purely digital and people always need calculators (or dice), but we’ve certainly seen a decrease in sales over the last eight months. I can see the current situation taking a good while to resolve, so that extra revenue is appreciated,” he added. “These changes will particularly help the small developers who have traditionally been the heart of the developer community, and I as happy about this, as I am surprised,” Thomson said.

Others also said they were generally happy with the changes. But some expressed reservations about the details of how the program works.

“Overall, I’m very pleased with this new program,” said developer David Smith, maker of Widgetsmith, Watchsmith, Sleep++ and a range of other iOS apps. “It will help countless small developers who can really benefit from that extra margin. I’m excited for all the indie developers who will now be able to focus full time on their apps just that little bit sooner.”

But Smith noted that it was odd that the program isn’t applied in a way that’s similar to a graduated tax rate, where, he explained, “your first $1M is at 15% and the rest at the higher rate.”

“The proposed system creates an awkward differentiation between developers, and one of the things I’ve always appreciated most about the App Store was that it treats developers equally,” Smith continued. “It also creates a strange disincentive for growth for mid-sized businesses who are approaching the threshold.”

We turned to third-party analytics firms to try to better understand the market.

According to App Annie data, around 98% of all iOS developers in 2019 (meaning, unique publisher accounts) fell under the $1 million annual consumer spend threshold. This supports Apple’s claims that the “vast majority” of developers would benefit. This group of developers accounts for 567,000 unique apps, or 93% of all apps generating revenue through in-app purchases.

Combined, their revenues represented just under 8% of the overall App Store revenue share — in other words, it’s money Apple could stand to lose.

Image Credits: App Annie

App Annie also found that the group of mid-range developers who are “nearing” that $1 million threshold is really small. The data indicates roughly 0.5% of developers are making between $800,000 and $1 million. And just over 1% are in the $500,000-$800,000 range.

Most developers have much smaller revenue streams, with 87.7% making less than $100,000 in 2019.

Image Credits: App Annie

Some expressed concern that Apple’s system would unfairly penalize developers who made just $1 over the $1 million threshold, and then trap them at the higher rate (30%).

But others suspected that the percentage of developers who were growing “slowly” at over $800,000 in ARR was actually pretty small.

From the data we’ve collected, it seems that subscription-based apps tend to keep growing fairly quickly once they pass that $1 million threshold. According to data from subscription platform RevenueCat, the apps on its platform grow, on average, at 1.5x year-over-year. So once an app crossed the $1 million threshold, the most likely scenario is that it would make $1.5 million the next year. Plus, the apps that are “nearing” the threshold tend to be growing even faster than the average rate, we understand. And they rarely backslide.

“Apple has made a lot of changes to the App Store over the years, and this is one of the first I’ve seen where there’s really not much to complain about,” said RevenueCat CEO Jacob Eiting. “It’s impactful to the App Store economy broadly and meaningful to individual indie developers. Sure it may have been for PR and they might not have a lot of downside in doing this, but it’s genuinely a great thing for so many developers,” he said.

We’ll have more data on this subject in the weeks ahead. 

Parler’s funders revealed…it’s the Mercers; parents warned about the app

The “Free speech” app Parler rising in the charts after Facebook and Twitter increased fact-checks, turns out to be funded by prominent conservative donor and Trump supporter Rebekah Mercer, The WSJ revealed.

Rebekah is the daughter of Robert Mercer, the hedge fund manager and principal investor in Cambridge Analytica — the data analytics firm behind the largest data leak in Facebook history, where 87 million users had their data harvested for the purposes of political advertising. The Mercers have also backed Breitbart News, the Heritage Foundation think tank, the Federalist Society, a super PAC that initially backed Ted Cruz’s bid for the Republican presidential nomination (before switching to Trump) and Citizens United (which distributed a 2007 anti-Clinton movie and succeeded in a Supreme Court ruling that reversed campaign finance restrictions), among other things.

