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Over the last several years, VC money has been abundant and relatively cheap. This created an environment where everyone’s motto became, “growth at all costs.” Seemingly, the recipe for a successful venture-backed company became very cookie-cutter: Raise capital every 18 months; invest heavily in go-to-market; grow revenue at a ‘standard’ rate that triples in year 1, triples again in year 2, and then doubles thereafter.

These “VCisms” borne out of an era of plenty have permeated boardrooms and investor meetings everywhere. In fact, the question, “How long do you expect the capital raised to last you?” essentially became a test of intelligence. The only right answer was 18 to 24 months, without any consideration of the specific circumstances of the company.

People may not be saying it aloud yet, but these VCisms are starting to feel outdated. Growth at all costs doesn’t work when capital isn’t readily available or when it is very expensive from a dilution perspective. And, raising capital every 18 months feels very onerous when it no longer takes one month to raise a round and instead takes three to six months or longer.

It’s time to ask ourselves if these VCisms are still relevant or if it’s time to change. First, let’s take a look back.

How did we get to a ‘growth at all costs’ mentality?

At this point, it’s common knowledge that the cost of capital has declined in recent years. This is mostly discussed by referring to the increased valuations companies were receiving at varying stages, as shown below in Chart B.

Across all stages, companies were seeing higher post-money valuations, anywhere from about 40% at the earliest stages to over 200% in the growth stages in the 2018 to 2022 period, compared to 2012 to 2018.

Put another way, over the last three years, a company could raise the same amount of capital for less dilution.

But what isn’t talked about often is the fact that the data shows us that companies did not, in fact, raise the same amount of capital. They raised more capital at each stage — significantly more. As Chart C shows, the median Series C more than doubled in size over the last several years compared to the 2012 to 2018 time frame.

On average, companies saw slightly less dilution, as shown in Chart D below.

For example, existing equity holders (Seed and Series A investors and founders) saw dilution of a median 22% during subsequent Series B rounds between 2012 and 2018, while their equity was diluted by only about 20% between 2018 and 2022. That’s only a 10% difference.

Notably, companies received more than twice the capital for this dilution (i.e. $25 million versus $11 million, as noted in Chart C) in the past three years. This capital could be used to fuel growth with marketing and by hiring salespeople.

If investors saw similar levels of dilution, does that mean that they saw similar returns?

Definitely not.

Let’s compare the two time periods. Between 2012 and 2018, the median valuation of a Series C company was $120 million. Assuming an investor received 15% ownership in a Seed round for an around $1 million check, and then saw their stake being diluted in each round thereafter, the data indicates that their ownership after the Series C raise would be about 7.2%.

The rules of VC are changing: Here’s what founders should be considering in the new era by Ram Iyer originally published on TechCrunch

Today, “Black Adam” is now streaming on HBO Max, giving more fans a chance to watch the DC antihero movie starring Dwayne “The Rock” Johnson.

“Black Adam” premiered in theaters on October 21. It centers around Teth Adam (Johnson), a superhuman from ancient Kahndaq who used his godly powers for vengeance and was then quickly imprisoned. After nearly 5,000 years, present-day archeologists free Adam so he can help save Kahndaq from the crime syndicate Intergang. However, he’s provoked by the Justice Society: Doctor Fate (played by Pierce Brosnan), Hawkman (Aldis Hodge), Atom Smasher (Noah Centineo) and Cyclone (Quintessa Swindell).

While the “Shazam!” spin-off was praised by some, many critics and fans were let down by the movie. NPR’s Glen Weldon called Johnson’s performance “under-seasoned” and “ponderous.” IndieWire reporter David Ehrlich referred to “Black Adam” as a “lifeless spectacle” and called the characters “a cheap photocopy of one from Gotham or the [Marvel Cinematic Universe].”

Also, “Black Adam” performed poorly at the box office, earning $400 million worldwide against a $195 million budget – which doesn’t include marketing and other costs related to promotion and distribution. However, Johnson disputed claims that “Black Adam” would lose between $50 million and $100 million. In a tweet, Johnson cited financiers, saying “Black Adam” would net between $52 million and $72 million.

There’s still hope for “Black Adam” to do well now that it’s streaming on HBO Max for its millions of subscribers. Plus, the movie is making its streaming debut over the holiday season which could strengthen its chances.

