Thousands of Gen Z creators are using Fanfix to monetize content and interact with fans

More and more Gen Z users are hopping on the content creation train in an effort to earn a living beyond a regular 9-5 gig. According to a 2022 study by Adobe, around 45% of Gen Z creators surveyed said they want to earn money from their content.

However, given the recent drama surrounding major social media apps, with Meta discontinuing its monthly Reels Play bonus program and the potential TikTok ban, many creators are getting worried. Sixty percent of Gen Z creators use TikTok to monetize content, the study said.

Fanfix, a Patreon competitor that is focused on Gen Z creators and only allows clean content, may provide an extra revenue stream for creators. The subscription content monetization platform enables influencers to earn money directly from their followers.

Fanfix has attracted over 10 million users — including 3,000 creators, the company claims. The average annual income for active creators is $70,000, its data shows.

As of this month, Fanfix says it paid out $11 million to creators so far, with projections to be at $50 million by the end of the year. It also claims a revenue run rate of $35 million and believes it will be profitable by Q1 2024, co-founder Harry Gestetner told TechCrunch.

The figures are notable for a two-year-old startup, especially when the current market makes it harder for creator-focused startups to succeed.

Fanfix is a web application where creators can create a membership, set a paywall and then post content behind the paywall. Creators can set their own subscription price, with the minimum cost being $5 per month and the maximum being $50.

Influencers can also earn even more with features like “Tip-to-DM” a pay-to-message feature that allows fans to pay between $3 to $500 to chat privately with their favorite creators.

Fanfix also recently launched a one-time purchases feature as well as a new message blast feature, where creators can reach out to all their subscribers at once.

Other features in the works include one-to-one calls, personalized videos and livestreaming.

Additionally, Fanfix has an analytics dashboard, allowing users to track their earnings, subscriber count, and other performance metrics. This can be a useful tool if creators want to share metrics with brands and hopefully land opportunities.

The platform generates revenue by taking a 20% commission fee. This is a little high compared to a few competitors, such as Fanhouse which only takes 10%. Patreon requires creators to sign up for one of its subscription plans, charging a monthly fee that ranges from 5% to 12%.

Although Fanfix doesn’t plan to lower the commission fee, the company pointed out that it has no hidden fees and offers a more “premium service” than most competitors, said Gestetner.

“If you look at other platforms, a lot of them charge the creators a payment processing fee. So, there are a lot of hidden fees, and we’re very transparent about how we monetize,” added co-founder Simon Pompan.

“Fanfix is one in this space that’s emerging as the leader in the clean Gen Z-first monetization space because our platform, very simply, has been the place where creators earn the most money,” Gestetner said. “Creators generally are very happy with the commission fee because they know that they’re earning more money on our platform than they do elsewhere.”

Simon Pompan (left) and Harry Gestetner (right)

Gestetner and Pompan have been friends since high school and launched Fanfix in August 2021 when they were attending college. Shortly after launching Fanfix, Gestetner and Pompan brought Vine star Cameron Dallas onto the team.

The idea of Fanfix came about when Gestetner’s cousin blew up on TikTok, gaining tens of millions of views yet unable to monetize. After doing some research, Gestetner found that a lot of creators were struggling to make money.

In general, the creator economy can be a tricky space to tackle– especially for full-time, smaller creators looking to make ends meet. Smaller creators seldom secure brand deals let alone consistent ones that provide a stable revenue stream.

“Brand deals underserved a vast majority of creators, and there needed to be a way that creators could monetize directly from their loyal fans without having to rely on brands, agents, studios or record labels. There was a gap in the market for a clean, family-friendly Gen Z fan membership platform,” he said.

Fanfix’s target audience is 13 to 24 years old, so the platform has strict content guidelines and prohibits nudity as well as content that promotes illegal activities.

The platform makes sure to protect users and creators under 18 with additional safety features like report functions and human moderators that monitor private messages 24/7 as well as review creator accounts twice a day.

Regardless of a creator’s age, they can use the “safe mode” feature, which allows them to enable human-reviewed messages.

Overall, the entire platform is human-moderated.

Fanfix only accepts creators with a follower count of 10,000 or more. The creator must fit with Fanfix’s “brand image” and be able to convert.

We spoke with Savannah Rae Demers, a 22-year-old content creator who started using Fanfix in the spring of 2022. Demers said that, so far, she has made nearly $100,000 on the platform.

“My subscription rate is currently $8, which leaves me making around $6.40 from each subscriber per month,” Demers told us. “With around 2,100 subscribers, that is already about $13,500 a month just from subscribers. That does not even include additional tips and earnings from messaging.”

Fanfix hosts other successful creators, including Madi Monroe, Brooke Monk and Anna Shumate, among others. There is an average of approximately 200 Fanfix subscribers per creator on the platform, according to the company.

“I was immediately intrigued with the overall concept of this platform – having a place to document behind-the-scenes content and not having only brand deals to rely on sounded pretty great to me! Also having a place to truly chat and engage with my community of followers is super special to me and that is exactly what Fanfix gave me with the messaging side of the platform,” Demers added.

Image Credits: @savannahraedemers (opens in a new window)

Gestetner and Pompan were only 21 and 23, respectively, when they sold Fanfix to SuperOrdinary in June 2022 for eight figures. SuperOrdinary partners with more than 140 brands, such as Farmacy, OLAPLEX, The Honest Company, and more.

SuperOrdinary has its own e-commerce platform called GalaGala, which offers a selection of brands curated by influencers.

Eventually, Fanfix creators will be able to collaborate with SuperOrdinary to sell products in their own online stores.

“Being a part of Fanfix, these creators get access to the whole SuperOrdinary ecosystem. Whether it’s giving access to the brands or whatever it is, access to a system that really no other platform can provide,” Gestetner said.

In November 2022, the company launched SuperLink, a monetization-focused link-in-bio platform that displays a creator’s Fanfix page. Creators get 46% of the ad revenue.

Patreon competitor Fanfix launches ‘SuperLink,’ a link-in-bio platform aimed at Gen Z creators

Thousands of Gen Z creators are using Fanfix to monetize content and interact with fans by Lauren Forristal originally published on TechCrunch

Acorns acquires UK’s GoHenry, a fintech focused on 6-18 year olds

U.S.-based savings and investing startup Acorns has acquired London-based GoHenry, a startup focused on providing money management and financial education services to 6-18 year-olds in an all-equity deal, the two companies announced today.

The combined valuation of the company, as well as further financial terms, were not disclosed. When Acorns last raised funding, $300 million in March 2022, it was valued at $2 billion; GoHenry has not disclosed its valuation but was believed to be valued at between $250 million and $500 million in October 2022, when it raised $55 million.

The acquisition is notable for a couple of reasons. For one, if the companies have managed to keep their valuations level (valuations have seen a lot of pressure in the last six months) it would be one of the bigger M&A deals between two fintech startups, coming at a time when startups have found it very challenging to raise further funding — either from private investors, or from the public markets by way of an IPO.

