How will the startups created in 2020 be different from startups built before?

Co-founder of LinkedIn and general partner at Greylock
The class of 2020 startups will be unique in two ways: 1) the massive shift in market readiness, and 2) nearly every founding team will be distributed.
The pandemic has set certain markets back (e.g. coworking spaces), but it has also created the conditions for other markets to take a giant leap forward. A specific example: telehealth startups. While the majority of health visits have now moved to video calls, the implications go well beyond a simple shift in delivery mechanism.
Moreover, older adults represent a large proportion of patients, and an even larger proportion of market power. Not previously early adopters of telemedicine, older adults are now developing what is likely to be a lasting habit, accelerating the industry adoption cycle by several decades. This will speed up the deployment of new technologies such as AI and machine learning to make diagnoses via smartphone imaging, or to extract information from doctor-patient interactions and improve follow-up and follow-through. And while the pandemic will eventually recede, we will see a permanent change in how we access health care.
Another impact for the class of 2020: All founding teams will be distributed. Previously, most founding teams coalesced in a specific place, but there isn't much social distancing in a garage! Teams that want to build world-changing products together will need better ways to communicate. It will be more difficult — and more important than ever — that co-founders find ways to quickly connect and align. And when people are sheltering-in-place, the geographic density of talent in Silicon Valley is much less relevant. The techniques that Silicon Valley uses to scale companies, such as Blitzscaling, can be learned and practiced by anyone. The next generation's big winner could be based anywhere with sufficient access to financial capital and virtual access to technological expertise.
Co-founding partner at Floodgate
Managing partner at Forerunner Ventures
This year has exposed so many important issues, including the crisis of COVID and the deeply important and impactful work of Black Lives Matter. Because these long overdue issues have surfaced and cracked the outdated veneer of status quo, this breakthrough class of startups will be reevaluating long-held business values and instead lead with compassion to make a real social impact.
These new startups are likely to be more purpose-driven with regards to their missions, business impact and cultures. The ones that capture our attention will be built around solving customer needs versus desires; they will prioritize sustainability practices and be hyper aware of their overall footprint on the planet; and importantly, they will be building diverse teams with inclusive practices. These startups won't be afraid of having important and often difficult or uncomfortable conversations and will understand their ability to influence for good.
In terms of operating, because of the pandemic, millions of workers experimented with working from home for the first time in their careers. And given that many tech companies have already mandated work-from-home until 2021 (Twitter, Google, Microsoft), many others will likely follow suit. As we continue to adapt to remote work, employees are operating within different frameworks, and companies will need to reimagine new ways to foster bonds and build strong team dynamics, especially from the top down.
In the face of unknowns and unimaginable hurdles to growing a business, flexibility and the fortitude to make swift changes will be more essential than ever for founders. Founders set expectations on growth, and it's their responsibility to build teams that can deliver on those visions, but now more than ever they have to have the adaptability to react to and ensure solid foundations for achieving considered growth and recalibrating their businesses for ever-changing environments. Resilience is the key word here.
Venture Partner at NextGen VP
We've left the pre-COVID world, where companies can easily raise millions amid major money losses and ignore human and social dynamics. New startups will be molded by the implications of COVID and the social and racial justice movement.
Startups will be remote-first to preempt health issues and avoid unnecessary real estate costs. Startups will focus on problems that affect the many and not just the elite few because of the work-life challenges that COVID has brought about (e.g., job loss, WFH). Startups will bootstrap, prioritize revenue, profit and performance more than ever. Because of the tightening of purse strings, startups will prompt side-hustling entrepreneurs looking for extra cash. This new breed of entrepreneur will create products and services (a la passion economy) and generate additional revenue streams.
From a social and racial justice movement perspective, startups with underestimated founding teams will get their moment to shine with capital coming their way from the VC and tech ecosystem that is putting their money where their mouth is (e.g. a16z's Talent x Opportunity Fund, SoftBank's Opportunity Growth Fund, Google investing $100 million in underestimated founders and funds).
