Month: June 2021

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. Want it in your inbox every Saturday? Sign up here.

Ready? Let’s talk money, startups and spicy IPO rumors.

Happy Saturday everyone. Despite it being a short week I feel pretty run over from the sheer news volume that we’ve put up with in the last few days. So let’s pause, repine and talk about SPACs as a nice little treat.

No, we’re not going through a SPAC investor presentation teardown today. Though we will dig into the Babylon Health SPAC on Monday. Instead, we’re discussing the SoFi and BarkBox blank-check deals.

Both began to trade this week after announcing their public debuts some time ago. And things went just fine? Here’s CNBC on SoFi’s first minutes as a public company:

SoFi, short for Social Finance, went public by merging with Social Capital Hedosophia Corp V, a blank-check company run by venture capital investor Chamath Palihapitiya. The stock closed up more than 12% to $22.65.

That’s not only a win for SoFi, but also for the somewhat-embattled Chamath Palihapitiya, whose SPAC bets have lost some luster in recent months; of course all SPAC-led debuts are speculative, but some retail traders appeared to index more on Palihapitiya’s reputation than fundamentals — what can you do!

BarkBox also did perfectly ok when it began to trade this week after its own SPAC combination was consummated, as Barrons reported:

BARK stock (ticker: BARK) jumped about 7.5% on Wednesday, to trade at around $12 in the afternoon. That gives the company a market value of close to $2.4 billion.

BarkBox stock has since given up some of its gains, but managed to get public without falling below its initial SPAC price. That’s a win given how market conditions have shifted since its flotation was initially announced.

Two wins in a single week is good news for SPAC-land and the myriad players on the blank-check and startup sides of the marketplace. Naturally two solid results does not a trend make, but it seems clear that for companies with material revenues the SPAC-route is not as potholed as we might have expected.

The crypto wager

If you think SPACs are generally annoying, just wait until we fuse the blank-check boom with crypto. As we are about to do!

This week Circle, a crypto-focused company with a particular taste for stablecoins, raised $440 million. That was an ocean of capital for a company best known for the USDC stablecoin; it is also reported to be considering a SPAC-led IPO.

What is a stablecoin? It’s a cryptocurrency that is pegged to a fiat currency. In the case of USDC, as you surmised, the coin is pegged to the US dollar. Stablecoins are useful fiat comps inside the crypto world and have proven to be hugely popular.

Circle’s USDC has $22.8 billion worth of supply in circulation, it claims, and several billion in daily transactions, per CoinMarketCap data. That’s not bad! But what isn’t as clear to your humble servant is precisely how the firm generates huge revenues at super-attractive gross margins. Which is what we’d expect from a company that just locked down nearly a half-billion dollars (or USDC, we suppose) in private capital in a single go.

So, for once, bring on the SPAC. Because we want to see the damn numbers, and quickly, given our sheer curiosity.

Growth?

Wrapping, Ron and I got to dig into a number of public companies’ earnings reports the other day, essentially discovering that the vaunted digital transformation acceleration is actually coming true for some companies.

This week’s news continued the argument. Zoom’s earnings, for example, backed up our thesis. Its revenues were up 191% in Q1 F2022 compared to Q1 F2021. That’s just bonkers good.

On the other end of the spectrum are Dropbox and Box, which are under fresh pressure this week from external investors. The pair of former private-market darlings have run into a growth wall and are taking incoming fire due to it. Grow or die is more than just startup advice. It’s what software companies need to do if they want to stay in charge of their own destiny.

Alex

Source: Tech Crunch

Earlier today, TechCrunch’s Kirsten Korosec reported that the autonomous vehicle startup Aurora is close to finalizing a deal to merge with one of three blank-check companies that have been formed to date by renowned entrepreneurs Reid Hoffman and Mark Pincus and a third partner in these deals, Michael Thompson, who long managed special situation funds.

The development is intriguing for a lot of reasons, including because Aurora’s founders are big wheels in their industry (no pun intended), and having already acquired the self-driving unit of Uber in a complicated arrangement, Aurora could, as a publicly traded entity, snap up even more rivals, given it would have a more liquid currency than it does right now.

Possible merits of the deal aside, the deal is also interesting because of Hoffman’s involvement. His venture firm, Greylock, is an investor in Aurora and has been since co-leading its Series A round in 2018, at which point Hoffman joined the board as a director. Now Hoffman’s SPAC is looking to take Aurora public at what we can safely assume is a much, much higher valuation than where it was valued back then. In fact, Korosec reports that one of the sticking points in this new deal is how much the company could conceivably be worth, writing that talk involved a $20 billion valuation at one point and is now closer to $12 billion, with the deal expected to be announced as early as next week.

