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Hello and welcome to Daily Crunch for August 6, 2021. We made it to Friday. High-fives all around. If you own stocks or cryptos, you are wrapping up the week on a high. Crypto prices are rising while some indices are hitting records.

Before we get into the news, don’t forget that TechCrunch is launching another newsletter! The first edition of This Week in Apps by our own Sarah Perez launches Saturday morning and is the place to go for all of your app news goodness. Be sure to sign up here.

Now, the news. — Alex

The TechCrunch Top 3

• SpaceX builds 400-foot rocket: If you were concerned that childish jokes regarding billionaire rocketry were about to die down, fear not: SpaceX has stacked its Starship vehicle on top of a Super Heavy booster. That means a very tall rocket with much oomph. This is the first time that Starship and Super Heavy have come together.
• The changing value of insurtech startups: A few weeks back, TechCrunch asked if the market should be concerned about insurtech valuations. Then they took another hit. We tackled the topic in the wake of Hippo’s public listing, deciding that most public insurtech companies are wealthy enough in cash terms to not sweat the declines. Too much.
• What to expect from Samsung’s next hardware event: Samsung’s impending Unpacked event may be, well, packed. We could see a new Galaxy Fold phone, new watches, wearables from a Google partnership and more. TechCrunch will be covering the event this August 11, so stick close to the site for more.

Startups/VC

• DesignOps is the new DevOps: That’s our take on zeroheight and its new $10 million Series A round. The startup “does for UX what DevOps platforms like GitHub do for building and shipping code, providing a central place to document and manage UX components,” CEO Jerome de Lafargue told TechCrunch.
• 500 Startups backs the Carta for Africa: Carta is an important part of the U.S. startup technology stack, helping keep cap tables and shares in proper order. As Africa’s startup scene expands, it will need something similar. And Raise is building it. Per the startup, most startup equity on the continent is still tracked with paper. It’s time for that to change.
• Healthcare provider API raises $17M: APIs to help companies manage their providers are not new. AgentSync is building something in the space for insurance brokers. Verifiable is pursuing a similar model, but focused on healthcare workers. As with Rapid, what is being replaced are manual processes. Software is good at many things, but alleviating humans from certain types of bullshit work is one of them.
• Card-issuing APIs are coming to Africa: Thanks to the first Zambian company to get into Y Combinator, I hasten to add. The startup in question, Union54, was first launched in 2015 as Zazu, a neobank. But it found the card-issuing space so punitive to work with that it took on that problem, rebranding along the way. Card issuing is a big market in the U.S. and Latin America. Let’s see how it performs in the startup space on a new continent.
• To close out our startup coverage today, TechCrunch has a good and long look at the burgeoning startup hub of Utrecht, that bit of the Netherlands that always looks super gorgeous when you see a photo of it. Enjoy!

Craft your pitch deck around ‘that one thing that can really hook an investor’

We frequently run articles with advice for founders who are working on pitch decks. It’s a fundamental step in every startup’s journey, and there are myriad ways to approach the task.

Michelle Davey of telehealth staffing and services company Wheel and Jordan Nof of Tusk Venture Partners appeared on Extra Crunch Live recently to analyze Wheel’s Series A pitch.

Nof said entrepreneurs should candidly explain to potential investors what they’ll need to believe to back their startup.

” … It takes a lot of guesswork out of the equation for the investor and it reorients them to focus on the right problem set that you’re solving,” he said.

“You get this one shot to kind of influence what they think they need to believe to get an investment here … if you don’t do that … we could get pretty off base.”

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

• Amazon gets win in Indian Supreme Court: Not happy with a planned sale of Indian retail and warehouse chain Future Group to Reliance Retail, the leader in its category, Amazon won a legal reprieve this week when India’s Supreme Court said that a ruling in Singapore to halt the transaction was valid in the country. Seeing a U.S. tech giant argue against consolidation of players in a market may sound ironic, or even hypocritical, but in business it’s better to simply remember that corporations are amoral by nature at best.
• Drama costs at Velodyne rise: Lidar shop Velodyne, a company that went public via a SPAC, is still paying out to cover the price of internal drama and some executive departures. TechCrunch dug into the company’s latest earnings here.

TechCrunch Experts: Growth Marketing

We’re reaching out to startup founders to tell us who they turn to when they want the most up-to-date growth marketing practices. Fill out the survey here.

Read one of the testimonials we’ve received below!

Marketer: Tate Lowry, Ranq

Recommended by: Anonymous

Testimonial: “They have been on my radar since their co-owner sold the e-comm website Here Pup. Tate and Perrin knew exactly what my site needed to ensure a realistic growth. They didn’t blow up any promises; they didn’t nickel and dime me along the way. Honest and genuine agencies that actually map out how they can and will help you are far and few between.”

“The growth industry is definitely maturing. Less hacks, more teams, more focus on velocity,” Ward van Gasteren, founder of Grow with Ward told us in an interview this week. “Everybody within the field is getting to know the best practices very quickly and implementing them even quicker. So then what?”

Working with a growth professional can alleviate some of the pressure on founders who are finding their way. In our discussion, van Gasteren spoke about the importance of knowledge — qualitative feedback, systemic approaches and when/how to experiment.

This week in TechCrunch’s growth marketing roundup, you’ll also find two guest columns from Stewart Hillhouse and Sam Richard’s take on how to hire a growth team. Below you’ll find recommendations of growth marketers from the community. If there’s a growth marketer that you’ve enjoyed working with, please fill out our survey.

Marketer: Maksym Podsolonko, Fractional CMO
Recommended by: Anonymous
Testimonial: “They provide hands-on marketing support and take full ownership of the marketing function. Ideal for companies that don’t need a full-time CMO.”

Marketer: Tate Lowry, Ranq
Recommended by: Anonymous
Testimonial: “They have been on my radar since their co-owner sold the e-comm website Here Pup. Tate and Perrin knew exactly what my site needed to ensure a realistic growth. They didn’t blow up any promises, they didn’t nickel and dime me along the way. Honest and genuine agencies that actually map out how they can and will help you are far and few between.”

 

Help TechCrunch find the best growth marketers for startups.

Provide a recommendation in this quick survey and we’ll share the results with everybody.

 

Demand Curve: Tested tactics for growing newsletters: Stewart Hillhouse, senior content lead at Demand Curve, talks through tactics for email newsletters. Hillhouse tells us that newsletters have nearly 40x ROI, but you have to work in order to achieve that. This article discusses the 60% rule for pop-ups, the strategy behind email timing and the importance of quality over quantity. Hillhouse mentions, “We’ve seen very little correlation between volume of emails and the resulting conversion rate.”