This week, the nonprofit ParentsTogether issued a warning to parents about Parler, saying that the app’s weak moderation policies and extremist user base put kids at risk of exploitation, abuse and recruitment for racist violence. The organization described Parler as hosting dangerous content, including hate speech, incitements of violence and widespread disinformation.

In addition, the group was concerned that while Apple’s App Store rates the app at 17+, Google Play has it listed as suitable for kids ages 13+.

“All parents of children under age 18 to immediately check their kids’ phones and tablets to ensure that their children have not installed Parler,” the group warned parents, in a statement. “If your child has installed Parler, we strongly recommend that you delete their account and the app.”

Twitter launches Fleets

Image Credits: Bryce Durbin

Twitter this week launched its own version of Stories — aka “Fleets” — to its global user base. The product, which allows users to post ephemeral content that disappears in 24 hours, had already rolled out to select markets, including Brazil, India, Italy, South Korea and, most recently, Japan. The rollout almost immediately ran into some snags, with Fleets suffering performance and stability issues. Twitter said it would pause things while it worked this out. On Thursday, the company announced the feature was globally available.

Reactions to Fleets has been mixed. Some users hate the feature, which is designed to encourage more users to post to Twitter, when they’ve otherwise been too shy to participate — largely because of Twitter’s “cancel culture” vibe where mistakes, bad takes and unpopular opinions are harshly criticized, even when they’re more minor offenses. It’s not clear how a Stories feature resolves this, however, as Fleets are still being published to Twitter’s public social network.

Twitter also said it will begin testing a Clubhouse rival where users will join audio chat rooms.

These changes follow the activities by activist investor Elliott Management Group, which took a sizable stake in Twitter earlier this year, along with Silver Lake. The firms did so with a plan to push the company for more innovation and new executive leadership. The companies later struck a deal to spare Twitter CEO Jack Dorsey’s ousting, gain board seats, and put someone on the board with expertise in technology and artificial intelligence. Dorsey disagreed with the characterization that their involvement had any impact on product development.

Weekly News

Platforms

  • Apple’s IDFA is targeted by EU privacy complaints. Apple had already told advertisers they’ll soon have to allow users the option to opt-out of ad tracking, but the new complaints are more about the fact that IDFA was ever created and stored in the first place, and that Apple’s planned changes don’t go far enough as they restrict its use for third parties, but not Apple itself.
  • Apple’s Developer Transition Kits (DTKs) help developers get their apps ready for Apple’s silicon. But it turns out they won’t be able to install iOS or iPadOS apps like M1 Macs can.
  • Google reminds Android developers they only have until January 18, 2021 to get approval to continue using background location data if they want to stay on Google Play.
  • Apple releases a new version of iOS 14.2 for iPhone 12. The update appears to fix the iPhone 12 mini lock screen issue that caused some users’ lock screens to not respond to touches. The update also fixes issues with MMS messages, Made for iPhone hearing devices and more.
  • Google also reminds Android developers that, starting Augut 2021, Google Play will require all apps to use the Android App Bundle publishing format and make other changes.
  • Apple now allows developers to market and distribute their subscriptions with offer codes. These one-time, alphanumeric codes can be redeemed either on the App Store or within the app itself, allowing developers to acquire and retain customers or win back lapsed subscribers with special deals. Here are some tips on putting them to work.
  • Apple’s iOS 14.3, beta 2 indicates that Apple will do away with the intermediate step of opening the Shortcuts app when app shortcuts are launched. This was one of the major pet peeves from the iOS 14 home screen customization trend, where users designed iOS themes using custom icons and widgets.