Funding will come from a more diverse set of vehicles, from alternative VC funds to equity crowdfunding, to debt to newly activated diverse angels. Underestimated founders will build the companies of the future — ones that represent the diversity of our population and produce the products and services that the mass market sorely needs.
Partner at First Round Capital
The national conversation around race and equality is creating a renewed emphasis on the importance of diversity in the startup and venture ecosystem. I'm hopeful that this much-needed and long overdue pressure — on both the startups being built and the investors tasked with backing them — will result in a more diverse class of founders than ever before.
Founders are taking a hard look at the composition of their founding teams, their cap tables, their board rooms, and their early hires — and will be less willing to let "diversity debt" accrue as the costs are impossible to ignore. As investors, we have a tremendous amount of work to do here. That work consists of 1) acknowledging and dismantling the bias within narrow "traditional" founder archetypes, 2) putting in the legwork and process changes it will take to back more founders of different backgrounds, and 3) pushing ourselves and the companies we back to build more inclusive organizations that are more representative of the country that we live in.
Whether it's fully remote or some kind of hybrid model, we're also seeing a broader shift toward both distributed workforces and distributed systems. We're noticing that companies in our community are increasingly opting to buy rather than build, and we expect to see developer focused API services proliferate. We're excited about this trend because it empowers new companies to focus as much as possible on their core product and creates a new category of developer focused companies for us to partner with as investors.
Finally, the growth-at-all-costs mentality is becoming more muted in the 2020 startups. We are seeing a shift from a "tell me the story" fundraising environment to a "show me the proof" fundraising environment. Conversations around contribution margins and unit economics are starting much earlier on in a company's life. We think businesses without a very strong economic engine will face challenges when they go to raise money this year, and the class of 2020 founders will take this into account when balancing growth vs. profitability.
Biz Carson ( @bizcarson) is a San Francisco-based reporter at Protocol, covering Silicon Valley with a focus on startups and venture capital. Previously, she reported for Forbes and was co-editor of Forbes Next Billion-Dollar Startups list. Before that, she worked for Business Insider, Gigaom, and Wired and started her career as a newspaper designer for Gannett.
Crypto broker Voyager Digital has filed for bankruptcy protection, days after suspending all trading and withdrawals on its service.
Voyager announced late Tuesday that it had filed for Chapter 11 bankruptcy in New York federal court. The company said prolonged volatility in the crypto markets and the default by Three Arrows Capital on a $666 million loan from Voyager required decisive action.
"This comprehensive reorganization is the best way to protect assets on the platform and maximize value for all stakeholders, including customers," Voyager CEO Stephen Ehrlich said in a statement.
Three Arrows, a crypto hedge fund also known as 3AC, has itself filed for bankruptcy after being ordered to liquidate by a court in the British Virgin Islands. Three Arrows had bet big on the Terra crypto ecosystem that collapsed in value in May when its stablecoin, UST, lost its peg to the dollar.
The bankruptcy for Voyager comes despite Alameda Research, a crypto company run by Sam Bankman-Fried, extending two credit lines to the crypto broker: one for about $200 million and the other for about 15,000 bitcoin.
Voyager has between $1 billion and $10 billion in both assets and liabilities and more than 100,000 creditors, it said in the bankruptcy filing.
In a Twitter thread explaining the company's restructuring plan, Ehrlich said customers with crypto in their Voyager accounts "will receive in exchange a combination of the crypto in their account(s), proceeds from the 3AC recovery, common shares in the newly reorganized company, and Voyager tokens."
Customers with U.S. dollars in their account "will receive access to those funds after a reconciliation and fraud prevention process is completed with Metropolitan Commercial Bank," an institution holding some customer funds for Voyager.
The plan is pending court approval, Ehrlich added.
"During the reorganization, we'll maintain operations," Ehrlich said. "We intend to certain customer programs without disruption. Trading, deposits, withdrawals and loyalty rewards on the Voyager platform remain temporarily suspended."
In order to hobble China’s ability to produce computer chips, U.S. officials are in talks with their counterparts in Holland to block a semiconductor manufacturing tool maker based there from exporting its machines to China, Bloomberg News reported on Tuesday.
