Failure is complicated, especially in the startup world – TechCrunch

Welcome to Startups Weekly, a fresh look at this week’s startup news and trends. To get this in your inbox, subscribe here.

As I hear of more startups struggling amid changing market conditions, major churn, and the general inflection point that begins once a company reaches a growth stage, it’s worth addressing an elephant in the room that often comes up in the debate between technology and media. How do we cover failure?

There’s an argument to be made that startup stress is inevitable and common, so should we pay attention every time something surfaces, especially at the cost of an underrepresented founder who might just be doing his best? There’s an argument that business is messy, so we should report problems when we hear about them; and there is an account of the history of women being taken down, in which people believe that women are targeted more than men because of unreasonably high standards.

The tech world has preconceived notions of how a historically overlooked individual should operate, and I use that reality to influence my reports. For example, I once remember asking a famous female founder about a drama I heard about from her former 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 speak up and why some can’t. empowered first.

My point 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 created – but you can also believe that advice from sources can sometimes be inherently biased. Rigorous vetting—from deciding what the former employee’s incentives are to understanding who can afford to comment—matters.

If we trace the upward trajectory of a startup, we must trace their decay. But framing matters, contextualizing matters. If a founder is lying to consumers or harassing employees, it’s pretty clear 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 pin failure down to a specific moment.

Sometimes a startup collapses because the founder leads a crappy culture, but sometimes venture capital incentives can lead to a messy product. Who is to blame in this case? The founder for taking money or the VC for too much pressure? Or the ever-volatile market? We’re talking about startup failure in a macro sense, but when we’re writing a window in a concrete example, the nuance is important. Diverse edits and patient editors are key to making sure we’re asking the right questions and not falling for tired tropes. It’s also key for founders to 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 of the war in Ukraine continues to unfold, with companies in the financial services sector having a particularly crucial role and set of decisions to make. In the past week, PayPal expanded services to allow users to send money to Ukrainians, Ukraine’s president signed a law to legalize crypto amid a flurry of digital donations, and data shows nearly 7,000 apps have left Russia’s app store. since she invaded Ukraine. Some major technological applications remain.

Here’s why this is important: I mean it’s pretty obvious. Our very own Romain Dilett interviews Mykhailo Fedorov, Ukraine’s Deputy Prime Minister and Minister of Digital Transformation, about the different ways technology moves in wartime. One key part of the interview was when Fedorov talked about Ukraine’s technology strategy, also known as digital blockade:

We call this project the digital blockade. And we believe that is a very important component in winning this war. And I think that in the future, governments will look like tech companies, not classic governments.

Digital platforms provide some vital services. They have become so embedded in the fabric of society. Once you start removing these services from the aggressor, one by one, you actually damage the fabric of their society and make it very uncomfortable for them to go about their daily lives.

We’d like to think of it as a completely new and uncharted battlefield. And this is an additional measure to the sanctions, which we expect will set Russia’s development back decades.

Other reports on technology and Ukraine:

Deal of the week

All Raise, a non-profit organization focused on increasing diversity in 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 working to increase representation in the startup world. Prior to All Raise, Dixon ran Founder Gym, an online training center for underrepresented founders that ran 18 cohorts across six continents. A few weeks ago, Dixon announced that Founder Gym’s current group would be its last graduating class, as it is closing.

Here’s why it’s important: Although All Raise is a non-profit organization created specifically to increase representation in tech, Dixon wants to bring a new level of inclusivity to the organization’s mission. Dixon was one of the first black women in Silicon Valley to raise venture capital and start working at a venture capital firm, she says. The entrepreneur also had two children during the pandemic, which she says added another “expansion” to who she has evolved as a leader.

“I also have these experiences of exclusionary bias, whether unconsciously or consciously — being the only one, being one of the few,” Dixon said in an interview this week. “I understand it because I very deliberately wanted to understand it. For All Raise, you can absolutely expect this to come to fruition under my leadership as we make sure that what we capture who we support is a truly more inclusive space for a realm of identities.”

Honorable Mentions:

Each will create a fund to support other funds

This week I wrote an article about the rise of funds created specifically to put money into other funds. As we talked about in Equity this week, investors are expanding the way they invest money, whether that’s backing other emerging fund managers or finally giving Series B rounds the attention they deserve.

Here’s why it’s important: The startup funding market is changing daily, which means we’ll see investors continue to innovate at a similar clip. New data from Carta shows that the changes are not hypothetical, they are happening and impacting US Series A, B and C ratings.

As Alex states in his piece, from November and December 2021 to January and February 2022.Series A rounds saw the largest average drop in round size in the United States. Still, he continues: “Serie A’s pool on both an average and average basis in the opening months of 2022 remains above the $10 million mark. Slowdown or not, the market is still hot.”

Looking at the grades, the C series is a clearer example. Alex reports that “average ratings for Series C investment in US startup market plummets in early 2022with grade point averages also taking a big hit. From a near-unicorn average valuation of $884 million, the average Series C in the first two months of the year was valued at a much lower $467 million. This is a huge shift that supports our general uneasiness about changing public markets and how these price changes should affect startup valuations, especially among companies that are clearly on an exit path.”

Funds want funds want funds:

During the week

We can go out in person! Soon! Techcrunch 2022’s early stage is April 14th, aka just around the corner, and it’s in San Francisco. Join us for a one-day founders meeting featuring GV’s Terry Burns, Greylock’s Glenn Evans and Felicity’s Aidan Sencutt. The TC team has been trying to get back in person, so don’t be surprised if the panels are a little spicier than usual.

Here’s the full agenda and get your tickets to the performance here.

Also, if you missed last week’s Startups Weekly, we continued the conversation with Equity this week asking, “Can Tiger’s second act live up to its first?”

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Until next time,

n