(Extra Crunch) Demand Curve: Questions you need to answer in your paid search ads: Hillhouse also wrote an Extra Crunch article this week about the 14 questions you should be answering with your paid search ads. One question he mentions revolves around acceptance and how “Going shopping in real life is a social activity. Shoppers will peer into the carts of others, compare their tastes and ask those with them for input.” Let’s be honest — we’ve all done it. Hillhouse answers how this behavior can be replicated for online shopping.

(Extra Crunch) How to hire and structure a growth team: Sam Richard, senior director of growth at OpenView, provides insights on what questions you should be asking when you’re hiring a growth leader. Richard says, “A strong growth-minded hire will already have a feel for benchmarks and should be able to identify which growth lever in your customer journey needs the most help.”

How Ward van Gasteren thinks about growth hacking today: In this interview, Ward van Gasteren spoke about common misconceptions regarding growth hacking, like how it’s assumed to be a perfect approach. But, we were told, “The hard data that you see in your analytics tools can only tell you what is slowing down your growth … not why your growth slows down there.”

Is there a startup growth marketing expert that you want us to know about? Let us know by filling out our survey.

Assembling a startup team is harder than assembling 10 IKEA dressers, and the stakes are much, much higher.

Starting with the assumption that 90% of startups will fail and the most successful ones take an average of six years to IPO, founders must make careful decisions about whom they invite to join the core team.

Will that stellar engineer become a great CTO? Should your product person be opinionated or a team player? Are you even the best choice for CEO?

ThoughtSpot CEO Sudheesh Nair shared some of his thoughts about building a sturdy leadership team and drafted a thorough checklist for entrepreneurs who are putting a crew together. His initial advice?

“Investors love founder-CEOs, and founders are often fantastic candidates for this role. But not everyone can do it well, and more importantly, not everyone wants to.”

In a related article, Gregg Adkin, VP and managing director at Dell Technologies Capital, shared the framework he’s developed for helping founders set up their board.

Choosing the right mix of people can impact everything from fundraising to hiring: “Investors often ask founders about their board [because] it says a lot about their character, their judgment and their willingness to be challenged,” he writes.

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Full Extra Crunch articles are only available to members.
Use discount code ECFriday to save 20% off a one- or two-year subscription.

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Miranda Halpern spoke to Amsterdam-based coach Ward van Gasteren for our latest growth marketing interview, which is free to read.

In their discussion, van Gasteren addressed misconceptions about growth hacking, the mistakes most startups are likely to make, and the distinctions he draws between growth hacking and growth marketing:

“Growth hacking is great to kickstart growth, test new opportunities and see what tactics work,” he tells us.

“Marketers should be there to continue where the growth hackers left off: Build out those strategies, maintain customer engagement, and keep tactics fresh and relevant.”

Thanks very much for reading Extra Crunch this week; I hope you have a great weekend.

Walter Thompson
Senior Editor, TechCrunch

@yourprotagonist

What Square’s acquisition of Afterpay means for startups

In his first column since returning to TechCrunch, reporter Ryan Lawler considered the potential ripples Square’s purchase of Afterpay may send across the pond of buy now, pay later startups.

For commentary and perspective, he interviewed:

• Dan Rosen, founder and general partner, Commerce Ventures
• Jake Gibson, founding partner, Better Tomorrow Ventures
• TX Zhuo, partner, Fika Ventures
• Matthew Harris, partner, Bain Capital Ventures

The investors he spoke to agreed that deferring payments helps drive e-commerce, “but scale matters and long-term margins look slim for BNPL startups,” reports Ryan.

Enterprise AI 2.0: The acceleration of B2B AI innovation has begun

Businesses have been deploying AI solutions for 20 years, but few have achieved the outstanding gains in efficiency and profitability promised when the technology first appeared.

But there’s a burgeoning new generation of enterprise AI, Eshwar Belani, an operating partner at Symphony AI, writes in a guest column.

“Companies on the leading edge of AI innovation have advanced to the next generation, which will define the coming decade of big data, analytics and automation — Enterprise AI 2.0.”

Embodied AI, superintelligence and the master algorithm

Over the next 18 months, one technologist says the increased adoption of embodied artificial intelligence will open a path to superintelligence — incredibly powerful software that dwarfs anything the human mind could produce.

“All the crazy Boston Dynamics videos of robots jumping, dancing, balancing and running are examples of embodied AI,” says Chris Nicholson, founder and CEO of Pathmind, which uses deep reinforcement learning to optimize industrial operations and supply chains.

“The field is moving fast and, in this revolution, you can dance.”

A lot of cash and little love: An insurtech story

The Exchange looks at the valuations of public insurtech companies and considers what that means for startups — but from a slightly different perspective.

“We’d typically riff on the new values of public neoinsurance companies and use that data to work our way into a guess concerning what the price declines might mean for related startups,” Alex Wilhelm writes. “Taking public-market data and using it to better understand private markets is pretty much the national pastime of this column.

“Not today.”

5 factors founders must consider before choosing their VC

The fact that the globe is awash in venture capital should not be news to readers of this newsletter.

For founders, it means more than just fat checks, Kunal Lunawat, the co-founder and managing partner of Agya Ventures, writes in a guest column.

“Founders would be well served to go back to the basics and focus on the principles of fundraising when determining who sits on their cap table.”

Neobanks’ moves toward profitability could be the path to public markets

Alex Wilhelm checks in on results from Starling Bank and Monzo to see what the neobanks’ most recent financial figures say about the state of neobanks overall.

“Although some neobanks are managing to clean up their ledgers and work toward profits — or reach profitability — not all are in the black,” he notes.

But among those that are?

“At least a portion of the neobanking world is financially stable enough to consider public offerings.”

Founders must learn how to build and maintain circles of trust with investors

The red-hot venture capital market may give founders lots of investors to choose from, but the most important thing (if you can be choosy) is being able to trust and rely on your investors, Ripple Ventures’ Matt Cohen and True’s Tony Conrad write in a guest column.

“This … new dynamic is forcing founders to be extremely selective about exactly who is sitting around their mentorship table,” they write.

“It’s simply not possible to have numerous deep and meaningful relationships to extract maximum value at the early stage from seasoned investors.”

What’s the board’s role in an early-stage startup?

Assembling a board of directors is not merely about finding individuals who can aid your early-stage journey, Gregg Adkin, the vice president and managing director at Dell Technologies Capital, writes in a guest column.

