Years after Evan Spiegel tried to buy Secret, its co-founder David Byttow joins Snap as director of engineering

David Byttow, co-founder of Secret, the defunct anonymous social network that once gained notoriety for serving as the tech industry’s burn book, announced today that he will join Snap. The hire is noteworthy because before Secret shut down in 2015, Snapchat CEO Evan Spiegel tried to acqui-hire its team but decided the asking price was too high. Byttow told TechCrunch that he is joining Snap as its director of engineering.

Most recently, Byttow was engineering and product lead at on-demand delivery service Postmates, a position he’d held since May 2017 when it acqui-hired enterprise blogging service Bold, the last startup he launched. In a Medium post, Byttow wrote “Postmates recently announced a $300M funding round and is in a great position to continue its success in a massively lucrative market. And so, after 15 months at Postmates and 18 years on the west coast, I desired a new challenge. I joined Snapchat in NYC. I love the product, its vision, and the team behind it. I couldn’t be happier with the challenges and opportunities ahead.”

Launched in 2014, Secret was among several anonymous apps, including Whisper, Yik Yak, and ASKfm, that gained traction (and concerns about anonymous cyberbullying) at around the same time. Instead of teenagers, many of Secret’s early adopters claimed to work in Silicon Valley and used the app to dish about their employers and co-workers (as TechCrunch’s Ryan Lawler put it at the time, many posts related to “the dark underbelly of the startup ecosystem”). In April 2015, however, the app shut down despite having raised $35 million, and returned money to its investors.

It emerged with the publication of “How to Turn Down a Billion Dollars,” a book about Snapchat’s beginnings written by former TechCrunch writer Billy Gallagher, that Snap co-founder and CEO Evan Spiegel had quietly tried to acqui-hire Secret’s team before the app shut down. Spiegel wanted Byttow, Secret co-founder Chrys Bader-Wechseler and Secret’s product engineering team to become a “special ops” team at Snapchat, but the deal fell through because Spiegel and Secret’s investors couldn’t agree on a price.

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Balderton’s $145M ‘secondary’ fund will give shareholders in European scale-ups the chance to exit early

In what looks like a European first, the London-based early-stage venture capital firm Balderton Capital is announcing it has closed a new $145 million “secondary” fund dedicated to buying equity stakes from early shareholders in European-founded “high growth, scale-up” technology companies.

Dubbed “Balderton Liquidity I,” the new fund will invest in European growth-stage companies through the mechanism of purchasing shares from existing, early shareholders who want to liquidate some or all of their shares “pre-exit.”

“Balderton will take minority stakes, between regular fund-raising rounds, making it possible for early shareholders — including angels, seed funds, current and former founders and employees — to realise early returns, reinvest capital in the ecosystem, or reward founders and early employees,” explains the firm.

The move essentially formalises the secondary share dealing that already happens — typically as part of a Series C or other later rounds — which often sees founders take some money off the table so they can improve their own financial situation and won’t be tempted to sell their company too soon, but also gives early investors a way out so they can begin the cycle all over again. Otherwise it can literally take five to 10 years before a liquidity event happens, either via IPO or through a private acquisition, if it happens at all.

“The bigger picture is there are lots of shareholders who either want or need or have to take liquidity at some point,” Balderton partner Daniel Waterhouse tells me on a call. “Founders are one part of that… but I think the majority of this fund is more targeted at other shareholders — business angels, seed funds, maybe employees who left, founders who left — who want to reinvest their money, want to solve a personal financial issue, want to de-risk their personal balance sheets, etc. So we’re not obsessed with founders in this fund, we’re obsessed with many different types of early shareholders, which for many different reasons would like to get liquidity before the grand exit event.”

Waterhouse says that one of the big drivers for doing this now is that Balderton’s analysis suggests there is “a critical mass of interesting companies” that are in the growth stage: “businesses that have got a scalable commercial engine” and a proven commercial model. This critical mass has happened only over the last two years, which is why — unlike in Silicon Valley — we haven’t yet seen a fund of this kind launch in Europe.