Second of all, it will add a number of new backers to Acorns’ cap table. GoHenry’s investors include Edison Partners, Revaia, Citi Ventures, Muse Capital and Nexi, which are all rolling over their equity in the deal.

Lastly, this gives Acorns an opening to grow internationally, starting with GoHenry’s existing footprint across the U.K., France, Italy and Spain.

The companies would not provide specific details regarding individual metrics, saying only that the combined company will have nearly 6 million subscribers. Previous TechCrunch coverage helps us break down the mix, but also points to either or both having lost some users in recent times. In March of 2022, CEO Noah Kerner had told TechCrunch that the company had more than 4.6 million paid subscribers. GoHenry last October said it had 2 million customers.

Since its 2012 inception, Acorns has raised just over $500 million from investors such as private equity firm TPG, BlackRock, Greycroft, Owl Rock (a division of Blue Owl), Senator Investment Group, Torch Capital, Industry Ventures, Bain Capital Ventures, Galaxy Digital, Headline and Kevin Durant & Rich Kleiman’s Thirty Five Ventures.

Acorns is coming into this deal after it faced a setback on an earlier exit plan of its own. The company originally had intentions to go public, and in 2021 it laid out plans to do so by way of a SPAC. At the time, it had projected revenue of $126 million for the year, according to the deck analyzed by our own Alex Wilhelm. But with the SPAC market facing a lot of troubles, and the tech IPO market drying up at the end of 2021, Acorns scrapped its SPAC IPO plans in January of 2022.

GoHenry (named after its first child-customer, according to the company) has raised a total of $125 million since it was founded in 2012. It posted $42 million in revenue in 2021 (the last complete year it reported), double what it made in 2020. 

Neither Acorns or GoHenry — both of which are 10 years old — were yet profitable at the time of their last raises.

Acorns got its start initially targeting younger adults, specifically millennials, before also opening its first services for children in 2017. GoHenry will help it extend in that market segment. From its early days, GoHenry has focused on the 6 to 18 age group, which currently use two main services from the company: a prepaid debit card (topped up by parents typically) and a “financial education” app that links to that card (and an app that parents can use to help monitor and manage the account). Until last summer, GoHenry operated in the U.K. as well as in the U.S., where it had expanded to in 2018. It began also servicing France and Spain when it acquired French startup Pixpay last July and it also opened up for business in Italy in January of this year.

Acorns has evolved its offering to also include investment services, debt management and a product aimed at children, Acorns Early which launched in June of 2020. Acorns Early lets parents, guardians, family and friends easily invest in a child’s future. Prior to GoHenry, Acorns had also acquired Vault, Harvest Platform and Pillar.

The two companies’ executives say that the combined company will let them serve customers through all life stages – from birth to retirement. Acorns claims it has helped Americans save and invest over $16 billion since its founding, while GoHenry’s customers saved $130 million in the last five years. The acquisition now puts Acorns directly in competition with other U.S.-based fintechs already offering debit cards to children and/or teens, including Greenlight, Step, and Current.

“Both of us have been dreaming about this idea for financial wellness for the whole family for a long time,” Kerner told TechCrunch in an interview, noting that the companies have been in conversations for two years. “So being able to serve kids, teens and adults holistically inside one company globally is really exciting.”

GoHenry co-founder Louise Hill said she is “excited about the opportunities” the combination will unlock.

“It’s very much a shared vision/mission, looking at the best interests of families, and the up and coming – the everyday people,” she said in an interview. “Being able to expand and offer the same approach to financial well being to adults as well is hugely exciting.”

The combined company — both of which offer subscription services — has over 700 employees. While the deal was primarily equity, there was a “tiny cash consideration,” Hill said, that was more out of “administrative necessity than anything else.”

The decision to acquire GoHenry was not one made lightly, according to Kerner, who said Acorns evaluated “over 100” companies globally.

“We have been very focused on the U.S. market with our products but have always had aspirations to deliver globally,” he told TechCrunch. “This allows us to accelerate that path.”

Hill said GoHenry too always had the intention to globalize.

“Our teams have been talking together for over two years, and it just became more and more obvious that the right way to go was to come together,” she said.

In the U.S., GoHenry will operate as GoHenry by Acorns. In the U.K. & Europe, GoHenry & PixPay will continue to operate under their own brands. 

As the IPO market has dried up, many industry observers had predicted that the fintech space would see more consolidation. And so far in 2023, we’ve seen a number of M&A deals.

For example, earlier this year, Marqeta announced plans to acquire two-year-old fintech infrastructure startup Power Finance for $223 million in cash, marking the first acquisition in that publicly traded company’s 13-year history. Also in January: investment giant BlackRock announced it was acquiring a minority stake in SMB 401(k) provider startup Human Interest; remote payroll startup Deel acquired fintech Capbase; Fidelity acquired equity management startup Shoobx; Vouch, an insurtech focused on startups, acquired lending startup Level and American Express entered into an agreement to acquire Nipendo.

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Got a news tip or inside information about a topic we covered? We’d love to hear from you. You can reach me at maryann@techcrunch.com. Or you can drop us a note at tips@techcrunch.com. Happy to respect anonymity requests.

Acorns acquires UK’s GoHenry, a fintech focused on 6-18 year olds by Mary Ann Azevedo originally published on TechCrunch

UK’s greenworkx takes aim at the domestic retrofit skills challenge

Steering humanity out of the climate crisis demands action in a very literal way. Boots on the ground, people rolling up sleeves and getting hands dirty retrofitting existing infrastructure, such as poorly insulated houses, type stuff. The goal is to re-make our built environment to be energy efficient and drive down carbon emissions ASAP. So we really need lots and lots more skilled tradespeople — fast. Aka, the kind of multifaceted, hands-on skills that technologists haven’t figured out how to automate yet.

Fixing this problem absolutely, therefore, demands human beings. Lots and lots of people to come in, eager and willing to learn new stuff, and take up green retrofitting jobs. So it’s a job discovery problem. And a training/upskilling/reskilling problem. Which means digital technology can of course help. And this is where a UK edtech startup founded last year, called greenworkx, is angling to step in — with a new spot of supportive construction: A digital pathway designed to boost the flow of skilled workers into green jobs.

The London-based team, which has just closed a £600k pre-seed funding round, describes what’s it’s building as “the go-to talent portal for green jobs”. The app soft launched towards the start of the year, after the co-founders formally incorporated the startup in mid June last year. The early stage funding round was led by Mangrove Capital Partners, with participation from Ada Ventures, and a number of angel investors in the climate and edtech sectors, including the CEOs of Multiverse (Euan Blair), MyTutor (Bertie Hubbard) and Octopus Electric Vehicles (Fiona Howarth).

