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The Daily Crunch: Chime will stop calling itself a bank to settle complaint by CA regulators

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Hello friends, welcome to Daily Crunch, where we bring you the day’s most important startup, tech and venture capital news in a single package.

The fintech world is front and center today, with big news from Chime lighting up the analytics boards here at TechCrunch. But we also explored impressive earnings from fintech giants today, asking ourselves how much market the PayPals and Squares of the world will leave for startups as they build ever-broader product sets.

The answer could matter for more than just the buy-now-pay-later world, a hot startup category in recent quarters. We don’t buy into the idea of hard kill-zones around the biggest tech companies, but all the same, the competitive fintech landscape is changing. Especially in emerging markets, where startup activity has been blistering.

Finally, if you reply to this email I will receive the note directly in my inbox. Feel free to say hi!

Alex@alex on Twitter

When is a neobank not a bank?

Fintech darling Chime has agreed to not refer to itself as a bank after running afoul of California regulators. As TechCrunch reported, Chime has mostly avoided calling itself a bank. In a televised interview, for example, as Connie wrote, its CEO, Chris Britt, said that his company is “more like a consumer software company than a bank.”

Sure. Anyway, we aren’t going to stop calling Chime a neobank, because that’s what it is. We’ll leave the linguistic nuance to the regulators.

The dustup with the Cali powers isn’t itself a huge deal, but it does underscore how Chime and its myriad global competitors are not in too much hot water with governments. Ask yourself: When was the last time you saw Chime in the news for misbehaving? Now, repeat the same experiment with, say, Robinhood? Totally different, right?

The neobank game is expensive, but potentially lucrative. Chime is generating positive EBITDA, for example. That’s a fancy way of saying that it no longer burns much, if any, cash. Something that Uber and Lyft are still struggling to do.

Startups and venture capital

We’ll get into a host of startup funding rounds shortly, but first I want to talk business models. Namely the evolution of SaaS. SaaS is just a fancy way of saying “modern software,” of course; the sort of stuff you pay a regular fee to use, and someone else hosts and delivers to your browser.

SaaS became the de facto startup business model some time ago. Why? It’s lucrative with strong revenue quality (high gross margins) and dependable (recurring) incomes. But in recent quarters, there’s been a shift toward more on-demand pricing (here’s the investor perspective). Which is like SaaS, but potentially even better.

And the trend away from SaaS toward on-demand is not slowing. For example, I chatted with Twilio’s CFO yesterday. Despite having bought some more SaaSy companies lately, he said that his company will keep its center of gravity in the on-demand world. We’re not surprised, but it was a data point worth sharing. (More on this below.)

Now, the day’s hottest funding rounds:

Freemium isn’t a trend — it’s the future of SaaS

While we adopted new pandemic habits like rearranging house plants to create pleasing Zoom backgrounds and having groceries delivered, top SaaS companies also tried something new — offering their products for free or at deep discounts.

Because many enterprises had to make snap decisions to digitize their operations, decision-makers were averse to making long-term plans. As a result, companies like Shopify, GoDaddy and GitHub roiled out free, free-trial and low-priced offerings aimed at end users.

Freemium conversion and expansion is here to stay, says Kyle Poyar, VP of Growth at VC firm OpenView. “The merits of launching a free plan should no longer need to be debated,” he says.

“Instead, more companies should be asking: Are we giving enough away for free?”

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

The tech giants 

Let’s talk about Google. Namely its Chromebook push. Anyone who recalls the UMPC boom, or even the ill-fated netbook phenom, could have been forgiven for dismissing Chromebooks. After all, they were nearly the same idea. But, unlike their predecessors, Chromebooks are kinda working? TechCrunch reported earlier this week that Chromebook sales were up 257% in Q1, for example. And today Google dropped some docks to try and get big companies to buy Chromebooks? For work? The latter bit makes no sense to me, though I will heartily admit that as far as couch computers go, Chromebooks are amazing.

Today, instead of another item or two from another Big Tech conglomerate, we’re turning to China. Recall that the Chinese Communist Party is in the process of cutting its fintech sector to a smaller size. The country’s tech industry seems to be in a general retreat as the government works to assert more control over its operations and influence.

We’ll see what impact that has on venture capital numbers over time. But there’s news from the country that matters to you and me. First, Chinese EV company Nio — which also has a Formula E team — is starting to sell cars in another country. A first. Norway, you win! And China is irked that India is not allowing Chinese companies to compete for a piece of its 5G hardware market. I am surprised that China is making noise about the matter, because after India banned apps from its companies, you would imagine that it would take a similar stance toward hardware that many countries eschew over security concerns.

Community

If you’re in the voting mood, give our podcast Equity a Webby vote. It’s the final voting day. So vote. Vote. Vote. Please vote. 🙂

Also, big shout out to our Extra Crunch #OG-EdTech community member Jomayra Herrera, who joined Reach Fund as their newest partner. Read more here and join us on Discord!

The Daily Crunch: Tech stocks hammered after US Treasury Secretary speculates on hiking interest rates

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Are startup valuations about to fall?