“We think there’s now about 500 companies in Europe that have raised over $20 million. That doesn’t mean they are all great companies but it’s an interesting, crude data point in terms of the scale they’ve got to. As a consequence, within that 500 we expect there to be quite a lot of interesting companies for this fund to help and we obviously have a pretty good lens on the market. Through our early-stage investing, and working with companies from the early-stage through to exit, and then obviously staying in touch with companies we don’t necessarily invest in, we have a pretty good sense of that from a bottom up perspective on how many opportunities are out there.”

He explained that there are three aspects behind the secondary funding strategy. First is that by investing via secondary funding, more companies will gain access to the “Balderton platform,” which includes an extensive executive and CEO network and support with recruitment and marketing. Secondly, it is good for the ecosystem as it will not only help relieve financial pressure from founders so they can “shoot for the next growth point” but will also let business angels cash out and recycle their money by investing in new startups. Thirdly, and perhaps most importantly, Balderton thinks it represents a good investment opportunity for the firm and its LPs as secondary liquidity is “underserved as a market.”

(Separately, one London VC I spoke to said a dedicated secondary fund in Europe made sense except in one scenario: that European valuations see a price correction sometime in the future promoted by the current trajectory of available funding slowing down, which he believes will eventually happen. “Funds are 10 years so they just have to get out in time,” is how said VC framed it.)

To that end, Waterhouse says Balderton is looking to do around 15-20 investments out of the fund, but in some instances may start slowly and then buy more shares in the same company at an even later stage. It will be managed by Waterhouse with support from investment principal Laura Connell, who recently joined the VC firm.

Struggling to see many downsides to the new fund — which by virtue of being later-stage is less risky and will likely command a discount on secondary shares it does purchase — I ask if perhaps Balderton is being a little opportunistic in bringing a reasonably large amount of institutional capital to the secondary market.

“No, I don’t think so,” he replies. “What we’ve seen in our portfolio is [that] the point in time when someone is looking for liquidity isn’t set on the calendar alongside when companies do fund raising. In particular as a company gets more mature, the gap between fund raises can stretch out because the businesses are more close to profitability. And so it’s not deterministic. We want to just be there to help people who are actually looking to sell out of cycle in those points of time and at the moment have very little options. If someone wants to wait, they’ll wait.”

Finally, I was curious to know how it might feel the first time Balderton buys a substantial amount of secondary shares in a company that it previously turned its nose down at during the Series A stage. After pointing out that companies usually look very different at Series A compared to later on in their existence — and that Balderton can’t and doesn’t invest in every promising company — Waterhouse replies diplomatically: “Maybe we kick ourselves a bit, but we’re quite happy with the performance of our early funds and obviously we’ll be happy to add other new companies that are doing really well into the family.”

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Ohanian’s Initialized raises $225M 4th fund to turn founders into cyborgs

“Right now we’re in this Empire Strikes Back moment” says Initialized Capital’s Garry Tan, referring to tech giants ruthlessly copying and competing with fresh ideas. “We think the startups represent the Return Of The Jedi.” It’s that willingness to stand up against incumbents and give founders their best shot at disrupting them that’s won Initialized a place on the cap table’s of some of today’s fastest rising companies. Instacart, Coinbase, Flexport, and Patreon all count Initialized as investors because Tan and Serena Williams’ husband jump in the trenches with them, dispensing advice and connections over text message.

Now Initialized Capital has raised enough money to tackle its next challenge: the Series A crunch. Their first fund of just $7 million in 2011 taught them to be scrappy, and consider nascent companies yet to find product market fit. But even with their $39 million 2013 fund, and the $115 million third one they raised in 2016, they didn’t have enough cash to always follow on or fill out rounds of their 100 portfolio companies the way they hoped.

That changes today with the announcement that Initialized Capital has closed its fourth fund of $225 million.

Initialized Capital’s co-founders Garry Tan (left) and Alexis Ohanian (right)

“We’ve always been the first high conviction check, and often the smallest check” Tan says, recalling how he tracked Airbnb’s Brian Armstrong as he left to start Coinbase and Initialized invested the first $50,000. With the $225 million fund, we can actually do most of round rather than being the first check and then send 30 emails trying to get people to invest in it.”

Williams’ husband, commonly known as Reddit co-founder Alexis Ohanian, is the face of Initialized. But it’s Tan and the software he’s built that lets Initialized wield The Force when picking startups, and then rearing them into Jedi. Tan had experience from building BookFace, Y Combinator’s internal community Q&A system that’s often cited as one of the accelerator’s biggest value-adds, when he and Ohanian were still partners there.