Services

Security & Privacy

  • Dating app Bumble’s vulnerabilities puts Facebook Likes, locations and pictures of 95 million online daters at risk. Bumble took six months to fix the flaws and says no user data had been compromised.
  • TikTok expands parental controls to include search, commenting and account privacy. The company launched Family Pairing in April, allowing parents to link their account to their teen’s in order to manage screen time, direct messaging and whether or not the teen’s account would be in “Restricted” mode — a special mode which limits TikTok’s feed to a safer set of more moderated content. This week, it also gave parents the ability to control whether the teen’s Liked Videos are visible to others, control who can comment on the teen’s videos and decide whether the teen is allowed to use TikTok search.
  • Messaging app Go SMS Pro exposed millions of users’ private photos and files. The app, popular on Android, didn’t respond to security researchers about the problem. Typically, companies are given a 90-day deadline before vulnerabilities are made public.

Apps in the News

  • Epic Games added video chat to Fortnite, via a Houseparty integration. The company bought the video chat app last year. Players use their phone or tablet as the webcam while they play on PCs, PS4 or PS5.
  • Epic Games sues Apple in Australia too. The Fortnite maker is currently in a legal battle in the U.S. over Apple’s requirement to use Apple Pay and pay commissions on in-app purchases. In an interview this week, Epic Games founder Tim Sweeney likened the fight with Apple to a fight for civil rights. (That’s a bit much, we’d say.)
  • Snap acquired Voisey, a U.K.-based app that lets users create music tracks and videos by overlaying their own vocals. The app had raise $1.88 million to date, but deal terms weren’t immediately available.
  • Google Maps is updated with more COVID info and adds its Assistant driving mode. The COVID layer in Google Maps on Android and iOS can now show the number of all-time detected cases in an area, links to COVID resources from local governments and how busy transit lines are. The driving mode can read texts and lets you control your music from Maps.
  • Facebook’s Messenger Kids redesigned to look more like Messenger. The updated app puts chats in a more traditional vertical list, with message and media previews, and bold text and blue dots to indicate their unread status. It also added a new tabbed navigation, which better highlights the separation between apps and games.
  • YouTube launches 15-second audio ads aimed at users who listen to music or podcasts while the app plays in the background.
  • Apple’s Shazam passes 200 million monthly active users.
  • Instagram expands its Guides features and upgrades Search. Guides now allow creators to share tips, resources and other long-form content in a dedicated tab on their profiles. Now, everyone can make guides for Products, Places and Posts. Users can also now search by keywords, instead of just by names, usernames, hashtags and locations.
  • Instagram also updates its Threads mobile messaging app. The app now adds a tab for easier navigation between stories and statuses. All users should also now have the tabbed inbox where they can see everyone’s stories, not just close friends, and have the option to publish to stories, not just close friends’ stories.
  • Facebook sued an operator of Instagram clone websites. The operator had scraped Instagram data of some 100,000 accounts using its own 30,000 fake accounts that pretended to be humans to avoid detection.
  • SoundCloud adds profile verification with official blue checks.
  • App Growth Awards announce their finalists. 
  • Google launches iOS 14 widgets for Gmail, Drive and Fit. Says Calendar and Chrome widgets will come soon.
  • State and federal investigators are preparing to bring antitrust charges against Facebook over its acquisition of Instagram and WhatsApp, The Washington Post reports.
  • Twitter and Facebook sat for another congressional tech hearing that again largely served to give lawmakers a chance to just talk about whatever they wanted, instead of the topic at hand: social media’s role during the election. The CEOs were asked about their apps’ addictiveness, their algorithms, their approaches to misinformation and more.

Deadpool

Trends

  • U.S. mobile strategy game spending surges 22% to $2.8 billion in the first 10 months of 2020, Sensor Tower reports. The top game by player spending during this time was Clash of Clans, which generated close to $262 million in the U.S.
  • Top home screen widget apps have reached 1 in 7 U.S. iPhones, another Sensor Tower report claims. The five most popular apps — Widgetsmith, Color Widgets, Photo Widget: Simple, WidgetBox and Photo Widget — have collectively seen 13 million iPhone installs since the launch of iOS 14. Globally, they’ve reached 45 million installs to date.