Hello, friends! Alex here to talk to you for a hot second about money. Then we’ll get into startups, venture capital, what Big Tech is up to and more. I promise. But hang with me for a moment.

Tech stocks got hammered today: The tech-heavy Nasdaq fell by more than 2%. Cloud stocks endured twice the damage. What happened? The U.S. government said that it might raise interest rates. So what? Well, when rates were low, lots of money that might have been invested elsewhere was instead funneled into tech stocks and VC funds that invest in startups.

Now, with the government saying that it might shake up the current state of affairs, investors are responding by selling tech stocks. Bessemer Venture Partners investor Byron Deeter noted the drop, tweeting that after a “brutal few days in the clouds,” with software stocks off “~5% today and ~10% on the week,” he was curious if valuations are “just taking a breather after a massive 2020” or starting “a broader reset.”

That’s a great question. More on the underlying economics of the situation here and here. Now, into startup-land.

Twitter doubles down on subscriptions

If you were curious about how Twitter was going to pursue its subscription strategy, the answer, to a degree, is buying startups. Today Big Tweet announced that it is buying Scroll, a startup that charges its users a fee, providing them with an ad-free experience on various media sites. Scroll then split its user fee with those sites.

A neat model, yeah? It’s a bit like the startup called Contenture that TechCrunch covered a few times back in 2009. Only Scroll made more progress than Contenture did. And your humble servant was not a co-founder at Scroll.

Regardless, the Scroll-Twitter deal matters because the social media company is busy rolling up startups and products into its ecosystem to better craft a set of services that may help it monetize more effectively over the long haul. Sarah reports:

[Scroll] will become a part of Twitter’s larger plans to invest in subscriptions, the company says, and will later be offered as one of the premium features Twitter will provide to subscribers. Premium subscribers will be able to use Scroll to easily read their articles from news outlets and from Twitter’s own newsletters product, Revue, another recent acquisition that’s already been integrated into Twitter’s service. When subscribers use Scroll through Twitter, a portion of their subscription revenue will go to support the publishers and the writers creating the content, explains Twitter in an announcement.

Twitter vs. Substack? Yep. Twitter vs. Clubhouse? Yep. And if Twitter can help media companies better monetize and thus not die? Well, then it’s Twitter versus the a16z media operation. I didn’t really expect a Jack versus Marc 2021 but am here for it all the same.

A typical day in today’s startup funding market

There was a cornucopia of startup news today on the site, so I’ve narrowed it a bit to get you what you need in a hurry. Also, shoutout to Mary Ann for covering half of it all by herself.

Here’s the rundown:

To round out our startup and venture capital notes, here are two more bits of news: Austin-based Multicoin Capital has raised a $100 million fund to “further capitalize on rampant excitement in the crypto world,” per our own reporting. Oh, and London-based seed investment fund Stride VC has raised a £100 million fund.

Advice and analysis from Extra Crunch

How to break into Silicon Valley as an outsider

There is no magic spell that will induce an investor to meet with you. As with most things in life, it all comes down to who you know and what you have to offer.

“Nothing beats building human networks,” says Domm Holland, CEO and co-founder of Fast. “That’s the way that you’re going to get this done in terms of fundraising.”

Since its founding in 2019, Fast has raised $124 million across three rounds as it lands new users and partners like Stripe for its one-click checkout product. In this interview, Holland, a native Australian, shares actionable advice for other outsiders with startup dreams.

“Raising money isn’t the only thing,” Holland says. “You’ve got to hire people, you’ve got to build a team, you’ve got to build customers and suppliers, and you’ve got to build entire ecosystems.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

The enterprise strikes back

Before we get into the enterprise news, here’s what you want to read about: Tesla spent $3 (not a typo) to purchase patents relating to battery tech that we think could really matter.

On the enterprise front, Ron has two stories today from tech giants that matter. The first is an interview with SAP CEO Christian Klein. SAP, you will recall, spun out Qualtrics a little bit ago. What’s ahead for the software giant? Ron is on the case!

From the same pen, Box’s time in the barrel continues as some of its largest public shareholders are agitating to “inject [Box’s] board with still more new blood, taking a swipe at the Box leadership team while it was at it.” This is a fight worth watching as it could encourage, or discourage, more unicorns from going public.

Finally from Big Tech, some good news. Namely that Instagram is working on improving its caption tech, which could help with accessibility. And our own Twitter-free Devin reports that Microsoft wants to help kids read.

Community

We asked everyone on Twitter about their experience trying to learn a foreign language, and you can weigh in here. Some of you have tried using Duolingo (with success!) and some shockingly got through German class in junior high without learning a single sentence of the language. Regardless of your personal experience, give the Duolingo EC-1 a read and learn about how the company started, how they figured out how to make money and what’s up next for them.

Speaking of starting a company … if you’re building your own, join us for this week’s Extra Crunch LiveRegister here. It’s free! See you there.