The Dutch ASML makes lithography machines that perform one of the critical steps in modern chip production. Several years ago the U.S. successfully lobbied the Dutch government to block the sale of extreme ultraviolet lithography, or EUV, tools needed to print the world’s most advanced chips. But now officials are going a step further: They're attempting to block the export of the prior generation of tools — deep ultraviolet lithography, or DUV, machines — Bloomberg reported.
The older generation of DUV machines are widely used in global chip production and are used to make many of the chips in phones, PCs and autos. ASML controls most of the market for DUV tools.
An ASML spokesperson said that discussions in Washington about blocking DUV exports to China aren’t new, and that no decision has been made. U.S. Deputy Secretary of Commerce Don Graves recently visited Holland and met with ASML’s CEO, Peter Wennink.
Choking off the China market for DUV tools would damage ASML’s business, which sold €2.7 billion ($2.8 billion) worth of products and services in 2021 to companies either based in China or with operations there, according to its most recent annual report. Other tool makers such as Applied Materials and Lam Research are already banned from selling some of their machines to China’s SMIC, but would likely be hurt by an expanded tool ban, too.
Stock and crypto trading service eToro has called off a SPAC merger and will stay private, the company said Tuesday. The company is also laying off about 6% of its staff.
The Betsy Cohen-led FinTech Acquisition Corp. and eToro said in a joint statement Tuesday that the companies had not met agreed-upon closing conditions for the blank-check merger ahead of a June 30 deadline. The deal valued eToro at about $10 billion when it was reached in March 2021.
The two sides did not clarify which conditions were not met ahead of the deadline. Cohen said in a statement that the "transaction has been rendered impracticable due to circumstances outside of either party’s control."
The split comes as rocky economic conditions have brought public debuts for companies to a near standstill and sunk the market values of previously high-flying tech firms. There were 70 SPAC debuts in the first half of 2022, according to SPAC Track, compared to 614 for all of 2021.
Robinhood, an eToro competitor, has lost nearly 80% of its market value since it went public in August 2021.
Earlier this year, eToro joined FTX, Coinbase and Crypto.com in a Super Bowl ad-buying bonanza. But crypto values have continued to fall since then.
In a blog post on Tuesday headlined "Staying private (for now!)," eToro CEO Yoni Assia wrote that last year "was an ideal operating environment for our business, with strong bull markets in both stocks and crypto, and we have seen (two) years of 100% growth in revenues and 1,000% growth in customer assets. So far, 2022 has started with a thud with the S&P 500 off to its worst start in more than 50 years and most crypto assets down 50% or more pushing us into a bear market for both stocks and crypto."
Along with calling off the deal, the company confirmed it is laying off about 6% of its staff, citing market conditions. It joins a list of crypto trading firms to cut jobs that includes Coinbase, Gemini and Robinhood.
"After a period of hyper growth, it is now necessary to take a more balanced approach between growth and profitability," said Elad Lavi, vice president of Strategy at eToro in an emailed statement. "Over the past 15 years eToro has weathered many market cycles, emerging stronger from the experience. Despite the current headwinds, our underlying business remains healthy, our balance sheet is strong and we are confident in our long term growth strategy.”
Calcalist first reported the layoffs, noting about half of the 100 jobs cuts would come in Israel, where eToro is headquartered.
Crypto lender Nexo announced Tuesday that it has signed a term sheet to acquire fellow lender Vauld for an undisclosed sum. While Nexo currently manages assets for about four million users, Vauld manages assets for about 100,000 people, according to the company’s estimates last year.
Vauld halted withdrawals Monday after customers pulled out about $197.7 million, according to the lender. Nexo said in an announcement that it is purchasing the lender in order to help it restructure and stabilize the industry overall, and will ease withdrawal limitations as soon as possible. It has 60 days to perform due diligence before completing the sale.
“The current market conditions are to a large degree reminiscent of the Bank Panic of 1907, characterized by excessive leverage in the system, an overabundance of companies in trouble, and no lender of last resort,” Nexo’s statement said. “Today, it is again in the hands of a few capable and well-capitalized entities to come up with systemic solutions and aid the sector.”
