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While I hear more startups are grappling with changing market conditions, the major layoffs, and the general tipping point that kicks in once a company hits the growth stage, it’s worth addressing an elephant in the room common in the tech industry. versus media debate. How do we cover failures?
There’s the argument that startup stresses are inevitable and common, so should we draw attention every time something bubbles to the surface, especially at the expense of an underrepresented founder who might just be doing his best? There is an argument that the company is messy so we have to report on the issues when we hear about it; and there’s the story of the women’s removal story, where people believe that women are more targeted by the press than men because of unreasonably high standards.
The tech world has biases about how a historically overlooked person should act, and I use that reality to influence my reporting. For example, I remember once asking a prominent female founder about a drama I heard about from her ex-co-founder. She essentially said, “It’s not that I don’t want to tell you, it’s that I can’t afford to show vulnerability at this point in my career.” It was a key moment that highlighted why certain people can cast their vote and why certain people are not empowered at all.
My take here is that you can believe that any powerful founder, especially those with millions of dollars at their disposal, should be held accountable for the company they create – but you can also believe that tips from sources can sometimes be inherently biased. Rigorous vetting — from deciding what a former employee’s incentives are to understanding who can afford to comment — matters.
Ashley perfectly articulated an important nuance about speaking
I remember asking a prominent female founder about a drama I heard. she basically said, “It’s not that I don’t want to tell you, I can’t afford to show vulnerability at this point in my career.” https://t.co/JD6whabOJr
— natasha (@nmasc_) March 17, 2022
If we follow a startup’s upward trajectory, we must follow them as well. But framing is important, contextualization is important. If a founder lies to consumers or harasses employees, it’s pretty obvious how to identify the individual as the source of the problems; but how we cover it is important. Failure is complex and it is difficult to attribute failure to a particular moment.
Sometimes a startup falls apart because the founder leads a crappy culture, but sometimes the incentives of venture capital can lead to a messy product flow. Who is to blame in this case? The founder for taking money, or VCs for too much pressure? Or the ever volatile market? We are talking about a startup error in macro sense, but when we write a window in a specific example, the nuance is important. Diverse newsrooms and patient editors are essential to ensure that we ask the right questions and are not subject to weary tropics. It’s also important that founders treat their staff like people.
In the rest of this newsletter we will talk about the new CEO of All Raise, funds to support other funds and Ukraine. As always you can support me by sharing this newsletter, follow me on twitter or subscribe to my personal blog.
Fintech and Ukraine
The startup story within the war in Ukraine continues to evolve, with financial services companies playing a particularly critical role and making a series of decisions. Last week, PayPal expanded its services to allow users to send money to Ukrainians. Ukraine’s president signed a bill to legalize crypto amid a slew of digital donations, and data showed nearly 7,000 apps have left the Russian app store since it invaded Ukraine. Some major tech apps remain.
Here’s why this is important: I mean, it goes without saying. Our very own Romaine Dillet interviewed Mykhailo Fedorov, the Deputy Prime Minister of Ukraine and Minister of Digital Transformation, about different ways technology moves in wartime. An important part of the interview was when Fedorov spoke about Ukraine’s technical strategy, otherwise known as a digital blockade:
We call this project digital blockade. And we believe this is a very crucial part to win this war. And I think governments in the future will be like tech companies, not classic governments.
Digital platforms provide a number of essential services. They are so embedded in the fabric of society. Once you start removing these services from the aggressor one by one, you are actually damaging their fabric of society and making it very inconvenient for them to go about their daily lives.
We would like to see this as a completely new and untapped battlefield. And this is an additional measure to sanctions that we expect to push back Russia’s development for decades.
Other coverage of technology and Ukraine:
Offer of the week
All Raise, a nonprofit focused on increasing diversity within venture capital deals and decision-makers, has appointed Mandela Schumacher-Hodge Dixon as the company’s new CEO. Dixon has spent more than 10 years building representation in the startup world. Prior to All Raise, Dixon ran Founder Gym, an online training center for underrepresented founders with 18 cohorts on six continents. A few weeks ago, Dixon announced that Founder Gym’s current cohort will be its last graduating class as it closes.
Here’s why it matters: While All Raise is a nonprofit created specifically to increase representation in technology, Dixon wants to add a new level of inclusiveness to the organization’s mission. Dixon was one of the first black women in Silicon Valley to raise venture capital and work at a venture capital firm, she says. The entrepreneur also had two children during the pandemic, which she says has added another “extension” to who she has evolved as a leader.
“I also live these experiences of exclusionary bias, unconsciously or consciously — alone, as one of the few,” Dixon told me in an interview this week. “I understand because I’ve been very conscious of wanting to understand it. For All Raise, you can absolutely expect this to continue in my leadership as we ensure that what we capture who we support is truly a more inclusive space for a realm of identities.”
Everyone is going to launch a fund to support other funds
I wrote a piece this week about the wave of funds that have been created explicitly to put money into other funds. As we discussed on Stocks this week, investors are broadening the way they invest in money, whether that’s to support other emerging fund managers or to finally give Series B rounds the attention they deserve.
Here’s why it matters: The startup financing market changes daily, which means we’ll see investors continue to innovate in a similar way. New data from Carta shows that shifts are not hypothetical, but are occurring and impacting US Series A, B and C valuations.
As Alex explains in his piece, from November and December 2021 to January and February 2022, Series A rounds recorded the largest average decline in round size in the United States. Still, he continues, “Serie A rounds on both median and mean basis in the early months of 2022 remain above $10 million. Delay or not, the market is still hot.”
Looking at valuations, Series C is a sharper example. Alex reports that “Average valuations for Series C investments in the start-up market in the United States fell sharply at the beginning of 2022, with median valuations taking a big hit as well. From a nearly unicorn average valuation of $884 million , the average Series C was valued at a much lower $467 million in the first two months of the year, which is a huge change, one that supports our general nagging about the changing public markets and how those price shifts should affect startup valuations. especially at companies that are on a clear path to an exit.”
Funds want funds want funds:
during the week
We will meet in person! Soon! Techcrunch Early Stage 2022 is April 14, aka around the corner, and it’s in San Francisco. Join us for a one day founding stop with GV’s Terri Burns, Greylock’s Glen Evans and Felicis’ Aydin Senkut. The TC team has gone out of their way to come back in person, so don’t be surprised if the panels are a little spicier than usual.
Here is the full agenda and buy your launch tickets here.
And if you missed last week’s Startups Weekly, this week we continued the conversation with Equity asking, “Can Tiger’s second act live up to its first?”
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Until next time,
This post Failure is complex, especially in the startup world – TechCrunch was original published at “https://techcrunch.com/2022/03/19/startup-failure/”