Image Credits: Sensor Tower

 

Funding and M&A (and IPOs)

Duolingo 2

Image Credits: Duolingo

  • Language learning app Duolingo confirms its raise of $35 million on a $2.4 billion valuation. The news was reported last week, but the numbers are now official. The app was valued at $1.65 billion earlier this year.
  • Baidu to acquire Joyy’s Chinese live-streaming service YY for $3.6 billion. The search giant has been struggling to fight newcomers, like ByteDance, and video giant Kuaishou. Last year, Joyy’s YY took a $1.45 billion majority stake in Bigo, which operates streaming app Bigo Live and TikTok rival Likee.
  • OpenPhone raises $14 million to replace outdated corporate phone systems with an app. Yammer founder David Sacks’ Craft Ventures led the round.
  • Flipkart acquires AR startup Scapic to build an immersive shopping experience. Deal terms were undisclosed.
  • Athlete social platform Strava raises $110 million in Series F financing from TCV and Sequoia Capital, with by Dragoneer Investment Group and existing investors including Madrone Capital Partners, Jackson Square Ventures and Go4it Capital.
  • Yubo raises $47.5 million for its social app offering live-streaming rooms, now used by 40 million users. Existing investors Idinvest Partners, Iris Capital, Alven and Sweet Capital returned, and new investor Gaia Capital Partners joined.
  • English learning app AllRight raises $5 million from Genesis Investments. The Ukraine startup combines real teachers with AI-powered tutors.
  • ContextLogic, the maker of the mobile e-commerce app Wish, filed to go publicWish saw revenues slow in 2019, but has grown more quickly in 2020. In the first nine months of 2019, Wish generated $1.33 billion in revenue compared with $1.75 billion during the same period in 2020, or up 32%.
  • Roblox files for its IPO, noting it has lost $206 million on $589 million in revenue, has 31.1 million daily active users who now spend up to 22.2 billion hours in app, a figure up 122% year-over-year.

Downloads

Amazon’s GameOn

Amazon this week launched GameOn for Android, an app that lets users record 30-second to five-minute long gameplay clips — including through a “Recall” feature that saves the clip after it happens. Clips are then shared the GameOn social network or elsewhere on social media. The app supports more than 1,000 games at launch, including PUBG Mobile, Crossy Road, Final Fantasy Brave Exvius and Angry Birds 2. A selfie camera lets gamers add their own commentary to the clips. Winners of weekly challenges get special profile badges. The launch follows Amazon’s release of its cloud gaming platform Luna.

Google Pay

Image Credits: Google

Google Pay launched a major redesign of its app on Android and iOS this week with a ton of new features, including a mobile bank account. The company partnered with 11 banks, including Citi and Stanford Federal Credit Union, to launch Plex, a mobile banking service where accounts are held at partner banks but Google Pay operates as the front end. Plex users will have no monthly fees, overdraft charges or minimum balances and can pay both businesses and friends from their account. They can also explore offers and rewards to save money while shopping and get spending insights, including from their connected bank accounts outside the app. Another new feature makes it easier to split bills with friends, like restaurant checks, rent or utilities.

Moment’s RTRO app

RTRO, launched earlier this year, offers a way to record and share vintage-looking photos and video. This week, the app was updated with “Instant Film,” which lets you emulate instant film photos powered by the app’s “analog effects engine.” The resulting photos will give you the feel of a instant camera pic.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Extra Crunch roundup: antitrust jitters, SPAC odyssey, white-hot IPOs, more

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Some time ago, I gave up on the idea of finding a thread that connects each story in the weekly Extra Crunch roundup; there are no unified theories of technology news.

The stories that left the deepest impression were related to two news pegs that dominated the week — Visa and Plaid calling off their $5.3 billion acquisition agreement, and sizzling-hot IPOs for Affirm and Poshmark.

Watching Plaid and Visa sing “Let’s Call The Whole Thing Off” in harmony after the U.S. Department of Justice filed a lawsuit to block their deal wasn’t shocking. But I was surprised to find myself editing an interview Alex Wilhelm conducted with with Plaid CEO Zach Perret the next day in which the executive said growing the company on its own is “once again” the correct strategy.


