Daily Crunch: Snap lays off one-fifth of its workforce after missing revenue and growth targets

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Midweek? More like mid-weak! Okay, terrible pun, but we’re a little low energy in this heat wave today, so it kinda made sense.

Oh! And good news, btw, we’re offering 15% off Disrupt tickets (excluding online or expo tickets) for you, our trusty Daily Crunch readers. Use promo code “DC” to claim your discount!

See you tomorrow!  — Christine and Haje

The TechCrunch Top 3

• Slumdog $5-illonnaire: Landa is the latest startup to attract venture capital, in this case $33 million, to democratize real estate ownership, Mary Ann writes. Its approach enables people to invest in the real estate sector, which is known for providing generational wealth, but in a less expensive, more fractional way, and in some cases, for as little as $5 initially.
• Snap, crackle and . . . fizzle: Despite the myriad of news and new revenue streams we’ve reported about Snap right here in this newsletter, Evan Spiegel said the words no tech employee wants to hear right now: “restructuring our business.” Amanda reports that this unfortunately means cutting 20% of staff.
• Obstacles abroad: Amazon faces some tough competition in India, and Manish reports that has presented some challenges in the e-commerce giant’s ability to gain a more prominent foothold in the country.

Startups and VC

This week, Haje went deep with a founder who’s building digital license plates. He mused that building an easy-to-copy hardware product in an incredibly tightly regulated industry where winner-takes-all would be an utter nightmare, but when it works, it works, and it’s fascinating to see Reviver build a company, one license plate at the time.

Populus, the San Francisco–based transportation data startup, got its start as shared scooter mania took hold and cities tried to make sense of how infrastructure was being used by fleets of tiny vehicles. Now, Populus co-founder and CEO Regina Clewlow is repositioning the company to take advantage of another hot opportunity: curbs and congestion, Rebecca writes. It’s a really good read from the TechCrunch transportation desk with an undertone of “the power of great pivots.”

Raisin’ money, raisin’ hell:

• Looking beyond the matrix: Ron reports on CodeSee’s latest product, which helps organizations visualize their code base.
• Turning coaching into a team sport: Natasha M reports that the founder of Human Q disagrees with some of the biggest and most valuable competitors out there. Instead of one-to-one coaching, Human Q wants to make group coaching an impactful alternative. This founder wants to take on the biggest coaching startups with a group-focused approach.
• Stretching the chains: Supply chain firm NFI inks a $10 million deal to deploy Boston Dynamics’ Stretch robots, reports Brian.
• Fintech, that’s like fly-fishing, right?: Christine reports that Solid raised a $63 million Series B round of funding to continue providing its fintech-as-a-service offering for companies wanting to launch and scale their own fintech products. 
• Like twitch3: Rita reports that Stacked raised $13 million to be the Twitch for web3 gamers.

 Crafting a XaaS customer success strategy that drives growth

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

Giving users better service than they expected could literally save a software startup. In one study, companies that spent 10% of yearly revenue on customer success attained peak net recurring revenue.

“Companies mostly deploy two or more customer success archetypes,” according to TC+ contributors Rachel Parrinello and John Stamos. “They usually vary by customer segment, business versus technical focus and sales motion focus: adopt, renew, upsell and cross-sell.”

If you’re interested in optimizing revenue through CS, read the rest for a full overview of job design methodology, because “companies should not design their customer success roles in a vacuum.”

Crafting a XaaS customer success strategy that drives growth

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Social media and privacy don’t often go hand in hand, especially when children can see a lot on the internet already. Twitter got caught up in this when it reportedly tried to monetize adult content in an effort to compete with OnlyFans. It later scrapped the program when it was found that its system couldn’t “detect child sexual abuse material and non-consensual nudity at scale,” Amanda writes. Meanwhile, California lawmakers wasted no time moving ahead to put in place statewide online privacy protections for children where there are none at the federal level, Taylor reports.

• Stepping on the gas, er, EV pedal: Toyota is accelerating its investment in U.S. electric vehicles, and will park some $3.8 billion into that initiative, up from an initial $1.3 billion, Jaclyn writes.
• Cashing in on NFTs: Event organizers working with Ticketmaster can now issue NFTs tied to tickets on Flow, Ivan reports.
• It’s almost fall and that means another Apple event: Brian has the skinny on all the things you should know about Apple’s iPhone 14 event on September 7.
• New satellite on the block: Royal Caribbean is going “all-in on satellite service,” and will outfit its fleet of ships with Starlink internet, Devin writes.

Let’s talk about party rounds

When it comes to types of venture capital instruments, party rounds are as controversial as they come. A party round is an early-stage financing round, usually occurring between the pre-seed and Series A stages, that includes a laundry list – or “party” – of individual investors. It’s different from a more traditional round, which may look like it’s led by one or two institutional investors with a few participating investors also taking part.

The investment vehicle has been around for over a decade and has been a subject of debate for just as long. The positives are obvious: With more investors on their cap table, startups have more avenues for distribution, introductions and advice throughout their lifecycle.

The cons are more complicated. Is the party-round investment as helpful as capital from fewer, more commitment sources? Are there too many cooks in the kitchen? Is it a negative signal that this startup had to raise from dozens of people instead of one high-conviction partner? During a downturn, is a party round all about the confetti and no allergen-friendly appetizers?

Party rounds are either the dinner party of your dreams or the one where no one shows up

While the argument is nothing new, the current market introduces dynamics that make party rounds a little more complex than just bringing a few of your favorite founders and thought leaders onto your cap table.

Kula makes the job recruitment process less exhausting

The process of finding job candidates often entails a lot of tedious manual work for recruiters, like sending versions of the same email over and over again. That’s Kula was created. The platform not only automates tasks like sending introductory messages, but also surfaces promising leads from the first-degree connections of an organization’s existing employee base.

Kula announced today it has raised a $12 million seed round co-led by Sequoia Capital India and Square Peg Capital, with participation from returning investors Venture Highway and Together Fund.