Commenting in a statement, Nikolas Krawinkel, partner at Mangrove, heralded the opportunity of the looming “green industrial revolution”, writing: “We’re on the cusp of a green industrial revolution, which will require a huge rethink of our education and training systems. The greenworkx team have a deep understanding of digital-first learning methodologies and we’re excited to work with them to take on this profoundly important challenge.”

“The urgent ramp-up needed in the green workforce is a unique opportunity to build a fairer, more equitable future by bringing millions into a rapidly-growing sector of huge social and environmental importance,” added Matt Penneycard, founding partner at Ada Ventures, in another supporting statement. “We’re incredibly excited about the double impact that greenworkx can have in empowering people to access well-paid, future-ready jobs, whilst simultaneously directly driving the net-zero revolution to address the climate crisis.”

The startup’s vision is to build a platform and digital tools to drive awareness and accelerate the uptake of green jobs, using techniques like bite-sized learning and algorithmic matching of jobseekers to connect them with relevant opportunities to help build and power up the green economy.

Co-founders Mat Ilic and Richard Ng bring backgrounds in public policy work and education and edtech to bear on this skills funnel challenge.

Ilic, the policy guy, says he was inspired to tackle the people side and the green jobs challenge as he was reading John Doerr’s book, Speed and Scale — which is literally subtitled an “action plan for solving our climate crisis now”. “It was the first time that net zero felt like a manageable problem,” he tells TechCrunch, saying the book helped him realize “how significant people are” — especially “the people we need to bring about the transition, not just people to make lifestyle changes” — and so the “loose idea was was born then and there”.

Ng, who started his career as a maths teacher before moving into edtech and, latterly, training software engineers at UK tech apprenticeship startup Multiverse, says he’d felt pretty settled in that career — until he got speaking to Ilic and also got the green jobs itch.

“He was explaining to me this problem that in order to reach Net Zero we need to deploy all this green infrastructure… and I remember being really shocked by this because I thought wow, this is obviously a huge problem, which is really high stakes, really time urgent, and yet when I think about skills and future work so often it’s purely about ‘oh we need to code’,” he says in a video call with TechCrunch, offering a tacit critique of the full-throttle focus on ‘learn to code’ of the past (many) years. (Code, after all, may well end up being automated by powerful technologies like generative AI — even as we’re still in desperate need of double glazers, plumbers, electricians etc etc.)

There are also of course plenty of people for whom learning to code is never going to be the right fit. And Ng says he realized there’s an unfolding opportunity for all sorts of workers to thrive in green jobs as demand for these more hands-on, people-facing skills keeps growing — as well as being excited by the chance to build out the kind of support for vocational training and learning that the UK’s traditional educational system has not been geared towards.

“We need people to work with data, that’s very necessary, and there’s a bunch of people working on that now. But I was like this is also super, super important and really, really underserved,” he says. “Coding, unfortunately, is phenomenally inaccessible for a bunch of people… [Whereas] these jobs… are really, really meaningful, they’re pretty well paid and they’re actually very accessible as well. And so, for me, it was also about making sure that as we think about this really important challenge Net Zero we’re also using that as an opportunity to make sure we have this bright future of work which is hopefully much more inclusive and accessible to the communities which I care a lot about.”

The scale of the retrofit challenge means the skills supply problem is vast indeed. Ilic cites a statistic suggesting at least 30 million roles will be needed globally by the end of the decade — and half a million in the UK alone, just for domestic energy retrofitting. (And the startup’s stated mission is to get 10 million people into green jobs over 10 years.)

While the challenge is global the UK certainly has some of the worst insulated homes in Europe, making that element a particularly acute local problem. Solutions can also be interdependent, too — since, for example, poorly insulated homes aren’t a good fit for low carbon heat pumps — which means tackling drafty buildings is really a prerequisite for speeding up the decarbonization of UK housing stock.

“We’re talking about half a million different professions and trades needed in already an existing skills shortage in construction — and that’s before we start talking about the other aspect of this, which is the existing workers who need to be reskilled in what’s basically the biggest reallocation of capital and the means of production since the Industrial Revolution,” says Ilic, adding: “And no one seems to be talking about it with the level of urgency and emergency and scale that is needed — and more fundamentally, we’re here because we believe it’s eminently solvable. And that’s what’s so practical about the way that we’re looking at this challenge.”

Some other startups are talking about it, of course. Denmark-based Lun, for example, recently bagged seed funding to build software tools to encourage more tradespeople to focus on installing heat pumps, instead of taking on less climate friendly jobs. While US-based BlocPower has already been beavering away for almost a decade with a residential retrofit-as-service platform focused on low-income communities. But it’s fair to say the scale of the change needed across our societies is so absolute — so root and branch — that it’ll need a tsunami of startups tackling as many bits and pieces as possible if we’re to drive the necessary system flip at the blistering pace now required to avoid even worse heating and weather extremes (not to mention the risk of runaway climate change).

Greenworkx’s app is soft launched at this stage — with a handful (around 40) of green skills seekers signed up to a (free) introductory retrofit course they’re offering.

Early users are more of a mix than the team’s expected target youth demographic (i.e. 16-24-year-old school and college leavers who did not follow the academic higher education route to university) — with Ng noting other profiles of interest include immigrants in their mid thirties to forties seeking a career switch into more stable work. Another early user he mentions was a former nurse — a women in her late fifties who could no longer continue working in a patient-facing role (owing to developing allergies) but who was looking for another job that allows her to keep serving her community and retrofitting social housing fit the bill for her. (“It’s a way to basically continue serving her community.”)

To locate their first users they’ve been partnering with organizations and charities that are focused on employability. But as they seek to scale up they plan to expand the pool of jobseekers via digital marketing on social media and tapping up the sorts of influencers who might resonant with key targets. They’re also planning a possible green jobs travelling roadshow to take their message of climate opportunity around the country in an electric bus.

The early product is still quite a manual experience, per the co-founders, as the team has been focused on understanding learner profiles and needs so they can better tailor the platform experience. But the goal is, ultimately, to automate the process of matching jobseekers to green skills opportunities to be able to scale the platform and its outputs.

“We’ve had our first proactive inbound from a small company this week looking for energy assessors and retrofit assessors,” notes Ilic. “So it’s been really interesting to see that. And in terms of where we focus attention on the job side, so really a lot of investment is going into decarbonizing social housing at the moment — housing associations, local authorities and smaller energy efficiency or construction companies are all looking for these sort of energy efficiency professionals or trades. So some of that is them reaching out to us some of it is us working with them. So we’re pretty confident that for this kind of batch of people that we’re taking through — both the understanding retrofit courses as well as some partnerships that are more focused on domestic energy assessment or retrofit advice — we should be able to get our first job outcomes and then explore how it goes from there.”

For larger energy companies and construction firms the first focus is likely to be on upskilling an existing workforce, rather than trying to hire scores of new workers. So the startup is thinking how it might best support those goals. They’re also still figuring out how much training content they might offer themselves — vs working with partners and/or employers to provide it. But the overarching goal is to find ways to support as many people as possible to think about a career switch, skills upgrade or first leap into green jobs.

