TechCrunch+ roundup: YC Demo Day faves, thrift shop VCs, cybersecurity product challenges

You don’t need to move to San Francisco to launch a startup, but working here does have some advantages: moderate weather, natural beauty, great food, and sure, the world’s largest concentration of venture capital.

Y Combinator’s Demo Day took place this week, and although the event itself was virtual-only, 86% of the founders in YC’s winter 2023 batch lived in SF while participating.

The ongoing AI boom is a contributing factor: 54 of the 282 companies in this cohort “are specifically building generative AI startups,” reported Natasha Mascarenhas.

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In keeping with tradition, TechCrunch staffers selected their favorites from the latest batch.

Please note that these are for entertainment purposes only, as “we’re not offering investing advice or recommending anyone join or back a startup.”

Thanks very much for reading. Have a great weekend!

Walter Thompson
Editorial Manager, TechCrunch+
@yourprotagonist

VCs to recommerce startups: Let’s pop some tags

Thanks in large part to Gen Z’s interest in sustainable shopping, recommerce is soaring to new heights, and VCs are looking for the come up.

Since Etsy went public in 2015, companies like Poshmark, The RealReal and thredUP followed suit, attracting even more investors to the sector. Last year, VCs flowed approximately $6 billion to resale platforms, according to Brian Schwarzbach, an investor with Cathay Innovation.

In a post for TC+, he explores three recommerce areas that are attracting VC interest and shares “some food for thought for founders building startups in this (re)emerging space.”

Funds offering ‘friends and family’ checks could bring the change underrepresented founders need

America’s long-standing wealth gap between white and Black households contributes to the lack of diversity among startup founders.

Median liquid wealth for a Black family in the U.S. is $3,630, but that figure soars to $79,000 for a white family. As a result, “the average Black founder raises less than around $1,000 from family and friends,” reports Dominic-Madori Davis.

Since the average friends and family round is $23,000, “they’d need to secure the entire liquid wealth of six Black families” for parity, according to a white paper by venture fund Fifth Star.

Pitch Deck Teardown: Smalls’ $19M Series B deck

Subscription cat food startup Smalls has raised $34 million since launching in 2017.

Now, the company has 50 employees, plans to open a cat café and is eyeing an expansion into retail. Its founders shared their Series B deck with TC+, minus “specific details to the company’s valuation and current revenue.”

• Cover slide
• Market slide
• Problem slide
• Mission slide (“We are here to make 9 lives 10”)
• Competition slide
• Product slide
• How it works slide
• Why Now interstitial slide
• Business metrics slide
• Milestones slide
• Team slide
• Use of Funds slide
• Performance interstitial slide
• CAC slide
• Go to market/growth channels slide
• Value Prop slide
• Churn analysis slide
• LTV slide
• Future Plans interstitial slide
• Market extension slide part 1
• Market extension slide part 2
• LTV extension slide
• The Ask and target milestones slide
• Thank you slide

As YC launches a new batch, here’s how the early-stage venture market is faring today

Drawing on data from Carta’s “First Cut – State of Private Markets: Q1 2023” report, Anna Heim and Alex Wilhelm crunched the numbers to get a feel for the early-stage VC landscape.

Taking into account “median round sizes and deal values,” they found that pre-money valuations for seed-stage startups fell slightly, but Series A, B and C rounds “seem to be showing signs of recovery.”

What’s a fair price premium for startup shares?

A market update report from Redpoint Ventures contains insights for Series B and C founders who are planning to fundraise this year, writes Alex Wilhelm.

“Middle-stage startups today still look rather expensive,” he writes. “Either the stock market needs to recover some of its juice, or startup prices need to fall more for things to get back to ‘normal.'”

6 common challenges facing cybersecurity teams and how to overcome them

Cybersecurity product teams operate under unique pressure, according to investor Ross Haleliuk.

It’s not just that they’re working in a crowded market — “it is an incredibly dynamic space with the landscape sometimes shifting overnight.”

Since many startups lack frameworks for building customer relationships and refining model metrics, Haleliuk, who’s also head of product at his own company, shares tactics that will help security vendors better “understand their target market and the kind of solutions they are looking for.”

Ask Sophie: How do we transfer H-1Bs and green cards to our startup?

Dear Sophie,

I was recently laid off.

I’m co-founding a cleantech startup with two of my former colleagues, who were also laid off. Both of my co-founders are on H-1Bs and had green cards in the works with our former company. I’m a U.S. citizen.

What do we need to do to transfer their H-1Bs and green cards to our startup? Based on your experience, do investors care about the amount of money a startup spends on visas and green cards for their founders?

— First-time Founder

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