The composition of the board can also impact your fundraising.

“Investors often ask founders about their board [because] it says a lot about their character, their judgment and their willingness to be challenged,” he writes.

Adkins offers a framework he calls “SPIFS” — for strategy, people, image, finance and systems for compliance — to aid founders in setting up a board.

Do bronze medals ever make sense for unicorns?

In the wake of Deliveroo’s plans to abandon the Spanish market after the country passed legislation requiring companies dependent on gig workers to hire employees, Alex Wilhelm wondered about the battle for smaller markets and whether third place is sufficient.

“One company exiting a market is not a big deal, but we were curious about Deliveroo’s comments regarding the need for market leadership — or something close to it — to warrant continued investment,” he writes for The Exchange.

“Is this the common reality for startups battling for market position, no matter if those markets are cities or countries?”

Biden’s major bipartisan infrastructure plan struck a rare chord of cooperation between Republicans and Democrats, but changes it proposes to cryptocurrency regulation are tripping up the bill.

The administration intends to pay for $28 billion of its planned infrastructure spending by tightening tax compliance within the historically under-regulated arena of digital currency. That’s why cryptocurrency is popping up in a bill that’s mostly about rebuilding bridges and roads.

The legislation’s vocal critics argue that the bill’s effort to do so is slapdash, particularly a bit that would declare anyone “responsible for and regularly providing any service effectuating transfers of digital assets” to be a broker, subject to tax reporting requirements.

While that definition might be more straightforward in a traditional corner of finance, it could force cryptocurrency developers, companies and even anyone mining digital currencies to somehow collect and report information on users, something that by design isn’t even possible in a decentralized financial system.

Now, a new amendment to the critical spending package is threatening to make matters even worse.

Unintended consequences

In a joint letter about the bill’s text, Square, Coinbase, Ribbit Capital and other stakeholders warned of “financial surveillance” and unintended impacts for cryptocurrency miners and developers. The Electronic Frontier Foundation and Fight for the Future, two privacy-minded digital rights organizations, also slammed the bill.

Following the outcry from the cryptocurrency community, a pair of influential senators proposed an amendment to clarify the new reporting rules. Finance Committee Chairman Ron Wyden (D-OR) pushed back against the bill, proposing an amendment with fellow finance committee member Pat Toomey (R-PA) that would modify the bill’s language.

The amendment would establish that the new reporting “does not apply to individuals developing block chain technology and wallets,” removing some of the bill’s ambiguity on the issue.

“By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers — many of whom don’t even have the personal-identifying information needed to file a 1099 with the IRS — are not subject to the reporting requirements specified in the bipartisan infrastructure package,” Toomey said.

Wyoming Senator Cynthia Lummis also threw her support behind the Toomey and Wyden amendment, as did Colorado Governor Jared Polis.

“Picking winners and losers”

The drama doesn’t stop there. With negotiations around the bill ongoing — the text could be finalized over the weekend — a pair of senators proposed a competing amendment that isn’t winning any fans in the crypto community.

That amendment, from Sen. Rob Portman (R-OH) and Mark Warner (D-VA), would exempt traditional cryptocurrency miners who participate in energy-intensive “proof of work” systems from new financial reporting requirements, while keeping those rules in place for those using a “proof of stake” system. Portman worked with the Treasury Department to author the cryptocurrency portion of the original infrastructure bill.

Rather than requiring an investment in computing hardware (and energy bills) capable of solving increasingly complex math problems, proof of stake systems rely on participants taking a financial stake in a given project, locking away some of the cryptocurrency to generate new coins.

Proof of stake is emerging as an attractive, climate-friendlier alternative that could reduce the need for heavy computing and huge amounts of energy required for proof of work mining. That makes it all the more puzzling that the latest amendment would specifically let proof of work mining off the hook.

Some popular digital currencies like Cardano are already built on proof of stake. Ethereum, the second biggest cryptocurrency, is in the process of migrating from a proof of work system to proof of stake to help scale its system and reduce fees. Bitcoin is the most notable digital currency that relies on proof of work.

The Warner-Portman amendment is being touted as a “compromise” but it’s not really halfway between the Wyden-Toomey amendment and the existing bill — it just introduces new problems that many crypto advocates view as a fresh existential threat to their work.

Prominent members of the crypto community, including Square founder and Bitcoin booster Jack Dorsey, have thrown their support behind the Wyden-Lummis-Toomey amendment while slamming the second proposal as misguided and damaging.

The executive director of Coincenter, a crypto think tank, called the Warner-Portman amendment “disastrous.” Coinbase CEO Brian Armstrong echoed that language. “At the 11th hour @MarkWarner has proposed an amendment that would decide which foundational technologies are OK and which are not in crypto,” he tweeted. “… We could find ourselves with the Senate deciding which types of crypto will survive government regulation.”

Unfortunately for the crypto community — and the promise of the proof of stake model — the White House is apparently throwing its weight behind the Warner-Portman amendment, though that could change as eleventh hour negotiations continue.

Andy Yang joined Indiegogo at a turbulent time. As the crowdfunding platform’s then-CEO stepped aside for personal reasons, the service also reportedly grappled with layoffs. Coming on board after a stretch with Reddit, the new CEO would have less than a year at the helm before COVID-19 turned the globe upside down.

Now 13 years old, the San Francisco-based site matured alongside the world of online crowdfunding. And, certainly, Indiegogo had a front-row seat for all of the ups and downs. Indiegogo introduced several million-dollar campaigns, but the platform has often suffered from comparisons to Kickstarter, a service that has become synonymous with the category for many.

Yang sat down to discuss how Indiegogo has changed under his tenure, how crowdfunding has evolved and what both will look like in a post-pandemic world.

(This interview has been edited for length and clarity.)

What was your primary objective coming on as CEO?

I was at Reddit doing core product, and when Indiegogo’s board and founders reached out, it was really around, “Hey, we would love somebody with product experience, a background in community.” What was going on in Indiegogo was really an evaluation of, “What’s our core values?” When I took the saddle and the reigns, it was really focusing on that core of who we are, what segments do we want to go after, and where do we want to focus. Where do we want to focus our product?

From that perspective, we’ve been really heads-down for the last two years, just working on ourselves, internally, and focusing on the core — what we’re terming “bringing the crowd back in crowdfunding.” I think a lot of the platforms have been very transactional in nature, and so I think backers and consumers and users have been trained by Amazon to click a button and get things two hours later. The premise of crowdfunding is very different.

