Startups Venture

From The Editor’s Desk: ‘You Can’t Put This Genie Back in the Bottle’

From the Editor's Desk

After I asked readers last week to share their thoughts with me on Silicon Valley’s future as the epicenter of the startup universe, my inbox filled up.

“SV is no longer the center for us,” wrote Jim Preston, a self-described serial entrepreneur who last month uprooted his business and life from the Silicon Valley city of Santa Clara to Fruita, a small town on Colorado’s Western Slope. 

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“I’m a bootstrapper and SV is getting too expensive for that,” he told me. “Sure, a team from Facebook or wherever can still do startups in SV because they can get early funding, but us little guys have to build our product and get traction with our own resources.”

Many of the startups we wrote about last week, including Asana and Palantir, are well-funded late-stage companies, he noted. “Those haven’t been startups for many years. Real startups have no revenue yet or are testing the market with their first product or service. SV is no longer the center for us. We’ve scattered all over the country and the world.”

Michael Skok, a partner and co-founder at Boston-based venture firm Underscore VC, said his firm is actively investing in startups in the remote-work space, including Macro, RemoteHQ and HelloTeam. It’s also increasingly investing in startups that are based outside the Boston area or that have distributed teams.

“Several of our limited partners have asked us ‘does geography matter any more?’” Skok wrote in an email. “It’s a smart question to ask as newly distributed teams prove their increased productivity, ability to hire the best talent wherever it is, and use remote working technologies to gain competitive advantage and in many cases cost savings.”

Underscore VC still has “a Boston-bias,” he said, “but you can’t put this genie (distributed and remote work) back in the bottle. So are we also looking ahead to a distributed investing future?  You bet—we would be crazy not to.”

Our top stories last week

Among our readers’ favorite Crunchbase News stories last week:

  • Every year, we take a look at the latest trends among startup names. A decade or so ago, weird names like Tumblr, Hulu and Airbnb were all the rage. In 2020, made-up monikers continue to fade while simple, descriptive nouns gain popularity, reporter Joanna Glasner found in her annual analysis of new startups in the Crunchbase database. “The crazy, silly, weird spelling name trend seems to have waned a lot. People are a bit longer with the names, and going back to English words,” one naming expert told her.
  • Reporter Christine Hall spoke with a handful of investors in the business-to-business software space to get their insights on why the sector remains hot and which particular areas they’re putting money into. Here’s what Tomy Han of Volition Capital, David Blumberg of Blumberg Capital, and Richard Wong of Accel had to say.
  • What recession? Unlike during the financial crisis of 2008, venture funds aren’t slowing down in 2020, researcher Gené Teare found in an analysis last month that’s still trending among our readers. To the contrary, many firms, including Lightspeed Venture Partners and NEA, have raised billions of dollars across multiple funds and continue to spend on investment at a pretty good clip.

What I’m reading

In recent years, SoftBank and its $100 billion Vision Fund have roiled the startup world with a shock-and-awe investment campaign that rained billions of dollars down on unicorn startups, including most famously WeWork.

Turns out, the Japanese conglomerate was also the “Nasdaq whale” that fueled the U.S. stock market rally over the past month by buying up billions of dollars in individual tech stock options, the Financial Times and The Wall Street Journal reported on Friday, citing unnamed sources.

SoftBank declined to comment on the reports. The company’s buying spree fueled “the largest ever trading volumes in contracts linked to individual companies,” FT reported, a move one banker described as a “dangerous” bet.

“It’s just a trip to the casino,” an analyst told the Journal. “If they’re supposed to be an investment company taking a long-term horizon, then trying to juice your short-term return through options, you’ve turned into a hedge fund.”

Illustration: Dom Guzman

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