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XWatch: Investing in Uncertain Times: Why a Reset in Valuations Could be Liberating for Founders
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.

A decade-long run-up in startup valuations that came to a screeching halt after the novel coronavirus froze much of the worldwide economy last month could have a silver lining for company founders.
"They can build great businesses but don't have to be chasing a growth rate," said Carter Reum, co-founder of M13. "It can be liberating. We've lived in a world the past few years where an artificially high valuation was nothing more than a vanity mark."
Reum spoke in a dot.LA webinar on the state of investing along with Kara Nortman, a partner at L.A.'s largest venture firm, Upfront Ventures.
dot.LA Strategy Session: Investing in Uncertain Timeswww.youtube.com
Both invest heavily in consumer companies and pointed out that a softening of direct-to-consumer companies began last year after well-documented stumbles at WeWork, Caspar, and other brands.
"There was a lot of shame around the resets in valuations and now I think that's gone," Nortman said. "I've seen that be liberating for founders."
Reum said he is excited to be able to invest in businesses he sees long-term potential in, but could not justify the lofty valuations they demanded from investors. He says now VCs and founders alike can focus more on creating sustainable companies.
"Whereas growth-at-all-costs was really cool that last few years, the coolest thing going forward is controlled growth-with-profitability," he said.
Upfront and M13 are still deploying capital but knowing their next fund could be harder to raise they are being more conservative. Nortman says Upfront is preferring to write checks in the $3 to $4 million range rather than the $10 million sums it would deploy before the crisis out of its sixth series-A fund. The firm normally invests in one new company a month, a pace that has continued.
"Things are still moving at Upfront," she said, but also added: "There's still a big question about how to price things and how to invest in people you've never met."
Nortman said even after the virus subsides there will be less travel and perhaps fewer gatherings. Asked whether her firm was still planning to host the Upfront Summit, a splashy annual conference that brings over a thousand investors and founders to L.A. each winter, Nortman said to stay tuned.
"We view the Upfront Summit as a permanent endeavor and an important element to the community," she said.
"Everyone just breathed a sigh of relief," laughed Reum.
Speakers Include:
- Kara Nortman, partner at Upfront Ventures
- Carter Reum, partner and co-founder of M13
- Ben Bergman, senior reporter at dot.LA
Kara Nortman is a partner at Upfront Ventures
Kara Nortman, Partner at Upfront Ventures
Kara is a Partner at Upfront Ventures, the largest venture capital firm based in Los Angeles. Some of her notable investments include Parachute Home, The Wing, Fleetsmith, Stem, Territory, Strive, and Qordoba. Before Upfront, Kara co-founded the children's e-commerce company Moonfrye and also spent seven years at IAC where she co-headed the M&A group and acted as the Senior Vice President and General Manager of Urbanspoon and Citysearch. During her tenure at IAC she oversaw the initial investment in Tinder. Earlier in her career, she also spent time at Morgan Stanley, Microsoft, and Battery Ventures. She received her AB in Politics from Princeton University and her MBA from Stanford University. Kara is also a founding member of All Raise, a VC-led group dedicated to increased diversity in funders and founders and serves as an advisor to the Women's National Soccer Team Players Association. Kara resides in Los Angeles with her husband and three daughters. @upfrontvc
Carter Reum is a partner and cofounder of M13.
Carter Reum is an Investor, Entrepreneur and Author
Carter and his brother Courtney are Partners and Co-Founders of M13, a full-service venture engine with offices in Los Angeles, New York and San Francisco. M13 executes a "founders first" focus to build and scale leading consumer technology companies. M13's holdco model consists of a $200M consumer tech fund, active support of its founding teams and a launchpad brand studio that incubates ideas into sustainable companies with partners such as P&G Ventures. With more than 80 direct investments and 16 exits, M13's prior investments total over $137B in enterprise value and includes Lyft, Pinterest, Ring, Daily Harvest, FabFitFun, Rothy's and more. The brothers began their careers at Goldman Sachs before launching their first company, VEEV Spirits, one of the fastest-growing independent brands and an early leader in sustainability and wellness. Carter is active in culture and arts as a member of the LACMA Board of Trustees, the digital advisory of The Metropolitan Museum of Art and an Executive in Residence for the City of Los Angeles. @M13Company
Ben Bergman is dot.LA's senior reporter, covering venture capital.
