With a new general partner and without Alexis Ohanian, Initialized Capital garners $230 million for fund five

Initialized Capital, the early-stage venture firm that got its start inside of Y Combinator almost a decade ago and spun out of the organization roughly five years later, has closed its newest fund with $230 million in capital commitments, cofounder Garry Tan announced on Medium earlier today.

The fund, its fifth, brings the assets that the San Francisco firm is managing to $770 million.

Tan also announced that Initialized has a new general partner in Brett Gibson, with whom Tan has partnered with time and again in the past. Specifically, Gibson co-founded with Tan the blog platforms Posthaven and Posterous. He and Tan also later wrote software for Y Combinator, building the organization’s internal software systems.

Initialized has been much in the news recently. We had the chance to talk with Tan just last month for at TechCrunch event organized for our Extra Crunch readers, and we discussed a few of the biggest mistakes that startups tend to make.

This editor also talked back in March with Tan and Alexis Ohanian, the Reddit cofounder and later Y Combinator partner with whom Tan, also a former YC partner, had founded Initialized.

The two talked at the time about the importance of founders finding a way to eke out 18 months of runway on the assumption that the pandemic could take a while. While they gave no indication that they’d be parting ways, that’s exactly what happened more recently, with Ohanian deciding to raise his own pre-seed stage fund (reportedly with a $100 million-plus target), and Tan forging ahead with Initialized.

Asked about the development last month, Tan told us that “Alexis isn’t leaving the firm, he’s stepping into a board partner role, so all of the existing portfolio companies are going to continue to have him [involved].” Tan added he has “never seen anyone” identify promising startups when it’s “just an idea and a team and before there’s even a product” . . . “better than Alexis has,” adding that the split is “really about setting each other up for success.”

If there’s more to the story, investors don’t seem to mind, given some of the early returns they are poised to see thanks to early bets on some very well-known companies including the cryptocurrency platform Coinbase and the grocery delivery company Instacart. The firm has also seen the rapid rise of two other companies, the telemedicine startup Ro and the HR systems provider Rippling, both now so-called unicorns.

Even during these uncertain days, Initialized has seemingly remained active, writing follow-on checks to Bodyport, a San Francisco-based digital health company focused on the detection and management of heart disease (it just closed a Series A round), and Truepill, a San Mateo, Ca.-based online pharmacy that’s expanding into telehealth (and recently closed a Series B round.)

Initialized also recently co-led a round for Shelf Engine, a five-year-old, Seattle-based company that optimizes the process of stocking store shelves for supermarkets and groceries.

Initialized closed its fourth fund with $225 million just shy of two years ago.


Source: Tech Crunch

NASA and SpaceX target October 23 for first operational astronaut launch

NASA and SpaceX have set a specific target date for Crew-1, the first operational crewed mission for SpaceX’s Crew Dragon spacecraft. Crew-1 will carry astronauts Shannon Walker, Victor Oliver, Mike Hopkins and Soichi Noguchi to the International Space Station, and will mark the first regular service mission of the Dragon spacecraft following its certification at the conclusion of its development and testing program.

Crew Dragon’s final major milestone in that process was Demo-2, the mission launched on May 30 with astronauts Bob Behnken and Doug Hurley on board. While Hurley and Behnken completed that mission with a successful return to Earth earlier this month, that was still technically part of the qualification process for Crew Dragon and for SpaceX’s Falcon 9 rocket, in order to certify it for human spaceflight so that it could begin regular mission operations – which kick off with Crew-1.

NASA says that the late October date (it had earlier discussed a late September timeframe as a possibility) in order to allow for the upcoming Soyuz spacecraft traffic from Russia to the ISS, as well as the departure of the current Space Station crew at the end of their current rotation. It’s also still pending a full review of the data and qualification criteria of Crew Dragon and the Demo-2 mission, which definitely appears to have gone pretty much exactly to plan, but which still will be examined under a microscope by NASA and SpaceX staff to ensure that was indeed the case.