“We’re a b2b proposition. And the ultimate goal is to create value by giving people the talent they couldn’t otherwise reach — so filling roles,” says Ilic. “But I think we’re exploring a range of different steps in between, including actually having that curriculum and training proposition to support reskilling existing workers, because if we’re building a high quality digital curriculum for connecting people to these jobs from a standing start, actually it’s also relevant for people that are learning about low carbon heating technologies in their current jobs. So both reskilling and recruitment are going to be part of our value proposition.”

“We are starting supply side. We want to build a tool that will matter so much to learners that they will obsess about,” he adds. “They would be prepared to pay for it even though we’d never want to charge them for it because we want to create a frictionless route for them to be able to access these roles. Because that’s partly in our collective interest — as I said, we’re looking at servicing the labour demand — but, yeah, we feel that the business side will become kind of apparent as things unfold; as you see the kind of exponential growth, say the consumer demand for solar among other things, so that’s what we’re planning.”

This report was updated to correct a citation by Ilic: The projection is for 30M retrofit jobs being needed globally before the end of the decade, not in the UK — there the projection is for half a million roles being required by 2030

BlocPower hits its stride, landing $25M Series B to expand its residential energy retrofit platform

Lun is in a mad rush to help heat-pump installers decarbonize homes

UK’s greenworkx takes aim at the domestic retrofit skills challenge by Natasha Lomas originally published on TechCrunch

5 growth lessons I learned while scaling from $0 to $1M ARR

Jonathan Martinez Contributor

Jonathan Martinez is a former YouTuber, UC Berkeley alum and growth marketing nerd who's helped scale Uber, Postmates, Chime and various startups.

More posts by this contributor

• When it comes to early-stage growth marketing, it’s often better to imitate than innovate
• Building a growth marketing team the right way

While building a startup may seem easier than ever because of the assortment of tools available, the available statistics on being successful still do not favor founders.

In the past year, I’ve had the privilege of co-founding Sales Kiwi, a virtual sales staffing and marketing service company, from ground zero to over $1 million in annual recurring revenue (ARR) and more than 25 employees.

What separates the startups that succeed over those who fail? While I don’t have a crystal ball to predict everyone’s futures, I do have a wealth of stories and experience gained from my work scaling our company. I’m here to share my top five growth lessons, with the aim to help you avoid making the same mistakes that we made early on.

1. Focus on a max of two growth pillars at a time

Once we had found success on a specific channel, I’d follow the same principles with other forms of growth marketing, such as lifecycle, referrals, or affiliates.

My first lesson can seem a bit obvious, but not spreading oneself too thin early on is imperative. In the area of growth specifically, I never tested more than two paid channels at a time, which is how I was ultimately able to unlock acquisition for my team. This applies for all forms of growth, so if you’re trying to unlock lifecycle marketing, don’t also put efforts into unlocking four paid channels at the same time. This gave me the ability to optimize and experiment with the channels that I was immediately working on, rather than taking the approach of throwing everything at the wall and seeing what stuck. Once we had found success on a specific channel, I’d follow the same principles with other forms of growth marketing, such as lifecycle, referrals, or affiliates.

In contrast, you also need to ensure you don’t spend excessive time focusing on one channel that isn’t showing any viability. A quick back-of-the-envelope method to assess whether you may find success on a channel, or not, is if your customer acquisition cost (CAC) is 5x where it should be, or you’re only seeing sub-5% of your conversions coming from the growth pillar after a few weeks of testing. There are a few exceptions to this such as content or SEO which typically have longer timelines before you encounter success.

2. Don’t overcomplicate your reporting

It’s not easy to have perfect reporting. This is especially true for startups. One of the biggest shortcomings at my startup was attempting to perfect our tracking with complex dashboards on our customer relationship management (CRM) software. As we scaled rapidly, we kept trying to create new dashboards to accommodate the new data points we wanted to measure, which was ultimately a big mistake.

Today, I am a firm believer that perfection can either make or break startups early on, and the first $1 million in ARR does not require expensive tools for reporting. Instead, one should leverage free tools like Google Sheets to create reports for your growth funnel, retention, and any other tracking that you’re looking to measure. There are also many resources, such as GooDocs, which provide free templates for revenue tracking or project management that can be customized to your startup. It does not make sense to spend time reinventing the wheel with fancy frameworks when you can easily download a free template.

5 growth lessons I learned while scaling from $0 to $1M ARR by Jenna Routenberg originally published on TechCrunch

Tencent backs Singapore’s Horizon Quantum Computing in $18M round

Quantum computers have the potential to carry out highly complicated calculations in minutes that would have taken classical computers thousands of years to work out. But much of the industry is still in its infancy, partly because of a lack of domain experts and software tools that match the progress of quantum hardware.

Now companies are working to simplify the process of developing quantum software applications so programmers don’t actually need to understand the underlying quantum mechanics. One of the early-stage startups making such an effort is Singapore-based Horizon Quantum Computing, whose tools can automatically construct quantum algorithms based on programs written in classical languages.

The company recently picked up $18.1 million in a Series A round from Tencent along with other investors, boosting its equity financing to around $21.3 million. Other investors in the Series A round included Sequoia Capital India, SGInnovate, Pappas Capital and Expeditions Fund.

The money raised will be used for product development and its expansion in Europe, where the company is planning to open an office in Dublin, Ireland. The startup is also scheduled to launch the early access program of its developer tools later this year.

While Singapore is more widely known as a financial hub, it has also been one of the most proactive governments in supporting quantum technologies. The Center for Quantum Technologies, where Horizon Quantum Computing’s founder and CEO Joe Fitzsimons used to be a professor, was set up under the city-state’s Research Centres of Excellence program to advance research in the cutting-edge field.

“When I made the jump from academia, Singapore already had the right talent [for quantum computing] and there was access to capital,” said Fitzsimons, who earned a PhD from University of Oxford.

Neutral ground

As a country that has historically been rather politically neutral, Singapore is also less prone to trade or technological sanctions, the founder reckoned.

This is important in a world where businesses are increasingly caught in the tech war between the U.S. and China/ Launching from a neutral home base is now seen as a prerequisite to many tech firms, including quantum computer builders that rely on components sourced from around the world.

Tencent’s investment in Horizon Quantum Computing is purely financial so it won’t entail any transfer of sensitive data, the founder noted. The startup took Tencent’s investment because the giant is an “expert” in the area, he said.

Indeed, the social networking and gaming giant has shown a keen interest in the field by opening its quantum research lab in 2018. Ling Ge, Tencent’s chief representative in Europe and the main person who oversaw the deal in Horizon Quantum Computing, has known Fitzsimons since her years in Oxford where she studied quantum computing.

