Pressured by fossil fuel interests, Vanguard decides maybe climate change isn’t a problem after all

Vanguard announced earlier this week that it was leaving the Net Zero Asset Managers initiative, a nascent attempt by the industry to self-regulate its carbon emissions. Its departure reinforces the need for government oversight of climate risks in investments.

Absent legal, financial or professional repercussions, industry self-regulation is often little more than window dressing so members can say they’re doing something, anything.

That’s not to denigrate the work being done by the Net Zero Asset Managers initiative, which was formed two years ago and seeks to bring assets under management to net-zero carbon by 2050, preferably earlier. But Vanguard’s flip-flop — it joined a little over a year ago — shows that voluntary associations with non-binding commitments that lack financial or legal repercussions are not the tool we need to hit net-zero by 2050 or before.

Why did Vanguard leave? Fund leadership apparently chickened out because a few states’ attorneys general asked the Federal Energy Regulatory Commission to revoke Vanguard’s ability to buy shares in U.S. utilities, citing membership in NZAM as a reason why. (You can guess which party the attorneys general belong to.)

Vanguard wouldn’t cop to that, of course, instead posting a fantastically anodyne message that’s kind of informative if you squint hard enough. A few lines stand out:

Vanguard has been taking steps to understand and attend to this risk [climate change] to investors’ returns.

That’s fine, I guess, but totally unsubstantiated. Membership in NZAM, while not perfect, was at least a concrete sign that Vanguard understood the problem and planned to do something about the risk that carbon emissions pose to its clients’ money.

So what’s Vanguard doing now? A lot of talking. Its statement on its “approach to climate change” doesn’t contain a single measurable benchmark, just meaningless and unmeasurable aspirations. Ultimate flexibility, zero responsibility.

Pressured by fossil fuel interests, Vanguard decides maybe climate change isn’t a problem after all by Tim De Chant originally published on TechCrunch

Computer vision technology startup Brodmann17 has shut down

Brodmann17, an Israeli computer vision technology startup that developed a novel approach to take on a marketplace dominated by Mobileye, shut down this week.

Brodmann17’s co-founder and CEO Adi Pinhas posted a message on LinkedIn announcing the move, stating that while the company would not be able to bring its products to the mass market as hoped, “we do get comfort that our innovation will hopefully influence the market thinking and others will proceed in the mission of creating safer mobility to everyone.”

In a subsequent interview, Pinhas told TechCrunch that “there is a strong feeling of sorrow as we proved the technology, there is outstanding demand and we have customers in production.”

Brodmann17, named after the primary visual cortex in the human brain, was launched six years ago by Pinhas, a deep learning and computer vision specialist, and AI scientists Amir Alush and Assaf Mushinsky. The trio focused their efforts on developing a new approach to computer vision technology designed to support advanced driver assistance systems.

Computer vision systems are considered a critical component to automated driving features. This multibillion-dollar market promises to only get bigger as automakers shift away from its autonomous vehicle goals and instead toward near-term revenue products like advanced driver assistance systems.

Brodmann17 knew it couldn’t compete with Mobileye on its front-facing camera unless it could bring a new angle to the tech, Pinhas said. “So we focused on the blue ocean,” he added.

That blue ocean was to develop deep learning-based computer vision technology that isn’t reliant on bulky hardware. This “lightweight” software-based product was able to run on low-end processors in the car itself and was designed to complement sensors like cameras, radar and even lidar already on the vehicle.

Brodmann17 applied its technology to blind-spot wing cameras, surround and rear cameras, video telematics and even two wheelers, Pinhas said.

“The demand in the market is far more diversified than people think,” he said. “We decided to take the road not taken by many other companies in the ecosystem. We just needed more time.”

The startup did attract investors during its lifetime. Brodmann17 raised $11 million in a Series A round back in 2019 that was led by OurCrowd. Maniv Mobility, AI Alliance, UL Ventures, Samsung NEXT and the Sony Innovation Fund also participated.

But the company struggled to get new funding. Even though the team was “very lean,” with fewer than 30 people, Pinhas said it was impossible to continue without support from private and corporate venture capital firms. He added that “everyone” is waiting for next year and for something to happen before making more investments.

