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Founders and emerging tech investors need to exude extreme energy from the main character, as this Week in Tech was all about making their lives easier.
AngelList announced AngelList Stack, a new suite of products that will compete with Carta in providing services to help founders start, operate and maintain ownership of their businesses. The new software will cover four bases: end-to-end incorporation, business banking, capital grants for advisors, and management of capitalization tables.
Here’s why AngelList isn’t worried about Carta, according to CEO Avlok Kohli:
There are a lot of experiences around point solutions, around solving different problems for different point problems for the founders. Our point of view is that founders always prefer to be integrated into one package.
Entering the world of founding support was a surprising but sensible move for AngelList, according to my Twitter DMs. The startup has spent the last year growing its venture capital services business, having first piloted working capital, which allows LPs to support investors on a quarterly subscription model. Speaking of working capital, one of the first to launch was Sahil Lavingia, the founder and CEO of Gumroad. He had his own news with AngelList this week, although in the world of boy scouts or people looking for deals for venture capitalists.
Lavingia is launching a new pooled scout fund with AngelList in which each scout obtains a carry in their referred deal (5%) and an additional 5% in the entire pool of startups. In other words, he redirected 33% of his portage, or how much money the fund makes from portco exits, to his scouts.
The Scout Fund is unique because, while most funds can have Scout programs today, it is still very rare to share the carry with both Scouts from a group. and individual point of view.
He explained why this is important on a personal note: the paper trail.
I want to go a long way with this and build a very different kind of Scout coalition. If they can prove themselves and they get a print essay, I can help them connect to this ecosystem.
[Even with crypto] you see the financialization of all these relationships. Before, there’s a sort of informal, prepayment handshake that goes on in Silicon Valley, whereas with crypto it’s kind of like “I’m going to buy it this transactional way. knowing what the real incentives are. I’m sending you this deal, but let’s be realistic here: this is a commercial transaction and I’m sending you this deal so I think it’s good to codify it.
I actually don’t mind not making money with Pinterest, but what’s frustrating sometimes is that an LP won’t appreciate the fact that I sent an investor to Pinterest. [when it was valued at $5 million].
As Lavingia suggests, a common thread between his efforts and those of AngelList is that they both want to formalize processes, whether it’s starting a business or introducing an investor to a business. It’s difficult to philosophically argue against more transparency and distribution in entrepreneurship, but it’s also difficult to achieve these goals in a way that actually helps those who need it most.
Think of it like this: AngelList wants it to be easier than ever to start a startup. But for whom? Lavingia thinks it is good that the scouts are paid, in full, for the companies they identify and thus develop a balance sheet. But what if the Boy Scouts are the same people who could possibly start a revolving fund if they wanted to? I’m always worried that new bets, whether it’s a company at full throttle or an investor sharing more of their carry, will want to reduce the risks of embedded volatility. Ultimately, democratizing access requires betting on people historically ignored, and that’s a risk the company clearly doesn’t take often.
This is why AngelList and Lavingia must be bold when building these new projects. Optionality (and affordability) is key when trying to usher in a new generation of innovators. But, they must ignore the status quo of who full stack has served in the past. Hell, they even need to remove a page from the crypto playbook.
In the rest of this newsletter, we’ll talk about the impact of frozen yogurt on consolidation, workplace benefits, and a return to blitzscaling. As always you can find me on Twitter @nmasc_ Where listen to me on Equity.
Benefits in the workplace, meet Alicia Keys
As the pandemic continues, employees are either chasing a bigger goal or simply exhausted by the uncertainty and outdated culture of their current jobs. And mainstream edtech is taking note.
Here’s what you need to know: Outschool and MasterClass are quietly forming teams to sell their services to employers, instead of going directly to end users like in the good old days. Similar to other sectors, edtech wants to freshen up the way it sells to consumers, but will run into “point solution benefit fatigue” when it knocks on business doors.
Work Work Work:
Consolidation everywhere, always
This week on Equity, we’ve gone from a conversation about full-stack approaches, like the ones above, to how consolidation seems to be everywhere these days. There are layers, or as the Equity team would like to say, flavors, to think about.
Here’s what you need to know: We used the fro-yo toppings to understand whether it makes sense for startups to be point solutions (give you the best of a flavor) or complete solutions (give you the medium option, but offer it all) . This mindset helps determine whether consolidation makes sense from a horizontal or vertical perspective. And the conversation started with an RPA space deal.
When M&A disappears:
Reid Hoffman wants to have a word
I’m still reflecting on a conversation I had with Reid Hoffman last week during TechCrunch Disrupt. The founder of LinkedIn joined us the same day Greylock, where he is an investment partner, announced a $ 500 million seed fund. So there was definitely a lot to say.
Here’s what you need to know: Even though Hoffman ironically adds to the ample market capital today, one of his strongest messages was to stay focused.
An excerpt from my play:
When LinkedIn co-founder and Greylock partner Reid Hoffman first coined the term “blitzscaling,” it was kept simple: It’s a concept that encourages entrepreneurs to prioritize speed over efficiency for a period of time. of uncertainty. Years later, the founders are going through a pandemic, perhaps the most uncertain time of their lives, and Hoffman has one clarification to make.
“Blitzscaling in itself is not the goal… blitzscaling is ineffective; it is inefficiently spending capital and inefficiently hiring; it’s being uncertain about your business model; and these are not good things. Instead, he said, blitzscaling is a choice companies may have to make for a set period of time to overtake a competitor or respond to a pandemic rather than a route to take the idea. at the IPO.
I buried the lede here, but this week we announced that ExtraCrunch is changing its name to TechCrunch +! We’re doing this to get the most out of the TechCrunch brand, but also because we don’t think our parts – most of which help provide a signal in the midst of noise – are “extra”. Instead, as our team says, these are table stakes. Plus, it’s a super cute logo.
All week long
Seen on TechCrunch
Current and Former Employees Raise Major Safety Concerns and Sexual Harassment Allegations at Blue Origin
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Seen on TechCrunch +
Where and when to spend your recently collected dollars
Scaling Series A to C
Dear Sophie: Any advice on getting media coverage for my startup?
Startups have more options than ever to reduce their reliance on venture capital