On the surface, it’s impressive that Israel has nearly as many unicorns as the European Union with a population almost 50 times smaller. It may seem odd to suggest that the gap can grow still larger. And yet, it is so.
The tech ecosystem is like a flywheel. When founders sell or go public, money floods into the ecosystem in three ways. The first, obviously, is the injection of liquidity from investors.
The second effect is the creation of new investors. There is truth to the idea that the newly wealthy founders (and employees) first buy a house — and then start investing in startups themselves. And third, venture capital flows to those who have shown successful innovation in the past — a halo effect that is as evident in Israel as it is in San Francisco.
These things happened with early employees of companies like Google, Uber and Twitter, who became investors or founders. And a version of it is happening in Israel, where it is not uncommon for employees to manifest total conviction that they can do better than the founders who brought them riches.
Being employee No. 10 at an Israeli success story like Monday.com or SentinelOne is somewhat akin to being employee No. 15 at Uber or Instagram: The companies may offer somewhat less of a halo — but not that much less. These employees-turned-founders have skills and backgrounds sought by investors. And Israeli chutzpah can sometimes do the rest.
That’s why Israel is pushing 100 unicorns — privately held companies (essentially all in tech) valued at a billion dollars or more. Compare that with Europe, which has a much larger population and just 125 unicorns. It is a success so profound that it begs for explanation.
For starters, Europe’s business culture is far more risk-averse than Israel’s, for reasons grounded in its past success. There are easier ways to make a good living in much of the EU, while in Israel, with its less established legacy economy, tech entrepreneurship was long a more appealing path.
That paradigm was right for a scrappy society that has never known true peace and is composed mostly of immigrants or their children. It’s an origin story that begets a spirit of adventure — and also its cousins, innovation and entrepreneurship. Add to that the technology driven by the security industry and military, which are a result of the wars, and throw in mass emigration from the post-arms-race Soviet Union, and you have a story.
In a new wrinkle, add to that the COVID factor. Israel was able to come out of the pandemic somehow stronger due to an early bet on vaccines and the fact that its outside tech sector (accounting for perhaps a tenth of the workforce) was well suited for remote work. Furthermore, Israel pulled in significant VC funds during the period.
This is happening at the right time. Israeli companies, already punching above their weight in areas like cyber, fintech and SaaS, are showing tremendous promise in verticals like food tech, agritech, space tech and, of course, vaccines.
But this is where the picture grows gloomier: A major roadblock may prevent Israel from realizing this potential.
On the surface, it would appear that Israel is well equipped for supplying workers to its industry. Indeed, this data shows Israel with 135 scientists and engineers for every 10,000 citizens, “more than any other developed country.” But it is not enough for the demands created by the burgeoning tech sector.
The 2020 High-Tech Human Capital Report from the Israel Innovation Authority and Start-Up Nation Central found that 60% of tech firms were having trouble finding workers and that there were currently 13,000 unfilled tech job openings in the country. Various recent studies found chronic shortages of engineers; September reportedly saw 14,000 engineer vacancies.
This shortfall in supply is pushing up the cost of labor, making Israeli engineers much more expensive than their counterparts in most countries. In an era of remote work, this drives employers to outsource work to countries like Ukraine and Romania, a trend that does not bode well for continuing to bottle the special sauce of “Startup Nation.”
Other things are moving in the wrong direction. Israeli students’ international test scores in math, science and reading are plummeting compared to those of other countries, largely because of massive political dysfunction: Successive governments have allowed the unimpeded growth of ultra-religious schools that often do not teach math at all.
This relates to the wider issue of the amazing expansion of the ultra-Orthodox sector, where half the men study religion full time (and most of the other half toil in a vast religious services bureaucracy) and women are dedicated to raising more than seven children each on average. Another sector that does not participate proportionately in the tech economy is the Israeli Arab one, a historically underprivileged and underfunded community that lives with high crime rates.