Ben Bergman, Senior Reporter at dot.LA
Ben Bergman is dot.LA's senior reporter, covering venture capital. Previously he was a senior reporter/host at KPCC, a producer at Gimlet Media and NPR and produced two investigative documentaries for KCET. He has been a frequent on-air contributor to NPR and Marketplace and has written for The New York Times. Bergman was a 2017-2018 Knight-Bagehot Fellow in Economic and Business Journalism at Columbia Business School. He enjoys skiing, playing poker, and cheering on The Seattle Seahawks. @thebenbergman
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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.
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Genies Wants To Help Creators Build ‘Avatar Ecosystems’
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”
The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.
Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.
Similar programs are common in the startup world and in the creator economy. For example, social media companies can use accelerator programs not only to support rising stars but to lure those creators—and their audiences—to the company’s platforms. Genies believes avatars will be a crucial part of the internet’s future and is similarly using its program to encourage creators to launch brands using Genies’ platform.
“I think us being able to work hands on with this next era—this next generation of designers and entrepreneurs—not only gets us a chance to understand how people want to use our platform and tools, but also allows us to nurture those types of creators that are going to exist and continue to build within our ecosystem,” said Allison Sturges, Genies’ head of strategic partnerships.
DIY Collective’s initial cohort will include roughly 15 people, Sturges said. They will spend three weeks at the Genies headquarters, participating in workshops and hearing from CEOs, fashion designers, tattoo artists and speakers from other industries, she added. Genies will provide creatives with funding to build brands and audiences, though Sturges declined to share how much. By the end of the program, participants will be able to sell digital goods through the company’s NFT marketplace, The Warehouse. There, people can buy, sell and trade avatar creations, such as wearable items.
Genies will accept applications for the debut program until Aug. 1. It will kick off on Aug. 8, and previous experience in digital fashion and 3D art development is not required.
Sturges said that the program will teach people “about the tools and capabilities that they will have” through Genies’ platform, as well as “how to think about building their own avatar ecosystem brands and even their own audience.”
Image courtesy of Genies
Founded in 2017, Genies established itself by making avatars for celebrities from Rihanna to Russell Westbrook, who have used the online lookalikes for social media and sponsorship opportunities. The 150-person company, which has raised at least $250 million to date, has secured partnerships with Universal Music Group and Warner Music Group to make avatars for each music label’s entire roster of artists. Former Disney boss Bob Iger joined the company’s board in March.
The company wants to extend avatars to everyone else. Avatars—digital figures that represent an individual—may be the way people interact with each other in the 3D virtual worlds of the metaverse, the much-hyped iteration of the internet where users may one day work, shop and socialize. A company spokesperson previously told dot.LA that Genies has been beta testing avatar creator tools with invite-only users and gives creators “full ownership and commercialization rights” over their creations collecting a 5% transaction fee each time an avatar NFT is sold.
“It's an opportunity for people to build their most expressive and authentic self within this digital era,” Sturges said of avatars.
The company’s call for creators could be a sign that Genies is close to rolling out the Warehouse and its tools publicly. Asked what these avatar tools might look like, the startup went somewhat quiet again.
Allison Sturges said, “I think that's probably something that I'll hold off on sharing. We will be rolling some of this out soon.”
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Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Here's What To Expect At LA Tech Week
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.
The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.
From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.
DoorDash’s Founding Story: Stanley Tang, a cofounder and chief product officer of delivery giant DoorDash, speaks with Pear VC's founding managing partner, Pejman Nozad. They'll discuss how to grow a tech company from seed stage all the way to an initial public offering. Aug. 19 at 10 a.m. to 12 p.m. in Santa Monica.
The Founders Guide to LA: A presentation from dot.LA cofounder and executive chairman Spencer Rascoff, who co-founded Zillow and served as the real estate marketplace firm’s CEO. Aug. 16 from 6 p.m. to 9 p.m. in Brentwood.