Another superhero movie with an antihero, “Morbius” was a box office flop and bombed an embarrassing two times in theaters, only earning $163 million worldwide and $74 million domestically with a budget of $75 million. Despite not making a satisfactory profit, Sony thankfully has a multiyear deal with Netflix, so the movie was a success after all. “Morbius” made it to Netflix’s top 10 list when it debuted on the service in September.

‘Black Adam’ arrives on HBO Max following box office bust by Lauren Forristal originally published on TechCrunch

If you’ve read anything about pitching your company, you’ve probably come across advice that says that you need a warm introduction to an investor. Without a doubt, a good, friendly introduction — ideally from a founder they’ve already invested in — is the best way to get on the radar of an investor. But if you don’t regularly attend barbecues at the Sonoma mansions of venture capitalists, don’t worry — access isn’t the only way to raise money.

Warm introductions

A “warm introduction” is one made by someone the VC knows well, by someone relevant. The VC might know their kids’ school teacher pretty well, for example, but the school teacher may not have a lot of startup or investing experience.

That’s a less warm introduction than one made by a founder of a startup in which the VC invested. Better than that, even, is an introduction from a founder who has already made the investor a lot of money through a previous exit. I don’t have to explain how this works; if you know investors personally, schedule a coffee and pick their brains. You don’t need an intro for that. If you know other successful startup founders, talk to them — they will make intros if they believe in your vision.

Unless you’ve been circulating in the startup ecosystem for a long time, odds are your list of founder buddies or investor friends is pretty short. Now, you may have to do a bit more work.

The idea of introductions is all about the network: It works as a filtering system. Any given founder will forward perhaps one or two deals per month to investors; those go to the top of the list, especially if the introduction adds some context about the strength of the connection. “I’ve worked with them for 15 years across three companies, and I have invested my own money in this company at the angel stage,” is better than “I met them at a party once.”

The problem, of course, is that networks can be opaque. Perhaps an old friend you used to work with at Google is a childhood friend of a well-known venture capitalist? Maybe your former boss went on to start a company, raised money from someone relevant to your company and would love to do an intro?

Mine your LinkedIn connections

LinkedIn is the perfect tool for doing this type of research. Make a long list of investors you might want to talk to: It’s time to research on LinkedIn.

Startup founders, this is how you get your first investor meeting by Haje Jan Kamps originally published on TechCrunch

European Union lawmakers have wasted no time warning Twitter-owner Elon Musk over “arbitrary suspension of journalists” following reports late yesterday that a number of reporters who had recently written about Musk had had their Twitter accounts suspended without warning.

Věra Jourová, an EU vice-president for values and transparency, took to Twitter this morning to tweet the bloc’s concern over Musk’s actions — and to issue a pointed warning of “red lines” and “sanctions” baked into recently updated EU rules for digital services which she noted require respect for media freedom and fundamental rights.

“News about arbitrary suspension of journalists on Twitter is worrying. EU’s Digital Services Act [DSA] requires respect of media freedom and fundamental rights. This is reinforced under our #MediaFreedomAct. @elonmusk should be aware of that. There are red lines. And sanctions, soon,” the EU commissioner wrote.

Among its many provisions, the incoming EU regulation puts requirements on providers of intermediary services not to act in an arbitrary or discriminatory manner when applying their terms of service — and to respect fundamental rights, such freedom of expression and information, and including media freedom and pluralism.

Sanctions available to the EU under the regulation include penalties that can scale up to 6% of global annual turnover — as well as powers for regulators to act swiftly on suspected infringements by imposing temporary corrective measures. In extreme cases, the Commission can also apply to EU courts to block a violating service from being accessed in the region.

The Commission proposed the European Media Freedom Act in September — which is intended to supplement the DSA with additional measures to protect media freedom and pluralism in the EU, including measures against “unjustified removal by very large online platforms (above 45 million users in the EU) of media content produced according to professional standards”.

Although this legislation has still to be adopted via the bloc’s usual co-legislative process — so it could be years before these targeted media freedom measures are confirmed in EU law.