“At Tencent, we take a long-term perspective on quantum. In our own quantum lab, we are focused on fundamental research, first principles simulations and quantum algorithms, and how these might serve enterprise customers,” said Ge at an industry event last year.

“In terms of investments, we take a science-driven approach. One of the challenges in investing in quantum is what we call the ‘black box’ paradox. The challenge of evaluating early-stage deep tech companies in areas like quantum, nuclear fusion or biotech is difficult because the core technology is in its early proof-of-concept phase. It is hard to evaluate and understand at what stage of maturity it really is.

“Therefore, we take appropriate steps to mitigate the risks of this black box paradox depending on the investment stage. This is primarily achieved through our deep technical expertise, which allows us to really understand what is being developed and its maturity,” she said.

UK quantum computing startup Quantum Motion raises $50.5M

Tencent backs Singapore’s Horizon Quantum Computing in $18M round by Rita Liao originally published on TechCrunch

The shocking allegations against Daylight, an LGBTQ+ focused startup

Welcome to The Interchange! If you received this in your inbox, thank you for signing up and your vote of confidence. If you’re reading this as a post on our site, sign up here so you can receive it directly in the future. Every week, I’ll take a look at the hottest fintech news of the previous week. This will include everything from funding rounds to trends to an analysis of a particular space to hot takes on a particular company or phenomenon. There’s a lot of fintech news out there and it’s my job to stay on top of it — and make sense of it — so you can stay in the know. — Mary Ann

Last week ended with an explosive feature published by NY Magazine. The article homed in on Daylight, an LGBQT+ focused neobank whose seed and Series A raises TechCrunch had covered here and here, respectively. The depiction of CEO and founder Rob Curtis was so far from the polite executive that I interviewed that it made me question my own character judgment. Lawsuits, fabrications and inappropriate behavior are among the many allegations reported in this in-depth piece. One person who tried the bank’s service shared with me that other than being allowed to use their chosen name on a card, they “didn’t really see much in the way of benefits or specialization” and that it was “so buggy,” they stopped using it.

Meanwhile, there is never a dull day in the corporate spend space. Last week, I wrote about Ramp reporting 4x revenue growth in 2022. That got me curious about other companies in the space, so I pinged a few of them. An Airbase spokesperson got back to me, sharing via email: “We grew 2X across the important dimensions of ARR, payment volume and number of paying customers. It’s important to point out that the majority of our revenue is high-margin and subscription based, unlike most of the interchange revenue focused companies in our space. We choose not to play the gross ARR obfuscation game…” Ouch. Meanwhile, I neglected to include last week that Brex had expanded into the travel space. That company has reportedly ruffled a few feathers, though, as of late, according to AwardWallet, by devaluing “cash and crypto redemptions by 40% and slashed Brex Rewards point transfer rates to airline partners by over 40%” with little to no notice. Twitter was also abuzz about the news, if this tweet is any indication. I did reach out to the company but had not yet heard back.

Other Weekly News

Reports Haje Jan Kamps: “What do you do when you have a very successful and popular product (marijuana) that is legal in some places, but federally has been a Schedule 1 drug since 1970? Well, you can’t rely on any national institutions as your business partners. One of the major places that shows up is in payments and payment processing; even after recreational cannabis became legal in 21 states and decriminalized in another dozen or so, cannabis has become largely a cash business. In a world that is increasingly cashless, that’s a problem for both consumers and businesses. Smoakland is currently beta-testing a loophole that lets its customers pay by credit card. The secret, it turns out, is crypto.” More here.

Reports Anna Heim: “If you think embedded insurance is the only hot thing in insurtech these days, we’ve got a surprise in store for you: While it’s true that startups that help sell insurance together with other products and services are enjoying tailwinds, there are plenty of other opportunities in the space, several investors told TechCrunch+.” More here.

I reached out to payment company Checkout.com’s new president, Céline Dufétel, to find out more about her plans in her new role, including what’s in store for the company this year, her thoughts on the future of payments generally and why she sees so much opportunity in the U.S. We also asked how she felt about the comparisons to Stripe…and her answer may surprise you. More here.

Reports Kyle Wiggers: “Confluent co-founder Neha Narkhede today announced a new fintech company, Oscilar, that’s developing an ‘AI-driven’ platform to help financial institutions protect online transactions from fraud and theft. Oscilar is entirely self-funded, backed by $20 million that Narkhede and the company’s other co-founder, Sachin Kulkarni, themselves contributed. Narkhede says they opted not to take outside funding so that they could ‘quickly build and scale the company as it launches publicly.” More here.

Reports Kyle Wiggers: Months after unveiling a “major update to Apple Pay called Apple Pay Later, which allows users to split the cost of an Apple Pay purchase into four equal payments over six weeks without interest or late fees, Apple has finally launched the feature. But not for everyone — at least not yet. Starting today, Apple says it’ll begin inviting randomly selected users to access a pre-release version of Apple Pay Later, with plans to offer it to all ‘eligible’ users on iOS 16.4 or iPadOS 16.4 in the coming months.”

Meanwhile, Fitch Ratings weighed in on the Apple Pay Later news, with senior director Michael Taiano noting via email that “Apple not allowing customers to link to a credit card is a unique feature in its BNPL product that should limit the ability of borrowers to pay off one form of debt with another form of debt, though it does not fully address our broader concerns over the structural and cyclical challenges the buy-now-pay-later business model continues to face.”

Tage Kene-Okafor conducted an in-depth interview with Union54 co-founder and CEO Perseus Mlambo in which the executive “spoke candidly about the issues Union54 had to contend with when it had to halt operations over an attempted $1.2 billion chargeback fraud last year, how the company was at risk of a total shutdown, and why fintechs need to be more transparent about fraud exposure.” A must read!

Reports Fintech Futures: “Payments giants Visa and Mastercard are reportedly among a number of firms competing to acquire Brazilian payment and banking platform Pismo. News reports state that the firm is working with Goldman Sachs on a potential sale at a reported valuation of $1 billion. Sources tell Bloomberg that other interested parties include a bank and a private equity firm, and that the talks may not result in a sale. According to Valor Economico’s Pipeline, Visa submitted an initial offer of $1 billion which was rejected by Pismo, following which Visa upped its bid to $1.4 billion.” More here. TechCrunch covered Pismo’s $108 million raise in October of 2021. If true, this is super exciting news not only for Pismo, but also for the Latin American startup scene as a whole.

Speaking of Latin America, Latitud, a self-described “tech entrepreneurship program” for the Latin American region that is backed by Andreessen Horowitz and NFX, “launched business accounts.” According to co-founder Brian Requarth, the move was made in part because “most all founders in LatAm worked with SVB. . . . There is a gaping hole,” he said via email. “We had been working on this for months so we decided to launch it.” TechCrunch covered Latitud’s raise last March.