You may or may not get this perk delivered in the time frame that you’re expecting, and to help educate backers and the community around that is really core to who we are. We’ve been through the last two years with COVID, but we’ve been profitable since I’ve joined, which is huge. We can control our own destiny and really take the time to do things right and invest in areas like trust and safety, like community, that we really wanted to.

The company wasn’t profitable when you joined?

We weren’t profitable. I enjoyed and then we cut to profitability, or at least kind of a neutral state, and with any kind of change in leadership, some tenured folks opted out, and we basically became a new team overnight to kind of re-found the company, and we’ve been slowly adding people over the last couple years, but always with that eye on profitability and controlling our own destiny.

Beyond people changing roles, what had to happen in order for the company to become profitable?

Really doubling down on making sure that we understood our sales pipeline and making sure that, from a supply perspective, that we had a number of campaigns from across a number of categories. Obviously, our bread and butter is what we call tech and innovation, consumer electronics hardware, but also seeing what other categories that we can lean into. We’re definitely strong in comics, travel, outdoors, and what can we do from expanding our wedge and our categories in different areas that we’re seeing growth. I think a trend that we’re currently seeing is a lot of green tech. Just trying to understand what categories are growing, where our brand resonates with entrepreneurs and backers.

That’s what needed to happen — just making sure that we had adequate supply on the platform, and also just from the backer side, we had not traditionally focused on the backer side. We had heavily focused on the supply side, but really starting to, again, return back to the crowd in crowdfunding, leaning on my Reddit experience, just making sure that we can engage the community in new and interesting ways.

Kickstarter announced on Wednesday that backers have pledged $6 billion to more than 200,000 projects over the course of the crowdfunding site’s history. The milestone comes a little over a year after the platform hit the $5 billion mark.

A matter of weeks before the company hit that last massive round number, however, it revealed starker news. Kickstarter reduced its staff by 39%, through a combination of layoffs and buyouts, as newly minted CEO Aziz Hasan noted a 35% drop in new projects. The company wasn’t alone, certainly, in suffering major setbacks in the face of a pandemic, but that likely didn’t cushion the blow of a downturn with “no clear sign of rebound,” according to the executive.

With another $1 billion pledge in the intervening 15 months, however, it’s probably safe to say that predictions of crowdfunding’s demise were somewhat premature. Like most of the rest of us, the pandemic has spurred a reprioritization and recentering, and the service that has long been synonymous with the category looked to new methods of engagement.

After a dozen years of being the face of crowdfunding, plenty of question marks still remain. The past decade has seen something of a hype bubble for the process, and for some, the shine has worn off a bit, courtesy of undelivered gifts and unfinished campaigns. What will the next decade hold for crowdfunding’s biggest name? And will the pandemic fundamentally transform how people back projects on the internet?

We sat down with Hasan to discuss the past year, the company’s big milestone and the future of crowdfunding.

(This interview has been edited for length and clarity.)

When you took the role of CEO in 2019, what changes did you feel like you needed to implement?

I’d really like to touch on the connection that I’ve always felt with Kickstarter. It, for me personally, is a place where I feel like both my personal passion and what we do on a day-to-day basis came together really well. At one of the first all-hands when I got hired, I said what’s beautiful about the job that I get to do is that every evening I go home and I illustrate. And so I get to feel the hard pain, a lot of the insecurity and the uncertainty that comes with being a creator.

I come in every morning and I say, “OK, how am I going to fix that? What can I do to make that process better, make that easier?” And so that for me was just this underlying motivation. This is what gets me out of bed in the morning. The thought to me was, “What are the ways in which we have the greatest strength in helping creators find the funding that they need?”

I think one of the greatest opportunities that I really see is that the backers are such an incredible part of this puzzle, and for us, for the longest time we really focused on the creator tools and really making sure that the creators have a way to share their project. What we’ve seen is that backers are such a tremendous part of this process and their ability to discover the joy, the fun, the curiosity that they feel through that process is such an important part of the experience as well. And so here’s a place where we can actually put some focus and some time and attention on what the backer experience looks like. And so that really has been a big mantra for me as we’ve been moving forward.

What does it mean to impact the backer experience? In the past two years, how has the backer experience changed?

One is just making it simpler and easier for backers to find projects that they would care about. And I think us being just a space where this stuff exists, I think just putting it out there as it is on a home page or through the creator that you know isn’t enough. And so there are a lot of channels that we’ve been using, particularly thinking about our emails and newsletters and these points of connection that we have with the backer over the course of their journey and actually introducing projects that they might like through that process. So we have a recommendation engine that we’ve been developing over the last few years that’s meant to help connect, make better connections based on either affinity, which you might like, or the way that you backed in the past or projects that you might’ve watched.

Early last year, Kickstarter went through a fairly large round of layoffs — 40%, according to reports. How did the company navigate the earliest days of the pandemic and what do you feel you’ve done to help right that ship?

What we saw in our platform was that creators just kind of off the bat had the same level of uncertainty everybody else was feeling. We saw a slowdown of projects and what we saw was about 40% of our pledge volume dipping. And as a result, there’s a lot of projects that fell off as a result of that. There were some very, very concerning times. The big thing that we thought about was, we need to make sure that our business is resilient for the future, make sure that we’re actually just set up operationally in a way that we can withstand uncertainty as it comes. Through that really tough time and then, kind of peeking out toward the end of 2020, the backers didn’t change their pattern of behavior. Even though creators were launching fewer projects during that really difficult time, what we saw was that the backers remained extremely eager to keep pushing forward and supporting creative work.

So things like our pledge rates and success rates remained quite high and that’s especially if you think about the games community, comics, publishing a number of these spaces where we’ve always seen strong engagement. That engagement actually continued through. About four or five months after that initial dip, we slowly started to see some of the creators come back online, because I think they also started to recognize that the backers are there. They haven’t changed their backing patterns. And so what that did for us is that started to give us a bit of understanding here that we should start to connect back to the creators and let them know that the backers are here.

It sounds like a plan concocted by a supervillain, if that villain’s dastardly end was to provide cheap, clean power all over the world: launch a set of three-kilometer-wide solar arrays that beam the sun’s energy to the surface of the Earth. Even the price tag seems gleaned from pop fiction: one hundred million dollars. But this is a real project at Caltech, funded for a nearly a decade largely by a single donor.

The Space-based Solar Power Project has been underway since at least 2013, when the first donation from Donald and Brigitte Bren came through. Donald Bren is the chairman of Irvine Company and on the Caltech board of trustees, and after hearing about the idea of space-based solar in Popular Science, he proposed to fund a research project at the university — and since then has given more than $100 million for the purpose. The source of the funds has been kept anonymous until this week, when Caltech made it public.