Journalists suspended by Twitter in this (latest) wave of erratic Musk enforcements include the Washington Post’s Drew Harwell, the New York Times’ Ryan Mac and CNN’s Donie O’Sullivan, as well as a number of other reporters from publications such as Mashable and the Intercept.

Musk implied the action was taken because the journalists had breached Twitter rules about doxxing that were amended Wednesday to prohibit the sharing of live location information after Musk took action to suspend a bot account, called @ElonJet — which, since June 2020, has tweeted the live location of Musk’s private jet using publicly available flight data.

The suspension followed an incident earlier this week, when Musk complained that a stalker had followed a car containing his son.

A Twitter Spaces audio stream that was quickly spun up around the journalist suspensions, hosted by BuzzFeed reporter Katie Notopoulos, was reported by attendees to have pulled in the creator of the ElonJet bot, several of the suspended journalists themselves — who were, hold tight, still able to join this despite their Twitter accounts being suspended (apparently because of a quirk of Twitter’s legacy infrastructure related to the audio streaming bolt-on) — and, briefly, also attended by Elon Musk himself — before the stream was abruptly shut down.

During the livestream, snippets of which are (currently) circulating on Twitter, Musk defended the suspensions by claiming the journalists had breached Twitter’s rules against doxxing by sharing his real-time location.

“There is not going to be any distinction in the future between journalists — ‘so-called journalists’ — and regular people,” Musk can be heard telling Notopoulos in recordings of the livestream being shared on Twitter. “Everyone’s going to be treated the same. You’re not special because you’re a journalist. You’re just a Twitter [user] — you’re a citizen. So no special treatment. You doxx, you get suspended. End of story.”

Musk also suggested that what he called “ban evasion or trying to be clever about it — like, oh I posted a link to the real-time information” would be interpreted as an attempt to circumvent the policy prohibition — and therefore that enforcement action would follow on anyone merely sharing links to accounts that post real-time information.

“You share the link to the real-time information, ban evasion — obviously,” said Musk.

Harwell pushed back against what he suggested was Musk’s insinuation that he had shared his address — which Harwell said is “not true”. Musk rebutted with “it is true”. To which Harwell then responded: “In the course of reporting about ElonJet we posted links to ElonJet which are now not online — which are now banned on Twitter, and Twitter also of course marks even the Instagram and Mastadon accounts of ElonJet as harmful — using, we have to admit, acknowledge, using the same exact link-blocking technique that you have criticized as part of the Hunter Biden New York Post story in 2020 so what is different here and there?”

“It’s not more acceptable for you as it is for me — it’s the same thing,” Musk replied, apparently ignoring the question. He followed that, after a brief Harwell interjection, by clarifying that he did not mean his own action suspending journalists for sharing links to ElonJet was unacceptable and reiterating: “No, you dox you get suspended end of story, that’s it.”

At which point, per attendees, Musk cut out of the livestream — and, shortly afterwards, the Twitter Space was shutdown by someone other than the host.

At the time of writing, there are reports of Spaces being unavailable and/or suffering from technical issues, with some Twitter users reporting glitches or other problems with launching a stream. And in the last few hours Musk responded to a complaint about this on Twitter — tweeting briefly that: “We’re fixing a Legacy bug. Should be working tomorrow.”

Musk has also piped up on the social network in recent hours to respond to Twitter chatter criticizing the journalist suspensions — claiming in one tweet that “critizing me all day long is totally fine, but doxxing my real-time location and endangering my family is not”; and in another implying that accounts that breach the rules on doxxing will receive only a “temporary seven day suspension”.

However one of the journalists affected by the ban — Aaron Ruper — has written (via a blog post on Substack) that he received a notification from Twitter saying his account was permanently suspended so it’s anyone’s guess whether Musk will abide by a seven day suspension rule or stick to his pique and decide never to reinstate the reporters.

The claimed seven day suspension ‘policy’ also appears to have been concocted on the fly by Musk after he polled Twitter users asking when accounts that doxxed “my exact location in real-time” should be unsuspended.