If this data review goes well, and Crew-1 flies in October, then Crew-2 should take place next spring, bringing up four more astronauts to relieve the Crew-1 astronauts for another tour of science and Space Station operations.


Source: Tech Crunch

Apple boots Fortnite from the App Store after Epic adds direct payments

After its creator Epic Games implemented a workaround to duck Apple’s hefty developer fees, Fortnite has vanished from the App Store. The popular game’s disappearing act came the same day that Epic added a new direct payment option for in-game currency on mobile, offering an enticing 20% discount for players who pay the company for its virtual V-Bucks rather handing that money to intermediaries Apple or Google.

“Currently, when using Apple and Google payment options, Apple and Google collect a 30% fee, and the up to 20% price drop does not apply,” Epic wrote in a blog post introducing the new option. “If Apple or Google lower their fees on payments in the future, Epic will pass along the savings to you.”

Epic Direct Payment in App Store

Epic Direct Payments on iOS

In a statement to TechCrunch, Apple confirms that it removed Fortnite for taking the “unfortunate step” of violating App Store rules:

“Epic enabled a feature in its app which was not reviewed or approved by Apple, and they did so with the express intent of violating the App Store guidelines regarding in-app payments that apply to every developer who sells digital goods or services.

“Epic has had apps on the App Store for a decade, and have benefited from the App Store ecosystem – including [its] tools, testing, and distribution that Apple provides to all developers. Epic agreed to the App Store terms and guidelines freely and we’re glad they’ve built such a successful business on the App Store. The fact that their business interests now lead them to push for a special arrangement does not change the fact that these guidelines create a level playing field for all developers and make the store safe for all users. We will make every effort to work with Epic to resolve these violations so they can return Fortnite to the App Store.”

Epic Games Founder and CEO Tim Sweeney has attacked Apple repeatedly in recent tweets over the cut it takes on the App Store, calling its decisions deliberately anti-competitive and declaring that Apple has “outlawed the metaverse.” A spicy tweet on Fortnite’s Twitter account evoking authoritarianism also suggests that Epic has no intention of backing down. Epic also apparently just filed a legal complaint against Apple in the U.S District Court for the Northern District of California.

“Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS In-App Payment Processing Market,” Epic argues in the filing.

In making the decision to add direct payments, a feature it calls “permanent,” Epic was well aware that removal from Apple’s marketplace was likely in the cards By adding the new payment method anyway, the hit game maker is planting a flag in the recent roiling controversy over Apple’s App Store fees. What happens next in a showdown between Apple and such a prominent software maker is anyone’s guess, but we’ll be following this story as it develops.


Source: Tech Crunch

Impossible Foods gobbles up another $200 million

Impossible Foods has raised $200 million more for its meat replacements.

The new round values the company at a Whopper-sized $4 billion valuation, according to the data tracker PrimeUnicorn Index.

The new round was led by Coatue, a technology-focused hedge fund, another New York-based hedge fund, XN, also participated in the round.

Since its launch the company has raised $1.5 billion from investors including Mirae Asset Global Investments, Temasek. The presence of these new public/private investment firms on Impossible Foods’ cap table could mean that the company is readying itself for an initial public offering, but that’s just speculation.

Impossible previously raised money from investment firms including Horizon Ventures and Khosla Ventures as well as some of the biggest celebrities in the US like: Jay Brown, Common, Kirk Cousins, Paul George, Peter Jackson, Jay-Z, Mindy Kaling, Trevor Noah, Alexis Ohanian, Kal Penn, Katy Perry, Questlove, Ruby Rose, Phil Rosenthal, Jaden Smith, Serena Williams, will.i.am and Zedd.

The most recent price per share is $16.15, an up round from Series F at $15.4139, according to PrimeUnicorn.

The company said it would use the funding to increase its research and development efforts and work on new products like pork, steak, and milk as well as expand its internationalization efforts and build out its manufacturing capacity.

