The slow standardization of venture capital

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Wwelcome to Startups Weekly, a nuanced look at this week’s startup news and trends by Senior Reporter and co-host of Equity Natasha Mascarenhas. Subscribe here to receive it in your inbox.

It’s taken me a while, but I realize my startup love language is discussing all the attempts to standardize the opaque and often informal world of venture capital. The clear tension is what entices me: how do you automate a process like check writing, which requires human buy-in and the art of trust in a way that makes both parties happy.

There are funds that invest entirely on the basis of data. Or tools that allow startups to see all their financing options in the blink of an eye. Or, as I discussed this week, a startup tool that allows companies to simultaneously launch the same application — or pitch — to multiple angel and pre-seed investors.

The tool, started by pre-seed company Afore Capital, is based on Common App, which sends one application to multiple colleges and universities. Afore’s take on the idea is to help founders quickly pitch to expert investors while helping those investors get differentiated deal flow on a consistent basis. While it may seem like a low-stakes tool — free for both parties to use — convenience can sometimes come with a side of questions. Is Afore too altruistic and sharing his information? Does a banger give the same signal as a warm intro?

Former general partner Anamitra Banerji thinks a finance-focused version of Common App will solve a classic conundrum: What happens when a startup isn’t right for your company, but is still a smart company that could make sense for your climate-focused emerging fund manager friend? Sometimes those savvy companies get lost – just think of the number of companies that don’t get into Y Combinator with a razor-thin margin – instead of being passed on to another company.

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Originally, Afore thought of sending companies that failed the accelerator program to his network of outside investors. But Banerji said Afore now sends startup applications to the network as they file, meaning Afore sees it at the same time as other pre-seed investors.

“We’re taking the risk of exposing it to everyone in the group and maybe losing the deal and assignment and things like that…passed on,” Banerji said.

You can read my entire piece on TBEN+: “Is it time for a common app for startup founders?” DM me through Twitter or Instagram if you want a discount code for TC+.

In the rest of this newsletter, we’ll talk about Carta, investor secret workflows, and when the Kardashian strategy doesn’t quite work.

Lawsuit and layoffs at Carta

Carta is suing Jerry Talton, the former CTO, for sending and receiving “sexually explicit, offensive, discriminatory and harassing messages involving at least nine women, including during working hours and on Carta’s systems.”

Here’s why this is important: The lawsuit isn’t the only sign that Carta may be facing internal strife. The company confirmed it had to lay off 10% of its staff in the second known headcount cut during the pandemic.

It doesn’t help that several users of Carta’s services, which range from cap table management to fund administration, have been less than impressed with the platform in recent months. TBEN spoke to a fund manager transitioning from the platform, who claims his team had four different account managers in less than two years, which “certainly didn’t help with the continuity and understanding of our fund and our needs.”

Image Credits: Carta

SBF stack

Infamous founder and former CEO of FTX, Sam Bankman-Fried, started a Substack this week. As my colleague Mary Ann Azevedo pointed out, it’s “a very unusual move for someone recently arrested and facing eight U.S. criminal charges.”

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Here’s why it’s important: As we discussed on Equity, the Kardashian method of distraction isn’t going to work for this former billionaire. There’s been a weird feeling around SBF’s actions lately, whether it’s calling him smart for pleading not guilty or making fun of his Substack. that adds lightness to a situation that ultimately needs to be taken pretty seriously.

That he starts a Substack is no different; we’re all talking about it, remembering him bypassing his lawyer. But what if this isn’t as radical as we think? What if SBF sees his loud, outward conversation being noticed, covered up, and amplified every time he says something, simply because no one else has done it before? It’s a distraction; one we may see more of until his anticipated trial in October.

NEW YORK, USA - JANUARY 03: Former FTX CEO and Founder Sam Bankman-Fried arrives at the Manhattan Federal Court in New York City on January 3, 2023.  (Photo by Fatih Aktas/Anadolu Agency via Getty Images)

Image Credits: Fatih Aktas/Anadolu Agency/Getty Images

The sequel

You’ve probably read a lot about ChatGPT, OpenAI’s artificial intelligence tool that went viral with its smart messaging capabilities. The tool, recently made available to the general public, is smart enough to answer serious and silly questions on deep topics, which has landed it in debates led by writers, educators, artists, and more.

But aside from the initial excitement surrounding the tool, I wanted to see if it actually makes its way into people’s workflows. So I dug into how investors use ChatGPT in a piece for TC+ with Kyle Wiggers and Christine Hall.

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Here’s why it’s important: Some investors indicated that ChatGPT could be used for fact checking around market size or growth potential claims; at the same time, so could Google. Of course, the argument for AI would be that the content would be original and perhaps more focused on someone’s exact questions, while a general Google search might require additional digging and putting together several articles.

As a nod to the beginning of this newsletter, ChatGPT could be seen as yet another way a company tries to automate itself. It just depends on whether investors think it’s smart enough to reject startups, or whether feedback is valued as the main currency for network building.

Artificial Intelligence - Chatbot concept

Image Credits: Carol Yepes/Getty Images

Topics to discuss

A non-exhaustive list of other news to note this week:

Seen on TBEN

The creators of Dungeons & Dragons content fight to protect their livelihoods

Tesla continues to cut prices, this time by as much as 20%

Will what happened at CES stay at CES?

Our obsession with pets means startups focused on vets are booming, as Digitail shows

Third-party Twitter apps are facing problems, users say

Seen on TBEN+

You are not going to grow in your appreciation for 2021

Pitch Deck Teardown: TBEN House’s $35 Million Series B Deck

Why Africa didn’t have unicorns last year, despite a record amount of fundraising

Web3 could help fashion become more sustainable

Pittsburgh’s AI expertise could give rise to an already growing startup market

With that, I’m going to enjoy a weekend in Providence with some old friends. New England, how I’ve missed you, your wonderfully cozy weather and nostalgic streets.

chat fast,

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