Brodmann17 did attract some interest as a possible acquisition target. There were several offers, but all of those fell through, due mostly to timing reasons, he added.

Despite the gloomy news, Pinhas said he is ready for another project.

“I love deep tech and creating new products,” he said, without elaborating on what he might focus. “Life is too short for a break.”

Computer vision technology startup Brodmann17 has shut down by Kirsten Korosec originally published on TechCrunch

TechCrunch+ roundup: VC trick questions, building 3-case models, B2B sales coaching

I have nothing against the investor class, but sitting in a room with several VCs while I try to sell them on my billion-dollar idea sounds very stressful.

When an investor inevitably asks founders about their valuation expectations, it is a trick question of the highest order. If the response is too high, it’s a red flag, whereas a lowball figure will undervalue the company.

“We’re letting the market price this round” is a confident reply, but it’s only appropriate if you’ve actually gathered substantial data points from other investors — and can fire back with a few questions of your own, says Evan Fisher, founder of Unicorn Capital.

Full TechCrunch+ articles are only available to members.
Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

“If that’s all you say, you’re in trouble because it can also be interpreted as ‘we don’t have a clue’ or ‘we’ll take what we’re given,’” said Fisher.

Instead of going in cold, he advises founders to pre-pitch investors for their next round and use takeaways from those conversations to shape current valuations.

In the article, Fisher includes sample questions “you will want to ask every VC you speak with,” along with other tips that will help “when they pop the valuation question.”

A pitch is a business meeting, but on some level, it’s also a game where investors hold all the cards and always win. To level the playing field, founders need to think one move ahead.

Thanks for reading,

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

Twitter Space: Is tech media creating “charismatic” founders?

Image Credits: YK/500px (opens in a new window) / Getty Images

Larger-than-life entrepreneurs are nothing new, but tech has taken that to the next level, often with an assist from news media.

On Tuesday, December 13 at 1:00 p.m. PT, Builders VC investor Andrew Chen will join me on a Twitter Space to discuss the role tech reporting plays in shaping ecosystems, narratives and expectations.

This should be a lively conversation, so please bring your comments.

I’ll be talking to @chandr3w about tech media’s role in shaping ecosystems, expectations and narratives: bring your comments! https://t.co/rMQVtVA6HY

— Walter Thompson (@YourProtagonist) December 8, 2022

The climate founders’ guide to the Inflation Reduction Act

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

The Inflation Reduction Act goes well beyond bringing down costs for American consumers — Congress earmarked $369 billion to combat climate change, creating new opportunities and incentives for thousands of entrepreneurs.

In a detailed post that examines the IRA’s impact on green fintech, electrification, carbon capture and other areas, investor David Rusenko and Floodgate Fund principal Leeor Mushin share their “understanding of the regulatory ramifications of this monumental bill.”

To prepare for a downturn, build a three-case model

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

Startups that develop case models are better equipped to deal with potential setbacks. Visualizing exactly how potential market shifts can impact your business is a great way to prepare for the unexpected.

A three-case model attempts to predict best-case, down-case and base-case scenarios, writes Matt Barbieri, partner-in-charge at accounting firm Wiss & Co.

“Typically, the base-case scenario falls between the extremes. For example, in financial modeling, you might say that Peloton experienced both its ‘best case’ and ‘down case’ scenarios within a year.”

In uncertain times, B2B sales teams must put value front and center

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

In an era when companies are looking for places to shave SaaS spending, sales teams must focus on ROI and value, says Ketan Karkhanis, EVP and GM of Sales Cloud at Salesforce.

In a post for TC+, he shares tactics successful B2B sales teams use to coach prospects through the sales funnel while building relationships via personalized interactions.

“Many customers are feeling lost,” he writes. “They’re confused by economic volatility and overwhelmed by a deluge of information.”

“Serving as a coach who brings personalized, relevant information to the right stakeholders without pushing for a quick close is key to building trust.”

Pitch Deck Teardown: Rootine’s $10M Series A deck

In 2018, TechCrunch reported that health and wellness startup Rootine was preparing to enter the U.S. market after racking up “1,500 paying customers in Europe.”