The new funding comes less than six months after Kula’s pre-seed and brings its total raised to $15 million before its public launch. It will be used to expand its research and development, product and go-to-market teams in the United States, Singapore and India.

Kula co-founders Suman Kumar Dey, Achuthanand Ravi and Sathappan M

Before co-founding Kula, CEO Achuthanand Ravi worked as a recruiter at tech companies including Stripe, Uber and Freshworks. During that time, he saw marketing and sales teams get increasingly sophisticated tech tools, but the recruitment process still remained more or less the same.

Kula helps fix that by integrating with tools commonly used by recruiters, including LinkedIn, Github, Gmail and the Applicant Tracking System (ATS) and automating workflows. For example, it can send introductory messages to promising leads through emails, LinkedIn nudges and InMails. A feature called Kula’s Circle consolidates all employee networks into one dashboard, helping recruiters figure out potential candidate from the first-degree connections of all their employees. Kula also includes analytics that helps recruiters forecast and measure their talent pipeline more accurately.

Kula is currently pre-revenue with alpha customers, and monetizes by selling to businesses through it’s go-to-market strategy, which is mostly focused on the United States. In particular, it targets SMBs and mid-market organizations with less than 1,000 employees, which Ravi says are underserved.

Ravi identified Gem.com, HireEz and Beamery as Kula’s closest competitors. But Gem.com only offers automated reach-outs as a product, and has no feature for the referral workflow like Kula’s Circle. HireEZ’s only channel to reach out to a candidate is email, but Kula’s platform also automates InMails on LinkedIns, an important source of potential candidates. Beamery, meanwhile, only counts the outbound recruitment workflow as a small part of is platform, Ravi said.

In a statement, Square Peg Capital partner Piruze Sabuncu said, Recruitment is an absolute priority for companies across the spectrum of size, industry, and geography, and is still an underserved business function. Kula’s founding team brings an unmatched combination of substantial recruiting experience and distinguishing engineering talent – giving them the ability to understand the problem deeply and build a solution that scales with the organizations they serve.”

What downturn? Investors remain bullish on HR tech as the Great Resignation slows

Topi raises $45M to power hardware subscriptions for B2B merchants

A new company is looking to do for B2B hardware sales what a growing number of companies have been doing in the consumer sphere, by making it easier for businesses to pay for equipment in instalments through rentals and subscriptions.

While companies such as Klarna and Affirm have been pushing payment services that help consumers procure goods without having to pay for everything up front, Berlin-based startup Topi launched out of stealth last December with $4.5 million in funding to do something similar for B2B transactions. At the time, Topi was somewhat vague in terms of what its actual product would be, but the company today announced its first product in partnership with German electronics retailer Gravis, and unveiled a fresh $45 million in equity and debt financing. 

Hardware-as-a-service

At its most basic level, Topi is selling a hardware-as-a-service business model, allowing merchants to rent out their equipment such as smartphones, printers, PC monitors, coffee machines, robotic arms, or whatever industry-specific machinery they specialize in. While it’s true that many merchants offer financing options already that allow businesses to stagger their payments, this isn’t typically integrated directly into the checkout process — and that, effectively, is what Topi is bringing to the table.

Topi payment methods

The problem, ultimately, is that companies can spend thousands of dollars up-front on physical goods that are essential to their operations, leaving them with limited capital for other business-critical purchases. On top of that, products that they buy might be outdated or obsolete in just a few years.

In tandem, with businesses across the industrial spectrum tightening their purse strings due to economic pressures, merchants will be looking for new ways to encourage their customers to continue spending money, even if it means on slightly different terms.

Topi essentially brings together the various components that a seller might need to offer hardware subscriptions, including insurance, logistics, and refinancing providers, so that merchants can easily build rentals into their existing online channels using Topi’s APIs. So for example, an electronics retailer might offer a €1,000 MacBook Air for a monthly fee of €26.25 payable over three years with a full warranty included, after which the customer can decide to upgrade to the latest MacBook model, return the device, or pay the remainder of the balance to own the laptop outright. In the future, Topi will also offer Klarna-style instalment payment options for customers who know in advance that they want to own the product at the end.

It’s worth noting that Topi also supports up-front purchases, so that a customer can decide to rent an iPhone at the checkout for a two-year period, while buying a laptop outright. Topi is pitched as a modular platform, so that merchants can pick and choose which elements they want — they can select just monthly billing and credit checks, to the full shebang including refinancing partners and insurance.

Additionally, while the Topi branding is prominent at checkout with the inaugural product, the company said that it plans to offer a white-labeled version that allows businesses to include their own logo.

Topi: Like a Klarna for B2B transactions

Access over ownership

A quick peek across the consumer technology sphere reveals a steady transition from ownership to access. This is evidenced in fields such as music, where subscription streaming services from the likes of Spotify and Apple Music now outweigh physical format or download sales. And the so-called circular economy is driving demand for consumer electronics rentals that includes smartphones, and even automobile subscription services.

There is evidence of this shift elsewhere in the B2B space too, with Munich-based Klarx specializing in construction equipment rentals. So it’s clear there is a movement away from ownership, something that Topi cofounder Charlotte Pallua said other merchants must take note of if they’re to stay ahead of the curve.

“If traditional retailers want to stay competitive and not lose their customers to those retailers, they will need to start offering subscriptions as a payment option,” Pallua told TechCrunch.

Pallua previous worked as a strategy and business development manager at Apple in the San Francisco Bay Area, where she led a team tasked with exploring the feasibility of hardware subscriptions — Apple has yet to launch such a service, but reports continue to surface that the Cupertino company is still looking to bolster its recurring revenue via such subscriptions. Pallua met her cofounder Estelle Merle while at Harvard Business School in Boston, and the duo cemented their friendship out in Silicon Valley where Merle worked briefly at Tesla during her MBA before landing at German mobility startup Via.