The winning option from that poll was actually “now” — which took 43% of 535,233 votes. The option for ‘Seven days’ received just 14.4% of the vote — underlining quite how arbitrary Musk’s policy decisions at Twitter are proving to be. (See also, among others, his decision to issue a general amnesty on previously banned accounts (also with a few exceptions apparently based on Musk’s personal preferences, such as InfoWars’ Alex Jones remaining banned); as well as Musk opting to undo the permanent ban on former US president Donald Trump (who has, so far, refrained from tweeting as he has his own social platform to worry about these days) after Musk ran another poll of Twitter users — rather than waiting for a content moderation council he had previously claimed he would establish to take such decisions to be formed. So, er, ¯_(ツ)_/¯)

Returning to the EU’s DSA, the regulationentered into force last month but will only begin to apply — meaning that’s the date from when compliance is expected — from February 17 next year, which is the applicable deadline for a subset of larger platforms, so-called “very large online platforms” (VLOPs), which have additional obligations under the DSA — in areas like algorithmic accountability and assessing and mitigating societal risks.

It’s still not clear if Twitter will be designated a VLOP under the DSA — or if it will fall under the general regime for digital services — which does not include the extra obligations and has a longer grace period (til February 2024) before compliance kicks in.

The Commission will make these formal designations of VLOPs by February. But, as we’ve reported before, Musk’s erratic piloting of Twitter since he took over at the end of October has clearly rattled Brussels — triggering a series of warnings and other actions by the Commission in recent weeks. Including a statement following reports of more layoffs at Twitter that it may take more expansive criteria (than sheer size) into account when deciding which platforms will face the additional obligations the DSA applies to VLOPs — such as the “appropriateness” of resources dedicated to complying with the bloc’s rules.

Last month, the Commission also revealed it has arranged to conduct a stress test of Twitter’s resources early next year — so it looks to be preparing to do the work (and ensure it shows its workings) to make that appropriateness assessment in order that it might slap a VLOP designation on Twitter if it deems it necessary (or, well, possible under due process; it certainly won’t want to be accused of taking arbitrary decisions of its own… ).

Discussing the DSA’s sanctions regime, a spokesperson for the Commission told TechCrunch the regulation gives it enforcement powers over VLOPs that are “similar to those it has under anti-trust proceedings”.

“For smaller platforms, each Member State will clearly specify the penalties in their national laws in line with the requirements set out in the Regulation, ensuring they are proportionate to the nature and gravity of the infringement, yet dissuasive to ensure compliance,” it also noted.

The Commission also made a point of emphasizing that the DSA’s enforcement mechanism is not limited to fines. And also deployed some interesting new terminology in this context — making a reference to “rogue platforms” — which reads as if it might very well have been coined with Musk in mind.

“The Digital Services Coordinator [aka a national regulator that enforces the DSA on non-VLOPs at EU Member State level] and the Commission will have the power to require immediate actions where necessary to address very serious harms, and platforms may offer commitments on how they will remedy them,” it said. “For rogue platforms refusing to comply with important obligations and thereby endangering people’s life and safety, it will be possible as a last resort to ask a court for a temporary suspension of their service, after involving all relevant parties.”

Europe wastes no time warning Musk over ‘arbitrary suspension of journalists’ by Natasha Lomas originally published on TechCrunch

Companies spend millions of dollars to launch thousands of promotions a month, but they don’t always have insight on which ones worked better than others. And when the promotions are analyzed, it’s discovered that a majority of them didn’t help the company’s bottom line at all.

Enter Kuona, a Mexico-based SaaS company using machine learning to look across all of those promotions to show consumer packaged goods companies and retailers which ones are doing well and to automatically optimize product prices and inventories in connection with the promotions.

Seeing the challenges around pricing and promotions, Chema Sanroman and Agustín Magaña, who have backgrounds in data science, artificial intelligence and CPG revenue and pricing, started Kuona in 2017.

Here’s how it works: Kuona developed data-driven tools to predict demand and track customer behavior. The tools integrate with company data in real time and leverage neural networks for simulations to increase return on investment of promotions while also maintaining or increasing sales.

“Our tool helps them understand what’s working and what’s not,” CEO Sanroman told TechCrunch. “It also gives them a picture of what has been working in the past, the present and then allows them to plan for the future.”

Currently, Kuona operates in the United States, Mexico, Peru and Ecuador and just opened an office in Brazil. It offers two products, including its price and promotion optimization and Perfect Order, which helps companies reduce the number of returns and out-of-stock items per point of sale.

