Valence Announces Funding Network to Connect Black Founders

Ben Bergman

Ben Bergman is the newsroom's senior finance reporter. Previously he was a senior business reporter and host at KPCC, a senior producer at Gimlet Media, a producer at NPR's Morning Edition, and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to business coverage on NPR and Marketplace and has written for The New York Times and Columbia Journalism Review. Ben was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. In his free time, he enjoys skiing, playing poker, and cheering on The Seattle Seahawks.

Valence Announces Funding Network to Connect Black Founders

Valence, a tech platform and professional network launched last year that connects Black founders, announced its inaugural funding network Thursday. The list includes investors at top firms including Sequoia Capital, Accel and Upfront Ventures.

"For years, Black entrepreneurs have been told that Silicon Valley is a meritocracy, but at the same time most haven't had access to the top networks, the warm introductions, and the mentorship that underpin lasting success in tech. Valence is upending this completely by bringing the top VCs to compete for the best Black entrepreneurs." said Valence co-founder and general partner at Upfront Ventures, Kobie Fuller. "We want to even the playing field with the goal of exponentially growing the number of Black-owned startups that get funded."


Only 4% of VC employees are black, according to a 2018 survey by the National Venture Capital Association, an industry trade group. Just 10% of VC-backed companies in Los Angeles are run by a person of color or a woman, according to PledgeLA.

However, the true numbers are likely much lower because those survey – like all others examining diversity — are self-reported.

Valence also announced that is has appointed tech and entertainment veteran Guy Primus as chief executive officer.

"Facilitating success in the innovation economy is key to Valence's mission. By creating the Valence Funding Network, we are eliminating one of the most formidable structural obstacles to success—the access to venture investors." said Primus.

Here are the inaugural funding members:

  • 645 Ventures
  • Nnamdi Okike
  • Accel
  • Rich Wong
  • Base10
  • Ade Ajao
  • Bessemer
  • Elliott Robinson
  • Capital G
  • Gene Frantz
  • Collab Capital
  • Jewel Burks
  • Concrete Rose
  • Sean Mendy
  • Defy Partners
  • Nabeel Hyatt
  • Techsquare Labs
  • Upfront
  • Neil Sequiera
  • Equal Ventures
  • Richard Kerby
  • First Round
  • Josh Kopelman
  • Forerunner
  • Brian O'Malley
  • Foundry
  • Brad Feld
  • General Catalyst
  • Peter Boyce
  • GGV
  • Hans Tung
  • Greylock
  • Sarah Guo
  • Jordan Fudge
  • Spark Capital
  • Rebecca Kaden
  • High Alpha
  • Scott Dorsey
  • Lightspeed
  • Mercedes Bent
  • Lux
  • Deena Shakir
  • Outlander
  • Paige Craig
  • Precursor
  • Charles Hudson
  • Redpoint
  • Annie Kadavy
  • Sequoia
  • Jess Lee
  • Sinai Ventures
  • Paul Judge
  • Union Square
  • Kobie Fuller


https://twitter.com/thebenbergman
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As TikTok Faces a Ban, Competitors Prepare to Woo Its User Base

Kristin Snyder

Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.

As TikTok Faces a Ban, Competitors Prepare to Woo Its User Base
Evan Xie

This is the web version of dot.LA’s daily newsletter. Sign up to get the latest news on Southern California’s tech, startup and venture capital scene.

Another day, another update in the unending saga that is the potential TikTok ban.

The latest: separate from the various bills proposing a ban, the Biden administration has been in talks with TikTok since September to try and find a solution. Now, having thrown its support behind Senator MarkWarner’s bill, the White House is demanding TikTok’s Chinese parent company, ByteDance, sell its stakes in the company to avoid a ban. This would be a major blow to the business, as TikTok alone is worth between $40 billion and $50 billion—a significant portion of ByteDance’s $220 billion value.