The idea emerges naturally from the current limitations of renewable energy. Solar power is ubiquitous on the surface, but of course highly dependent on the weather, season and time of day. No solar panel, even in ideal circumstances, can work at full capacity all the time, and so the problem becomes one of transferring and storing energy in a smart grid. No solar panel on Earth, that is.

A solar panel in orbit, however, may be exposed to the full light of the sun nearly all the time, and with none of the reduction in its power that comes from that light passing through the planet’s protective atmosphere and magnetosphere.

“This ambitious project is a transformative approach to large-scale solar energy harvesting for the Earth that overcomes this intermittency and the need for energy storage,” said SSPP researcher Harry Atwater in the Caltech release.

Of course, you would need to collect enough energy that it’s worth doing in the first place, and you need a way to beam that energy down to the surface in a way that doesn’t lose most of it to the aforementioned protective layers but also doesn’t fry anything passing through its path.

These fundamental questions have been looked at systematically for the last decade, and the team is clear that without Bren’s support, this project wouldn’t have been possible. Attempting to do the work while scrounging for grants and rotating through grad students might have prevented its being done at all, but the steady funding meant they could hire long-term researchers and overcome early obstacles that might have stymied them otherwise.

The group has produced dozens of published studies and prototypes (which you can peruse here), including the lightest solar collector-transmitter made by an order of magnitude, and is now on the verge of launching its first space-based test satellite.

“[Launch] is currently expected to be Q1 2023,” co-director of the project Ali Hajimiri told TechCrunch. “It involves several demonstrators for space verification of key technologies involved in the effort, namely, wireless power transfer at distance, lightweight flexible photovoltaics and flexible deployable space structures.”

These will be small-scale tests (about six feet across), but the vision is for something rather larger. Bigger than anything currently in space, in fact.

“The final system is envisioned to consist of multiple deployable modules in close formation flight and operating in synchronization with one another,” Hajimiri said. “Each module is several tens of meters on the side and the system can be built up by adding more modules over time.”

Eventually the concept calls for a structure perhaps as large as 5-6 kilometers across. Don’t worry — it would be far enough out from Earth that you wouldn’t see a giant hexagon blocking out the stars. Power would be sent to receivers on the surface using directed, steerable microwave transmission. A few of these in orbit could beam power to any location on the planet full time.

Of course that is the vision, which is many, many years out if it is to take place at all. But don’t make the mistake of thinking of this as having that single ambitious, one might even say grandiose, goal. The pursuit of this idea has produced advances in solar cells, flexible space-based structures and wireless power transfer, each of which can be applied in other areas. The vision may be the stuff of science fiction, but the science is progressing in a very grounded way.

For his part, Bren seems to be happy just to advance the ball on what he considers an important task that might not otherwise have been attempted at all.

“I have been a student researching the possible applications of space-based solar energy for many years,” he told Caltech. “My interest in supporting the world-class scientists at Caltech is driven by my belief in harnessing the natural power of the sun for the benefit of everyone.”

We’ll check back with the SSPP ahead of launch.

With most popular online video games, there’s a huge gap between being a good player and a great one. A casual player might be able to hold their own against other casual players, only for a random pro to wander by and chew through everyone like they’re somehow playing with a different set of rules.

Could an AI-driven voice in your ear help close that gap, if only a bit? SenpAI.GG, a company out of Y Combinator’s latest batch, thinks so.

Much of that aforementioned gap boils down to practice, muscle memory and — let’s face it — natural ability. But as a game gets older/bigger/more complex, the best players tend to have a wealth of one resource that’s oh-so-crucial, if not oh-so-fun to gather: information.

Which guns do the most damage at this range? Which character is best suited to counter that character on this map? Hell, what changed in that “minor update” that flashed across your screen as you were booting up the game? Wait, why is my favorite weapon suddenly so much harder to control?

Staying on top of all this information as players discover new tactics and updates shift the “meta” is a challenge in its own right. It usually involves lots of Twitch streams, lots of digging around Reddit threads and lots of poring over patch notes.

SenpAI.GG is looking to surface more of that information automatically and help new players get good, faster. Their desktop client presents you with information it thinks can help, post-game analysis on your strategies, plus in-game audio cues for the things you might not be great at tracking yet.

It currently supports a handful of games — League of Legends, Valorant and Teamfight Tactics — with the info it provides varying from game to game. In LoL, for example, it’ll look at both teams’ selected champions and try to recommend the one you could pick to help most; in Valorant, meanwhile, it can give you an audio heads-up that one of your teammates is running low on health (before said teammate starts yelling at you to heal them), when you’ve forgotten to reload or how long you’ve got before the Spike (read: game-ending bomb) explodes.

Just as important as the information it provides is the information it won’t provide. In my chat with him, SenpAI.GG founder Olcay Yilmazcoban seemed very aware that there’s a hard-to-define line here where “assistant” blurs into “cheating tool” — but the company follows certain rules to stay on the right side of things and prevent their players from getting banned.

They won’t, for example, ever take action on a player’s behalf — they might fire an audio cue to say “hey, you should heal that teammate,” but they won’t press the button for you. They’ll only generate their real-time insights from what’s on your screen — not anything hidden within the running process. They also won’t do things like reveal an enemy’s location just because your teammate is also running the app and can see them. Think “good player standing over your shoulder,” not “wall hack.” The company says that they’re always within each game developer’s competitive fairness guidelines, and only work with approved/provided APIs.

It’s a good idea because it’s one that, arguably, never gets old. With each new game they support, they’ve got a new potential audience to serve. Meanwhile, it’s not as if the old games/insights will expire — a game’s big ol’ book-of-stuff-you-need-to-know tends to only get bigger and more complex as a game ages and the patches pile up. There are games I’ve been playing for years where I’d still love a voice assistant that says “Oh hey, the recoil on the gun you just picked up has gotten way more intense since the last time you played.” SenpAI.GG isn’t there yet, but there’s a ton of natural room for growth.

Yilmazcoban tells me that they currently have over 400,000 active users, with a team of 11 people working on it. The base app is free, with plans to offer advanced features for a couple bucks a month.

Everyone at an organization should own growth, right? Turns out when everyone owns something, no one does. As a result, growth teams can cause an enormous amount of friction in an organization when introduced.

Growth teams are twice as likely to appear among businesses growing their ARR by 100% or more annually. What’s more, they also seem to be more common after product-market fit has been achieved — usually after a company has reached about $5 million to $10 million in revenue.

