Extra Crunch roundup - Tonal EC-1, Deliveroo’s rocky IPO, is Substack really worth $650M - Android

This week included a deep dive on Tonal, a look at Substack's valuation and how-tos on startup hiring and responding to security breaches.

For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.

We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.

Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.

Seeking more insight into these liquidity options, Alex interviewed:

• DigitalOcean CEO Yancey Spruill, whose company went public via IPO.
• Latch CFO Garth Mitchell, who discussed his startup’s merger with real estate SPAC $TSIA.
• Brian Cruver, founder and CEO of AlertMedia, which recently sold to a private equity firm.

After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”

Thanks very much for reading Extra Crunch! Have a great weekend.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

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The Tonal EC-1

On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.

By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.

Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.

We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.

Here’s how the Tonal EC-1 breaks down:

• Part 1: How a homegrown experiment became one of the fastest-growing companies in fitness tech
• Part 2: Millions of dollars and 3.5 years, and it all came down to this
• Part 3: Building online communities for fun, profit and product
• Part 4: Can Tonal become the luxury fitness market champion?

We have more EC-1s in the works about other late-stage startups that are doing big things well and making news in the process.

What to make of Deliveroo’s rough IPO debut

Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?

Let’s peek at the numbers and find out.

Kaltura puts debut on hold. Is the tech IPO window closing?

The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.

Is Substack really worth $650M?

A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.

Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.

RPA market surges as investors, vendors capitalize on pandemic-driven tech shift

Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.

RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.

E-commerce roll-ups are the next wave of disruption in consumer packaged goods

This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.

Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?

Hack takes: A CISO and a hacker detail how they’d respond to the Exchange breach

The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.

Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?

5 machine learning essentials nontechnical leaders need to understand

Machine learning has become the foundation of business and growth acceleration because of the incredible pace of change and development in this space.

But for engineering and team leaders without an ML background, this can also feel overwhelming and intimidating.

Here are best practices and must-know components broken down into five practical and easily applicable lessons.

Embedded procurement will make every company its own marketplace

Embedded procurement is the natural evolution of embedded fintech.

In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.

Knowing when your startup should go all-in on business development

There’s a persistent fallacy swirling around that any startup growing pain or scaling problem can be solved with business development.

That’s frankly not true.

Dear Sophie: What should I know about prenups and getting a green card through marriage?

Dear Sophie:

I’m a founder of a startup on an E-2 investor visa and just got engaged! My soon-to-be spouse will sponsor me for a green card.

Are there any minimum salary requirements for her to sponsor me? Is there anything I should keep in mind before starting the green card process?

— Betrothed in Belmont

Startups must curb bureaucracy to ensure agile data governance

Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.

That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.

Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.

Bring CISOs into the C-suite to bake cybersecurity into company culture