Clearly, TikTok faces an uphill battle as its CEO Shou Zi Chew prepares to testify before the House Energy and Commerce Committee next week. But other social media companies are likely looking forward to seeing their primary competitor go—and are positioning themselves as the best replacement for migrating users.

Meta

Last year, The Washington Post reported that Meta paid a consulting firm to plant negative stories about TikTok. Now, Meta is reaping the benefits of TikTok’s downfall, with its shares rising 3% after the White House told TikTok to leave ByteDance. But this initial boost means nothing if the company can’t entice creators and viewers to Instagram and Facebook. And it doesn’t look promising in that regard.

Having waffled between pushing its short-form videos, called Reels, and de-prioritizing them in the algorithm, Instagram announced last week that it would no longer offer monetary bonuses to creators making Reels. This might be because of TikTok’s imminent ban. After all, the program was initially meant to convince TikTok creators to use Instagram—an issue that won’t be as pressing if TikTok users have no choice but to find another platform.

Snap

Alternatively, Snap is doing the opposite and luring creators with an ad revenue-sharing program. First launched in 2022, creators are now actively boasting about big earnings from the program, which provides 50% of ad revenue from videos. Snapchat is clearly still trying to win over users with new tech like its OpenAI chatbot, which it launched last month. But it's best bet to woo the TikTok crowd is through its new Sounds features, which suggest audio for different lenses and will match montage videos to a song’s rhythm. Audio clips are crucial to TikTok’s platform, so focusing on integrating songs into content will likely appeal to users looking to recreate that experience.

YouTube

With its short-form ad revenue-sharing program, YouTube Shorts has already lured over TikTok creators. It's even gotten major stars like Miley Cyrus and Taylor Swift to promote music on Shorts. This is likely where YouTube has the best bet of taking TikTok’s audience. Since TikTok has become deeply intertwined with the music industry, Shorts might be primed to take its spot. And with its new feature that creates compiles all the videos using a specific song, Shorts is likely hoping to capture musicians looking to promote their work.

Triller

The most blatant attempt at seducing TikTok users, however, comes from Triller, which launched a portal for people to move their videos from TikTok to its platform. It’s simple, but likely the most effective tactic—and one that other short-form video platforms should try to replicate. With TikTok users worried about losing their backlog of content, this not only lets users archive but also bolsters Triller’s content offerings. The problem, of course, is that Triller isn’t nearly as well known as the other platforms also trying to capture TikTok users. Still, those who are in the know will likely find this option easier than manually re-uploading content to other sites.

It's likely that many of these platforms will see a momentary boost if the TikTok ban goes through. But all of these companies need to ensure that users coming from TikTok actually stay on their platforms. Considering that they have already been upended by one newcomer when TikTok took over, there’s good reason to believe that a new app could come in and swoop up TikTok’s user base. As of right now, it's unclear who will come out on top. But the true loser is the user who has to adhere to the everyday whims of each of these platforms.

https://twitter.com/ksnyder_db

We Asked Our Readers How They’re Using AI in a Professional Setting. Here's What They Said

Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

We Asked Our Readers How They’re Using AI in a Professional Setting. Here's What They Said
Evan Xie

According to Pew Research data, 27% of Americans interact with AI on a daily basis. With the launch of Open AI’s latest language model GPT-4, we asked our readers how they use AI in a professional capacity. Here’s what they told us:

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The Near Miss Apocalypse: Predictions for Post SVB Collapse

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

The Near Miss Apocalypse: Predictions for Post SVB Collapse
Evan Xie

The historic Silicon Valley Bank collapse dominated headlines recently, and the tech and financial communities have only just started processing the aftermath. The 48-hour breakdown was both historic and a few inches away from economically catastrophic, and thanks to the swift moves of the FDIC, complete disaster was avoided.

But it’s still been disruptive. SVB was the banking partner for nearly half of U.S. venture-backed technology and healthcare companies that listed on stock markets in 2022, making it one of the biggest lenders for early-stage startups. The aftershocks of SVB’s breakdown spread just as far and fast as the main event: the close of Signature Bank just two days later, major market volatility, other banking crises at Credit Suisse, tech industry troubles, and much more.