A year on from its foundation, Pallua and Merle are now ready to launch their businesses in partnership with Gravis, an Apple authorized reseller which has 40 physical outlets in Germany in addition to its online store. Gravis was a key partner as Topi iterated its product through its pilot phase.

“We are excited that our business customers can now easily subscribe to their IT equipment in real-time at the point of transaction, without tedious processes and bureaucratic paperwork,” Gravis managing director Jan Sperlich said in a statement. “In our pilot phase, around half of our customers that rented hardware through Topi came back for additional products.”

But arguably more important than all of that, Topi isn’t just focused on improving access to hardware or helping companies’ cashflows — they see sustainability as a core underlying selling point behind its product.

“In light of climate change, being sustainable is increasingly important for companies,” Pallua said. “Used devices should be given a second life or properly recycled — a drawer full of old devices should no longer exist.”

Topi’s funding round constituted $15 million in equity and $30 million in debt, with backers including Index Ventures, Creandum, TriplePoint Capital, and undisclosed angel investors.

Daily Crunch: Embedded finance fintech Pezesha raises $11M pre-Series A equity-debt round

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Hey, hey, hey! Good to have you back with us again. Today, we’re mostly amazed at how quiet Twitter gets during Burning Man, and excited that we’re doing a Labor Day sale for TechCrunch Plus, if you’ve been wanting to read our subscription site but you’ve been holding off for whatever reason. — Christine and Haje

The TechCrunch Top 3

• Embed that finance: Pezesha, a Kenyan-based fintech startup, is flush with $11 million in new capital as it seeks to bridge the gap between access to financial products and what is a “$330 billion financing deficit for the small enterprises that make up 90% of Africa’s businesses,” Annie reports.
• We’re all connected: If you haven’t yet seen yourself in one of your Twitter connection’s Circles, you may soon. The social media giant is launching the “Close Friends” features globally, Ivan reports. Add a bunch of people to your Circle and get tweeting.
• No delivery for you: Delivery platform Gopuff has only been in Europe since November 2021, but Natasha L writes it made the decision to discontinue its service in Spain. She cites that perhaps this is to focus more on the United Kingdom market where revenue there is increasing 30% month over month.

Startups and VC

Initialized Capital was VC Garry Tan’s answer to a need first highlighted by Y Combinator. As a partner at the accelerator from 2010 to 2015, Tan spent time working with companies to better understand what they needed from investors after they graduated. This week, he announced he’s back at the helm at YC, and Natasha M interviewed him about what’s next for Y Combinator.

The company behind last summer’s hot social app, Poparazzi, appears to be readying a round two following its $15 million Series A announced in June. A new listing in the App Store under the developer’s account, TTYL, is teasing a pre-release app called Made with Friends, Sarah reports.

When the news hits your eye, like a big pizza pie, that’s a-more-news:

• Notification bubbles: Devin reports that, at long last, there’s an underwater messaging app.
• Money for laundering: Flush with fresh funds, U.K. “eco laundry” startup Oxwash raised $12 million to spin up its growth plans, Natasha L reports.
• Faster when further afield: The U.K.’s £5 billion Project Gigabit gives out its first contract to connect rural areas to high-speed broadband, Paul reports.
• PriceOye gets the Thiel seal of approval: Islamabad-based startup PriceOye offers a range of electronics products, including smartphones, TVs and home appliances. It just closed a round of funding from investors, including Peter Thiel, reports Jagmeet.
• Dodging the SPAC bullet: Alex and Anna wrote a really interesting piece on TC+ (use “DC” for a 15% discount if you’re not a subscriber yet) about SPACs, how they are falling apart, and how Europe may have dodged a bullet on that front.

How to communicate to your crypto community when things aren’t going well

Image Credits: Peter Dazeley (opens in a new window) / Getty Images

Because it’s a nascent industry that’s largely unregulated, crypto companies are not generally skilled at crisis communications. (We’re being generous here.)

When a bank or financial services company experiences a massive security failure or a volatility shock, federal laws dictate how it must communicate with its customers. Crypto startups, however, must rely on their own best judgment.

“There’s little benefit in declaring that the sky is falling and begging your community for investment, but an overly rosy outlook won’t fool anyone either,” says Tahem Verma, co-founder and CEO of Mesha.

How to communicate with your crypto community when things aren’t going well

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Last chance to get your game on in the Facebook Gaming app. The social media giant said it is shutting down its stand-alone app at the end of October, Aisha reports. Don’t worry, you can still find your games in Gaming on actual Facebook. When launching the separate app two years ago, it seemed to be more difficult than Facebook bargained for, so it decided to join ’em instead of beating ’em.

• Data duh!: Millions of faces and vehicle license plates were leaked online in China, Zack writes.
• Ghosts can drive?: A Tesla Model 3 owner filed a class action lawsuit against the electric vehicle maker alleging the car keeps “phantom braking,” Jaclyn reports. 
• New security regime: Broadband and mobile carriers in the United Kingdom could face fines of up to $117,000 per day or 10% of their sales if they don’t abide by some new cybersecurity rules, Ingrid writes.
• More Elon: Taylor has the 411 on Elon Musk’s new strategy for getting out of the Twitter deal — hint, it involves the company’s whistleblower. Meanwhile, Paul goes over the new subpoena related to the ongoing battle.

Populus to combat curbside parking chaos with millions in new funding

Populus, the San Francisco-based transportation data startup, got its start as shared scooter mania took hold and cities tried to make sense of how infrastructure was being used by fleets of tiny vehicles.

Now, Populus co-founder and CEO Regina Clewlow is positioning the company, which collects data on transportation fleets and shares it with cities, to take advantage another hot opportunity: curbs and congestion. 

Populus has continued to ride the micromobility wave and expand into other areas such as commercial fleets, ride-hail vehicles and other new mobility forms like autonomous vehicles. Its software-as-a-service product, which is now used by more than 100 cities across the U.S. and Israel, collects data on shared fleets like scooters, e-bikes and car-sharing. That data is then shared with cities to help planners and regulators understand and manage how streets are used. Cities also can use the Populus API to share information such as restrictions on motorized vehicles, preferred scooter parking areas and information on bike lanes, with mapping platforms and other third parties.