Four months ago, the company, which sells a $70/month subscription for multivitamins, announced that it raised a $10 million Series A.

If you’d like to read all 29 unreacted slides, click through for our latest pitch deck teardown.

Dear Sophie: How do tech layoffs impact PERM and the green card process?

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I handle HR and immigration at our tech company. We filed a PERM for one of our team members about five months ago for her EB-2 green card, and we’re awaiting certification from the Labor Department. We’ve been gearing up to start PERM for another employee.

Will the layoffs in the tech industry affect the PERM process for EB-2 and EB-3 green cards? What will happen to my team members’ green cards if our company has to do layoffs?

— Pondering in People Ops

To win over investors, use growth as your differentiator

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

Despite the doom and gloom, investors are still meeting founders as they look for places to park their money. Suave storytelling skills are good, but they’re not enough: Once you’re in the room where it happens, it’s critical to make the best use of everyone’s time.

To make investor buy-in more likely, Jon Attwell, leader of the Seedstars Growth Track, advises teams to create metric-oriented customer journey maps that detail “all the mini-processes that customers are put through and the pathways they are led down.”

Growth projections are nice, but showing investors concrete plans for onboarding and retention, fighting churn and addressing other growth factors will help demonstrate how well you understand your market.

“For investors, it’s a rare treat to see an obsession with the granular metrics of a customer journey,” writes Attwell.

TechCrunch+ roundup: VC trick questions, building 3-case models, B2B sales coaching by Walter Thompson originally published on TechCrunch

2022: The good, the bad, and the wake-up calls

Hello and welcome back toEquity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.

We are nearly at the end of the year, so your friendly, local podcast crew is trying to make sense of just what happened in 2022.

We started the year on a venture capital high which quickly turned into a downturn. Startups kicked off the year hiring and wrapped the year shedding staff. The stock market kept going down. A crypto winter kicked off. We saw some PE deals but very few IPOs. And the world saw a bit more geopolitical upheaval than we might have anticipated.

There were elections and shutdowns and frauds and mistakes and big wins. It was, well, a lot.

Thankfully Mary Ann, Natasha, and Alex were able to collate the news into a few distinct categories, so that we can all look back at 2022 with a bit more clarity. And we even got to hear from a bunch of you, thanks to your dozens, and dozens of great taglines you sent in concerning the year and how it felt from your chair.

We have even more good stuff coming, including our yearly predictions episode. Get hype, and we’ll talk to you soon!

Equity drops at 7 a.m. PT every Monday, Wednesday, and Friday, so subscribe to us on Apple Podcasts,Overcast,Spotifyandall the casts. TechCrunch also has agreat show on crypto, ashow that interviews founders, one thatdetails how our stories come together, and more!

2022: The good, the bad, and the wake-up calls by Natasha Mascarenhas originally published on TechCrunch

Getaround braves chilly public markets with SPAC combination

This column would like to apologize for somehow missing the buildup to Getaround‘s SPAC combination, which was voted on yesterday and began trading this morning. I don’t know how we managed to get so far behind on this particular news item, but we will rectify our tardiness today.

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

Getaround allows consumers to rent cars from one another, taking a cut on the transactions. As you can imagine, it’s a marketplace-style company. And it was a venture capital darling, raising hundreds of millions of dollars while private, including a $200 million round in 2019and another $140 million in 2020.

It had a choppy early-COVID period but has since managed to announce and close a combination with a special purpose acquisition company.

Early direction of Getaround’s stock after the deal closed and it began to trade under the “GETR” ticker symbol has been sharply negative. Indeed, in the first moments of its trading under its own name, Getaround lost around 65% of its value. It now trades for around $3 per share.

Getaround braves chilly public markets with SPAC combination by Alex Wilhelm originally published on TechCrunch

Tesla hopes China boss will bring secret sauce to Gigafactory Texas

Tom Zhu, Tesla’s China president who oversaw Gigafactory Shanghai’s transformation into the world’s largest EV plant, has been appointed to run the new Gigafactory in Austin, Texas, Bloomberg reported earlier this week. That would make the China chief, who joined Tesla China in April 2014, one of the top executives at the EV giant.