In the days since, things have settled slightly, and the world’s fingers are crossed that depositors are comforted enough and confident enough to avoid another bank run. It’s good news, but we aren’t out of the woods yet. Now that we know the second-largest bank failure in U.S. history could be looming around any corner, how does that change the ways startups do business?

Level, Set, Go

Before we get into what could happen, it’s smart to level-set about how we got here. (And for an introductory primer, this short podcast can help.)

  • The government 100% did the right thing by assuring depositors that they will be made whole. The FDIC swooped in, steadied the ship, and made sure people had the money they needed when they needed it.
  • Some have called this a ‘bailout', but it’s not for two reasons. 1) SVB shareholders and creditors will be wiped out and 2) taxpayer money is not being used to do any bailing.
  • Remember: depositors are not creditors. When companies and people put money into their accounts at SVB, they had every reason to expect that it would be there when they needed to withdraw it. They weren’t loaning the money to SVB (as a creditor would), they were depositing money into their own account at SVB for safekeeping.
  • People who say “depositors took a risk by having more than the FDIC insured $250K limit” are, ahem, a bit misguided. (I’m being polite). The truth is that $250K is not that much money for a company, especially of the size and scale of some of SVB's major customers.

Here’s where I think we should go from here.

The Short Term

While SVB’s failure didn’t launch us over the precipice, many people are rightfully feeling very nervous being this close to the edge.

Looking out to the next few weeks, I predict we’ll see venture funding slow way down. It’s been chilly out there recently, but it’s going to be ice cold, piggybacking on the already struggling tech landscape. Writing new checks will take a backseat to checking in on existing investments. VCs will need to assess where their cash is and where their portfolio companies stand, and likewise startups are going to have to start thinking hard about what it means to be lean and extend runway. Hopefully this only lasts a few weeks and the wheels of the machine start turning again before summer.

If there is a positive take on the SVB wreckage, it’s that the Fed will likely slow down the rate of increases. I’d predict a 25, maybe even 0, basis-point increase next week, and I wouldn’t be surprised if there was a rate cut later this year.

Whither venture debt?

Prior to SVB’s failure, it was very common for a startup to have enough cash at SVB for one year of runway, plus a venture debt line for an additional another year. SVB profited from this by charging interest plus warrants and requiring banking exclusivity. It was part and parcel of how they did business, and since they’ve transitioned from success story to cautionary tale, expect to see new regulations prohibiting banks from requiring customer exclusivity in exchange for additional services.

In the immediate term, companies who had venture debt lines with SVB are trying to decide whether to put their cash back in SVB in order to access that venture debt. The whole situation is surreal, since just a few days ago these same companies were scrambling to pull their money out of SVB, and now they are considering returning. There are conflicting reports, but it appears that SVB is allowing these companies to keep a second banking relationship with another bank (so no more exclusivity), but at least half of their cash must be with SVB.

For startups choosing not to access that venture debt line, now trying to figure out how to operate without venture debt (aka less hiring, less spending, less growth), they’re in for challenging times ahead. To fill that funding gap, maybe we’ll see more private lenders step in and provide venture debt as a product. If that is the case, I suspect terms will be tougher and many VCs will recommend against it for their companies.

Another prediction: audit committees of boards will come into play much earlier than they often do now. Given the ever larger seed and Series A/B rounds, it wasn’t uncommon to see startups that had raised $100M+ and had 200+ employees before an audit committee was formed. I suspect these will now be formed upfront and have a much bigger role to play in early stages.

Silver Lining

The good news: the world isn’t ending and won’t in the near future (at least, not because of this). Yes, things will be different and it will take some time to settle into a post-SVB startup environment, but with change comes adaptation. And with adaptation comes innovation, which is what startups are all about.

https://twitter.com/spencerrascoff
https://www.linkedin.com/in/spencerrascoff/
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