Vauld is one of many crypto lenders to halt withdrawals as tanking token prices and defaults have created a liquidity crisis in recent weeks. The near-collapse of several entities affected, like major crypto lender Celsius and hedge fund Three Arrows Capital, have made it clear how interconnected the DeFi world is. Both were heavily dependent on the UST stablecoin, which continues to create knock-on effects after its collapse in May.
Nexo is positioning itself as an industry knight in shining armor, devoting capital to acquiring a struggling lender that, if it collapsed, could spread the crypto sector's contagion. Nexo said last month that it was also interested in purchasing assets from Celsius, though Celsius informally rejected the offer and hasn’t publicly replied to a formal offer.
FTX’s Sam Bankman-Fried is mounting a rescue operation on a grander scale. The billionaire solidified an acquisition of BlockFi and an investment in Voyager last month.
Depending on who you talk to, these types of acquisitions are either a charitable endeavor to save the industry or opportunistic “vulture capital.” But either way, they mark an inherently centralizing period of consolidation for so-called decentralized finance.
Twitter on Tuesday filed a suit against the Indian government in an attempt to limit government oversight over politically charged content moderation decisions. The lawsuit, filed in the Karnataka High Court, also alleges abuse of power by elected officials in India.
India revamped its social media laws such that companies are required to comply with government takedown requests before proceeding with any legal challenges. In Twitter's most recent transparency report, India’s government accounted for 11% of global legal requests, behind only Japan, Russia and Turkey. India previously accounted for as much as 18% of Twitter's global takedown requests.
Twitter has taken issue with the flood of content moderation requests issued under Prime Minister Narendra Modi and his Bharatiya Janata Party. The government previously told Twitter to remove content expressing support for the farmers’ protests and Sikh independence.
Last year, the Indian government threatened to jail India-based Twitter executives for up to seven years. That threat came after Twitter restored more than 250 accounts the government had requested be removed. Many of those accounts were critical of the BJP. The government alleged some of those accounts were spreading misinformation and inciting violence.
Twitter said India’s government “arbitrarily and disproportionately” went after content and users on its platform. In February 2021, Twitter suggested it wouldn’t comply with government requests to remove accounts for media outlets, journalists, politicians and activists. In a statement released at the time, the company said it hadn’t removed such accounts and believed doing so would “violate their fundamental right to free expression under Indian law.” Eventually, though, Twitter complied with many of those requests.
Meta-owned WhatsApp filed a similar lawsuit in the Delhi High Court last year, requesting a legal review of the government mandate to make messages traceable. That case is ongoing.
India has a history of removing popular social media platforms when political circumstances intervene. In the summer of 2020, after a violent border skirmish with China left roughly 20 Indian soldiers dead, India banned TikTok from the country. TikTok had around 167 million users in India prior to the ban, making it one of the biggest markets for the China-based ByteDance.
Based on past experience in other nations such as Nigeria, Twitter will likely exercise caution in escalating tensions with the Indian government. The Nigerian government blocked Twitter from operating in the country for a seven-month period that ended in January 2022. Nigeria’s government took issue with Twitter’s decision to delete a tweet from President Muhammadu Buhari that many interpreted as a call for violence against the Igbo ethnic group. As part of the reinstatement deal, Twitter agreed to appoint a representative who would interface directly with Nigeria’s regulatory agency overseeing technology.
Elon Musk could also throw a wrench in things should his acquisition attempt go through. In an April Ted Talk, Musk said Twitter should abide by the laws of the countries in which it operates.
For now, Twitter isn’t rocking the boat all that much in India. Even as it signaled its opposition to the government requests, Twitter has still complied with many of them. The lawsuit takes the company’s grievance through the appropriate channels, and allows Twitter to formally express its dissent without unilaterally making content decisions that would rile up the BJP.
To give you the best possible experience, this site uses cookies. If you continue browsing. you accept our use of cookies. You can review our privacy policy to find out more about the cookies we use.