The decision didn’t come as a surprise to industry insiders, given how quickly Gigafactory Shanghai became a cornerstone manufacturing and export hub for Tesla.

It took the plant merely a year — from December 2018 to December 2019 — to go from construction to production. In August, Gigafactory Shanghai made its one-millionth car, accounting for a third of the total Teslas produced up until that point, Elon Musk tweeted. This November was a record month for the facility with 100,291 vehicles delivered.

Such achievements no doubt make Zhu a preferred aide of Musk who promotes a “hardcore” work environment. While Zhu might have a secret recipe for building a well-oiled manufacturing team in a short time, China’s unique conditions aren’t easily replicable in another country.

“Over the past three years, Gigafactory Shanghai has outperformed its counterparts in Fremont, Texas, and Berlin, although [not all of the success] is attributable to Tom or the China team,” suggested Chris Zheng, founder of Chinese automotive blog Channel-Q.

“A friendly regulatory environment, a strong supply chain base, and an efficient front-line execution team — these are three factors that are currently only available in China, so the key isn’t Shanghai or Texas. Look at BYD. Granted, Tom and his executive team are excellent, but that’s not all,” he added.

Chinese tech news site PingWest reported Wednesday that Musk has anointed Zhu as the CEO of Tesla Global, a new executive role in charge of sales and Gigafactories, while Musk continues to lead “key technical works at the firm.”

Musk tweeted Thursday that he continues to “oversee both Tesla & SpaceX, but the teams there are so good that often little is needed from me.”

This is a developing story…

Tesla hopes China boss will bring secret sauce to Gigafactory Texas by Rita Liao originally published on TechCrunch

Instant grocery app Getir acquires its competitor Gorillas

After weeks of rumors, Getir has announced that it is acquiring Gorillas. This is a major consolidation deal for the instant grocery delivery space. The Financial Times first reported that Getir has closed the acquisition of its competitor. TechCrunch has confirmed the news with Getir.

“Markets go up and down, but consumers love our service and convenience is here to stay. The super fast grocery delivery industry will steadily grow for many years to come and Getir will lead this category it created 7 years ago,” Getir founder Nazim Salur said in a statement.

Getir originally launched its service in Turkey in 2015. Over the past couple of years, many people started ordering groceries online because of lockdown restrictions. Getir, Gorillas, Flink and a cohort of startups tried to popularize a new model for grocery deliveries.

Instead of reserving a delivery slot for the next day, orders are processed instantly on those apps. The user experience works more like food delivery services, such as Uber Eats, Deliveroo and Just Eat Takeaway. You open an app, pick a few items, hit the order button and track your order from your phone.

Those services raised a ton of money and grew at a rapid pace during the COVID-19 pandemic. Behind the scenes, all those instant delivery startups built networks of dark stores in dense cities so that orders can be delivered in less than an hour.

In addition to these expensive operation costs, startups in the space spent a small fortune in promo codes and reduced delivery fees. But restrictions were lifted, VC funding dried up and some cities put some restrictions on dark stores. That’s why 2022 has been a rough year for the industry, leading to a lot of layoffs, pullbacks and consolidation moves.

In May, Getir announced that it would cut 14% of its global staff — more than 4,000 were impacted by the downsizing. In addition to its home country, Getir operates in various European countries, such as the U.K., Germany, France, Italy, Spain, the Netherlands and Portugal. It operates in the U.S. as well.

Gorillas also had to conduct a round of layoffs earlier this year. It decided to focus on a handful of markets — Germany, the Netherlands, the U.K. and the U.S. The German startup acquired Frichti before it became harder to raise funding rounds.

According to the Financial Times’ Tim Bradshaw, the combined group is now valued at $10 billion. At the height of the instant grocery bubble, Getir and Gorillas reached valuations of $11.8 billion and $3 billion respectively. Gorillas investors are set to obtain 12% of Getir’s capitalization table.

As there is a lot of overlap between the two companies, there might some layoffs in some cities where both services are currently live. Reducing the number of dark stores could also help the company’s bottom line.