“We use software as a means of constantly sharing knowledge” Tan explains. “every phone call, every email we have . . . it all goes in there. Then we take the software that we built…and augment those really talented founders into cyborgs.” From partnerships to recruiting, all that information allows startups to scale faster, and hopefully get to that Series A Initialized now has deep enough pockets to fund. The human element is still crucial, though, so it’s recruited a lean team of domain experts such as Thiel Macro’s financial modeling whiz Eric Woersching, ex-Founders Fund general counsel Alda Leu Dennis for legal, and former TechCrunch reporter Kim-Mai Cutler for press strategy.

The Initialized Capital team, where one-third of investment partners are female

What Initialized looks for in founders is the same as what it looked for in a mascot. “I still remember doodling the Reddit alien in college and years later seeing it tattooed on people’s bodies. We know the power that symbols can have, and we do plan on being a different kind of VC firm.” One critical example of how is that one-third of Initialized’s investment team is female. “Women in tech is one of the most important trends in representation and we’re very much allies there.”

So based on an early viral video about the small animal’s ferocity, the team settled on the honey badger for their brand. Though after 20 ugly attempts, Ohanian let a professional designer draw it. In a sea of funds named after old white dudes with abstract shapes as logos, they didn’t want to be another VC that makes you cringe when you see its brand on a Patagonia pullover.

“Garry and I want taking money from our firm to be something [founders] are proud of and they can wear on their chest. Maybe not tatooed…”

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The investors and founders of Yellow, 99 Taxis, and Didi will talk about the new mobility race at Startup Battlefield Latin America

In the nine months since Didi acquired the Brazilian ride hailing startup 99 in a deal that valued the company at a reported $1 billion, the market for mobility and logistics startups in Latin American region has changed dramatically.

The Didi deal was perhaps the first big acquisition for a Latin American startup in recent years and a starting gun for what’s been an extremely competitive race among startup companies to win the hearts and minds of consumers across the region.

The past year has seen the on-demand delivery service Rappi raise $200 million at valuation north of $1 billion from investors including the Russian firm, DST Global. And just weeks ago, the Sino-U.S. investment firm GGV led a $63 million investment into Yellow, a company launched by 99 co-founders Ariel Lambrecht and Renato Freitas.

That deal was the largest Series A investment in Latin America to date, and a potential harbinger of things to come, given that the early stage Mexico City based scooter on-demand service, Grin, raised $21 million from the Asian and U.S.-focused investment firm DCM. 

These deals also underscore the intensifying global competition between U.S. and Chinese technology companies and investors for larger shares of the worldwide market for technology enabled goods and services.

Given all of the jockeying for position, we’re lucky to welcome to our inaugural Latin American event a group of investors and entrepreneurs to help us make sense of all of these market moves.

Hans Tung, Managing Director, GGV Capital

Hans Tung, a managing partner at GGV Capital, has been on the Forbes Midas List six times from 2013 to 2018 and is one of the top investors in Chinese startups (including Xiaomi and Musical.ly, acquired by Bytedance). Tung is also now investing in Latin America having shepherded his firm’s investment in Yellow.

Yellow co-founders Ariel Lambrecht (who was one of the masterminds behind 99) and Eduardo Musa, who previously served as chief executive of the Brazilian bike brand, Caloi, will also be on hand to give us their sense of the mobility market and the role foreign and domestic companies are playing.

Finally, Tony Qiu, the general manager of Didi in Latin America, will be on hand to give us his perspective on this increasingly strategic market for the company.

With the capital flowing and competition growing, this is certainly one panel that’s not to be missed at our Startup Battlefield Latin America event. Get your tickets here.

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Google launches voice assistant app to help people with limited mobility use their phones

Google just introduced a new Android app to better enable people with limited mobility to use their phones. Called Voice Access, the app offers people a hands-free way to use apps, write and edit text and, of course, talk to the Google Assistant.

It’s designed to make it easier to control specific functions like clicking a button, and scrolling and navigating app screens. Currently, the app is only available in English, but Google is working on additional languages.

Google created the app in service of people with Parkinson’s disease, multiple sclerosis, arthritis and spinal cord injuries, but recognizes that the tool can also be helpful for people whose hands are tied with other tasks.

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