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Are startup valuations about to drop?
Hello friends! Alex here to talk to you for a hot second about the money. Next, we’ll cover startups, venture capital, what Big Tech does, and more. I promise. But stay with me for a moment.
Tech stocks were hammered today: the tech-heavy Nasdaq fell more than 2%. Cloud stocks suffered twice as much damage. What happened? The US government has said it could raise interest rates. So what? Well, when rates were low, a lot of money that could have been invested elsewhere was instead funneled into tech stocks and venture capital funds that invest in startups.
Now, with the government saying it could turn the current situation upside down, investors are responding by selling tech stocks. Byron Deeter, investor in Bessemer Venture Partners, noted the decline, Tweeter that after “a few brutal days in the clouds”, with software stocks down “~ 5% today and ~ 10% on the week”, he was curious as to whether valuations “just take a break after a massive year 2020 “or begin” a larger reset. “
This is a great question. More information on the underlying economics of the situation here and here. Now in the field of startups.
Twitter doubles the number of subscriptions
If you were curious how Twitter was going to pursue its subscription strategy, the answer, to some extent, is to buy startups. Today, Big Tweet announced that it is buying Scroll, a startup that charges a fee to its users, providing them with an ad-free experience on various media sites. Scroll down and then split its usage fees with these sites.
A neat model, yeah? It’s a bit like the startup called Contenture that TechCrunch covered a few times in 2009. Only Scroll has made more progress than Contenture. And yours truly was not a co-founder of Scroll.
Either way, the Scroll-Twitter deal is important as the social media company is busy integrating startups and products into its ecosystem to better create a set of services that could help it monetize more effectively on. the long term. Sarah reports:
[Scroll] will be part of Twitter’s larger plans to invest in subscriptions, the company says, and will later be offered as one of the premium features Twitter will provide to subscribers. Premium subscribers will be able to use Scroll to easily read their articles in news outlets and from Twitter’s own newsletter product, Revue, another recent acquisition that has already been integrated into the Twitter service. When subscribers use Scroll through Twitter, a portion of their subscription revenue will go to helping publishers and editors create the content, Twitter explains in an announcement.
Twitter vs. Substack? Yeah. Twitter vs. Clubhouse? Yeah. What if Twitter can help media companies monetize better and therefore not die? Well then it’s Twitter versus the a16z media operation. I wasn’t really expecting a Jack vs Marc 2021 but I’m here for everything.
A typical day in the current startup financing market
There was a cornucopia of startup news today on the site, so I’ve narrowed it down a bit to get you what you need quickly. Also, shout at Mary ann to cover half of it on its own.
Here is the recap:
To round out our startup and venture capital ratings, here’s two more pieces of information: Austin-based Multicoin Capital has raised a $ 100 million fund to “further capitalize on the rampant excitement in the crypto world.” according to our own reports. Oh, and London-based startup investment fund Stride VC has raised a £ 100million fund.
Advice and analysis from Extra Crunch
How to enter Silicon Valley as a foreigner
There is no magic spell that will make an investor meet you. As with most things in life, it all depends on who you know and what you have to offer.
“Nothing beats building human networks,” says Domm Holland, CEO and co-founder of Fast. “This is how you’re going to get there in terms of fundraising.”
Since its inception in 2019, Fast has raised $ 124 million in three rounds by attracting new users and partners like Stripe to its one-click payment product. In this interview, Holland from Australia shares actionable advice for other foreigners with startup dreams.
“Raising money isn’t the only thing,” says Holland. “You have to hire people, you have to build a team, you have to create customers and suppliers, and you have to create entire ecosystems.
(Extra Crunch is our membership program, which helps founders and startup teams grow. You can sign up here.)
The company retaliates
Before we get into the company news, here’s what you want to read: Tesla spent $ 3 (not a typo) to buy battery technology patents that we think could really have importance.
On the corporate front, Ron has two stories today of tech giants that matter. The first is an interview with the CEO of SAP, Christian Klein. SAP, you will recall, created Qualtrics a little while ago. What awaits the software giant? Ron is on the case!
Likewise, Box’s time in the barrel continues as some of its largest public shareholders wave to “inject [Box’s] board with even more new blood, glancing at Box’s management team while she was at it. It’s a fight worth watching as it could encourage or discourage more unicorns from going public.
Finally from Big Tech, some good news. Namely that Instagram is working on improving its captioning technology, which could help with accessibility. And our own Devin, without Twitter, reports that Microsoft wants to help kids read.
We asked everyone on Twitter about their experience trying to learn a foreign language, and you can weigh here. Some of you have tried using Duolingo (with success!) And some have shockingly gone through German lessons in college without learning a single sentence of the language. Whatever your personal experience, read the Duolingo EC-1 and find out how the business got started, how it figured out how to make money and what happens next for it.
Speaking of starting a business… if you’re starting your own, join us for this week’s Extra Crunch Live. Register here. It’s free! We’ll see each other there.