Aspiration filed a WARN notice in Oregon on March 24, 2023, notifying the state that it plans to lay off 180 people sometime between May 26, 2023, and June 1, 2023. Among those impacted are the chief administration officer, president of the MENA region, and vice presidents of business development, HR and product design. As one source shared, Aspiration had planned to become a public company but has yet to iron out its SPAC. The SPAC requested an extension until June 9 to complete the merger. Notably, according to its website, it has “pivoted to selling carbon credits to businesses instead of the environmentally friendly neo bank most people might know them as,” the source said. TechCrunch reached out to Aspiration but did not get a response. The company has raised about $250 million in known funding.

Reports PYMNTS: “Family finance app Greenlight has unveiled an integration for banks and credit unions. Greenlight for Banks…lets financial institutions add Greenlight’s app to their financial service offerings…With the app, banks can offer customers Greenlight’s tools for earning, saving and spending. In addition, parents can automate allowances and send money instantly, while kids and teenagers get ‘hands-on money management experience with parental supervision,’” the company said.

Other headlines

Equals Money launches a new expense management platform in the US

Novo to launch working capital program for small businesses

Pinwheel launches smart branch to bring payroll connectivity to physical bank branches

Secfi and Daffy.org partner to make charitable giving seamless for advisory clients

Has fintech lost its lustre? What VC investors need to see from founders

Checkout.com President Céline Dufétel Image Credits: Checkout.com

Fundings and M&A

Seen on TechCrunch

Salt Labs raises $10M to gamify frontline work

StellarFi lands $15M to help people build credit by paying bills, rent on time

Paytrix raises $18.3M to build out its one-stop payments shop 

Payday wants to power the future of work for Africa with $3M seed led by Moniepoint Inc

Amazon-backed Acko nears $120 million in new funding

And elsewhere

Mexican restaurant payment startup Pacto raises $4 million in seed funding

Investing.com buys StreetInsider for $10M

Personal finance app Playbook snares $7m in Series A

Stratyfy rakes in $10m to advance AI-driven lending offering

PSA: Last year was my first Disrupt and I was blown away. This year, I am even more excited, as we will have a dedicated fintech stage! Come join us — it’s going to be awesome.

Next week we’ll be taking a break due to the Easter holiday, but I’ll be back on April 16. Until then, please take good care! And as always, thank you for reading, and sharing, this newsletter. xoxo, Mary Ann

The shocking allegations against Daylight, an LGBTQ+ focused startup by Mary Ann Azevedo originally published on TechCrunch

Do you need a deck to raise from VCs? Not always

For all the focus on pitch decks (and more than 80 articles on the topic), you’d think that it’s impossible for startups to raise from angels or institutional investors without one. That’s not entirely correct. Here’s why.

Going far enough back into the history of investing, you needed a comprehensive business plan to raise funding from institutional investors. The Harvard Business Review has a great guide to how to create one. The exact details of what goes into a business plan vary but often include history, market analyses, strategy, product and service descriptions, org charts, competitive analyses, management team, financial plans and projections, along with all the research to back up each section.

That’s all good and well, but by the time you’ve completed all of that, your business plan has ballooned to a novel’s worth of pages — and that’s before you add in all the graphics and charts. Business plans are great for teaching you business basics and dynamics, and mistakes in a business plan are a great way to show would-be entrepreneurs how to avoid problems before they happen.

The problem is that it will be out of date before the ink is dry, and the financials will be inaccurate long before you even hit “print.” It isn’t that startups operate on different dynamics than other businesses, but they are essentially the agile equivalents of the old dinosaurs. Build it, test it, iterate.

Essentially, startups are the equivalent of how software is built these days: Rather than spending six months writing out a full product spec that’ll be wrong before you write a single line of code, you launch a lean MVP version of the product and adjust from there.

There were a few advocates for doing business plans differently, including Guy Kawasaki, whose “you only need 10 slides” argument may be a little too far into deep minimalism, but at least it was more helpful for weaving a pitch narrative than a 90-page business plan. In short: The pitch deck was to the business plan what agile software development was to waterfall software development.

From there, the market evolved further, and some founders chose not to use a deck at all.

“The story is super important,” said Tom Hacohen, the CEO of webhooks-as-a-service company Svix, who recently raised a round of financing from Andreessen Horowitz without using a deck. “Investors are not webhook experts, so they have to understand the story. To do that, we had to tell a great story — and when we did that, they really started digging into the business. They understood our metrics and started talking to a good chunk of our customers. At that point, the deck is just going to help me walk them through what they already know.”

Let’s walk through how to tell the story of your company without relying on a deck!

Do you need a deck to raise from VCs? Not always by Haje Jan Kamps originally published on TechCrunch

How you invest your time is just as important as how you invest your money

Allison Baum Gates Contributor

Allison Baum Gates is a general partner at early-stage venture capital fund SemperVirens, and the author of Breaking into Venture.

One night, a policeman is doing his typical evening neighborhood walk. The sun has set, and he’s on high alert for any potential danger as he strolls slowly down the street. Soon, he comes across a professionally dressed man frantically pacing beneath a streetlight, periodically dropping to his knees to look between the cracks of the sidewalk.

He is desperately offering $100 to any passerby who can help him find his misplaced keys. Relieved at the sight of law enforcement, he asks for the policeman’s help and explains that he urgently needs to get home to his family. Together, they search every inch of the sidewalk, the gutter, and the road beneath the light and come up empty. Anyone they have enlisted for help similarly gives up after finding nothing beneath the streetlight.

Frustrated and disappointed, the policeman finally asks, “Well, sir, are you sure you lost them here? Is there anywhere else they could be?”

The man replies, “Well, no, I actually lost them in the park across the street, but the light is better over here.”

This tale encapsulates a concept commonly known as the streetlight effect. Its origins can be traced back to a Turkish parable from the thirteenth century, but the concept has been repeated throughout history in everything from jokes about people who lost their keys to scientific explanations of observer bias in which observers only see what they expect to see. The point is that you can spend a lot of time searching for something, but if you’re looking in the wrong places, you’ll never find it.

Unfortunately, in my early days of venture capital, nobody told me this story, so I immediately started searching for deal flow where it was easiest: in Hong Kong. I had a strong personal network and brand in the Hong Kong region, and I had no trouble finding local entrepreneurs who wanted to pitch Fresco Capital for funding. I spent my days meeting with new companies that were willing to come to my favorite coffee shop on Hollywood Road in Hong Kong, though they were not the businesses I was most excited about or thought were most likely to go on to be massively successful. Soon, I found myself with an extremely packed schedule but little excitement about any prospective investments.

At the end of every week, I would sit back and wonder where the time went. I was growing self-conscious that I had nothing to show for my packed schedule.

You can spend a lot of time searching for something, but if you’re looking in the wrong places, you’ll never find it.