Clewlow contends the next big, and present-day growth opportunity is with Populus’s curb management feature, which gives cities data on how curbs are used so they can set dynamic pricing and free up congestion. That opportunity is being driven by rising demand for same-day and next-day delivery.

The company will use a fresh injection of $11 million venture capital raised in a Series A round to scale its existing product as well as its curb management software. The money will also be used to make key strategic hires, said Clewlow, noting that Populus hopes to double its current headcount of 25 people over the next year.

The round was co-led by Zero Infinity Partners and Climactic with participation from Comcast Ventures and Robert Downey Jr.’s FootPrint Coalition Ventures.

Populus’s curb management software “allows cities to better manage everything that moves, from commercial delivery operations to the future of autonomous vehicles,” Clewlow told TechCrunch. “Cities can receive data from fleet operators through our platform so they know where the most demand is, and then they can create new parking policies and enforce them through our platform as well.”

The data is particularly pertinent for cities trying to reduce emissions and improve air quality. While many delivery companies are trialing fleets of e-cargo bikes or autonomous sidewalk robots, most deliveries today are still completed by gas-powered trucks and vans that major are contributors of tailpipe emissions in urban areas.

Populus says its curb management software can steer fleet operators to park in areas that reduce conflict. At the same time, smarter policies backed by Populus’ curb data can incentivize delivery operators to use smaller, more carbon efficient modes of transportation.

In the future, Populus would like to focus on congestion pricing, which cities like New York are implementing to disincentivize driving in city centers.

“There’s no reason that our platform couldn’t be used to manage vehicles that are increasingly more and more connected, entering and leaving a zone and pricing them for use of those zones,” said Clewlow.

While Populus is mostly based in North America, the startup has reached as far as Tel Aviv, and is pursuing a number of pilots in major European cities, with an eye toward expansion.

Robin Games debuts Playhouse, an interior design game you can both play and shop

Women-led mobile gaming startup Robin Games raised funding around the idea of carving out a new niche in the market of “lifestyle gaming.” The idea, the company explained at the time of its 2020 public debut, was to create a fantasy gaming experience that’s more sophisticated and stylish — something more in line with the sort of content you’d typically find in a lifestyle magazine or Instagram influencer’s profile. Today, the startup is releasing its first title to tackle this concept with the launch of a mobile game, PLAYHOUSE, which combines both gameplay and shopping in one experience.

Available on iOS and Android, PLAYHOUSE is a DIY design game that allows players to drag-and-drop furniture and décor into spaces to create original looks for rooms using elements like wall art, sofas, chairs, tables, plants, and more. This alone doesn’t make the app unique — the interior design genre is a popular sub-genre within the Simulation Games category on today’s app stores where competitors like Playtika’s Redecor, SayGames’ Decor Life — Home Design Game, and Crowdstar’s Design Home: Dream Makeover can be found in the Top Charts.

Instead, where PLAYHOUSE differentiates itself from others is in both its technology and its partnerships.

The company allows users to drag-and-drop pieces into the space but also move, rotate, resize and even layer items as they style the space in a much more freeform manner than some other games allow. In addition, the company is working with real-life furniture brands to make the items in its game shoppable in real life.

At launch, PLAYHOUSE features shoppable experiences that connect players to brands like Arhaus, Article, 1stDibs, Chairish, One Kings Lane, ABC Carpet & Home, Jenni Kayne, Society6, Bloomscape, Room & Board, and Lulu & Georgia, among others. In other words, the game’s goal isn’t just to provide a creative outlet for art and interior design fans, but to also drive the discovery of new furniture and decor.

Image Credits: Robin Games

Robin Games says that, at launch, there are over 6,000 pieces of real furniture and décor available from more than 100 home design brands available inside the app. Players can choose to purchase the actual items they’re using to create their designs by visiting the retailer’s website.

This concept is somewhat like Pinterest’s new collage-making app Shuffles, which allows its players to create custom art experiences using their own photos and Pinterest Pins. While the Shuffles app is primarily being used as a creative tool before publishing to TikTok or Instagram, the items featured in the collages link to their Pin’s page on Pinterest — where they’re also connected with the retailer’s website and can be purchased, similar to PLAYHOUSE.

Shuffles, Pinterest’s invite-only collage-making app, is blowing up on TikTok — here’s how to get in

“One of the main reasons we wanted to make PLAYHOUSE, and ‘Lifestyle Games’ in general, is because we see a hole in the market for truly expressive, creative games,” Robin Games co-founder and CEO Jill Wilson told TechCrunch. “It’s unusual to think of an interior design-focused game as a fantasy game but we do — it’s a different type of fantasy from what is typically explored in games. Getting to design spaces with beautiful pieces as if you are an interior designer is a real-world fantasy for many people, and our company is devoted to giving players that experience,” she added.

In addition, PLAYHOUSE users can submit their design projected to be rated by other players, which allows them to earn tickets, coins and gems as well as other décor pieces that help them to level up. The company also partnered with content creators including design enthusiasts, artists, Airbnb hosts and others to create limited-time “hosted projects” aimed at inspiring players’ own designs.

And it’s working with editorial publishing houses Condé Nast, Hearst (House Beautiful), Leaf Group (Hunker), and Design Milk who will be active hosts who create design challenges and other inspiring content, the company says. House Beautiful, for instance, will host a series of design challenges based on the articles it publishes on its website.

Image Credits: Robin Games

During its soft launch period, the team refined the game mechanics, play controls, onboarding experience and the in-game economy, which is free-to-play with in-app purchases. While you can move forward without playing, players can choose to pay to unlock additional pieces with gems they purchase instead of waiting to earn them in the game through achievements. Limited-timed bundles around a particular theme are also sometimes available for purchase — like a bundle of special plants and plant-themed items that are only available in the bundle.