“The use of animals to make food is the most destructive technology on Earth, a leading driver of climate change and the primary cause of a catastrophic global collapse of wildlife populations and biodiversity,” said the incredibly credentialed Dr. Patrick O. Brown, M.D., Ph.D., CEO and Founder of Impossible Foods, in a statement. “Impossible Foods’ mission is to replace that archaic system by making the most delicious, nutritious and sustainable meats in the world, directly from plants. To do that, Impossible Foods needs to sustain our exponential growth in production and sales, and invest significantly in R&D. Our investors believe in our mission to transform the global food system — and they recognize an extraordinary economic opportunity.”


Source: Tech Crunch

How to get what you want in a term sheet

One of the most exciting moments in the life of every newly christened founder is the sweet relief of seeing a term sheet come in from an investor. After weeks, perhaps months (but hopefully not years!), of work fundraising and pitching, there is nothing like getting that email with a PDF attached to it laying out the terms and conditions of the VC relationship going forward.

Of course, that rejoicing dampens quickly as all the specific nuances of the deal suddenly come to the forefront. It’s one thing to get the valuation you want, or the amount of capital you are seeking, but what about the setup of the board of directors? What should you do about deal terms that may shape your startup for a decade or more?

The reality of term sheets, as our guest Lior Zorea discusses, is that the terms you agree to early on at a startup tend to be the terms that will carry through for the life of the company. That means getting that first term sheet right is critical for ensuring the financial and capital success of your business.


Source: Tech Crunch

Instagram wasn’t removing photos and direct messages from its servers

A security researcher was awarded a $6,000 bug bounty payout after he found Instagram retained photos and private direct messages on its servers long after he deleted them.

Independent security researcher Saugat Pokharel found that when he downloaded his data from Instagram, a feature it launched in 2018 to comply with new European data rules, his downloaded data contained photos and private messages with other users that he had previously deleted.

It’s not uncommon for companies to store freshly deleted data for a time until it can be properly scrubbed from its networks, systems and caches. Instagram said it takes about 90 days for deleted data to be fully removed from its systems.

But Pokharel found that his ostensibly deleted data from more than a year ago was still stored on Instagram’s servers, and could be downloaded using the company’s data download tool.

“Instagram didn’t delete my data even when I deleted them from my end,” he told TechCrunch.

Pokharel reported the bug in October 2019 through Instagram’s bug bounty program. The bug was fixed earlier this month, he said.

A spokesperson for Instagram told TechCrunch: “The researcher reported an issue where someone’s deleted Instagram images and messages would be included in a copy of their information if they used our Download Your Information tool on Instagram. We’ve fixed the issue and have seen no evidence of abuse. We thank the researcher for reporting this issue to us.”

It’s a near-identical issue that Twitter fixed last year, in which users could access long-deleted direct messages — including messages sent to and from suspended and deactivated accounts — using its own data download tool.


Source: Tech Crunch

Five success factors for behavioral health startups

Telehealth, or remote, tech-enabled healthcare, has existed for years in primary medical care through companies like Teladoc (NYSE: TDOC)Doctors on Demand and MDLIVE.

In recent years, the application of telehealth had rapidly expanded to address specific chronic and behavioral health issues like mental health, weight loss and nutrition, addiction, diabetes and hypertension, etc. These are real and oftentimes very severe issues faced by people all over the world, yet until now have seen little to no use of technology in providing care.

We believe behavioral health is particularly suited to benefit from the digitization trends COVID-19 has accelerated. Previously, we’ve written about the pandemic’s impact on online learning and education, both for K-12 students and adult learners. But behavioral health is another area impacted by the fundamental change in consumers’ behavior today. Below are four reasons we think the time is now for behavioral health startups — followed by five key factors we think characterize successful companies in this area.

Telehealth can significantly lower the cost of care

Traditional behavioral healthcare is cost-prohibitive for most people. In-person therapy costs $100+ per session in the U.S., and many mental health and substance-use providers don’t accept insurance because they don’t get paid enough by insurers.