One obvious approach would be to encourage ultra-Orthodox Jews and Israeli Arabs to integrate into wider Israel and be given every tool. Underfunding of the Israeli Arab towns and schools must end (a process that is beginning with baby steps this year, with an Arab party joining the new coalition), and the government must order the police to crack down on rampant criminality in the sector. Funding should be denied to any schools that do not teach math or science (one of many steps needed to integrate the ultra-Orthodox).
The Israeli government should seize the initiative through public-private partnerships — the very approach that in the past helped incubate and fund promising startups — that would target ways to improve the education system. The goals are the same: accelerating the economy. Israel needs to tackle education with the same gusto it directed at the Iron Dome or dealing with its adversaries.
Possibilities include improving STEM education (science, technology, engineering and math), particularly in the periphery; improving teachers’ pay; limiting how aggressively parents can intervene; incentivizing outside programs like Fullstack Academy and other coding academies to open schools in Israel; and working with tech giants like Wix to further develop Silicon Valley-style campuses nurturing local talent.
Starting students earlier by teaching coding and programming could help units of the military focused on R&D and cognitive areas, broadening recruitment to new population groups and, in turn, creating new employees for the tech sector.
None of this will be easy, but the cost of complacency is high. To do nothing and hope for the best is worse than nothing. It would fritter away a monumental gift that the inscrutable fates have somehow bestowed upon the Jewish state.
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India’s Exponent Energy may have found the secret to 15 min rapid EV charging – TechCrunch
Bangalore-based Exponent Energy might have come up with a way to deliver 15-minute rapid charging for electric vehicles. The startup, which just raised a $13 million Series A, relies on a combination of its proprietary battery pack and charging infrastructure to achieve such a feat.
Exponent Energy’s business model is geared towards OEMs building commercial EVs for fleet purposes. Ideally, the company works with the OEM to integrate its battery pack, or e^pack, that can then be charged quickly via Exponent’s network of chargers, or e^pumps. Earlier this month, Exponent announced its first partnership with Altigreen, an Indian electric cargo vehicle manufacturer, launching the Exponent-enabled Altigreen neEV HD, a three-wheeler that both companies say can be fully charged, from 0% to 100%, in 15 minutes.
The rub is that the battery pack only charges that quickly when it’s being charged on Exponent’s charging infrastructure — if the e^pack is being charged at a standard charging station, it’ll take about 60 minutes, according to the company. Likewise, the e^pumps don’t deliver the same rapid charge to all EVs, so the two must be scaled side-by-side. This is how Exponent hopes to monetize its energy offerings. It will earn revenue from both the sale of the battery pack to OEMs and the charging on a recurring basis, according to Arun Vinayak, Exponent’s co-founder and CEO.
For comparison, Exponent’s business model is a somewhat similar model to Gogoro, the Taiwanese company that works with OEMs to integrate its swappable batteries into their electric two-wheelers while simultaneously building out swapping stations around the country.
Aside from the monetization logic of including the battery pack and charging infrastructure as a package deal, Vinayak says it just makes sense to do so from a technology perspective.
“15-min rapid charging is a two-sided problem,” said Vinayak. “It’s not just the battery but also the charger. The e^pump delivers 600A of current to the e^pack (15x industry standard) while managing individual cell characteristics including thermals to ensure safety, long battery life and performance consistency even at 50 degrees Celsius. Since our technology is present on both sides, we’re able to manage the flow of energy far more efficiently, safely and rapidly.”
Building out such a network will require funds, which is where Exponent’s Series A comes in. The round, which was led by Lightspeed with participation from YourNest VC, 3one4 Capital and AdvantEdge VC, will be used to scale up the e^pump network to 100 location points in each city Exponent expands into, starting with Bengaluru and eventually making its way to New Delhi, according to Vinayak. The company also aims to deploy 2,000 Exponent-enabled vehicles as part of its partnership with Altigreen.
Vinayak said the e^pack is scalable across multiple form factors, and Exponent Energy is currently in the engineering phase for partnerships in other segments, specifically three-wheeled passenger vehicles and four-wheeled cargo vehicles.