So far, over 1 million design challenges were submitted with the most devoted players participating in every project released daily and sticking around long-term, Wilson says.

Following its $7 million seed, Robin Games closed on a $14 million Series A in 2020 and continued to develop PLAYHOUSE in the months that followed. While being a women-led startup has given them an advantage in a game that’s marketed primarily to women, Wilson believes it’s the team’s diversity that will help it to get ahead.

Image Credits: Robin Games

“I like to make games that I’d want to play myself and believe that surrounding myself with a diverse group of talented people who also want to play the game we’re making gives us the best chance of success,” Wilson explains. “At Robin Games, we have over 50% women on our board, management team, and team overall — and the majority of all our team members are passionate about design. Putting creative decision-making in the hands of potential players is the key to our authenticity and why we believe true design lovers will love what we’ve made. While we anticipate our audience will be primarily women, we have tried to make it as inclusive as possible and hope that everyone who loves design will enjoy it,” she says.

PLAYHOUSE is live today on both iOS and Android as a free download.

How gender-affirming health care startups are navigating legal miasma

Kate Anthony started in the Lone Star State.

It was there, in 2019, that she launched her app Euphoria, seeking to provide information and resources on gender-affirming care. She knew the stakes were going to be high, and as the state passed anti-trans legislation, she and her company were forced to flee.

Settling in Denver, Anthony made a plan on what to do next. She decided to maintain business as usual while the fight for trans rights continues. She’s not alone in that decision. Many apps, if not all, that service the trans community are hyperexposed, under fire and seemingly undeterred.

TechCrunch conducted a vibe check to see how trans entrepreneurs servicing their communities are navigating this moment. The Human Rights Campaign told TechCrunch that legislators in state houses have introduced 344 anti-LGBTQ+ bills this session, with more than 140 specifically targeting the trans community.

“We will not allow these anti-trans people to bully us into giving information.” Aydian Dowling, founder, Trace

These proposed restrictions range from an Alabama bill that seeks to deny medical care for transitions to Iowa and Alaska bans on trans students participating in sports. Louisiana introduced a bill to bar medical professionals from offering minors translation-related care, and Florida now prohibits gender-affirming care under Medicaid.

Anthony said it’s inevitable that her company will one day be sued by someone or some state. Other founders said they are watching the court systems closely, with some rethinking strategies regarding consumer privacy and employee benefits. And for the startup and venture community, support is better late than never — it’s a critical time to defend trans founders.

Singapore-based Propseller uses data to take the hassle out of real estate transactions

Headquartered in Singapore, proptech startup Propseller is on a mission to make real estate transactions more efficient and data-driven for sellers and buyers alike. Its platform is able to tell users the likelihood of a conversion each step of the way. Today Propseller announced it has raised $12 million in Series A funding led by Vertex Ventures Southeast Asia and India. 

Other investors participating in the round include returning backers Hustle Fund, Iterative and Rapzo Capital, along with new investors Partech, ICCP SBIT, Vulpes Ventures and Redbadge Pacific. It also includes several prominent proptech founders, like PropertyGuru’s Jani Rautiainen, OpenAgent’s Marta Higuera, Homeday’s Steffen Wicker and Tushar Garg of Flyhomes. 

Founded in 2018, Propseller will use its Series A to scale its business model, expand its offerings (including adding services like moving) and enter overseas markets. It currently has about 50 employees, including 20 salaried real estate agents (or consultants, as the startup calls them), and plans to hire 200 more people for its marketing, operations, product, engineering and sales and real estate teams. 

By using technology to make the real estate buy/sell process more efficient, Propseller is also able to charge only 1% commission rate, as opposed to 2% for traditional real estate agencies, its founder and CEO Adrien Jorge told TechCrunch. 

Jorge became interested in real estate while growing up in Nice, France. He says people from his family either became engineers or real estate agents, and he noticed that the latter group made more money than the engineers. Curious, Jorge joined his mother’s real estate agency at the age of 14 and stayed there until he was 22. But when his grandfather asked if the wanted to take over the business, Jorge decided not to.

One of his reasons was that the traditional real estate agency model was hard to scale and very manual, and often charged commissions that are hard to justify. Instead, Jorge went on to work for tech companies, including six years at Groupon, where he was in positions including general manager of Southeast Asia. 

While looking for investment opportunities, Jorge experienced the hassle of buying real estate in Southeast Asia. For example, he says that property prices are often high, but service from traditional brokerages often leave much to be desired. He attributes this to the fragmentation of Southeast Asia’s real estate market, with 200,000 agents across Southeast Asia, who close on average only two transactions per year. 

As a result, Jorge saw an opportunity to build a platform to help people sell their homes more quickly, with transparency and the least amount of hassle. 

The reason why Propseller calls its licensed real estate agents consultants is because the company’s automation gives them the time to work on client relationships. On average, Propseller’s consultants close about 55 sales transactions per year, which also means they make more revenue. 

“We are very likely the only company in Singapore to tell you what is the expected conversion rate of buyer leads coming from PropertyGuru or 99.co,” said Jorge. This means when a lead is generated, it can be tracked from start to finish, so sellers and consultants know how likely a successful closing is at every step of the process. 

Viewings generally take place offline, but Propseller also makes video and VR viewings for each property. Sellers can stay on top of the process with a dashboard that shows them which channels their property is being distributed on, inquiries generated, scheduled viewings and offers. 

The COVID pandemic has made people more willing to buy large-ticket items online and many who will continue to work from home are seeking a larger property. As the pandemic subsides gradually, Jorge believes these trends will stick around. 

The company’s main competition are the 34,000 independent agents in Singapore, who own about 99% of the real estate market share. Proptech competitors include Own My Home and Blue Nest in Singapore, Red Fin in the U.S. and Flyhomes to a certain extend, Jorge said. 