The Daily Crunch: Tech stocks hammered after US Treasury Secretary speculates on hiking interest rates

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Are startup valuations about to fall?

Hello, friends! Alex here to talk to you for a hot second about money. Then we’ll get into startups, venture capital, what Big Tech is up to and more. I promise. But hang with me for a moment.

Tech stocks got hammered today: The tech-heavy Nasdaq fell by more than 2%. Cloud stocks endured twice the damage. What happened? The U.S. government said that it might raise interest rates. So what? Well, when rates were low, lots of money that might have been invested elsewhere was instead funneled into tech stocks and VC funds that invest in startups.

Now, with the government saying that it might shake up the current state of affairs, investors are responding by selling tech stocks. Bessemer Venture Partners investor Byron Deeter noted the drop, tweeting that after a “brutal few days in the clouds,” with software stocks off “~5% today and ~10% on the week,” he was curious if valuations are “just taking a breather after a massive 2020” or starting “a broader reset.”

That’s a great question. More on the underlying economics of the situation here and here. Now, into startup-land.

Twitter doubles down on subscriptions

If you were curious about how Twitter was going to pursue its subscription strategy, the answer, to a degree, is buying startups. Today Big Tweet announced that it is buying Scroll, a startup that charges its users a fee, providing them with an ad-free experience on various media sites. Scroll then split its user fee with those sites.

A neat model, yeah? It’s a bit like the startup called Contenture that TechCrunch covered a few times back in 2009. Only Scroll made more progress than Contenture did. And your humble servant was not a co-founder at Scroll.

Regardless, the Scroll-Twitter deal matters because the social media company is busy rolling up startups and products into its ecosystem to better craft a set of services that may help it monetize more effectively over the long haul. Sarah reports:

[Scroll] will become a part of Twitter’s larger plans to invest in subscriptions, the company says, and will later be offered as one of the premium features Twitter will provide to subscribers. Premium subscribers will be able to use Scroll to easily read their articles from news outlets and from Twitter’s own newsletters product, Revue, another recent acquisition that’s already been integrated into Twitter’s service. When subscribers use Scroll through Twitter, a portion of their subscription revenue will go to support the publishers and the writers creating the content, explains Twitter in an announcement.

Twitter vs. Substack? Yep. Twitter vs. Clubhouse? Yep. And if Twitter can help media companies better monetize and thus not die? Well, then it’s Twitter versus the a16z media operation. I didn’t really expect a Jack versus Marc 2021 but am here for it all the same.

A typical day in today’s startup funding market

There was a cornucopia of startup news today on the site, so I’ve narrowed it a bit to get you what you need in a hurry. Also, shoutout to Mary Ann for covering half of it all by herself.

Here’s the rundown:

To round out our startup and venture capital notes, here are two more bits of news: Austin-based Multicoin Capital has raised a $100 million fund to “further capitalize on rampant excitement in the crypto world,” per our own reporting. Oh, and London-based seed investment fund Stride VC has raised a £100 million fund.

Advice and analysis from Extra Crunch

How to break into Silicon Valley as an outsider

There is no magic spell that will induce an investor to meet with you. As with most things in life, it all comes down to who you know and what you have to offer.

“Nothing beats building human networks,” says Domm Holland, CEO and co-founder of Fast. “That’s the way that you’re going to get this done in terms of fundraising.”

Since its founding in 2019, Fast has raised $124 million across three rounds as it lands new users and partners like Stripe for its one-click checkout product. In this interview, Holland, a native Australian, shares actionable advice for other outsiders with startup dreams.

“Raising money isn’t the only thing,” Holland says. “You’ve got to hire people, you’ve got to build a team, you’ve got to build customers and suppliers, and you’ve got to build entire ecosystems.

(Extra Crunch is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

The enterprise strikes back

Before we get into the enterprise news, here’s what you want to read about: Tesla spent $3 (not a typo) to purchase patents relating to battery tech that we think could really matter.

On the enterprise front, Ron has two stories today from tech giants that matter. The first is an interview with SAP CEO Christian Klein. SAP, you will recall, spun out Qualtrics a little bit ago. What’s ahead for the software giant? Ron is on the case!

From the same pen, Box’s time in the barrel continues as some of its largest public shareholders are agitating to “inject [Box’s] board with still more new blood, taking a swipe at the Box leadership team while it was at it.” This is a fight worth watching as it could encourage, or discourage, more unicorns from going public.

Finally from Big Tech, some good news. Namely that Instagram is working on improving its caption tech, which could help with accessibility. And our own Twitter-free Devin reports that Microsoft wants to help kids read.

Community

We asked everyone on Twitter about their experience trying to learn a foreign language, and you can weigh in here. Some of you have tried using Duolingo (with success!) and some shockingly got through German class in junior high without learning a single sentence of the language. Regardless of your personal experience, give the Duolingo EC-1 a read and learn about how the company started, how they figured out how to make money and what’s up next for them.

Speaking of starting a company … if you’re building your own, join us for this week’s Extra Crunch LiveRegister here. It’s free! See you there.