By contrast, telehealth reduces overhead costs and scales more effectively. Leveraging technology, providers can treat more patients in less time with almost zero marginal costs. Mobile-based communications enable asynchronous care that further helps providers scale. Access to digital content gives patients on-going support without the need for a human on the other side. This is particularly useful in treating behavioral health issues where ongoing support and motivation may be necessary.

Technology unlocks supply in “shadow markets” of providers

Globally, we face an extreme shortage of behavioral health providers. For example, the United States has fewer than 30,000 licensed psychiatrists (translating to <1 for every 10,000 people). Outside of big cities, the problem gets worse: ~50-60% of nonmetro counties have no psychologists or psychiatrists at all.

Even when providers are available, wait times for appointments are notoriously long. This is a huge issue when behavioral health conditions often require timely intervention.

We are seeing new platforms build large networks of certified coaches, licensed psychologists and psychiatrists, and other providers, aggregating supply in what has historically been a scarce and a highly fragmented provider population.

Behavioral/mental health issues are losing their stigma

We believe the stigma associated with mental illness and other behavioral health conditions is dissipating. More and more public figures are speaking out about their struggle with anxiety, depression, addiction and other behavioral health issues. Our zeitgeist is shifting fast, and there’s an all-time high in people seeking help as the Google Trends data below demonstrates.

google trends search: "therapist near me," 2015- 2010

Image Credits: Google

Note: The anomalous dip in March/April ’20 was driven by mandatory shelter-in-place due to COVID-19.

Policy and regulations are changing quickly


Source: Tech Crunch

What’s different about hiring data scientists in 2020?

It’s 2020 and the world has changed remarkably, including in how companies screen data science candidates. While many things have changed, there is one change that stands out above the rest. At The Data Incubator, we run a data science fellowship and are responsible for hundreds of data science hires each year. We have observed these hires go from a rare practice to being standard for over 80% of hiring companies. Many of the holdouts tend to be the largest (and traditionally most cautious) enterprises. At this point, they are at a serious competitive disadvantage in hiring.

Historically, data science hiring practices evolved from software engineering. A hallmark of software engineering interviewing is the dreaded brain teaser, puzzles like “How many golf balls would fit inside a Boeing 747?” or “Implement the quick-sort algorithm on the whiteboard.” Candidates will study for weeks or months for these and the hiring website Glassdoor has an entire section devoted to them. In data science, the traditional coding brain teaser has been supplemented with statistics ones as well — “What is the probability that the sum of two dice rolls is divisible by three?” Over the years, companies are starting to realize that these brain teasers are not terribly effective and have started cutting down their usage.

In their place, firms are focusing on project-based data assessments. These ask data science candidates to analyze real-world data provided by the company. Rather than having a single correct answer, project-based assessments are often more open-ended, encouraging exploration. Interviewees typically submit code and a write-up of their results. These have a number of advantages, both in terms of form and substance.

First, the environment for data assessments is far more realistic. Brain teasers unnecessarily put candidates on the spot or compel them to awkwardly code on a whiteboard. Because answers to brain teasers are readily Google-able, internet resources are off-limits. On the job, it is unlikely that you’ll be asked to code on a whiteboard or perform mental math with someone peering over your shoulder. It is incomprehensible that you’ll be denied internet access during work hours. Data assessments also allow the applicants to complete the assessment at a more realistic pace, using their favorite IDE or coding environment.

“Take-home challenges give you a chance to simulate how the candidate will perform on the job more realistically than with puzzle interview questions,” said Sean Gerrish, an engineering manager and author of “How Smart Machines Think.”

Second, the substance of data assessments is also more realistic. By design, brainteasers are tricky or test knowledge of well-known algorithms. In real life, one would never write these algorithms by hand (you would use one of the dozens of solutions freely available on the internet) and the problems encountered on the job are rarely tricky in the same way. By giving candidates real data they might work with and structuring the deliverable in line with how results are actually shared at the company, data projects are more closely aligned with actual job skills.