Instant grocery app Getir acquires its competitor Gorillas by Romain Dillet originally published on TechCrunch

The climate founders’ guide to the Inflation Reduction Act

When President Joe Biden signed the Inflation Reduction Act (IRA) into law on August 16, 2022, we started looking into its implications, particularly with regard to the impact on the future of the climate and the innovations that might shape that future.

As the most important piece of climate legislation in United States history, the IRA represents a fundamental regulatory inflection that may help create a different future. The purpose of this post is to share our understanding of the regulatory ramifications of this monumental bill, especially as they relate to the problems some of the most capable founders in the world are looking to tackle.

Building electrification

The IRA contains several major programs that aim to accelerate building electrification — the replacing of residential fossil fuel machines with electric equivalents. This has the benefit of eliminating combustion emissions, improving comfort, as well as improving indoor air quality, which can have dramatic positive health impacts.

There are three major programs that incentivize building electrification. The first (Sec. 50122) provides a total of $4.5 billion in funding for appliance replacements and is means tested: It provides up to 100% of project costs for those earning less than 80% of area median income (AMI) and 50% of project costs for those earning less than 150% AMI, with annual limits. Eligible appliances include heat pumps, heat pump water heaters, electric or induction stoves, electric or heat pump clothes dryers, upgraded breaker boxes, electrical wiring upgrades, home energy audits, and insulation and sealing.

Image Credits: REPEAT Project

The second program (Sec. 50121) is a performance-based home energy retrofit program that provides up to $4,000 per home, or $8,000 per home for low-to-moderate income households. Projects cannot claim both this program and Sec. 50122.

To gauge long-term regulatory impact, it is worthwhile to look to the EU, which continues to play a leading role in the evolving global climate policy.

Both programs can be combined with the third program (Sec. 13302), which expands the Investment Tax Credit (ITC) to a 30% tax credit for eligible projects including residential solar, solar water heating, fuel cell, small wind energy, battery storage and geothermal heat pumps.

The IRA also includes significant and open-ended financing for projects that broadly reduce greenhouse gasses and accelerate deployment of renewable energy, many of which will likely apply to building electrification projects, such as the Greenhouse Gas Reduction Fund (Sec. 60103), and $40 billion in loan guarantee authority for the Department of Energy (Sec. 50141).

Interesting problems

The funding in the IRA for buildings is likely to catalyze the replacement of fossil fuel machines in buildings and accelerate the adoption of fully electric alternatives. Today, market share of these alternatives is relatively low and contractor adoption and expertise is lacking. Early examples of an increase in consumer demand for these products include Maine and New York.

While we won’t see an overnight shift across the country, these incentives will create a burgeoning market for home electrification, similar to how past laws created a market for residential solar. Problems we have identified include:

Fragmented contractor market.
There are not enough trained professionals (electricians, HVAC technicians, etc.).
Projects tend to be highly custom and time intensive to design and quote.
Difficult for businesses and consumers to navigate the changing financing/incentives landscape.
The ROI of these projects will be highly variable and vary from home to home.
Most home appliances are replaced on failure in an emergency, and most homes are not wired for 220v, so there is a pre-wiring problem to be solved.
Navigating the retrofit process is time consuming and confusing for consumers, requiring work across multiple contractors that don’t individually plan for holistic project needs (e.g., panel upgrade).

Carbon capture/methane reduction

The latest science tells us that in order to keep warming to 1.5°–2° C, we need to reduce emissions to about 45% lower than 2010 levels by 2030 and achieve net-zero by 2050. It is not realistic to expect that we can replace all of our fossil fuel machines and processes in that time frame.

The climate founders’ guide to the Inflation Reduction Act by Ram Iyer originally published on TechCrunch

How to respond when a VC asks about your startup’s valuation

There is one trick question that investors almost always ask, and it’s guaranteed to make founders uneasy: “What are your expectations surrounding valuation?”

For most founders, it’s the perennial Goldilocks scenario. Throwing out a number that’s too high might push investors away, while an amount that’s too low might trigger the question, “Why so low? What’s wrong with this business?” and leave shareholder value on the table.