This isn’t the first time a SPAC sponsor has pursued an existing investment as a target. In just one similar case, famed VC Chamath Palihapitiya was an investor in insurance company Clover through his firm Social Capital and as industry watchers will know, one of his blank-check companies merged with Clover last year.

A representative for Palihapitiya declined to disclose to Bloomberg whether or not he sold the stake prior to the SPAC deal, but legally, it doesn’t matter anyway. All a SPAC sponsor need do right now is write a lengthy disclosure when raising a SPAC that ultimately says, ‘Hey, I might use the capital I’m raising for this blank-check company to buy another company where I already have a financial interest, and here’s how that’s going to work.’

The question is whether such rules around potential conflicts — or lack of rules — will continue to exist indefinitely. The SEC is clearly taking a closer look right now at SPACs, and while it offered guidance specifically around conflicts of interest last December, saying that they make the agency a little nervous and could sponsors please disclose as much as possible to everyone involved in a deal, there’s a new administration in Washington and a new agency head in SEC Chief Gary Gensler, and it wouldn’t be surprising to see more being done on this front than we’ve witnessed to date.

There perhaps should be. SPACs already have a lousy reputation because investors lose money on the majority of them, and notwithstanding the esteem of individuals like Hoffman, these obvious conflicts of interest — let’s face it — generally smell bad.

Yes, there’s a strong argument that a SPAC sponsor who has been long involved with a target company knows better the value of that company than anyone else. That inside knowledge cuts both ways, though. The target could be an amazing company that just needs a way to go public more quickly than might be possible with a traditional IPO. Let’s assume for now that Aurora falls into this camp. But the target could also need to bailed out by SPAC sponsors who have a vested interest in the company and know its prospects may dim otherwise.

Do most retail investors know the difference between the two? It’s doubtful, and in this go-go market, they seem bound to get hurt if regulators continue to turn a blind eye to the practice. That’s leaving some industry observers to wonder of the SEC: what’s it waiting for?

Source: Tech Crunch

Autonomous vehicle startup Aurora is close to finalizing a deal to merge with Reinvent Technology Partners Y, the newest special purpose acquisition company launched by LinkedIn co-founder and investor Reid Hoffman, Zynga founder Mark Pincus and managing partner Michael Thompson, according to several sources familiar with the talks.

One of the sticking points is the targeted valuation, which had been as high as $20 billion. It is now closer to $12 billion and the deal is expected to be announced as early as next week, said multiple sources who have asked not to be identified because they’re not authorized to discuss the deal. Aurora declined to comment. Reinvent also declined to comment.

The Hoffman, Pincus, Thompson trio, who are bullish on a concept that they call “venture capital at scale,” have formed three SPACs, or blank check companies. Two of those SPACs have announced mergers with private companies. Reinvent Technology Partners announced a deal in February to merge with the electric vertical take off and landing company Joby Aviation, which will be listed on the New York Stock Exchange later this year. Reinvent Technology Partners Z merged with home insurance startup Hippo.

Their latest SPAC, known as Reinvent Technology Partners Y,  priced its initial public offering of 85 million units at $10 per unit to raise $850 million. The SPAC issued an additional 12.7 million shares to cover over allotments with total gross proceeds of $977 million, according to regulatory filings. The units are listed on Nasdaq exchange and trade under the ticker symbol “RTPYU.”

Aurora already has a relationship with Hoffman. In February 2018, Aurora raised $90 million from Greylock Partners and Index Ventures. Hoffman, who is a partner at Greylock and Index Ventures’ Mike Volpi became board members of Aurora as part of the Series A round. The following year, Aurora raised more than $530 million in a Series B round led by Sequoia Capital and included from Amazon, T. Rowe Price Associates. Lightspeed Venture Partners, Geodesic, Shell Ventures and Reinvent Capital also participated in the round, as well as previous investors Greylock and Index Ventures.

While Hoffman and Reinvent showing up on two sides of a SPAC deal would be unusual, it is not unprecedented. For instance, a blank check company formed by T.J. Rodgers announced in February a merger with Enovix, a battery technology company that he has been a director of since 2012 and is its largest shareholder, Bloomberg reported at the time. In this case, Hoffman is a board member, but not its largest shareholder.