I’m not here to sell you on why you need a growth team, but I will point out that product-led businesses with a growth team see dramatic results — double the median free-to-paid conversion rate.

How do you hire an early growth leader?

According to responses from product benchmarks surveys, growth teams have transitioned dramatically from reporting to marketing and sales to reporting directly to the CEO.

Some of the early writing on growth teams says that they can be structured individually as their own standalone team or as a SWAT model, where experts from various other departments in the organization converge on a regular cadence to solve for growth.

My experience, and the data I’ve collected from business-user focused software companies, has led me to the conclusion that growth teams in business software should not be structured as “SWAT” teams, with cross-functional leadership coming together to think critically about growth problems facing the business. I find that if problems don’t have a real owner, they’re not going to get solved. Growth issues are no different and are often deprioritized unless it’s someone’s job to think about them.

I put early growth hires into a few simple buckets. You’ve got:

Product-minded growth experts: These folks are all about optimizing the user experience, reducing friction and expanding usage. They’re usually pretty analytical and might have product, data or MarketingOps backgrounds.

Brick-and-mortar stores forced to close due to pandemic lockdowns had to quickly pivot to an online-only model. Understandably, newcomers to the digital retail scene found themselves behind the curve in attracting online buyers, particularly in the face of popular established events like Amazon Prime Day. This year’s Prime Day, held June 21-22, was reportedly the biggest ever on the platform.

Online retailers that have opted to forge their own path to generate sales often wonder how they can compete with Amazon.

The reality is that Amazon’s true unique selling proposition is its distribution network. Online retailers will not be able to compete on this point because Amazon’s distribution network is so fast. Instead, it’s important to focus on areas where they can excel — without having to become a third-party seller on Amazon’s platform.

The following are seven key tips that are relevant for online retailers that want to attract and retain customers without having to partner with Amazon or to try to beat it at its own game.

Gain a 360-degree view of the customer

An online retailer needs to consider what kind of experience it wants to create; customers expect smooth processes on every step of their online shopping journey.

One idea is to implement a consumer data platform that will help the retailer gain the best insights into their customers: who they are and what they like, which websites they frequent and other relevant information. Retailers can use this data to then target customers with ads for products they’ll actually want to buy. Consumer data platforms can even help online retailers target consumers across platforms as well as in the store.

Ensure smooth and glitch-free pre-sale transactions

One of the biggest frustrations with online retailers is the performance of a website, from getting on the site through the closing of the sale. If something fails or glitches at any point in the process of searching for a product and paying for it, the customer will leave and not come back.

The solution to this problem involves a lot of testing of the user interface to ensure a good user experience. Tests should be done on all e-commerce segments on a site, including the basket and ad banners. By inserting tags along the customer journey, a retailer can track lost sales and see where problems happen on their website.

Offer a broad variety of payment options

As a payment option, PayPal recently experienced a record 36% year-on-year growth in payment volume between the third quarter of 2019 and Q3 2020. Despite PayPal’s popularity, Amazon does not accept it as a form of payment.

Venture capitalists are chatting this week about a recent piece from The Information titled “The End of Venture Capital as We Know It.” As with nearly everything you read, the article in question is a bit more nuanced than its headline. Its author, Sam Lessin, makes some pretty good points. But I don’t fully agree with his conclusions, and want to talk about why.

This will be fun, and, because it’s Friday, both relaxed and cordial. (For fun, here’s a long-ass podcast I participated in with Lessin last year.)

A capital explosion

Lessin notes that venture capitalists once made risky wagers on companies that often withered away. Higher-than-average investment risk meant that returns from winning bets had to be very lucrative, or else the venture model would have failed.

Thus, venture capitalists sold their capital dearly to founders. The prices that venture capitalists have historically paid for startup equity in high-growth tech upstarts make IPO pops appear de minimis; it’s the VCs who make out like bandits when a tech company floats, not the bankers. The Wall Street crew just gets a final lap at the milk saucer.

Over time, however, things changed. Founders could lean on AWS instead of having to spend equity capital on server racks and colocation. The process of building software and taking it to market became better understood by more people.

Even more, recurring fees overtook the traditional method of selling software for a one-time price. This made the revenues of software companies less like those of video game companies, driven by episodic releases and dependent on the market’s reception of the next version of any particular product.

As SaaS took over, software revenues kept their lucrative gross margin profile but became both longer-lasting and more dependable. They got better. And easier to forecast to boot.

So, prices went up for software companies — public and private.

Another result of the revolution in both software construction and distribution — higher-level programming languages, smartphones, app stores, SaaS and, today, on-demand pricing coupled to API delivery — was that more money could pile into the companies busy writing code. Lower risk meant that other forms of capital found startup investing — super-late stage to begin with, but increasingly earlier in the startup lifecycle — not just possible, but rather attractive.

With more capital varieties taking interest in private tech companies thanks in part to reduced risk, pricing changed. Or, as Lessin puts it, thanks to better market ability to metricize startup opportunity and risk, “investors across the board [now] price [startups] more or less the same way.”

You can see where this is going: If that’s the case, then the model of selling expensive capital for huge upside becomes a bit soggy. If there is less risk, then venture capitalists can’t charge as much for their capital. Their return profile might change, with cheaper and more plentiful money chasing deals, leading to higher prices and lower returns.

The result of all of the above is Lessin’s lede: “All signs seem to indicate that by 2022, for the first time, nontraditional tech investors — including hedge funds, mutual funds and the like — will invest more in private tech companies than traditional Silicon Valley-style venture capitalists will.”

Capital crowding into the parts of finance once reserved for the high priests of venture means that the VCs of the world are finding themselves often fighting for deals with all sorts of new, and wealthier, players.

The result of this, per Lessin, is that venture “firms that grew up around software and internet investing and consider themselves venture capitalists” must “enter the bigger pond as a fairly small fish, or go find another small pond.”

Yeah, but

The obvious critique of Lessin’s argument is one that he makes himself, namely that what he is discussing is not as relevant to seed investing. As Lessin puts it, his argument’s impact on seed investing is “far less clear.”

Agreed. Sure, it’s the end of venture capital as we know it. But it’s not the end of venture capital, because if capitalism is going to continue, there’s always going to need to be risky-ass shit for VCs to bet on at the bottom.

The factors that made later-stage SaaS investing something that even idiots can make a few dollars doing become scarce the earlier one looks in the startup world. Investing in areas other than software compounds this effect; if you try to treat biotech startups as less risky than before simply because public clouds exist, you are going to fuck up.