Jesse Anderson, an industry veteran and author of “Data Teams,” is a big fan of data assessments: “It’s a mutually beneficial setup. Interviewees are given a fighting chance that mimics the real-world. Managers get closer to an on-the-job look at a candidate’s work and abilities.” Project-based assessments have the added benefit of assessing written communication strength, an increasingly important skill in the work-from-home world of COVID-19.

Finally, written technical project work can help avoid bias by de-emphasizing traditional but prejudicially fraught aspects of the hiring process. Resumes with Hispanic and African American names receive fewer callbacks than the same resume with white names. In response, minority candidates deliberately “whiten” their resumes to compensate. In-person interviews often rely on similarly problematic gut feel. By emphasizing an assessment closely tied to job performance, interviewers can focus their energies on actual qualifications, rather than relying on potentially biased “instincts.” Companies looking to embrace #BLM and #MeToo beyond hashtagging may consider how tweaking their hiring processes can lead to greater equality.

The exact form of data assessments vary. At The Data Incubator, we found that over 60% of firms provide take-home data assessments. These best simulate the actual work environment, allowing the candidate to work from home (typically) over the course of a few days. Another roughly 20% require interview data projects, where candidates analyze data as a part of the interview process. While candidates face more time pressure from these, they also do not feel the pressure to ceaselessly work on the assessment. “Take-home challenges take a lot of time,” explains Field Cady, an experienced data scientist and author of “The Data Science Handbook.” “This is a big chore for candidates and can be unfair (for example) to people with family commitments who can’t afford to spend many evening hours on the challenge.”

To reduce the number of custom data projects, smart candidates are preemptively building their own portfolio projects to showcase their skills and companies are increasingly accepting these in lieu of custom work.

Companies relying on old-fashioned brainteasers are a vanishing breed. Of the recalcitrant 20% of employers still sticking with brainteasers, most are the larger, more established enterprises that are usually slower to adapt to change. They need to realize that the antiquated hiring process doesn’t just look quaint, it’s actively driving candidates away. At a recent virtual conference, one of my fellow panelists was a data science new hire who explained that he had turned down opportunities based on the firm’s poor screening process.

How strong can the team be if the hiring process is so outmoded? This sentiment is also widely shared by the Ph.D.s completing The Data Incubator’s data science fellowship. Companies that fail to embrace the new reality are losing the battle for top talent.


Source: Tech Crunch

Does 👁👄👁 illustrate the power of meme culture in fundraising?

Fundraising was once a formal process.

A decade ago, founders would make pilgrimages to the stodgy investor offices that line Sand Hill Road. Now, as the coronavirus ravages the world and venture capital grows as an asset class, a first “yes” can come from an investor-matching tool built on Notion, or an entire fund can come together over a Zoom call. In this era, Twitter DMs are better for deal flow than walking around a conference.

As startup-land becomes more informal, a new generation of early-stage founders are searching for ways to make the relaxed new world work in their favor. One way this is happening?

Meme culture as a signaling mechanism.

Before Gefen Skolnick, founder of Couplet Coffee, launched her company and Slack channel for underrepresented and underresourced groups in tech, she established credibility in a unique way.

Skolnick was part of the Eye Mouth Eye ( 👁👄👁) campaign that rocked Silicon Valley in June 2020. The cryptic effort was a statement on how FOMO and hype culture dominate venture capital conversations. Participants in the campaign changed their Twitter names, tweeted cryptically and earned more than 20,000 email subscribers for a product that did not even exist.

Skolnick says Eye Mouth Eye gave her a larger platform, which she’s leveraging by stepping up the pace of posting new content and launching products. She said the stunt gave her “sign-offs” from high-profile individuals, and investors have been blowing up her inbox.

“My fundraising experience has just been angel investors DMing me to tell me they’re investing,” she said.

Meme culture, she says, is the “best way the younger generation can showcase their insights, humor and commentary in a more digestible and shareable format.”