Propseller is setting itself apart with an end-to-end real estate transaction platform, Jorge said. “We have broken down every step of the process, recording everything that happens and we are able to record data that no one else has and identify how that process can be optimized to get the best results.” 

In a prepared statement, Vertex Ventures Southeast Asia and India managing partner Carmen Yuen said that Propseller is “revolutionizing the way we transact our homes in a more cost and time-efficient, using technology and data. We’ve followed the Propseller team for more than two years now, and they have demonstrated impressive resilience and growth over the years.” 

Proptech still has fundamental problems for entrepreneurs to solve

Daily Crunch: Meta partnership allows Indian WhatsApp users to browse and buy groceries via JioMart

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Good morning, you crunchy ol’ pirates. Good to see you again, and hope you had a swell weekend. On Wednesday, we’re hosting a healthcare-focused TechCrunch Live. It’ll be fun! Tune in here, and if you want to be part of the 2-minute pitch practice, Haje will be on the lookout for your applications.

Now, grab yourself a glass of water, and settle in with some tech-newsy goodness from the TC team! —Christine and Haje

The TechCrunch Top 3

• Order up: Meta joined forces with Reliance Retail and Jio Platforms two years ago to test grocery shopping on WhatsApp in India, and Manish and Jagmeet write that customers can now “browse JioMart’s entire grocery catalog on WhatsApp, add items to a cart and make the payments via local payments rail UPI without ever leaving the instant messaging service.”
• Welcome back: Former Amplify co-founder and CEO Segun Adeyemi is back with Anchor, a banking-as-a-service startup that is helping businesses offer financial products in Nigeria and across Africa. It also caught the eye of Y Combinator and other investors, who put in over $1 million, Tage reports.
• Hail to the chief: Speaking of YC, Mary Ann and Natasha M paired up to report on today’s surprise news that Initialized Capital founder Garry Tan is going to be the accelerator giant’s next president and CEO.

Startups and VC

As we all know, the housing market goes through cycles. Low interest rates mean more purchases and refinances. Higher interest rates mean far fewer purchases and refinances — and lots of business for fintechs operating in the real estate industry, Mary Ann writes in this week’s issue of the Interchange, our fintech newsletter.

Kli Capital was your average family office headed up by a former tech entrepreneur looking to opportunistically back a new fleet of founders. Becca reports that the firm changed gears in the firm’s third fund, as it evolved into a multi-LP fund.

• From chillcore to core chill: Ivan reports that music streaming service Deezer is testing a meditation app.
• A stroke of genius: Health tech startup Neurofenix puts a new spin on home stroke rehabilitation with the NeuroBall, Devin reports.
• Soaring highs, cutting lows: Just five months after fintech Argyle raised a $55 million round, the startup cuts a bunch of jobs, Natasha M reports.
• Into the sea, you and me: Mermade Seafoods swims in cell agriculture waters to make cultivated scallops, Christine reports.
• A test of the times: African genomics startup 54gene lays off 95 employees as its COVID testing business struggles, Tage reports.

A Gen Z VC speaks up: Why Gen Z VCs are trash

Image Credits: Anastasiia Yanishevska / EyeEm (opens in a new window) / Getty Images

Tech investors born after 1996 “have raised funds, garnered social media followings and profited from the Gen Z mentality,” says Andrew Chan, a senior associate at Builders VC.

However, “Gen Z, no matter how you slice it, are still a bunch of kids. Myself included,” he notes in a TC+ guest post. “Good for them. I don’t want to be any part of it.”

Chan says too many investors in his age cohort rely on “youth, group-think identification and confidence as a substitute for hard work and experience.”

“It might work for now, but if that’s success for my generation of venture capitalists, then I would have rather stayed in my happy little bubble writing geochemistry code at NASA JPL.”

A Gen Z VC speaks up: Why Gen Z VCs are trash

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

If you like earbuds that glow, you will enjoy Haje’s review of Angry Miao’s Cyberblade gaming earbuds. We think “these are some of the best-manufactured in-ear headphones I’ve ever seen” pretty much sums it up.

Remember the vintage Apple iMac Blueberry? That’s what the back of the new Aston Martin Valhalla reminds us of. For true car connoisseurs, Jaclyn writes this high-performance vehicle is being used to “develop a playbook for its future EVs.”

• Can’t buy me love: Four years later, Facebook seems ready to settle the Cambridge Analytica lawsuit, Natasha L reports. For those of you who don’t recall, that was related to user data that was allegedly shared illegally.
• Biting into Apple: Meanwhile, Apple may need to get its lawyers ready. Sarah reports that the U.S. Justice Department is preparing to file an antitrust lawsuit against Apple.
• The ads are here: It looks like Netflix’s ad-supported plan will run you a cool $7 per month, Ivan writes. Get ready for four minutes of commercials in an hour-long show.
• Light ’em up: Honda and LG Energy have plans to build a $4.4 billion lithium-ion plant somewhere in the U.S., Jaclyn reports.
• No copycat here: There’s been a number of apps trying to replicate BeReal’s experience, but Amanda writes that Snapchat’s Dual camera feature doesn’t really fall into that category.

Garry Tan’s return is a full circle moment for Y Combinator

Initialized Capital was venture capitalist Garry Tan’s answer to a need first highlighted by Y Combinator. As a partner at the accelerator from 2010 to 2015, Tan spent time working with companies to better understand what they needed from investors after they graduated.

“I literally built the seed fund that I wanted to exist for those companies,” he said in an interview over Zoom with TechCrunch. Today, Initialized Capital manages over $3.2 billion in assets under management and Tan is stepping back to return to the accelerator that was his muse — this time as the new chief executive and president of the entire institution. While Tan’s new gig is set to begin in January 2023, he sat down with TechCrunch to talk about his vision for the accelerator, its batches and his goals going forward.