“Our primary focus is commercial vehicles and our primary customer is anyone running a fleet, from a single vehicle owner to an aggregator of 1000s of vehicles,” Vinayak told TechCrunch via email. “In India, commercial vehicles have the highest per vehicle energy use-age. (Constitutes 10% of vehicles, but consumes 70% of our on-road energy). This represents a highly concentrated market for an energy company like us as the segment is already convinced of switching to electric as EVs drive better than their diesel counterparts. However, the bottleneck for adoption is energy, as slow charging (3 to 6 hours) affects operations. Therefore customers are forced to opt for large batteries with short life thereby making owning the vehicle expensive.”
How a16z’s investment into Adam Neumann further solidifies the ‘concrete ceiling’ – TechCrunch
It was the fundraise heard around Twitter.
Adam Neumann, the infamous entrepreneur behind WeWork, raised a stunning $350 million from Andreessen Horowitz for a yet-to-launch real estate company called Flow. The investment gave Neumann’s latest venture a more than $1 billion valuation, as reported by The New York Times, and came amid what is supposed to be an investor pullback in a bear market.
It is the largest individual check a16z has ever written and the second time the firm backed a Neumann-founded company this year.
There is no need to rehash every single thing that Neumann did wrong; AppleTV+ did that already in the miniseries “WeCrashed.” His calamitous tenure at WorkWork garnered him a reputation for worker mismanagement and he led his company to a disastrous IPO. He nevertheless walked away with a roughly $1 billion exit package. He failed up, and the announcement of his a16z round was a reminder that he is still failing up.
“The news [of Neumann’s raise] was not shocking to me,” Nicole Tinson, the founder of the inclusion platform HBCU 20×20, told TechCrunch. “I actually anticipated this because discrimination in funding is no different than discrimination in any avenue.”
One cannot out-educate, out-network, and out-assimilate the systemic barriers designed to discriminate against them.
The news put reality in a harsh light, a breaking point for many. Women are tired of shattering glass ceilings; their hands are slashed from the dropping shards. Some founders are also exhausted from taking swings at the concrete ceiling, where gender, racial, and often socioeconomic conditions combine to create a discriminatory barrier so strong it cannot shatter like glass; it’s sturdy like concrete and must arduously be drilled through.
Polestar is launching an EV roadster in 2026 called the Polestar 6 – TechCrunch
Electric vehicle maker Polestar said Tuesday that it is expanding its lineup to include an 884-horsepower hard-top convertible with recycled polyester upholstery.
The Polestar 6 electric performance roadster will go into production in 2026 based on the Polestar O₂ Concept the company revealed in March. Customers can now begin reserving build slots online.
Polestar CEO Thomas Ingenlath called the forthcoming roadster “a perfect combination of powerful electric performance and the thrill of fresh air with the top down.”
The company hasn’t announced details such as price, acceleration or battery range. However, Polestar confirmed that the hard-top convertible will use the same bonded aluminum platform and 800-volt architecture that will underpin its future Polestar 5 GT.
The dual motor powertrain delivers a top speed of 155 mph and 0-to-62 mph acceleration in 3.2 seconds, according to Polestar.
Polestar will make 500 limited-edition models, the Polestar 6 LA Concept edition, named after the city where the electric roadster concept made its debut. Those models will come with the concept’s Sky blue exterior, leather interior and 21-inch wheels.
Polestar, which made its Nasdaq debut in June, has outlined aggressive growth plans. The company spun out from Volvo and Geely to merge with special purpose acquisition company (SPAC) with Gorges Guggenheim at a $20 billion valuation.
The automaker raised $890 million in the deal to help fund a three-year growth plan, which includes scaling its global operations, adding a second shift at its factory in China and beginning in October will produce the Polestar 3 SUV at Volvo’s factory in South Carolina.
Polestar also plans to introduce a Polestar 4 midsize crossover in 2023 and Polestar 5 four-door GT in 2024.
So far, Polestar has avoided the pitfalls facing most other EV manufacturers that have opted to go public through a SPAC instead of an IPO in the past two years.
Faraday Future, Electric Last Mile Solutions, Lordstown Motors and others have struggled to raise enough money to build their own EVs from scratch. Polestar benefits from access to Volvo and Geely’s manufacturing expertise, facilities and connections, as well as a $3 billion deal to supply Hertz with 65,000 EVs over the next five years.