Time To Build: Los Angeles: Venture capital firm Andreessen Horowitz (a16z) hosts a discussion on how L.A. can maintain its momentum as one of the fastest-growing tech hubs in the U.S. Featured speakers include a16z general partners Connie Chan and Andrew Chen, as well as Grant Lafontaine, the cofounder and CEO of shopping marketplace Whatnot. Aug. 19 from 2 p.m. to 8 p.m. in Santa Monica.
How to Build Successful Startups in Difficult Industries: Leaders from Southern California’s healthcare and aerospace startups gather for panels and networking opportunities. Hosted by TechStars, the event includes speakers from the U.S. Space Force, NASA Jet Propulsion Lab, Applied VR and University of California Irvine. Aug. 15 from 1 p.m. to 5 p.m. in Culver City.
LA Tech Week Demo Day: Early stage startups from the L.A. area pitch a panel of judges including a16z’s Andrew Chen and Nikita Bier, who co-founded the Facebook-acquired social media app tbh. Inside a room of 100 tech leaders in a Beverly Hills mansion, the pitch contest is run by demo day events platform Stonks and live-in accelerator Launch House. Aug. 17 from 12:30 p.m. to 3 p.m. in Beverly Hills.
Registration information and a full list of LA Tech Week events can be found here.
Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.
Inflation Reduction Act Officially Passes the Senate, Revamping Electric Vehicle Pricing
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
Over the weekend Senate Democrats officially passed the Inflation Reduction Act in what amounts to President Biden’s biggest legislative win so far. The bill includes a host of broad-spectrum economic policy changes and completely reworks the subsidies for electric vehicle purchases. The law still has to get through The House, but this should be a much smaller hurdle.
dot.LA covered the bill in depth as it neared the goal line at the end of July, and the final iteration doesn’t change much. To recap:
1.The rebate total stays $7,500 but is broken into two $3,750 chunks tied to how much of the car and its battery are made in the US.
2.The manufacturer caps are eliminated, meaning even EV companies that have sold more than 20,000 vehicles are once again eligible.
3.Rebates will now only apply to cars priced below $55,000 and trucks/SUVs below $80,000
With the new system placing a renewed emphasis on American manufacturing and assembly, the calculus of which vehicles cost how much is still being worked out, but the most comprehensive list I’ve seen has come from reddit user u/Mad691.
In addition to the EV rebate program, the bill also includes a number of economic incentives aimed at curbing emissions and accelerating the country’s transition to electric vehicles.
There’s $20 billion earmarked for the construction of new clean vehicle manufacturing facilities and $3 billion will go help electrify the USPS delivery fleet. Another $3 billion will go to electrifying the nation’s ports. Then there’s $1 billion for zero-emission trucks and buses.
Now that the bill is about to be codified into law, VC investment in the sector might heat up in response to the new money flowing in. “I do anticipate more climate funds standing up to invest in EV infrastructure,” says Taj Ahmad Eldridge, a partner at Include Ventures and the Director at CREST an ARES Foundation initiative with JFF/WRI that aims to provide training for people in the new green economy. “However, we do see funds being a little more thoughtful on diligence and taking their time to fund the right investment.”
The sentiment seems similar across Southern California. ChargeNet CEO and Co-Founder Tosh Dutt says the Inflation Reduction Act “super charges” the company’s effort to build infrastructure across the country.
“This investment accelerates the transition to renewable energy and gives companies like ChargeNet Stations the confidence to expand more rapidly, especially in underserved communities,” says Dutt.
For Rivian, the bill’s passage has left would-be customers in a sort of limbo. Because many of their models will exceed the $80,000 cap for trucks and SUVs after options, customers who’ve preordered are scrambling to sign buyers’ agreements to take advantage of the current EV rebate scheme which doesn’t include price caps. As I noted in the previous article, if you buy an EV before the bill is signed, you’re eligible for the current rebate system even if the vehicle isn’t delivered until 2023. Any existing contracts under the current system will remain valid.
With the legislation seemingly on the fast track to become law, it’s unclear whether or not Rivian will expedite the purchasing process to allow customers to sign the buyers’ agreement before the new rebate program becomes the law of the land. Tick tock!
- New Climate Legislation Upends Electric Vehicle Pricing - dot.LA ›
- Inflation Reduction Act - dot.LA ›
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.