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In an analysis for Extra Crunch, Managing Editor Danny Crichton suggested that federal regulators’ new interest in antitrust enforcement will affect valuations going forward. For example, Procter & Gamble and women’s beauty D2C brand Billie also called off their planned merger last week after the Federal Trade Commission raised objections in December.

Given the FTC’s moves last year to prevent Billie and Harry’s from being acquired, “it seems clear that U.S. antitrust authorities want broad competition for consumers in household goods,” Danny concluded, and I suspect that applies to Plaid as well.

In December, C3.ai, Doordash and Airbnb burst into the public markets to much acclaim. This week, used clothing marketplace Poshmark saw a 140% pop in its first day of trading and consumer-financing company Affirm “priced its IPO above its raised range at $49 per share,” reported Alex.

In a post titled A theory about the current IPO market, he identified eight key ingredients for brewing a debut with a big first-day pop, which includes “exist in a climate of near-zero interest rates” and “keep companies private longer.” Truly, words to live by!

Come back next week for more coverage of the public markets in The Exchange, an interview with Bustle CEO Bryan Goldberg where he shares his plans for taking the company public, a comprehensive post that will unpack the regulatory hurdles facing D2C consumer brands, and much more.

If you live in the U.S., enjoy your MLK Day holiday weekend, and wherever you are: thanks very much for reading Extra Crunch.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

 

Rapid growth in 2020 reveals OKR software market’s untapped potential

After spending much of the week covering 2021’s frothy IPO market, Alex Wilhelm devoted this morning’s column to studying the OKR-focused software sector.

Measuring objectives and key results are core to every enterprise, perhaps more so these days since knowledge workers began working remotely in greater numbers last year.

A sign of the times: this week, enterprise orchestration SaaS platform Gtmhub announced that it raised a $30 million Series B.

To get a sense of how large the TAM is for OKR, Alex reached out to several companies and asked them to share new and historical growth metrics:

  • Gthmhub
  • Perdoo
  • WorkBoard
  • Ally.io
  • Koan
  • WeekDone

“Some OKR-focused startups didn’t get back to us, and some leaders wanted to share the best stuff off the record, which we grant at times for candor amongst startup executives,” he wrote.

5 consumer hardware VCs share their 2021 investment strategies

For our latest investor survey, Matt Burns interviewed five VCs who actively fund consumer electronics startups:

  • Hans Tung, managing partner, GGV Capital
  • Dayna Grayson, co-founder and general partner, Construct Capital
  • Cyril Ebersweiler, general partner, SOSV
  • Bilal Zuberi, partner, Lux Capital
  • Rob Coneybeer, managing director, Shasta Ventures

“Consumer hardware has always been a tough market to crack, but the COVID-19 crisis made it even harder,” says Matt, noting that the pandemic fueled wide interest in fitness startups like Mirror, Peloton and Tonal.

Bonus: many VCs listed the founders, investors and companies that are taking the lead in consumer hardware innovation.

A theory about the current IPO market

Digital generated image of abstract multi colored curve chart on white background.

Digital generated image of abstract multi colored curve chart on white background.

If you’re looking for insight into “why everything feels so damn silly this year” in the public markets, a post Alex wrote Thursday afternoon might offer some perspective.

As someone who pays close attention to late-stage venture markets, he’s identified eight factors that are pushing debuts for unicorns like Affirm and Poshmark into the stratosphere.

TL;DR? “Lots of demand, little supply, boom goes the price.”

Poshmark prices IPO above range as public markets continue to YOLO startups

Clothing resale marketplace Poshmark closed up more than 140% on its first trading day yesterday.

In Thursday’s edition of The Exchange, Alex noted that Poshmark boosted its valuation by selling 6.6 million shares at its IPO price, scooping up $277.2 million in the process.

Poshmark’s surge in trading is good news for its employees and stockholders, but it reflects poorly on “the venture-focused money people who we suppose know what they are talking about when it comes to equity in private companies,” he says.