Aurora, which was founded in 2017 by Sterling Anderson, Drew Bagnell and Chris Urmson, has had a high-flying year. In December, the company reached an agreement with Uber to buy the ride-hailing firm’s self-driving unit in a complex deal that value the combined company at $10 billion.

Aurora did not pay cash for Uber ATG, a company that was valued at $7.25 billion following a $1 billion investment in 2019 from Toyota, DENSO and SoftBank’s Vision Fund. Instead, Uber handed over its equity in ATG and invested $400 million into Aurora. The deal gave Uber a 26% stake in the combined company, according to a filing with the U.S. Securities and Exchange Commission. (As a refresher, Uber held an 86.2% stake (on a fully diluted basis) in Uber ATG, according to filings with the SEC. Uber ATG’s investors held a combined stake of 13.8% in the company.)

Since the acquisition, Aurora has spent the past several months integrating Uber ATG employees and now has a workforce of about 1,600 people. Aurora more recently said it reached an agreement with Volvo to jointly develop autonomous semi-trucks for North America. That partnership, which is expected to last several years and is through Volvo’s Autonomous Solutions unit, will focus on developing and deploying trucks built to operate autonomously on highways between hubs for Volvo customers.

In March, Aurora disclosed in a regulatory filing, that it has sold $54.9 million in an equity offering that kicked off in March 2021.

Source: Tech Crunch

Xometry, a Maryland-based service that connects companies with manufacturers with excess production capacity around the world, filed an S-1 form with the U.S. Securities and Exchange Commission announcing its intent to become a public company.

As the global supply chain tightened during the pandemic in 2020, a company that helped find excess manufacturing capacity was likely in high demand. CEO and co-founder Randy Altschuler described his company to TechCrunch this way last September upon the announcement of a $75 million Series E investment:

“We’ve created a marketplace using artificial intelligence to power it, and provide an e-commerce experience for buyers of custom manufacturing and for suppliers to deliver that manufacturing,” Altschuler said at the time. Xometry raised nearly $200 million while private, per Crunchbase data.

With Xometry, companies looking to build custom parts now have the ability to do so in a digital way. Rather than working the phones or starting an email chain, they can go into the Xometery marketplace, define parameters for their project and find a qualified manufacturer who can handle the job at the best price.

As of last September, the company had built relationships with 5,000 manufacturers around the world and had 30,000 customers using the platform.

At the time of that funding round, perhaps it wasn’t a coincidence that the company’s lead investor was T. Rowe Price. When an institutional investor is involved in a late-stage round, it’s usually a sign that the company is ready to start thinking about an IPO. Altschuler said it was definitely something the company was considering and had brought on a CFO, too, another sign that a company is ready to take that next step.

So what do Xometry’s financials look like as it heads to the public markets? We took a look at the S-1 to find out.

The numbers

Xometry makes money in two ways. The first comes from one part of its marketplace, with the company generating “substantially all of [its] revenue” from charging “buyers on its platform.” The other way that Xometry engenders top line is seller-related services, including financial work. The company notes that seller-generated revenues were just 5% of its 2020 total, though it does expect that figure to rise.

Source: Tech Crunch

We’re just five days away from TC Sessions: Mobility 2021 where thousands of mobility movers and shakers will dive deep into the game-changing technology that’s reinventing the way we move people — and pretty much everything else — around the world.

Mobility 2021 is a jam-packed event, and we want to make sure you know about everything that’s going down on June 9. But first, a message from the home office: Buy your TC Sessions: Mobility 2021 pass here. We now return you to our regularly scheduled post.

We’ve told you about the incredible slate of speakers, and you’ll find the wide range of topics they’ll cover in the event agenda. Remember, you can watch any session later at your convenience thanks to video on demand.

Now we want to remind you to visit our virtual expo area. It’s one of the most exciting aspects of Mobility 2021 — and one that offers untold opportunity. That’s where you’ll find 28 outstanding early-stage startups exhibiting their awesome tech and talent.

Hopin, our virtual platform, lets exhibitors schedule and host interactive product demos via live stream. Don’t be shy. Ask for a demo and start a conversation. Whether you’re looking to invest, collaborate or find the right solution for your business, you’ll find opportunity waiting for you in the expo.

Pro Tip: Watch all the exhibiting startups pitch live to TC editors and event attendees during the Startup Pitch Feedback Session (check the agenda for the exact time).