Source: Tech Crunch

The Philips Hue Play HDMI Sync Box makes any home theater a bit more theatrical

Philips has steadily expanded its Hue line of smart lighting products to cover the entire home, inside and out. But while the ability to remotely control your lighting, including adjusting color, intensity and brightness is great, one of its more recent products focuses more on how to turn all those connected lights into a dynamic, at-home interactive entertainment experience. The Philips Hue Play HDMI Sync Box is a relatively simple device that sits between your video sources, including things like game consoles and the Apple TV, and your television, enabling synced light shows that can take advantage of a wide range of Hue products.

The basics

The Hue Play HDMI Sync Box is at its core an HDMI switcher, offering four HDMI inputs and a single HDMI output. Signals from your input devices (e.g., Apple TV, Roku, Xbox, PS4, etc.) go into the box and are passed through to the TV, with switching happening automatically depending on which device was most recently active (you can also change them manually with the app and with voice controls).

The Sync Box supports a range of modern quality standards for display and audio. It supports 4K 60Hz resolution, HDR10+ and Dolby Vision standards, as well as Dolby Atmos surround sound. It also supports HDMI 2.0b with HDCP 2.2 compliance for copyright protection.

You will need not only Hue colored lights, but also a Hue Bridge (the second-generation, rounded-square version) to ensure that the Hue Sync Box is more than just a particularly expensive HDMI hub, but it does that job very well, too. If you do have Hue products, like the Hue Play light bars that can easily mount on top of your TV stand or to the back of your TV itself, or the Hue Signe multicolored floor or table lamps, then you can use the Sync companion app to ensure your lights reflect what’s going on on screen — for any video that plays through the box from any source.

Image Credits: Philips

Design and performance

Why would you want this? Well, mostly because it looks really, really cool. Hue Sync has already been available as a software feature for you to use with video played back on Macs and PCs when used in combination with a monitoring tool. But that has a lot of limitations, including not being able to work with official Netflix apps and Netflix in the browser. The Sync Box eliminates any potential roadblocks and also means you can use regular streaming and gaming sources without having to run a media center PC.

The box itself is relatively large, but that seems like it’s mostly to accommodate the multiple HDMI ports. It’s very short, despite being about twice the surface area of an Apple TV, so it should be very easy to integrate into your existing home theatre setup, whatever that entails.

Setting up the Hue Play HDMI Sync Box is very easy and requires only installing the app and pressing the sync button on your Hue Bridge when instructed to do so. As mentioned, you can plug in up to four sources and the box will switch between them automatically when you use an input device or you can also manually change the input (and rename them) using the app. The app also allows you to tweak the intensity, brightness and responsiveness of the light, making it more subtle or more extreme, depending on your preferences and your activity. A “Game” setting, for instance, sets it to maximum intensity and responsiveness for a more dynamic effect befitting fast-paced interactive content.

Image Credits: Philips

I found that the lighting was extremely good at mimicking the colors and brightness of a scene, especially if you take the time to accurately set up the position of your Hue lights for a dedicated “entertainment area” in the official main Hue app. It’s an effect that, when used in its most subtle settings, can basically fade away but still provide genuine enhancement for the watching experience, making it feel more immersive. At its maxed out settings, it’s much more noticeable, but still something that basically fades away into the background over an extended period of use, in a good way.

Especially since the firmware update, the Hue Play Sync Box has proven a fantastic addition to my home theater setup, providing an extra bit of flair to every TV watching experience. It’s obviously more effective in dark rooms, but it really seems to especially complement high-quality OLED screens that produce vibrant colors and true, deep blacks.

Bottom line

The Hue Play HDMI Sync Box is a bit of an extravagance at $229.99, but it definitely adds to the overall home TV-watching experience, for movies, streaming and for gaming. The four HDMI inputs mean you can also use it to add more ports to your TV, if that’s something you need, and the recent updates mean you’re not going to sacrifice any video quality while doing so.

 


Source: Tech Crunch