And if it’s just right, most investor’s knee-jerk response goes something like this: “Let’s see how much I can work this founder down to a better price.”

Founders are at a distinct disadvantage in the valuation game. By design, investors play this game far better than most founders ever will — a VC might do multiple deals in a quarter, but a founder might approach markets only once every couple of years.

So, instead of having to throw out specific numbers that will inevitably be challenged, here’s a solution:

Don’t throw out a number

The more you seek to understand your investors’ thoughts on deal-making, the better you’ll be at getting to that deal.

The most confident (and valuable) founder response to the infamous valuation question starts with: “We’re letting the market price this round.”

When delivered correctly, it implies you’re taking offers, you aren’t desperate and you’re confident you’ll close a deal at acceptable terms.

But if that’s all you say, you’re in trouble because it can also be interpreted as “We don’t have a clue” or “We’ll take what we’re given.” After all, you need to give a baseline indication of your expectations if you actually want to close a deal.

Jay Levy, co-founder and managing partner of Zelkova Ventures, explains, “When speaking with VCs, founders should give some indication of their valuation expectations coming into the conversation. It’s important to know that everyone is on the same page, because it would be painful and unfortunate for everyone to advance toward a term sheet only to realize that expectations are misaligned.”

Gather your valuation data points

To substantiate your market-based valuation approach, you have to begin early. Start by pre-pitching the investors for your next round to gather valuation data points and have low-stakes conversations to build in the presumption that “we’re probably too early for you, but in 12-15 months, we’ll most likely be a great fit.” In these chats, always ask how they might approach valuing your company when the time would be right (i.e., in your next round, 12-15 months from now).

How to respond when a VC asks about your startup’s valuation by Ram Iyer originally published on TechCrunch

CommonSpirit Health says patient data was stolen during ransomware attack

Chicago-based medical giant CommonSpirit Health has confirmed that an October ransomware attack exposed the personal data of more than 620,000 patients.

CommonSpirit Health, which operates more than 700 care sites and 142 hospitals in 21 states, first confirmed an “IT security issue” on October 5. At the time, the company declined to comment on the nature of the incident, which interrupted access to electronic health records and delayed patient care in multiple regions, and refused to say whether patient information or health data was compromised.

In a December update, CommonSpirit confirmed that the incident was a ransomware attack. The organization said that threat actors gained access to portions of its network between September 16 and October 3 and, during that time, “may have gained access to certain files, including files that contained personal information” belonging to patients who received care or family members of those who received care at Franciscan Health, a 12-hospital affiliate of CommonSpirit Health.

CommonSpirit notes that while its investigation is ongoing, this data includes names, addresses, phone numbers, dates of birth and unique ID numbers used internally by the organization. The company said that attackers did not access medical record numbers of insurance IDs, and says it has seen no evidence that any personal information has been misused as a result of the attack.

The update doesn’t say how many users were impacted by the data breach. However, as first spotted by Bleeping Computer, the U.S. Department of Health data breach portal – where healthcare organizations are legally obligated to report data breaches impacting over 500 individuals –confirms that threat actors accessed the personal data of 623,774 patients during the CommonSpirit ransomware attack.

“Upon discovering the ransomware attack, CommonSpirit quickly mobilized to protect its systems, contain the incident, begin an investigation, and maintain continuity of care,” the company’s updated notice states. “CommonSpirit notified law enforcement and is supporting their ongoing investigation. Once secured, systems were returned to the network with additional security and monitoring tools.”

The company has not yet attributed the attack to a particular ransomware group, and CommonSpirit spokesperson Chad Burns did not immediately respond to our request for comment. TechCrunch has checked the dark leak websites of several major ransomware groups, but none appear to have yet claimed responsibility for the attack.

At least 15 U.S. health systems operating 61 hospitals across the country have been impacted by ransomware so far in 2022, according to Brett Callow, threat analyst at Emsisoft. In at least 12 of these incidents, sensitive data, including personal health information was compromised.

CommonSpirit Health says patient data was stolen during ransomware attack by Carly Page originally published on TechCrunch

Pin It on Pinterest