Ready to start planning your expo strategy? Here’s the list of the mighty mobility startups exhibiting at TC Sessions: Mobility 2021.

• Akridata
• AMPECO EV Charging Platform
• Bestmap
• CitySwift
• Civilized Cycles
• DRONAMICS
• EMC Squared Vehicles
• EVBloom
• EyeLights
• FTEX
• Go Oil
• GridMatrix
• Imtyrd.com
• Infinite Mobility
• Ivee
• Koop Technologies
• LinkedCar
• MACA
• NODAR
• PIX Moving
• ROADZ
• Busability
• Sonatus
• Tangram Vision
• Threshold 360
• Vene Rides Inc
• Zygg
• Zync

TC Sessions: Mobility 2021 takes place on June 9 — in just five days. Grab your pass and dive into all the information, education, community and opportunity designed to drive your business forward.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2021? Contact our sponsorship sales team by filling out this form.

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Source: Tech Crunch

Ransomware attacks on the JBS beef plant, and the Colonial Pipeline before it, have sparked a now familiar set of reactions. There are promises of retaliation against the groups responsible, the prospect of company executives being brought in front of Congress in the coming months, and even a proposed executive order on cybersecurity that could take months to fully implement.

But once again, amid this flurry of activity, we must ask or answer a fundamental question about the state of our cybersecurity defense: Why does this keep happening?

I have a theory on why. In software development, there is a concept called “technical debt.” It describes the costs companies pay when they choose to build software the easy (or fast) way instead of the right way, cobbling together temporary solutions to satisfy a short-term need. Over time, as teams struggle to maintain a patchwork of poorly architectured applications, tech debt accrues in the form of lost productivity or poor customer experience.

Our nation’s cybersecurity defenses are laboring under the burden of a similar debt. Only the scale is far greater, the stakes are higher and the interest is compounding. The true cost of this “cybersecurity debt” is difficult to quantify. Though we still do not know the exact cause of either attack, we do know beef prices will be significantly impacted and gas prices jumped 8 cents on news of the Colonial Pipeline attack, costing consumers and businesses billions. The damage done to public trust is incalculable.

How did we get here? The public and private sectors are spending more than $4 trillion a year in the digital arms race that is our modern economy. The goal of these investments is speed and innovation. But in pursuit of these ambitions, organizations of all sizes have assembled complex, uncoordinated systems — running thousands of applications across multiple private and public clouds, drawing on data from hundreds of locations and devices.

Complexity is the enemy of security. Some companies are forced to put together as many as 50 different security solutions from up to 10 different vendors to protect their sprawling technology estates — acting as a systems integrator of sorts. Every node in these fantastically complicated networks is like a door or window that might be inadvertently left open. Each represents a potential point of failure and an exponential increase in cybersecurity debt.

We have an unprecedented opportunity and responsibility to update the architectural foundations of our digital infrastructure and pay off our cybersecurity debt. To accomplish this, two critical steps must be taken.

First, we must embrace open standards across all critical digital infrastructure, especially the infrastructure used by private contractors to service the government. Until recently, it was thought that the only way to standardize security protocols across a complex digital estate was to rebuild it from the ground up in the cloud. But this is akin to replacing the foundations of a home while still living in it. You simply cannot lift-and-shift massive, mission-critical workloads from private data centers to the cloud.

There is another way: Open, hybrid cloud architectures can connect and standardize security across any kind of infrastructure, from private data centers to public clouds, to the edges of the network. This unifies the security workflow and increases the visibility of threats across the entire network (including the third- and fourth-party networks where data flows) and orchestrates the response. It essentially eliminates weak links without having to move data or applications — a design point that should be embraced across the public and private sectors.

The second step is to close the remaining loopholes in the data security supply chain. President Biden’s executive order requires federal agencies to encrypt data that is being stored or transmitted. We have an opportunity to take that a step further and also address data that is in use. As more organizations outsource the storage and processing of their data to cloud providers, expecting real-time data analytics in return, this represents an area of vulnerability.

Many believe this vulnerability is simply the price we pay for outsourcing digital infrastructure to another company. But this is not true. Cloud providers can, and do, protect their customers’ data with the same ferocity as they protect their own. They do not need access to the data they store on their servers. Ever.

To ensure this requires confidential computing, which encrypts data at rest, in transit and in process. Confidential computing makes it technically impossible for anyone without the encryption key to access the data, not even your cloud provider. At IBM, for example, our customers run workloads in the IBM Cloud with full privacy and control. They are the only ones that hold the key. We could not access their data even if compelled by a court order or ransom request. It is simply not an option.