The investor is going to have a bigger scope. Initialized Capital just raised its largest fund to date last year and now works with over 200 active portfolio companies. YC, however, is operating at an entirely different scale: The accelerator has funded over 3,000 companies and worked with over 6,000 founders. YC declined to share AUM but did confirm that portfolio companies have a combined valuation nearing $1 trillion.

“The world has just become so much bigger and there’s so many problems to solve — the chance to help make more prosperity in the world, that’s a super big draw,” Tan said.

Tan’s announcement comes at an active time for the accelerator. Next week is Y Combinator’s biannual Demo Day, in which startups present to the public for the first time after spending three months going through the accelerator. It’s different than demo days prior because it’s smaller. YC recently said that this summer’s batch is 40% smaller than the last batch in response to the funding environment and the economy.

Demo days definitely amplify a brand, but not the one you’d think

While YC’s narrowing of focus addressed one of the most frequent critiques of the accelerator — that its batches have gotten too big and the network has diluted as a result — Tan didn’t offer any details or sentiment that would support a similar approach going forward. He’s a former YC founder himself and instead defended the accelerator’s approach to growing the batches year over year — something that his soon-to-be predecessor Geoff Ralston saw known for pushing forward.

“A lot of people talk about the batch size as being too big, but I think it’s like, dude, Metcalfe’s law is one of the most fundamental laws,” Tan said, eliciting the argument that the more number of nodes there are, the more interconnected and valuable a network is. “There are a lot more people who want to maybe escape the rat race, like me … and build their own.”

He views the network and community as YC’s biggest strength, instead of its biggest challenge (the latter of which he said it’s too early for him to say).

Tan hopes to engage YC’s alumni community more in the future of the institution although it’s unclear how that may materialize, whether through more events or if there’s a microcommunity play to be seen. There are already some external efforts of this happening that loosely tie back to the accelerator. OrangeDAO, for example, is bringing together over 1,000 YC alumni who are interested in backing crypto companies together — and just last week raised $80 million for its debut fund.

While the number of YC alumni is undoubtedly vast, powerful and present in various sectors through some of the most richly valued companies, it also has historically struggled with diversity within its batches. Last batch, YC’s cohort featured 90% male founders, up from 88% in the prior batch. It also had 12% Latinx founders, down 15% from the previous batch. It made incremental progress when it came to Black founders, with Winter 2022 having 6% Black founders up from 4% the batch prior.

When asked if diversity will be a focus for him going into YC, Tan noted that Initialized was named one of the most diverse firms in a research project conducted by tech outlet The Information. He gave “a lot of credit to Jen” Wolf, who has been running the firm as president and partner. “I want to continue that because [YC] is the most growth mindset thing in the world, right? So you know that these are all things in the past that we want to carry forth.”

Tan’s love for the Bay Area could play a role in attracting founders. While it looks like YC will remain remote in some capacity going forward — especially considering its international focus — the entrepreneur talked about his personal story growing up in the Bay Area and said that YC is already moving in a great direction toward becoming refocused on the region — including a Sonoma retreat this batch. “Let’s just keep that prosperity happening because, you know, something is magic in the San Francisco Bay Area,” he said. “As YC is a magnet, as the San Francisco Bay Area is … it has a big role to play in the future of technology.”

Tan’s exit is shaking up the firm he helped found. He held down the fort after the firm’s other co-founder, Reddit’s Alexis Ohanian stepped away in 2020. Now, with the impending change, the firm has appointed Jen Wolf and Brett Gibson as managing partners. Wolf will continue to invest and lead all of Initialized’s operations. Gibson, who previously served as general partner (focused on crypto, Web 2.0, SaaS and DevOps), will lead the firm’s early-stage investment strategy.

Sources noted to TechCrunch that Tan’s appointment and the ensuing leadership handoff was not abrupt, some saying it has been a work in progress for more than a few quarters. Tan maintains that he heard about the opportunity somewhat recently.

The two worlds of Initialized and YC are similar beyond ethos and origin. For example, Tan hired YC alumni Scott Moss to be a principal over at Initialized. One of Tan’s most successful investments to date is cryptocurrency platform Coinbase. Through investments with Y Combinator and then Initialized, Tan’s investment was once estimated, using private secondary valuation, to bring a 6000x return. Initialized routinely invests in startups coming out of Demo Day.

Tan didn’t say how his new role at YC and his future role at Initialized, which is venture advisor, will overlap when asked about competitive or complementary dynamics. “You need a seed investor who’s going to be there for over the course of years and Initialized remains that,” he said. “The high level here is like I’m here to make the YC companies [and] the founders successful.”

New rules for digital lenders in Kenya aim to weed out bad actors while bolstering sector growth

Fresh regulations are often met with skepticism from startup founders, but digital lenders in Kenya largely seem to be upbeat about the new Digital Credit Providers law, saying it will bring order to the sector.

The chairman of the Digital Lenders Association of Kenya, Kevin Mutiso, sounded optimistic about the impending new regulatory environment, saying that it had already fostered investor confidence and will bolster growth in the sector.

“The regulations have encouraged investors to come into our market, and I’m already aware of five new big players that have come in because of the new regulatory field. We are looking forward to being regulated and having a fair playing field,” Mutiso told TechCrunch.

Mutiso added that the association’s 16 members — including the market-dominant Tala and Zenka — are awaiting the required licenses to be fully compliant.

The regulations, set to come into effect on September 18, give Kenya’s apex bank, the Central Bank of Kenya, the requisite authority to police digital mobile lenders that have flooded the local market in the last few years.

Garry Tan is the next president and CEO of Y Combinator

Initialized Capital founder Garry Tan will become president and CEO of Y Combinator next year, the two organizations announced today.

Tan will be taking over the role from Geoff Ralston, who has been with YC since 2011. Ralston did not say what’s next for him, only writing: “I am leaving YC, but I’m not actually the retiring type and am looking forward to some to-be-discovered adventures.”  Tan, however, will continue to serve as founder and partner at Initialized – a $3.2 billion fund – “with no changes to his current role” until the transition takes place next year. After that, he will become a strategic advisor to the firm – similar to what Sam Altman did when he stepped away from the role. 