In July, Polestar said it is on track to sell 50,000 cars this year. Currently, the Polestar 2 battery-electric sedan is the only model the automaker sells, following the discontinued, 600-horsepower Polestar 1 plug-in hybrid. The company’s ambitious plans call for expanding to 30 countries by the end of 2023 and selling 290,000 cars annually by 2025 — about 10 times Polestar’s 2021 sales.
SoftBank, Sequoia China back this ERP startup enabling China’s online exporters – TechCrunch
Thanks to cross-border e-commerce platforms, China continues to be a major exporter of consumer goods for the world in the online shopping age. It’s not just marketplaces like Amazon and AliExpress that are enabling Chinese businesses to sell abroad. Behind the scene, a group of startups are making the software that allows exporters to more easily figure out what to sell and how to sell.
Dianxiaomi, roughly translated as ‘shop assistant’, is one of these ecommerce SaaS providers. The company just secured $110 million in a Series D funding round led by SoftBank Vision Fund II and Sequoia Capital China. Other prominent investors, including Tiger Global Management, GGV Capital, and Huaxing Growth Capital, also participated.
The financing lifts the company’s total investment to $210 million in 2022 alone.
Dianxiaomi is strategically located in Shenzhen, the capital of export-oriented ecommerce activity in China. The city that’s home to Huawei, Tencent, and DJI is also known to house the most Amazon sellers in the world.
Dianxiaomi started out with a convenient tool that allowed sellers to list their products already sold on Taobao, Alibaba’s marketplace for Chinese consumers, on Wish with “one click”, said its founder and CEO Du Jianyin, a former R&D engineer at Baidu, in an interview.
From there, Dianxiaomi went on to create a suite of enterprise resource planning (ERP) software for Chinese vendors on Wish, Amazon, eBay, AliExpress, Shopee, Lazada and the like. The target users are small and medium-sized sellers with 5,000 orders per day or less, the company told TechCrunch.
The SaaS provider itself is expanding overseas as well. It’s launched localized ERP products for sellers in Southeast Asia and Latin America, respectively. Globally, it claims to be serving 1.5 million users and has partnered with some 50 ecommerce platforms. In Southeast Asia, it has amassed 430,000 users that are selling within the booming region.
The company plans to open offices in Indonesia, Malaysia, and the U.K., where it looks to build a team of 20-100 staff to carry out customer service, operations, and other tasks in each country.
Landing in Southeast Asia is an obvious choice for many Chinese entrepreneurs, who see similar opportunities in the region as they did in their home market a decade ago.
“At its rapid growth rate, [Southeast Asia] is a bit like China from ten years ago. Second, the region is culturally similar with a big ethnically Chinese population, who can help promote the products. And third, orders from Southeast Asia have been growing at over 100% a year,” the CEO noted in the interview.
The financing for Dianxiaomi is one of the few deals that SoftBank has sealed this year in China, which for long was a major destination for the investment powerhouse. But amid a slowing economy and regulatory uncertainties, the company said last year that it would take a more “cautious” approach to backing Chinese startups.
In January, SoftBank and Sequoia Capital China injected funding into a similar venture called Shoplazza, a Canada- and Shenzhen-based company that powers direct-to-consumer brands with online store management tools.
Galaxy Digital calls off $1.2 billion acquisition of BitGo – TechCrunch
Crypto sector’s first $1 billion deal, announced at the height of record surge in token prices, is disbanding as the market reverses much of the gains.
Galaxy Digital said Monday it has terminated the $1.2 billion proposed acquisition of crypto custodian BitGo, a high-profile deal they announced in May last year, after the San Francisco-based startup failed to provide its audited financial statements for the year 2021.
BitGo’s alleged failure to provide the financial statements by July 31 violated the terms the two firms had agreed upon last year, Galaxy Digital said in a public statement, adding that the termination of the deal won’t incur the company any fee. Shares of Galaxy Digital, which trades in Toronto, jumped on the news.