Will startup valuations change given rising antitrust concerns?

GettyImages 926051128

financial stock market graph on technology abstract background represent risk of investment

This week, Visa announced it would drop its planned acquisition of Plaid after the U.S. Department of Justice filed suit to block it last fall.

Last week, Procter & Gamble called off its purchase of Billie, a women’s beauty products startup — in December, the U.S. Federal Trade Commission sued to block that deal, too.

Once upon a time, the U.S. government took an arm’s-length approach to enforcing antitrust laws, but the tide has turned, says Managing Editor Danny Crichton.

Going forward, “antitrust won’t kill acquisitions in general, but it could prevent the buyers with the highest reserve prices from entering the fray.”

Dear Sophie: What’s the new minimum salary required for H-1B visa applicants?

Image Credits: Sophie Alcorn

Dear Sophie:

I’m a grad student currently working on F-1 STEM OPT. The company I work for has indicated it will sponsor me for an H-1B visa this year.

I hear the random H-1B lottery will be replaced with a new system that selects H-1B candidates based on their salaries.

How will this new process work?

— Positive in Palo Alto

Venture capitalists react to Visa-Plaid deal meltdown

A homemade chocolate cookie with a bite and crumbs on a white background

OLYMPUS DIGITAL CAMERA

After news broke that Visa’s $5.3 billion purchase of API startup Plaid fell apart, Alex Wilhelm and Ron Miller interviewed several investors to get their reactions:

  • Anshu Sharma, co-founder and CEO, SkyflowAPI
  • Amy Cheetham, principal, Costanoa Ventures
  • Sheel Mohnot, co-founder, Better Tomorrow Ventures
  • Lucas Timberlake, partner, Fintech Ventures
  • Nico Berardi, founder and general partner, ANIMO Ventures
  • Allen Miller, VC, Oak HC/FT
  • Sri Muppidi, VC, Sierra Ventures
  • Christian Lassonde, VC, Impression Ventures

Plaid CEO touts new ‘clarity’ after failed Visa acquisition

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Zach Perret, chief executive officer and co-founder of Plaid Technologies Inc., speaks during the Silicon Slopes Tech Summit in Salt Lake City, Utah, U.S., on Friday, Jan. 31, 2020. The summit brings together the leading minds in the tech industry for two-days of keynote speakers, breakout sessions, and networking opportunities. Photographer: George Frey/Bloomberg via Getty Images

Alex Wilhelm interviewed Plaid CEO Zach Perret after the Visa acquisition was called off to learn more about his mindset and the company’s short-term plans.

Perret, who noted that the last few years have been a “roller coaster,” said the Visa deal was the right decision at the time, but going it alone is “once again” Plaid’s best way forward.

2021: A SPAC odyssey

In Tuesday’s edition of The Exchange, Alex Wilhelm took a closer look at blank-check offerings for digital asset marketplace Bakkt and personal finance platform SoFi.

To create a detailed analysis of the investor presentations for both offerings, he tried to answer two questions:

  1. Are special purpose acquisition companies a path to public markets for “potentially-promising companies that lacked obvious, near-term growth stories?”
  2. Given the number of unicorns and the limited number of companies that can IPO at any given time, “maybe SPACS would help close the liquidity gap?”

Flexible VC: A new model for startups targeting profitability

12 ‘flexible VCs’ who operate where equity meets revenue share

Spotlit Multi Colored Coil Toy in the Dark.

Spotlit Multi Colored Coil Toy in the Dark.

Growth-stage startups in search of funding have a new option: “flexible VC” investors.

An amalgam of revenue-based investment and traditional VC, investors who fall into this category let entrepreneurs “access immediate risk capital while preserving exit, growth trajectory and ownership optionality.”

In a comprehensive explainer, fund managers David Teten and Jamie Finney present different investment structures so founders can get a clear sense of how flexible VC compares to other venture capital models. In a follow-up post, they share a list of a dozen active investors who offer funding via these non-traditional routes.