Invest time in places where there is a high concentration of what you are looking for

I had been investing my time in meeting with local entrepreneurs, a strategy that wasn’t producing results. Clearly there was a light shining directly in front of me in Hong Kong, but I had a feeling my keys were across the street in a park somewhere. I knew I had to stop doing what was easy and start looking beyond Hong Kong for deal flow. Along with my business partner, I began to spend my time researching the major hubs of entrepreneurial and tech activity that had a high concentration of entrepreneurs seeking funding. I also hunted for those who had produced big outcomes in the past decade (unlike Hong Kong, which was still early in its journey as a startup ecosystem and did not have as many examples of successful venture-backed businesses). Then I hit the road.

My partner and I spent time in cities like San Francisco, Austin, and New York, as well as London, Beijing, and Singapore. I spent the better part of my first five years in venture capital on a plane (mostly in middle seats in economy, to be exact). On each trip, I was energized by the entrepreneurial buzz in each region we visited and overwhelmed by the number of promising companies we met in each place. My days were equally jam-packed, if not more so, than my time at home. However, unlike my experience in Hong Kong, each day of meetings was yielding exciting investment opportunities that I was eager to dig into. Time flew by, and I was finally producing results. I had real deal flow! I just had to get on a plane to go get it.

As a new, small fund, we were on a shoestring budget, so I crashed on friends’ couches or stayed in inexpensive Airbnbs while I was traveling. Especially when it came to navigating the San Francisco Bay Area, I could not have felt more like an outsider. Who knew that Google’s headquarters in Mountain View were at least an hour from downtown San Francisco, and that distance ballooned into several hours during rush hour, which in California started not at 5 p.m. like a person might usually expect, but instead at 3 or 4 p.m.? One trip, in hopes of cutting down on travel times, I picked the halfway point between my meetings and splurged on a budget motel in Daly City. I arrived, suitcase in hand, only to discover that the hotel was located directly across the street from a junkyard filled exclusively with old school desks, and that Daly City was affectionately referred to by locals as “Daly Shitty.”

It certainly wasn’t exactly what I had originally envisioned happening once I was on the other side of the investing table, but it was fun and energizing to be hunting for opportunities, trying to find the diamond in the rough or the next big thing. We were simultaneously in the process of raising our fund, so when we did make an investment, it was a very small amount. We were, however, investing a lot of our time in developing new sources of deal flow.

How you invest your time is just as important as how you invest your money by Jenna Routenberg originally published on TechCrunch

Always be prompting

Welcome to Startups Weekly, a nuanced take on this week’s startup news and trends by Senior Reporter and Equity co-host Natasha Mascarenhas. To get this in your inbox, subscribe here.

Reporter’s note: Before we get into this, thank you to the Startups Weekly readers who pointed out that last week’s link to my column was broken. If you want to know about the state of solo GPs — which oh boy, is it rocky — please read my TC+ story here: Are Solo GPs screwed? Ok, now into this week’s newsletter! 

“AI whisperer” jobs are roles made for people who are savvy prompt engineers and able to manipulate ChatGPT or other generative AI tools to get what they want from it. As Bloomberg reported earlier this week, these jobs can land up to $335,000 in annual salary. Cha-ching.

It’s an impressive price tag for a job role that would’ve blown minds just one year ago. It’s also a reminder that generative AI’s boom will create a whole new set of questions about how we ask questions. By just spending a few minutes playing around on ChatGPT, I learned that you can elicit a diversity of AI-generated answers to questions just by changing a few select words and demanding bullet points versus three sentences.

Before we see a whole wave of AI prompt engineering consultancy practices for hire — just kidding, we already are — I figured it would be helpful to aggregate some of the top tips I’m hearing from the community on how to better interact with AI to get it to give you the answers you want. We already know it’s imperfect, it can’t be trusted with every single fact, and it sometimes is left speechless. What can we do with what we’ve got, though?

Many techies weighed in on Twitter — you can see the full thread here — but here are the top five tips:

1. Overdescribe. As one person put it, don’t be afraid to be extra when prompting artificial intelligence. There’s a difference between asking for a banana bread recipe and asking for a simple banana bread recipe that incorporates cardamom, takes less than one hour to bake and has a surprise ingredient. Or put differently, don’t just keep it high level, get specific about the tone and complexity you prefer in answers. Over explanation and adjective use was probably the most common tip I received when asking for advice on how to be a better prompter.

2. Ask for help. It’s not always easy to know how specific to get when you’re prompting the AI — so why not ask for help? One entrepreneur told me to ask ChatGPT how to prompt it based on what I want, so ask something like, what information do you need from me to create an itinerary for a San Francisco hiking trip? The AI will tell you what it needs — I wish humans were like this — and as a result, you’ll get a more tailored answer.

3. Give feedback. Let’s say I ask for: “a chatty but informative three-sentence explanation about the impact of generative AI on education, incorporating at least one metaphor.” ChatGPT had a pretty good response, but I didn’t love the response. Tell it that! Feedback is helpful to train the AI on the types of answers you like and takes a split second. Here’s how that process went for me:

Natasha: Give me a chatty but informative three-sentence explanation about the impact of generative AI on education, incorporating at least one metaphor.

ChatGPT: Generative AI has the potential to transform education by serving as a virtual Sherpa, leading students on personalized learning expeditions. Just as a Sherpa uses experience to guide climbers through treacherous terrain, AI can harness vast data to provide a customized path to knowledge. With the help of generative AI, education can become a more accessible and tailored journey, empowering students to reach new heights.

Natasha: I don’t like the virtual sherpa metaphor. Also, can you be more specific on which new heights students can reach?

ChatGPT: Generative AI can be thought of as a personal tutor, providing students with a tailor-made curriculum that meets their individual needs and interests. Like a skilled coach, AI can identify students’ strengths and weaknesses, and provide them with targeted guidance to help them excel. With the help of generative AI, students can reach new heights by unlocking their full potential and gaining a deeper understanding of complex topics.

4. Ask for nuance. ChatGPT only answers what it is asked, so why not ask for nuance? A founder said that they ask for pros and cons on every recommendation that they prompt ChatGPT to give.

5. Be a little cringe. Is it self-indulgent to tell AI to speak like me, specifically nudging it to be voicey, charismatic and informative? Maybe, but it helps. One of the biggest hacks I’ve learned is to throw my Twitter handle in when asking for a deep dive on a topic. ChatGPT responds better to “Make an argument for why Cauliflower is the best vegetable in the tone of @nmasc_” than “Make an argument for why Cauliflower is the best vegetable in the tone of Natasha Mascarenhas.” And because I know you’re curious about the former, I’ll leave you with ChatGPT’s argument on cauliflower supremacy:

Alright, buckle up folks, because I’m about to make a case for why cauliflower is THE BEST vegetable out there. First of all, let’s talk versatility. This baby can be roasted, grilled, mashed, pureed, riced, and even turned into buffalo wings. Name one other vegetable that can do all that, I’ll wait.

And don’t even get me started on the health benefits. Cauliflower is packed with vitamins and minerals like vitamin C, vitamin K, and potassium, not to mention it’s high in fiber and low in calories. Plus, it’s a great source of antioxidants, which help fight off disease and keep your body in tip-top shape.