Paying down the principal on any kind of debt can be daunting, as anyone with a mortgage or student loan can attest. But this is not a low-interest loan. As the JBS and Colonial Pipeline attacks clearly demonstrate, the cost of not addressing our cybersecurity debt spans far beyond monetary damages. Our food and fuel supplies are at risk, and entire economies can be disrupted.

I believe that with the right measures — strong public and private collaboration — we have an opportunity to construct a future that brings forward the combined power of security and technological advancement built on trust.

Source: Tech Crunch

Facebook has been making plenty of one-off virtual reality studio acquisitions lately, but today the company announced that they’re buying something with wider ambitions — a Roblox-like game creation platform.

Facebook shared that they’re buying Unit 2 Games, which builds a platform called Crayta. Like some other platforms out there, it builds on top of the Unreal Engine and gives users a more simple creation interface teamed with discovery and community features. Crayta has cornered its own niche pushing monetization paths like Battle Pass seasons, giving the platform a more Fortnite-like vibe as well.

Unit 2 has been around for just over three years, and Crayta launched just last July. Its audience has likely been limited by the studio’s deal to exclusively launch on Google’s cloud-streaming platform Stadia, though it’s also available on the Epic Games Store as of March.

The title feels designed for the lightweight nature of cloud-gaming platforms, with users able to share access to games just by linking other users, and Facebook seems keen to use Crayta to push forward their own efforts in the gaming sphere.

“Crayta has maximized current cloud-streaming technology to make game creation more accessible and easy to use. We plan to integrate Crayta’s creation toolset into Facebook Gaming’s cloud platform to instantly deliver new experiences on Facebook,” Facebook Gaming VP Vivek Sharma wrote in an announcement post.

The entire team will be coming on as part of the acquisition, though financial terms of the deal weren’t shared.

Source: Tech Crunch

If you didn’t want to shell out $9.99 per month to watch the meme-worthy iCarly reboot, now you won’t have to. On Monday, Paramount+ will launch its ad-supported Essential Plan, priced at $4.99 per month.

This less-expensive plan will replace the CBS All Access plan, which included commercials, but also granted access to local CBS stations. If you’re currently subscribed to that $5.99 per month plan, you can keep it. But starting Monday, it won’t be around anymore for new subscribers. 

What makes the Essential Plan different from CBS All Access? Subscribers on the new tier will get access to Marquee Sports (including games in the NFL, UEFA Champions, and Europa Leagues), breaking news on CBSN, and all of Paramount’s on-demand shows and movies. This includes offerings from ViacomCBS-owned channels like BET, Comedy Central, MTV, Nickelodeon, the Smithsonian Channel, and more. But, local live CBS station programming will no longer be included. So, if that’s a deal-breaker, you might want to subscribe to CBS All Access this weekend. 

The existing Premium Plan ($9.99 per month) removes commercials and adds support for 4K, HDR, and Dolby Vision. Like other streaming services, only Premium subscribers will have access to mobile downloads. 

Both plans include access to parental controls and up to six individual profiles. The service doesn’t have a watch list at this time. But that has become a baseline feature for being competitive in this space, so it’s not a matter of if, but when. 

For comparison, the basic Netflix plan costs $8.99 per month, but only lets you watch on one screen at a time. That makes it harder to share an account with family or friends. Their standard tier is $13.99, making it a bit pricier than Paramount+.

Earlier this week, HBO Max unveiled their own lower-cost, ad-supported subscription tier, priced at $9.99 per month. The WarnerMedia-Discovery merger could also have major implications for the popular streaming service, though how that shakes out in terms of content libraries, or even possibly a combined streaming app, remains to be seen. 

Ultimately, consumers will make their decisions about which services to pay for based on a variety of key factors including content, pricing, and user experience. On the content front, Paramount+ plans to announce a slate of big-name titles when the new plan goes live on Monday, in hopes of wooing new subscribers. But the low-cost plan may also appeal to those who don’t necessarily care about top movies – they just want an affordable add-on to their current streaming lineup that provides them with access to some of the programs Netflix lacks. 

Paramount+ owner ViacomCBS said it added 6 million global streaming subscribers across their Paramount+, Showtime OTT, and BET+ services in Q1, to end the quarter with 36 million global users. Most of those come from Paramount+.