So the Lessin argument matters less in seed-stage and earlier investing than it does in the later stages of startup backing, and doubly less when it comes to earlier investing in non-software companies.

While it’s a little-known fact, some venture capitalists still invest in startups that are not software-focused. Sure, nearly every startup involves code, but you can make a lot of money in a lot of ways by building startups, especially tech startups. The figuring-out of SaaS investing does not mean that investing in marketplaces, for example, has enjoyed a similar decline in risk.

So, the VCs-are-dead concept is less true for seed and non-software startups.

Is Lessin correct, then, that the game really has changed for middle- and late-stage software investing? Of course it has, but I think that he takes the concept of less risky, private-market software investing in the wrong direction.

First, even if private-market investing in software has a lower risk profile than before, it’s not zero. Many software startups will fail or stall out and sell for a modest sum at best. As many in today’s market as before? Probably not, but still some.

This means that the act of picking still matters; we can vamp as long as we’d like about how venture capitalists are going to have to pay more competitive prices for deals, but VCs could retain an edge in startup selection. This can limit downside, but may also do quite a lot more.

Anshu Sharma of Skyflow — and formerly of Salesforce and Storm Ventures, where I first met him — made an argument about this particular point earlier this week with which I am sympathetic.

Sharma thinks, and I agree, that venture winners are getting bigger. Recall that a billion-dollar private company was once a rare thing. Now they are built daily. And the biggest software companies aren’t worth the few hundred billion dollars that Microsoft was largely valued at between 1998 and 2019. Today they are worth several trillion dollars.

More simply, a more attractive software market in terms of risk and value creation means that outliers are even more outlier-y than before. This means that venture capitalists that pick well, and, yes, go earlier than they once did, can still generate bonkers returns. Perhaps even more so than before.

This is what I am hearing about certain funds regarding their present-day performance. If Lessin’s point held up as strongly as he states it, I reckon that we’d see declining rates of return at top VCs. We’re not, at least based on what I am hearing. (Feel free to tell me if I am wrong.)

So yes, venture capital is changing, and the larger funds really are looking more and more like entirely different sorts of capital managers than the VCs of yore. Capitalism is happening to venture capital, changing it as the world of money itself evolves. Services were one way that VCs tried to differentiate from one another, and probably from non-venture capital sources, though that was discussed less when The Services Wars were taking off.

But even the rapid-fire Tiger can’t invest in every company, and not all its bets will pay out. You might decide that you’d be better off putting capital into a slightly smaller fund with a slightly more measured cadence of dealmaking, allowing selection at the hand of fund managers that you trust to allocate your funds among other pooled capital to bet for you. So that you might earn better-than-average returns.

You know, the venture model.

V2Food is one of many new contenders in the alternative protein space, founded in Australia but now setting its sights on Europe, Asia and beyond. It has a few key advantages over the competition, and with €45 million in new funding it may be finding its way to plates in the Eurozone soon.

The company has seen strong uptake in its home market, and the first goal is to be No. 1 in Australia, said CEO and founder Nick Hazell, formerly of MasterFoods and PepsiCo R&D. But in the meantime they’ll be expanding their presence in Asia, where partner Burger King has launched a Whopper with their patty, and in Europe, where the product’s minimal suspicious elements come into play.

Currently v2Food makes plant-based ground beef and patties, sausages and a ready-made Bolognese sauce. Obviously they have strong competition in those categories, which are sort of the opening play of most alternative protein companies. But v2Food has a leg up on many of them in two ways.

First, v2Food products are made, or at least can be made, using “any standard meat production facility.” That’s a big plus for scaling and a minus for cost, since economies of scale are already in play. The processes for creating and mixing the plant-derived and other artificial substances that make up alternative proteins in general aren’t always amenable to existing infrastructure. This also opens the door to partnerships with existing meat companies that might have balked at having to switch processes. (Incidentally, Hazell noted that what they’re aiming for isn’t so much about replacing traditional meats so much as growing the market in a new direction, a philosophy those companies may appreciate.)

Second, as the press release announcing the fundraise puts it, “v2food products do not contain GMOs, preservatives, colors or flavorings. This makes it an ideal product for the European market, where the many large competitors have been unable to enter the market due to strict regulation.” It’s also a soft advantage for winning over in-store buyers vacillating between two plant-based options; who hasn’t on occasion ended up going for the one with fewer ingredients that proudly touts its lack of preservatives and such? The alt-protein buying demographic is likely especially sensitive to this consideration.

The €45 million round is a “B Plus,” led by European impact fund Astanor, with participation from Huaxing Growth Capitol Fund, Main Sequence and ABC World Asia. The money is going toward both R&D and scaling.

“This funding is an important step towards v2food’s goal of transforming the way the world produces food,” said Hazell. “It’s imperative that we scale quickly because these global issues need immediate solutions.”

To that end a large portion will go toward simply creating enough product to meet demand. They’re also doubling R&D spend to both accelerate new products and improve the existing ones. And rather than import the necessary ingredients to Australia, they’re exploring the possibility of building a local manufacturing facility there. With luck and a bit of plant-based elbow grease, the region could become a net exporter, propping up the local economy as well as building up v2Food’s resilience and cutting costs.

The Europe expansion is still a twinkle in the company’s (and Astanor’s) eye, for even with its simplicity and non-GMO origins, it’s not trivial to launch a new product in the European market.

 

Michelle Davey’s pitch to Jordan Nof of Tusk Venture Partners about Wheel, a startup focused on providing a full suite of virtual care solutions to clinicians, was front-loaded with early metrics. It may not be standard practice to start with the numbers, especially early on, but she explained to us why she chose that strategy — and Nof told us why it worked.

Davey and Nof joined us on a recent episode of Extra Crunch Live and went into detail on why Tusk was eager to finance Wheel, walking us through the startup’s Series A pitch deck and sharing which slides and bits clinched the deal.

Extra Crunch Live is a weekly virtual event series meant to help founders build better venture-backed businesses. We sit down with investors and the founders they finance to hear what brought them together, what they saw in each other and how they work together moving forward. We also host the Extra Crunch Live Pitch-Off, where founders in the audience can pitch their startups to our outstanding speakers.

Extra Crunch Live is accessible to everyone live on Wednesdays at noon PDT, but the on-demand content is reserved exclusively for Extra Crunch members. You can check out the full ECL library here.

