🌼 Summertime….
…and the living is easyyy. Just kidding. But we’ve still got you covered on tech and innovation insights for your socially distanced reading delight.
Hasta pronto,
Rob & the FI Team
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What's grabbed our attention this month:
Brought to you by Ezra Konvitz and Hendrik Jandel
⬛ – SoftBank launched a $100m fund to invest in entrepreneurs ‘from communities that face systemic disadvantages in building and scaling their businesses’ and A16Z’s partners stumped up $2.2m of their own cash to invest in under-represented and under-served founders, and provide access to their network & training; other venture firms are seeking out ways to provide more access and support for Black founders including greater benchmarking and transparency, hiring more Black VCs, building relationships with and showcasing Black talent, and developing easier access to advice for Black founders outside their existing networks.
So what? We have a diversity problem and these efforts to more proactively consider tech’s race issue are a good start, but more is needed. 75% of UK tech companies’ boards and 70% of their executive teams had no BAME member; Blacks are under-represented in start-ups’ executive ranks by 82% - despite research showing companies with diverse leadership are more likely to achieve higher realised multiples (3.3x vs 2x on IPOs). Beginning to understand and address the issue is essential; former Founders Intelligence consultant Ashleigh Ainsley started Colorintech in 2016 to make the European ecosystem more inclusive and our friends at Founders Pledge have put together some helpful resources here.
Love for sale – Amazon just bought autonomous vehicle start-up Zoox at a reported $1B, a 66% discount on its last valuation (and just more than it’s raised..); Uber recently led a $170m round in micromobility start-up Lime, reducing its valuation by 79% (and making them buy Uber’s Jump division); and Facebook snapped up Giphy for $400m, getting 33% off. This blow-out is driving Silicon Valley to its highest level of deal-making since 2015, aka the year Google became Alphabet (also that whole blue/gold dress situation).
So what? The tech megaliths suddenly don’t seem like the bad guys anymore - instead, they’re saving the stock market, ‘rescuing’ start-ups and helping us survive lockdown in relative comfort. Big Tech is now on a shopping spree powered by $$$ (Alphabet, Apple, Amazon, Facebook and Microsoft together have >$560B in cash) and their still-buoyant share prices - and some hot deals on assets right now. We’ve been writing about crisis M&A, whether in the tech space or outside, as a key shortcut to building moats and shoring up strategic advantages in future growth areas; expect more consolidation and less internal innovation from the biggest companies as they double down on finding and integrating great bolt-on acquisitions.
Algorithms as a Service (AaaS?) – Uber is opening up and partnering with California’s Marin County public transit agency to power Marin Transit’s own on-demand shared minibuses (and offer them in Uber’s app). This goes beyond Uber’s previous forays into multimodal transport (aka taking a car to the train) and puts them in direct competition with fellow unicorn Via, who aim to be the OS for public microtransit services. Uber is taking a SaaS fee rather than a share of the ride.
So what? Use this as a cut-out-and-keep guide to world domination: 1) create unrivalled tech, 2) offer a (loss making) vertically-integrated service, 3) licence said tech to all your competition and - wait for it - become the underlying industry OS. Online retailer Ocado is a master of this (and is looking to raise £1B to increase capacity) and so is e-commerce superstar Shopify, who just announced a deal enabling their merchants to also list their products in Walmart’s Marketplace (how you like them apples, Bezos?); Uber rides are increasingly commodity but this additional revenue model might just have legs.
Start spreadin’ the news, I’m leavin’ today – Increasingly Zoom-friendly WFH citydwellers (especially those with kids) can’t help but wonder: why do I still live here? 40% of US adults in cities are considering moving somewhere less populated; 5% of New Yorkers have already left (that said, NY, LA and Chicago all lost population over the past few years - aka the rent is too damn high). While cities were always seen as pandemic amplifiers, density as a cause is debatable (cf Manhattan, NY’s densest borough, has some of the lowest infection rates); au contraire: key factors driving higher infection rates are household overcrowding, economic segregation and high participation in non-WFH jobs in vulnerable populations.
So what? People live in cities for two reasons: 1) economic opportunity (or as Trump calls it, ‘JOBS’) and 2) ‘being a part of it’ in a melting pot of people, ideas and cultures. But with a new premium on outside space and an ‘extinction event’ impacting an estimated 75% of independent restaurants (not to mention theatres, galleries et al), people are looking to get out of Dodge and find a place with a garden (and maybe a home office amiright). What’s next? Cities will need to aim to be more livable with new homes, smart mobility and cycle lanes galore - bringing new opportunities for start-ups, as long they don’t just rely on population density (WeLive anyone? anyone?).
In focus: Entrepreneurial Responses
At Founders Intelligence, we have a privileged position in being able to look at how top investors, start-ups and corporates are planning their responses.
We’ve brought together our thinking on how corporates can seize the moment here:
Pithy versions of our favourite (online) events
One thing lockdown brought was a boatload of incredible online events - but who has time? We sum them up, short and sweet.
London Tech Week:
Health Tech: Founders Forum HealthTech covered the future of pharma (it’s collaborative, responsive and tech-led), inequalities in health care and the impact of COVID-19 on mental health. Read more here
Resilience of Tech – Leadership: Our very own Rob Chapman hosted a panel on agility and pivoting in the face of disruption. Read more here
State of Investment: VC’s focus has not (yet?) dramatically shifted with the pandemic, but there are pressures on valuations. Read more here
Accelerate Her: Hillary Clinton, Cherie Blair QC CBE and Dame Vivian Hunt (McKinsey & Company) discussed “The State of the World for Women”. Read more here
‘Myfirstminute’ chats:
Sir Martin Sorrell: The greatest asset any company can have is agility — and that’s why Big Tech will stay on top. Read more here
Tony Blair: The tech sector will not only help to fight the pandemic but will also play a key role in dealing with its knock-on effects. Read more here
PS: We’re also contributing insights to Founders News, a new personalised tech newsletter with info on your network (and lots of this content, too) hatched out of Founders Forum - subscribe here!