PITTSBURGH — This city’s tech clout has grown immensely in recent years, yet it is often said that Pittsburgh still suffers from a lack of venture capital to fuel startups. But major figures from Pittsburgh’s tech scene differed with each other when discussing that theory during an event Tuesday night.
“Some people say that there is a funding gap; I personally don’t believe that,” said Luis von Ahn, CEO of Duolingo, a language learning company that is one of Pittsburgh’s top tech ventures. “It’s always going to be the case that it is going to be difficult for many emerging startups to get funding, but that would be true in every city because it’s competitive. Your idea has to be good to get funding.”
Duolingo has raised more than $108 million since it was founded in 2011. Von Ahn co-founded reCAPTCHA, which was acquired by Google in 2009. He and his Duolingo co-founder Severin Hacker have begun investing in startups themselves, but von Ahn said they’re having a hard time finding enough companies to put money into.
Audrey Russo, CEO of the Pittsburgh Technology Council, offered a different take — lamenting a lack of funding for startups trying to get off the ground. Investors, she said, will often seek concepts they can relate to because then they can add value to the company. A limited pool of investors restricts which startups can get funded.
Pittsburgh needs a few high-profile startup exits, Russo said, that can put some money in the pockets of entrepreneurs, who can turn around and invest in other companies from a variety of disciplines.
“That’s the piece I think is going to come in time,” Russo said. “I don’t think it’s happening fast enough, but I think as we create more wealth and more opportunities for people who are in different sectors, we will begin to see some of those changes.”
That was one of the key topics addressed during the panel discussion, moderated by GeekWire reporter Taylor Soper at Duolingo’s headquarters in Pittsburgh’s East Liberty neighborhood as part of our month-long project covering the city’s technology and startup landscape.
Pittsburgh companies pulled in $302 million in venture capital last year — buoyed by a $93 million round for AI startup Petuum — which marked the region’s largest amount of funding in 17 years, according to data from the latest PwC/CB Insights MoneyTree report. Another AI company from Pittsburgh, Argo AI, landed a $1 billion deal with Ford to develop a software program for the automotive giant’s self-driving vehicle initiative.
— Cathy Wissink (@cathywissink) February 14, 2018
Tuomas Sandholm, a professor at Carnegie Mellon University’s School of Computer Science, agreed with von Ahn’s assessment that the talk of a funding gap is overblown. A founder of three startups himself — Optimized Markets, Strategic Machine and CombineNet — Sandholm said his companies never had a hard time landing funding.
Sandholm added that some companies would be better off if they didn’t lean heavily on investor money and instead tried to bootstrap the business off customer revenue.
“I see so many announcements where Pittsburgh companies are congratulating themselves for raising a venture round, and that’s a very doubled-edged sword,” Sandholm said. “I don’t know if I should congratulate or offer condolences.”
Diversity came up a lot on the panel, among investors, companies in the region and employees/prospects. At CMU, which Sandholm described as more selective than its top computer science contemporaries, this year’s incoming class is half female. The university has groups that actively try to recruit women for its computer science programs.
Duolingo covers more than 25 languages, and only 20 percent of its users are U.S.-based, so diversity is a very important tenet for the company. Von Ahn said Duolingo just hit a 50-50 male-to-female ratio, and did so without lowering its hiring standards.
Von Ahn lamented comments from a string of male users on a Facebook post about the diversity milestone, where they complained that the company was actually discriminating against men.
“I was super pissed,” von Ahn said.
Duolingo hit the 50-50 mark, von Ahn said, because it chose to recruit from universities that had a high concentration of female computer science students. He explained, “The ones where we didn’t go, we spent time telling them ‘we aren’t going to recruit at your place because you guys haven’t done your job on diversity, so when you do your job on diversity, we’ll come recruit there.’ “