When to lead with traction

Davey emphasized the importance of not sticking to a rigid format for building a pitch deck. She said it’s important to instead focus on crafting your pitch around what makes you appealing and unique. That should be on the foreground and featured prominently.

For Wheel, that meant leading with traction, since the company had impressive uptake even early on. That remained true for their recent Series B raise, too.

Sequoia is one of the most prestigious and successful venture firms to ever exist. The firm’s portfolio includes Airbnb, 23andMe, Docker, Dropbox, Figma and GitHub — and that barely covers the first half of the alphabet. (The Sequoia website lists portfolio companies in alphabetical order.)

So it should go without saying that we are absolutely thrilled to have Sequoia partner Stephanie Zhan and Rec Room founder Nick Fajt join us on Extra Crunch Live in the coming weeks.

Rec Room is a Seattle-based startup that allows users to not only play games, but to build them collaboratively with their friends. The gaming world has seen a huge boost in the wake of the pandemic, and Rec Room is thinking way out in the future about what gaming looks like not only as a user, but as a creator.

The company has raised nearly $150 million, and Sequoia led Rec Room’s seed and Series A financing rounds.

Stephanie Zhan has been with Sequoia as part of the early-stage and seed investment team, with a portfolio that includes Sunday (outdoor home subscription service), Linear (issues tracking tool for modern developers) and Middesk (background checks for businesses). She has also helped lead investments in Graphcore (microprocessors for machine intelligence), Evervault (dev tools for data privacy) and Doppler (secrets management for developers).

Before joining Sequoia, Zhan held product roles at Google and Nest.

We’ll hear from this founder/investor duo about how they met, what made them choose each other and how they’ve worked together and tackled obstacles moving forward.  REGISTER HERE FOR FREE!

Extra Crunch Live also features the ECL Pitch-off, where founders in the audience will have the opportunity to virtually raise their hand and pitch on our stage to our guests, who will give live feedback.

Anyone can attend Extra Crunch Live, but accessing the content on-demand is reserved exclusively for Extra Crunch members. And damn, the Extra Crunch library is quite a resource. If you’re not yet a member, what are you waiting for? Sign up here.

This episode of Extra Crunch Live, which goes down on August 18 at 3 pm ET/noon PT, is a can’t miss. See you there!

Velodyne Lidar, the sensor company that went public a year ago when it merged with special purpose acquisition company Graf Industrial Corp., reported its second quarter earnings Thursday, results that show a company spending more to find new customers for its products while grappling with an increasingly expensive internal drama.

Just a few weeks ago, Velodyne’s CEO Anand Gopalan resigned, taking $8 million in equity compensation with him, according to the company’s second-quarter report. At the time of Gopalan’s resignation, the company restated its business outlook for 2021 revenue, noting that its guidance of between $77 million and $94 million remained unchanged.

Earlier in the year, founder David Hall was removed as chairman of the board and his wife, Marta Thoma Hall, lost her role of chief marketing officer following an investigation by the board into the couple for “inappropriate behavior.” The legal fees involved in this debacle set the company back $1.4 million this quarter, and $3.7 million for the first half of 2021, according to Velodyne CFO Drew Hamer.

The board’s fight with the Halls has escalated. In a May letter, David Hall blamed the SPAC, specifically the SPAC-appointed members of the combined company’s board, for its poor financial performance, and called for the resignation of Gopalan and two board members.

During a call with investors Thursday, Hamer also said general and administrative expenses are expected to increase by about 35% in 2021 due to increased public company and legal expenses, meaning the struggle is not over. From the first quarter to the second, there was already a 21% increase, from $17 million to $20.6 million.

The “general and administrative expenses” category falls under the company’s broader operating expenses, which were $84.8 million this quarter, about double last quarter’s spend. 

Rising legal costs at the company are only part of its accelerating cost profile. The company is also investing heavily in growth, namely in sales and marketing.

A large majority of operating expenses were spent on sales and marketing. Velodyne spent $47.2 million in the second quarter, which is up massively from $7.1 million in the first quarter.

On average, companies spend about 11.3% of their total revenue on marketing budgets, according to a 2020 CMO survey, though that is a broad metric. It’s important to note that the full impact of sales and marketing spend is never fully realized in the quarter in which that capital is put to work. In other words, we don’t know if Velodyne’s expanded Q2 sales and marketing spend has brought in more business.

The company’s revenue eased between the first and second quarters, falling from $17.7 million to $13.6 million. For a company investing so heavily in sales to see revenue decline is not encouraging, even if the bulk of results stemming from Q2 spend may not show up until the company’s third-quarter earnings report.

Velodyne is betting that its efforts will lead to accelerating sales in coming quarters. 

The company said it expects to make an additional $46 to $62 million revenue in the second half of the year due to an increase in demand for lidar products. While Q2’s total revenue was actually less than Q1’s, the company’s product-based revenue rose around 30%, which Hamer attributed to “renewed demand for lidar sensors from customers with delayed purchases due to the uncertainty caused by the COVID-19 pandemic.”

“Our pipeline continues to grow,” said Hamer. “We had 213 projects on August 1, up from 198 projects at May 1…Included in the signed and awarded pipeline are new ADAS multiyear agreements, which we expect will begin to ramp starting in 2026.”

Hamer estimated that through 2025, Velodyne has the opportunity for more than $1 billion in revenue from signed and awarded projects, plus a pipeline of projects that are not yet signed and awarded that could bring the company to $4.5 billion in potential revenue. 

At the end of April, Velodyne was selected by EV company Faraday Future as an exclusive lidar supplier for its flagship luxury electric car FF 91, which is due to be launched next year. Faraday’s cars would use the Velarray H800 lidar sensors to power their autonomous driving system. 

Velodyne has some other existing partnerships, but it faces steep competition in the automotive space.

Luminar, for example, has deals with major OEMs like Volvo and Toyota, and it recently bought one of its chip suppliers so that it wouldn’t have to be held up like everyone else in the industry, including Velodyne, by the semiconductor shortage. Hesai is also seeing some traction with customers like Lyft, Nuro, Bosch, Navya and Chinese robotaxi operators Baidu, WeRide and AutoX. 

Velodyne, which has long been the dominant supplier in the industry, has lost some customers more recently.

For instance, Ford, which had originally backed Velodyne, divested its stake in the company and placed its bets on Argo AI, which is supplying the automaker with its the autonomous vehicle technology. Argo had upped its game by drastically improving its in-house lidar sensor, meaning it would no longer need to rely on Velodyne. That had a ripple effect and impacted Veoneer, which had partnered with Velodyne to produce the lidar for Ford.