B2B marketplaces, edtech M&A, breaking into the $1M ARR club – TechCrunch

I’ve worked at TechCrunch for a little over a year, but this was one of the hardest weeks on the job so far.

Like many people, I’ve been distracted in recent days. As I write this, I have one eye on my keyboard and another on a TV that sporadically broadcasts election results from battleground states. Despite the background noise, I’m completely impressed with the TechCrunch staff; it takes a great deal of focus and energy to set aside the world’s top news story and concentrate on the work at hand.

Monday feels like a distant memory, so here’s an overview of top Extra Crunch stories from the last five days. These articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.

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B2B marketplaces will be the next billion-dollar e-commerce startups

Marketplaces created for B2B activity are surging in popularity. According to one report, transactions in these venues generated around $680 billion in 2018, but that figure is predicted to reach $3.6 trillion by 2024.

The COVID-19 pandemic is helping startups that innovate in areas like payments, financing, insurance and compliance.

Even so, according to Merritt Hummer, a partner at Bain Capital Ventures, “B2B marketplaces cannot simply remain stagnant, serving as simple transactional platforms.”

The startups that are first to market with innovative “adjacent services will emerge as winners in the next few years,” she advises.

Software companies are reporting a pretty good third quarter

For this morning’s edition of The Exchange, Alex Wilhelm interviewed three executives at cloud and SaaS companies to find out how well Q3 2020 has been treating them:

• Ping CFO Raj Dani
• JFrog CEO Shlomi Ben Haim
• BigCommerce CEO Brent Bellm

As one Twitter commenter noted, Alex doesn’t just talk to the best-known tech execs; he reaches out to a wide range of people, and it shows in the quality of his reporting.

Will new SEC equity crowdfunding rules encourage more founders to pass the hat?

New Regulation Crowdfunding guidelines the SEC released this week allow companies to directly raise up to $5 million each year from individual investors, an increase from the previous limit of $1.07 million.

“Life has gotten easier in other ways as well for founders pursuing this fundraising type and the platforms that seek to simplify it,” reports Lucas Matney, who interviewed Wefunder CEO Nicholas Tommarello.

Funding for seed-stage startups slumped 32% last quarter compared to 2019, so “the tide could be turning” for founders who were reluctant to raise from a giant pool of small dollars, Lucas found.

3 tips for SaaS founders hoping to join the $1 million ARR club

Reaching scale is paramount for software companies, so growth is a top priority.

In a guest post for Extra Crunch, Drift CEO David Cancel explains that too many SaaS and cloud companies waste time trying out a number of solutions before finding the right recipe.

“I can tell you that there absolutely is a repeatable process to building a successful SaaS business,” he says, “one that can reliably guide you to product-market fit and then help you quickly scale.”

Implementing a data-driven approach to guarantee fair, equitable and transparent employee pay

Companies that hope to eliminate longstanding inequities in the workplace can’t just rely on doing what they think is right. Without a data-driven approach, subjective judgments and implicit bias tend to negate good intentions.

Many startups don’t hire full-time HR managers until they’ve reached scale, but this comprehensive post lays out several critical factors for creating — and maintaining — a fair pay model.

4 questions as Airbnb’s IPO looms

News broke this week that Airbnb plans to to raise approximately $3 billion in a public filing that would allow it to reach a valuation in the $30 billion range.

Our expert unicorn wrangler Alex Wilhelm says curious investors should ask themselves the following:

• Will Airbnb be able to show a near-term path to profitability?
• How high-quality is Airbnb’s revenue after the pandemic?
• Is there anything lurking in its recent financings that public investors won’t like?
• Will Airbnb be able to show year-over-year revenue gains?

Starling Bank founder Anne Boden says new book ‘isn’t a memoir’

“People at the end of their career write memoirs,” Starling Bank founder Anne Boden told TechCrunch’s Steve O’Hear. “I’m at the beginning.”

In Boden’s new book, “Banking On It,” she shares the story of how (and why) she decided to found a challenger bank, eventually parting with colleagues who launched competitor Monzo.

“This is really putting down on paper where we are at the moment,” she said. “It’s been written over several years, and I’m hoping to use this to inspire a generation of entrepreneurs.”

Pandemic’s impact disproportionately reduced VC funding for female founders

Natasha Mascarenhas and Alex Wilhelm collaborated on Monday’s edition of The Exchange to report on how investors became less likely to fund female founders since the beginning of the COVID-19 pandemic.

Drawing on data from multiple sources, Alex and Natasha found that startups led by women and mixed-gender founding teams received 48% less VC funding in Q3 2020 than in Q2, even though overall funding bounced back.

“From fear in late Q1, to a middling Q2, to a boom in Q3,” they wrote. “It was an impressive comeback. For some.”

Booming edtech M&A activity brings consolidation to a fragmented sector

Natasha Mascarenhas has owned TechCrunch’s edtech beat since she came aboard at the start of 2020, just a few months before the pandemic led to widespread school closures.

She’s reported on countless funding rounds and interviewed founders and investors who are active in the space, but she recently spotted a new trend: “M&A activity is buzzier than usual.”

4 takeaways from fintech VC in Q3 2020

Alex Wilhelm shrugged off his Election Day distractions long enough to write a column that comprehensively examined fintech investment activity over the last quarter.

In Q3 2020, “60% of all capital raised by financial technology startups came from just 25 rounds worth $100 million or more,” he reports.

Are these mega-rounds funding “the next crop of unicorns?” It’s too early to say, but it’s clear that pandemic-fueled uncertainty is driving consumers into the arms of companies like Robinhood, Chime, Lemonade and Root.

In 1,316 words, Alex captures the state of play in insurtech, banking, wealth management and payments investing: “Now, we just want to see some ******* IPOs.”

New GV partner Terri Burns has a simple investment thesis: Gen Z

Five years ago, Terri Burns was a product manager at Twitter. Today, she’s the first Black woman — and the youngest person — to be promoted to partner at Google Ventures.

In a Q&A with Natasha Mascarenhas, Burns talked about her plans for the new role, as well as her investment thesis.

“I don’t know what it actually means to build a sustainable business and venture is a really great way to sort of learn that,” said Burns.

GV General Partner MG Siegler talks portfolio management and fundraising 6 months into the COVID-19 pandemic

Are founders and investors really leaving Silicon Valley for greener pastures? Now that investors are limited to virtual interactions, are they being more hands-on with their portfolio companies?

In an Extra Crunch Live chat hosted by Darrell Etherington, GV General Partner MG Siegler talked about how the pandemic is — and is not — shaping the way he does business.

“I do feel like things are operating in a pretty streamlined manner, or as much as they can be at this point,” he said.

“But, you know, there’s always going to be some more wildcards — like we’re a week away, today, from the U.S. election.”

Thank you very much for reading Extra Crunch; I hope you have a great weekend.