Source: Tech Crunch

The fundraising continues apace in the go-go world of venture capital. Today, it’s Lux Capital — known for its frontier investing — that has closed a $675 million early-stage venture fund and an $800 million growth-stage fund from its existing LPs, including many of the foundations, endowments, and family offices that have backed the firm from its start in 2000.

It’s easy to appreciate why they would re-up. Over the last 12 months alone, a dozen of Lux’s portfolio companies have either been acquired, gone public, or announced plans to go public, either via a SPAC of the good-old-fashioned way. Among them is Zoox, bought by Amazon last year; Desktop Metal, which went public by merging with a blank-check company last December; and Shapeways, which agreed in April to merge with a blank-check company.

The most recent of Lux’s portfolio companies to announce a SPAC deal is Bright Machines, a manufacturing software company that two weeks ago announced a merger with a publicly traded shell company. (Lux also raised its own $345 million blank-check company last fall, one that has yet to identify a target.)

Still, even a firm with Lux’s track record isn’t immune to competition in a crowded market. That’s partly why Lux — whose last two funds closed with a collective $1 billion in August 2019 —  has incubated more than a dozen companies of its own, says the firm’s cofounder, Peter Hebert, who talked with us yesterday from Menlo Park about that approach, along with whether and when he sees a correction coming. Some of that conversation is excerpted below, edited lightly for length.

TC: What size checks will you be writing from these new funds?

PH: The median investment in this current early-stage fund will be about $25 million over the life of [each] investment, and that could range from $100,000 to something like $50 million. With our opportunity vehicle, that can be up to a $100 million check and also larger, but I would expect there to be at least one investment in that range.

TC: And the opportunity fund can back companies inside of the portfolio or outside it?

PH: That’s right. I would expect that the majority will be companies where we were an early-stage lead investor, but that there’s no requirement that it’s exclusively Lux-seeded or Series-A-backed companies that receive investment. There’ve been a handful of companies we’ve backed in the past [that weren’t earlier bets] including (the liquid biopsy company) Thrive Earlier Detection [which was acquired soon after], (contract management software maker) IronClad [backed earlier this year], and (the at-home health testing company) Everly Health [which Lux first funded in December].

TC: What startup in your portfolio right now has received the most funding from Lux?

PH: I guess that would be Applied Intuition (which makes simulation software and infrastructure tools to test and validate autonomous vehicles at scale).

TC: How much do you look to own?

PH: Generally, where we are coming in as the lead institutional investor in a Series A, it’s 20% to 25%, and that can be higher or lower. In many cases, we will create companies from scratch and more often those can be as high as 50%.

TC: I didn’t realize that incubating companies was a big part of Lux’s business.

PH: Yeah, for us, one of the most successful of our investments was a company called Kurion that was a pioneer in nuclear waste remediation that we created based largely on the vision of my cofounder, Josh Wolfe, and his view on the future of alternative energy. We recruited all these great folks out of MIT’s material science department and built that and owned north of 30% when it was acquired by a French waste water company, Veolia, for $400 million in 2016 — and that [was part of a] $100 million fund.

TC: How active are you on this front right now? Given how heated pricing is out there, I’d think it’s a good time to be starting companies in-house.

PH: In the last two to three years, we’ve been most active in new [company] formation for exactly [those] reasons. It’s not like we’re just a factory [looking to] churn things out. Inspiration is the starting point. But whether it’s a market opportunity that we assess,  or whether it’s interesting science and tech that needs a catalyst to get things off the ground, we’re happy to play that role.

TC: What do you think of what’s happening in terms of the feverish pace of fundings and how quickly companies’ valuations are soaring? It seems nuts, but it’s also hard to imagine it ending anytime soon.

PH: I think we’re uncomfortably optimistic. Structurally, [I’m optimistic] because the way that science and technology are funded today is so changed. When I got into business in the late ’90s, the venture industry was small, it was provincial, it was people on Sand Hill Road who wouldn’t talk with anyone who was beyond 10 miles of their office. People were proud to know nothing about the financial markets because there was little connectivity in terms of their impact on [what VCs were doing].

Now it’s global and while some might say the market is frothy, [all that capital is] allowing companies that are really ambitious and that require capital that otherwise might not have [materialized] to [gain momentum], and from the perspective of scientific advancement and technological progress, this is good.

There will certainly be experimentation, people will lose money, there will be hundreds of companies funded and most of them wash out. But there’s going to be a lot of lasting transformative change that comes out of all of this.

Source: Tech Crunch