But let’s be real, the best thing about cauliflower is how dang delicious it is. Whether you’re enjoying it as a creamy soup, a spicy stir-fry, or a crispy pizza crust, cauliflower has a flavor and texture that can’t be beat. And let’s not forget about its ability to take on different flavors and spices, making it the ultimate canvas for creative cooking.

So, there you have it folks. Cauliflower is the MVP of vegetables, and I challenge anyone to prove me wrong.

Those are some starter tips I’m incorporating but I’d still love to know what else I’m missing so please do throw your top tips in this thread. Also, shout out to Fundrise CMO Jon Carden for the headline inspiration!

In the rest of this newsletter we’re talking about Cerebral Valley and Substack. As always, you can follow me on Twitter or Instagram to continue the conversation. And if you feel like supporting me extra, subscribe to my personal (and free!) Substack.

Overheard in Cerebral Valley

I attended the Cerebral Valley AI conference on Wednesday, which brought together the top 200 minds in artificial intelligence for a one day deep dive. The event, put on by Newcomer and Volley, was immersive to say the least. I spoke to half a dozen YC founders who are building AI companies, bullish and surprisingly bearish VCs, and, briefly, Stability CEO and founder Emad Mostaque, about keeping it real.

Here are some great one liners:

• “The pause for six months seems destructive and probably exorbitantly expensive to consider,” said Kleiner Perkins partner Bucky Moore in response to the recent open letter.
• “Safety research is one of the areas were best known for … I don’t necessarily think that’s un-synonymous with a technology company, a company that is also thinking about how to take that research and turn it into something that is practical,” said Daniela Amodei, co-founder of Anthropic.
• “You’re building for GPT-4, but you want to be building for GPT-10,” said Lisha Li, CEO of Rosebud AI.
• “Of course we’re not in a bubble, this is bigger than 5G and self-driving customers,” Emad Mostaque, CEO and founder of Stability AI, said about AI’s hype. “When founders come to me, I say build good products and solve problems … most of the stuff is still surface level.”

And finally: If you’re still looking for more Stability, listen to my podcast interview with Credo AI founder Navrina Singh, who spoke about responsible AI, governance and fear as a not-so-great motivator. 

Image Credits: Getty Images

Substack’s newsy week

Blogging and media platform Substack opened up a community fundraising round this week, seeking capital from its writers, readers both accredited and unaccredited. As of Friday morning, over 6,000 investors have pledged around $6.9 million in funding.

We spoke about the crowdfunding campaign on our podcast Equity this week, too, which was spicier than I expected. To me, if Substack successfully raises money from its community after disclosing its financials — the equity crowdfunding world will get a much needed reputation and public perception boost.

Here’s what to know, via my colleague Alex Wilhelm:

Ironically, Substack’s users could be giving professional money managers in the company a bit of a breather. The venture investors that once put a mountain of capital into Substack don’t have to invest more, the incoming dilution is effectively zero and the company gets more total funding to pursue its long-term goals. For Substack, this is a win.

We won’t see this sort of conundrum too often. Most startups could not manage this sort of crowdfund because their customers pay them, not the other way around. In contrast, Substack users make part or all of their living from the company, so they are more invested in it sticking around. This makes the Substack crowdfund unique.

• Speaking of interesting community efforts: I wrote about Seed Checks this week, which is an effort to bring a common app style model to fundraising. Founders are invited to apply using a one-minute form that asks for a deck, memo and region. The app is then blasted to 16 investors, including Conviction’s Sarah Guo, Mercury’s Immad Akhund and CapitalX’s Cindy Bi — all of whom have unilateral or individual check-writing capabilities.
• Hampton is tech’s new membership community for chief executive officers.

Image Credits: AndreyPopov / Getty Images

Etc., etc.

• Throwback Saturday: If you missed Startups Weekly last week, catch my last issue here: “The tide has shifted for solo GPs.” 
• Let’s hang on campus? TechCrunch is coming to Boston on April 20. I’ll be there with my favorite colleagues to interview top experts at a one-day founder summit. Book your pass ASAP! Speakers include Techstars’ Kerty Levy, Construct Capital’s Dayna Grayson and NFX’s James Currier.
• Programming note: If you’re reading this on a browser, get this in your inbox too! subscribe here and share it with your friends.

Seen on TechCrunch

StellarFi lands $15M to help people build credit by paying bills, rent on time

Groupon, which has lost 99.4% of its value since its IPO, names a new CEO… based in Czech Republic

US investors slash Byju’s and Swiggy valuation

Twitter is dying

Apple acquired a startup using AI to compress videos

Seen on TechCrunch+

The layoffs will continue until (investor) morale improves

Investors unfazed by Q1 crypto funding decline

Pitch Deck Teardown: Northspyre’s $25 million Series B deck

What’s going on with the TikTok ban?

Blinded by the speed of change

Talk soon,

N

Always be prompting by Natasha Mascarenhas originally published on TechCrunch

There’s trouble in Startup Nation

W
elcome to the TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.

Tel Aviv has the fifth most unicorn companies in the world. Yet, relatively little has been written outside of Israel about the major concerns local entrepreneurs are currently dealing with. We talked to one of them, MDI Health CEO Avishai Ben-Tovim. — Anna

To SVB and back

The Exchange recently noted how Sweden was punching above its weight in terms of startup dollars raised per capita. But Israel is even more outstanding when it comes to tech — so much so that it earned the nickname “Startup Nation.”

Israel’s tech scene is also remarkably resilient and relatively immune from the country’s global and local political woes. But in recent months, the Israeli startup ecosystem has found itself at the forefront of the protests against the government’s highly controversial judicial reform plan.

The reform, its opponents claim, would harm Israel’s democracy and its economy, in a country where the tech sector “makes up about 25 percent of Israel’s income taxes and contributes about 15 percent to the country’s annual GDP,” according to The Jerusalem Post.

Driven by these political and economical worries, major players from the Israeli startup scene took a public stance; Index Ventures, for example, “denounce[d] the proposed reforms in Israel that foster discrimination and threaten democracy.”

Others chose not to make official statements or formally join the strikes, leaving it up to their employees. But regardless of their position, many are concerned about the economic consequences that this political crisis might have.

These concerns have also turned into actions, especially finance-related ones. In January, Reuters reported that an Israeli venture capital fund and a local startup were moving their bank accounts out of Israel, and others similarly started looking into keeping funds in different locations.

MDI Health CEO Avishai Ben-Tovim was one of these. His health tech company, which has raised $26 million to date according to Crunchbase, is both Israeli and American. As political instability increased in Israel, it made sense to make good use of its Silicon Valley Bank account … until it didn’t. Ironically, Ben-Tovim found himself in the position of moving money back to Israel in a rush before the banking entity collapsed.

There’s trouble in Startup Nation by Anna Heim originally published on TechCrunch