The proposed acquisition — which was proposed to include Galaxy Digital issuing 33.8 million new shares, and a $265 million cash component — was supposed to be crypto sector’s first $1 billion deal. The BitGo purchase was positioned to help Galaxy Digital broaden its offerings for institutional investors by adding services such as investment banking, prime lending and tax services. BitGo counts Galaxy Digital, Goldman Sachs, Valor Equity Partners, Craft Ventures, DRW and Redpoint Ventures among its backers.
“The power of the technology, solutions, and people we will have as a result of this acquisition will unlock unique value for our clients and drive long-term growth for our combined business. We are excited to welcome Mike Belshe and the talented BitGo team to Galaxy Digital,” Mike Novogratz, chief executive officer and founder of Galaxy Digital, said at the time.
Novogratz (pictured above) said Monday: “Galaxy remains positioned for success and to take advantage of strategic opportunities to grow in a sustainable manner. We are committed to continuing our process to list in the U.S. and providing our clients with a prime solution that truly makes Galaxy a one-stop shop for institutions.”
The announcement follows Galaxy Digital reporting a second-quarter loss of $554.7 million, up from a loss of $183 million a year ago, earlier this month. In the company’s earnings call, Novogratz said Galaxy Digital had about $1 billion in cash on hand.
Galaxy Digital said today it is waiting for the SEC’s review and stock exchange approval for a Nasdaq listing.
Uber to sunset free loyalty program in favor of subscription membership – TechCrunch
Ride-hailing giant Uber is shutting down its free loyalty program, Uber Rewards, so it can focus on its subscription-based Uber One membership.
Uber first launched the rewards program in 2018 as a sort of frequent flyer scheme that allowed riders to earn points for every dollar spent on rides or Uber Eats deliveries. Those points could then be used to get discounts on future rides or deliveries. In November 2021, Uber began introducing Uber One, which, for $9.99 per month or $99.99 annually, allows members perks like 5% off certain rides or delivery orders and unlimited $0 delivery fees on food orders of over $15 and grocery orders of over $30.
In an email sent to customers that was picked up by The Verge, Uber said users can still earn points via the legacy rewards program until the end of August, and that they can redeem those points until October 31. Uber Rewards will officially shut down on November 1, 2022, according to an update posted by the company.
The Uber Rewards program allowed users to earn 1x point for every Uber Pool dollar spent, 2x for every UberX dollar spent and 3x for every $1 spent on Premium. The number of points accumulated would put members into different castes of loyalty, from Blue to Gold to Platinum to Diamond, the latter of which comes with benefits like access to highly rated drivers, free delivery on three Uber Eats orders, access to better customer service and free upgrades.
While phone support will continue for Diamond users, now the only way to get additional perks with Uber will be to shell out for a subscription. Existing Rewards members will get a free one-month subscription to Uber One, but then will be charged for access. If you’re someone who orders Uber Eats more than twice a month, you can easily break even with the Uber One subscription, but plenty of users might not see the money saving benefits in the switch.
Uber did not respond immediately for clarity as to why it is shutting down the Rewards program in favor of the Uber One membership. Perhaps the company did not see the returns and user loyalty that it would have expected from the program and thinks a subscription offering will provide better returns.
As companies fight to retain talent, employee benefits startups might escape cost cuts – TechCrunch
How will employee benefits startups fare when their corporate customers start slashing costs as the market goes downhill? We’re going to find out if current trends continue.
There was a spike in the number of startups offering employee benefits services through a B2B2C model last year, as nearly every company focused on employee benefits amid the Great Resignation in an effort to retain and attract talent. These startups sell everything from paid care leave coordination and fertility services to discounted gym memberships to consumers through their employers.
But the freewheeling spending of 2021 is now over, and some of these startups could find their offered services on the chopping block if market conditions continue to worsen.
If there is indeed a recession on the horizon, many of these startups would be right to fear for their future growth, but Brian Kropp, chief of HR research at Gartner, doesn’t think this downturn will mirror the last. Kropp told TechCrunch that even if the market enters a recession, it won’t be similar to what we saw in 2008 because of the ongoing labor shortage.
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