Michael Seibel was chief executive of Y Combinator up until 2020, when the accelerator evolved from a more traditional partnership to no longer having multiple CEOs. Then, Seibel became managing director of early-stage and a group partner at Y Combinator. YC says that no one else’s role at the accelerator has changed with today’s executive shake up.

Tan wears many hats. Beyond co-founding Initialized, which raised $700 million fund last year and has over $1 billion in known assets under management, Tan was also co-founder of YC-backed blog platform Posterous, which was acquired by Twitter in 2012. He was also the 10th employee at Palantir, where he was a founding member of the engineering team of the company’s financial product and designed its logo.

Thus entrepreneur is no stranger to early-stage investing – nor the famed accelerator to which he will soon run. Tan was a YC founder in the summer of 2008 and served as a partner there from December 2010 to November 2015. During his time as a partner, he advised and funded 700 companies and more than a thousand founders, YC says. 

In fact, Y Combinator’s Ralston titled his blog announcing the change: “Welcome Home, Garry Tan.” 

Ralston continued. “My goal has been to cement YC as an institution that will endure for decades – not only through organizational changes but by leading a team that has scaled the community we bring together, the products and capital we provide to startups, and the software we build. Garry, the visionary hacker, designer, and builder who has described how YC is ‘engraved on his heart’ believes in this future and is precisely the right person to take over as YC’s chief executive.” 

Y Combinator narrows current cohort size by 40%, citing downturn and funding environment

YC itself says it was founded in 2005 as “an antidote to the classic venture capital firm.”

In anticipation of the change, Initialized said it has appointed Jen Wolf and Brett Gibson to managing partners. Wolf, who was previously president and partner, will continue to invest and lead all of Initialized’s operations. Gibson, who previously served as general partner focused on crypto, web2, SaaS and devops) will lead the firm’s early-stage investment strategy.

“Since inception, my goal has always been for Initialized to outlive its founders. Over the past five years in particular, we have evolved our organization with the addition of best-in-class leadership, investing talent, and infrastructure. All the while, we have remained true to our founding principles and delivered strong metrics,” Tan wrote in a blog. Initialized Capital’s other co-founder, Reddit co-founder Alexis Ohanian, left the firm in 2020 to start his own early-stage operation, 776.  Ohanian maintains a board partner role, similar to the position that Tan will take  come next year. 

“Initialized and YC are very much aligned — YC made me, but I made Initialized,” Tan continued. 

Next year, I'll be going back to Y Combinator as President and CEO.

It's a one in ten billion lifetimes kind of opportunity— YC gave me my start, and I'm deeply grateful to the community. https://t.co/EVO6QY0jnm

— Garry Tan 陈嘉兴 (@garrytan) August 29, 2022

Mermade Seafoods swims in cell agriculture waters to make cultivated scallops

Mermade Seafoods is out to disrupt the $8 billion global scallops market with its circular cellular agriculture technology approach for producing cultivated scallops.

The Israeli company was founded in July 2021 by CEO Daniel Einhorn, CTO Dr. Rotem Kadir and COO Dr. Tomer Halevy. Einhorn, who has Navy — which explains his love of the sea — and venture backgrounds, met Kadir and Halevy at his venture studio, Tech7. They hit it off over the idea for cell-based seafood, and Einhorn suggested being their partner.

Mermade Seafoods’ technology is meant to streamline production and provide a tasty scallop, which will be the company’s first product, that is less expensive than alternative proteins currently available.

As Einhorn explains, cell-cultured foods express a biowaste just like other animals and us humans, and it is typically discarded. Mermade Seafoods’ differentiator is using that biowaste, made of water, ammonia and carbon dioxide, to feed algae. That algae is then used as the growth media to feed the cells. The company is calling this interpretation of aquaponics “cytoponics,” and it has filed several related patent applications.

This recycling method is not just for seafood, but is one already used in other cell-based applications, like pharmaceuticals, Einhorn told TechCrunch. Another unique feature is it cuts down on the cost of the cultivated cell manufacturing, which is heavily reliant upon expensive growth media that can gobble up between 55% and 90% of the costs. This is partly why cultivated meat is difficult to scale, Einhorn added.

The seafood market as a whole is expected to reach $193.9 billion by 2027, with another report saying “scallops are one of the most heavily traded and widely consumed seafood in the world and the vast majority of production comes from aquaculture.”

And it seems to be growing quickly to boot. In 2018, the global scallop aquaculture market had been valued at over $5.8 billion “with farms producing nearly three times the biomass as the entirety of the wild harvest.”

Even with all of that production, it is widely known that food production in general will not be able to meet population demand in the next few decades, which is why startups like Mermade Seafoods and other cultivated seafood companies like Bluu Seafood, Wildtype, CellMeat, Plantish and BlueNalu are working to create alternative protein sources.

And also catching investors’ eyes. Behind chicken and beef, alternative seafood only represents about 0.1% of the total U.S. seafood retail market, according to a Good Food Institute report. Collectively, 15 startups in this area raised $175 million in 2021, which was double the amount raised in 2020, GFI reported. In fact, that figure is actually larger because nine other deals happened that didn’t disclose funding amounts.

Mermade Seafoods is among the latest to get funding, raising $3.3 million in seed funding from a group that includes OurCrowd, Fall Line and Sake Bosch. The investment closed in June and will enable the company to employ more stem cell and algae researchers in order to develop its product and reach laboratory-scale production by 2023, Einhorn said.

He says being commercially ready is still a tough question to answer, though the company is planning for five years out.

“Getting to that lab scale production, we’re talking about a few tenths of a unit, and we want to get that there by 2023,” Einhorn added. “We want to drive the cost of scallops down, and we’re looking for a very significant decrease in cost in this round.”

Plantish fishes for restaurant partners to try plant-based salmon filets

Investors salivate over food tech companies perfecting precision fermentation