These 5 VCs have high hopes for cannabis in 2021

Marijuana leaf on a yellow background.

Image Credits: Anton Petrus (opens in a new window) / Getty Images

For some consumers, “cannabis has always been essential,” writes Matt Burns, but once local governments allowed dispensaries to remain open during the pandemic, it signaled a shift in the regulatory environment, and investors took notice.

Matt asked five VCs about where they think the industry is heading in 2021 and what advice they’re offering their portfolio companies:

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GitLab oversaw a $195 million secondary sale that values the company at $6 billion

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GitLab has confirmed with TechCrunch that it oversaw a $195 million secondary sale that values the company at $6 billion. CNBC broke the story earlier today.

The company’s impressive valuation comes after its most recent 2019 Series E in which it raised $268 million on a 2.75 billion valuation, an increase of $3.25 billion in under 18 months. Company co-founder and CEO Sid Sijbrandij believes the increase is due to his company’s progress adding functionality to the platform.

“We believe the increase in valuation over the past year reflects the progress of our complete DevOps platform towards realizing a greater share of the growing, multi-billion dollar software development market,” he told TechCrunch.

While the startup has raised over $434 million, this round involved buying employee stock options, a move that allows the company’s workers to cash in some of their equity prior to going public. CNBC reported that the firms buying the stock included Alta Park, HMI Capital, OMERS Growth Equity, TCV and Verition.

The next logical step would appear to be IPO, something the company has never shied away from. In fact, it actually at one point included the proposed date of November 18, 2020 as a target IPO date on the company wiki. While they didn’t quite make that goal, Sijbrandij still sees the company going public at some point. He’s just not being so specific as in the past, suggesting that the company has plenty of runway left from the last funding round and can go public when the timing is right.

“We continue to believe that being a public company is an integral part of realizing our mission. As a public company, GitLab would benefit from enhanced brand awareness, access to capital, shareholder liquidity, autonomy and transparency,” he said.

He added, “That said, we want to maximize the outcome by selecting an opportune time. Our most recent capital raise was in 2019 and contributed to an already healthy balance sheet. A strong balance sheet and business model enables us to select a period that works best for realizing our long-term goals.”

GitLab has not only published IPO goals on its Wiki, but its entire company philosophy, goals and OKRs for everyone to see. Sijbrandij told TechCrunch’s Alex Wilhelm at a TechCrunch Disrupt panel in September that he believes that transparency helps attract and keep employees. It doesn’t hurt that the company was and remains a fully remote organization, even pre-COVID.

“We started [this level of] transparency to connect with the wider community around GitLab, but it turned out to be super beneficial for attracting great talent as well,” Sijbrandij told Wilhelm in September.

The company, which launched in 2014, offers a DevOps platform to help move applications through the programming lifecycle.

Update: The original headline of this story has been changed from ‘GitLab raises $195M in secondary funding on $6 billion valuation.’

 

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Facebook blocks new events around DC and state capitols

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As a precaution against coordinated violence as the U.S. approaches President-elect Joe Biden’s inauguration, Facebook announced a few new measures it’s putting in place.

In a blog post and tweets from Facebook Policy Communications Director Andy Stone, the company explained that it would block any events slated to happen near the White House, the U.S. Capitol or any state capitol building through Wednesday.

The company says it will also do “secondary” sweeps through any inauguration-related events to look for violations of its policies. At this point, that includes any content connected to the “Stop the Steal” movement perpetuating the rampant lie that Biden’s victory is illegitimate. Those groups continued to thrive on Facebook until measures the company took at the beginning of this week.

Facebook will apparently also be putting new restrictions in place for U.S. users who repeatedly break the company’s rules, including barring those accounts from livestreaming videos, events and group pages.

Those precautions fall short of what some of Facebook’s critics have called for, but they’re still notable measures for a company that only began taking dangerous conspiracies and armed groups seriously in the last year.

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