The company has doubled its revenue and customers for each of the past two years and is already profitable. It counts on its list of 15 to 20 customers global entities like Coca-Cola and OXXO convenience stores.

Today, it announced $6 million of seed capital in a round led by Cometa and including Seaya Cathay Latam and FEMSA Ventures. The new investment gives Kuona around $7.2 million in total funding.

Sanroman intends to deploy the new funding into continued expansion of its team and geographical presence in Latin America and the United States as well as establishing a team in Europe, where it already has some connections.

This startup bagged $6M to show you which promotions bring ROI and which don’t by Christine Hall originally published on TechCrunch

There are a ton of tools that cater to the needs of having a collaborative whiteboard. Figma, which closed a deal to be acquired by Adobe for $20 billion in September, has FigJam; there’s Miro, which is valued at $17.5 billion post its series C raise in January; and Apple has released the Freeform app for its users earlier this week. Amid all this, TLDraw offers users a collaborative canvas without any login.

TLDraw consumer app

TLDraw is pretty simple to use from the get-go. It’s a blank infinite canvas that lets you draw lines or objects, write text, and insert media like images, videos, or GIFs.

What’s more, you can easily share this collaborative board with your colleagues through a link. If you don’t want anyone to change the board, you can also share a read-only link. This is like Google Docs, which lets you share the document both with multiple contributors and in a read-only mode.

The new version of the site, which is in beta, offers more features. It has more shape, color, and line options for drawing; you can also insert new kinds of objects like a frame or a sticky note; additional options to duplicate and move around objects; and multiple formats like SVG, PNG, JPG, and JSON to export the board.

To use all these features, you don’t need any account or login. Since this is on the web, you and your colleagues could easily use this without being dependent on the platform.

The company

TLDraw was first launched as an open-source project by Steve Ruiz in 2021. He built TLDraw on the back of his other open-source projects like perfect-freehand and globs.design.

“After making these projects, I wanted to create something new that was more “shape agnostic”, that let me put any sort of shape on the canvas; and this is what would become TLDraw. I was building all of this in public (mainly via Twitter gifs) and the TLDraw content got very popular fast,” Ruiz told Techcrunch.

TLraw has raised a $2.7 million seed round led by Lux Capital with participation from Amplify Partners, Sabrina Hahn, Guillermo Rauch of Vercel, and NP-Hard Ventures. The round also had other investors like Soleio, Badrul Farooqi, Michael Stoppelman, Tom Preston-Werner, Adam Wiggins of Muse, Brian Lovin of Campsite, David Khourshid of Stately.ai, Cristóbal Valenzuela of Runway ML, Johannes Schickling of Prisma.

The company, which has five full-time employees, currently doesn’t earn any revenue beside money donated by GitHub sponsors. Going forward, the startup wants to work on licensing and support to generate revenue. Ruiz said the team might have some features — like collaboration tools between team members — behind a paywall.

The developer tools and the road ahead.

While TLDraw is available for all to use for free, the company also offers developer tools to integrate its canvas. Think of it as “Whiteboard-as-a-service.”

Ruiz told TechCrunch, that when he started working on the project, he wanted to provide a platform for anyone to build on collaborative canvases with all the basic tools available to them.

“The current set of whiteboard applications assume that if you are working on an infinite canvas, you are working on just visual components. But with TLDraw, we wanted to give importance to all kinds of formats,” he said.

The startup founder added that existing tools offer their own take on collaboration design and they are hard to customize for a company’s own needs. With TLDraw, teams can get a strong starting point in terms of effective interaction design and collaborative canvas.

There are already quite a few projects that are using TLDraw as a base. There are neat web-based drawing apps like MacPaint and OkSo; developers have also used TLDraw to make useful story-building tools like LengendKeeper and WorldAnvil such as Dungeons & Dragons; AI-based video generation platform Vidext is using it as a base canvas; and open-source virtual classroom firm BigBlueButton is using it has its in-class whiteboard tool.

The company is now working towards open-sourcing the new beta version of the TLDraw website along with moving all collaborative versions and the Visual Studio Code plugin to it. What’s more, in the next 12 months, the startup plans to add more features like rulers, object lists, and animations based on community feedback.

TLDraw offers a collaborative whiteboard without any login by Ivan Mehta originally published on TechCrunch