Tech Crunch

Intel agrees to sell its NAND business to SK Hynix for $9 billion

SK Hynix, one of the world’s largest chip makers, announced today it will pay $9 billion for Intel’s flash memory business. Intel said it will use proceeds from the deal to focus on artificial intelligence, 5G and edge computing.

“For Intel, this transaction will allow us to to further prioritize our investments in differentiated technology where we can play a bigger role in the success of our customers and deliver attractive returns to our stockholders,” said Intel chief executive officer Bob Swan in the announcement.

The Wall Street Journal first reported earlier this week that the two companies were nearing an agreement, which will turn SK Hynix into one of the world’s largest NAND memory makers, second only to Samsung Electronics.

The deal with SK Hynix is the latest one Intel has made so it can double down on developing technology for 5G network infrastructure. Last year, Intel sold the majority of its modem business to Apple for about $1 billion, with Swan saying that the time that the deal would allow Intel to “[put] our full effort into 5G where it most closely aligns with the needs of our global customer base.”

Once the deal is approved and closes, Seoul-based SK Hynix will take over Intel’s NAND SSD and NAND component and wafer businesses, and its NAND foundry in Dalian, China. Intel will hold onto its Optane business, which makes SSD memory modules. The companies said regulatory approval is expected by late 2021, and a final closing of all assets, including Intel’s NAND-related intellectual property, will take place in March 2025.

Until the final closing takes places, Intel will continue to manufacture NAND wafers at the Dalian foundry and retain all IP related to the manufacturing and design of its NAND flash wafers.

As the Wall Street Journal noted, the Dalian facility is Intel’s only major foundry in China, which means selling it to SK Hynix will dramatically reduce its presence there as the United States government puts trade restrictions on Chinese technology.

In the announcement, Intel said it plans to use proceeds from the sale to “advance its long-term growth priorities, including artificial intelligence, 5G networking and the intelligent, autonomous edge.”

During the six-month period ending on June 27, 2020, NAND business represented about $2.8 billion of revenue for its Non-volatile Memory Solutions Group (NSG), and contributed about $600 million to the division’s operating income. According to the Wall Street Journal, this made up the majority of Intel’s total memory sales during that period, which was about $3 billion.

SK Hynix CEO Seok-Hee Lee said the deal will allow the South Korean company to “optimize our business structure, expanding our innovative portfolio in the NAND flash market segment, which will be comparable with what we achieved in DRAM.”

VCs reload ahead of the election as unicorns power ahead

This is The TechCrunch Exchange, a newsletter that goes out on Saturdays, based on the column of the same name. You can sign up for the email here.

It was an active week in the technology world broadly, with big news from Facebook and Twitter and Apple. But past the headline-grabbing noise, there was a steady drumbeat of bullish news for unicorns, or private companies worth $1 billion or more.

A bullish week for unicorns

The Exchange spent a good chunk of the week looking into different stories from unicorns, or companies that will soon fit the bill, and it’s surprising to see how much positive financial news there was on tap even past what we got to write about.

Databricks, for example, disclosed a grip of financial data to TechCrunch ahead of regular publication, including the fact that it grew its annual run rate (not ARR) to $350 million by the end of Q3 2020, up from $200 million in Q2 2019. It’s essentially IPO ready, but is not hurrying to the public markets.

Sticking to our theme, Calm wants more money for a huge new valuation, perhaps as high as $2.2 billion which is not a surprise. That’s more good unicorn news. As was the report that “India’s Razorpay [became a] unicorn after its new $100 million funding round” that came out this week.

Razorpay is only one of a number of Indian startups that have become unicorns during COVID-19. (And here’s another digest out this week concerning a half-dozen startups that became unicorns “amidst the pandemic.”)

There was enough good unicorn news lately that we’ve lost track of it all. Things like Seismic raising $92 million, pushing its valuation up to $1.6 billion from a few weeks ago. How did that get lost in the mix?

All this matters because while the IPO market has captured much attention in the last quarter or so, the unicorn world has not sat still. Indeed, it feels that unicorn VC activity is the highest we’ve seen since 2019.

And, as we’ll see in just a moment, the grist for the unicorn mill is getting refilled as we speak. So, expect more of the same until something material breaks our current investing and exit pattern.

Market Notes

What do unicorns eat? Cash. And many, many VCs raised cash in the last seven days.

A partial list follows. It could be that investors are looking to lock in new funds before the election and whatever chaos may ensue. So, in no particular order, here’s who is newly flush:

All that capital needs to go to work, which means lots more rounds for many, many startups. The Exchange also caught up with a somewhat new firm this week: Race Capital. Helmed by Alfred Chuang, formerly or BEA who is an angel investor now in charge of his own fund, the firm has $50 million to invest.

Sticking to private investments into startups for the moment, quite a lot happened this week that we need to know more about. Like API-powered Argyle raising $20 million from Bain Capital Ventures for what FinLedger calls “unlocking and democratizing access to employment records.” TechCrunch is currently tracking the progress of API-led startups.

On the fintech side of things, M1 Finance raised $45 million for its consumer fintech platform in a Series C, while another roboadvisor, Wealthsimple, raised $87 million, becoming a unicorn at the same time. And while we’re in the fintech bucket, Stripe dropped $200 million this week for Nigerian startup Paystack. We need to pay more attention to the African startup scene. On the smaller end of fintech, Alpaca raised $10 million more to help other companies become Robinhood.

A few other notes before we change tack. Kahoot raised $215 million due to a boom in remote education, another trend that is inescapable in 2020 as part of the larger edtech boom (our own Natasha Mascarenhas has more).

Turning from the private market to the public, we have to touch on SPACs for just a moment. The Exchange got on the phone this week with Toby Russell from Shift, which is now a public company, trading after it merged with a SPAC, namely Insurance Acquisition Corp. Early trading is only going so well, but the CEO outlined for us precisely why he pursued a SPAC, which was actually interesting:

  • Shift could have gone public via an IPO, Russell said, but prioritized a SPAC-led debut because his firm wanted to optimize for a capital raise to keep the company growing.
  • How so? The private investment in public equity (PIPE) that the SPAC option came with ensured that Shift would have hundreds of millions in cash.
  • Shift also wanted to minimize what the CEO described as market risk. A SPAC deal could happen regardless of what the broader markets were up to. And as the company made the choice to debut via a SPAC in April, some caution, we reckon, may have made some sense.

So now Shift is public and newly capitalized. Let’s see what happens to its shares as it gets into the groove of reporting quarterly. (Obviously, if it flounders, it’s a bad mark for SPACs, but, conversely, successful trading could lead to a bit more momentum to SPAC-mageddon.)

A few more things and we’re done. Unicorn exits had a good week. First, Datto’s IPO continues to move forward. It set an initial price this week, which could value it above $4 billion. Also this week, Roblox announced that it has filed to go public, albeit privately. It’s worth billions as well. And finally, DoubleVerify is looking to go public for as much as $5 billion early next year.

Not all liquidity comes via the public markets, as we saw this week’s Twilio purchase of Segment, a deal that The Exchange dug into to find out if it was well-priced or not.

Various and Sundry

We’re running long naturally, so here are just a few quick things to add to your weekend mental tea-and-coffee reading!

Next week we are digging more deeply into Q3 venture capital data, a foretaste of which you can find here, regarding female founders, a topic that we returned to Friday in more depth.

Alex

Pear hosted its invite-only demo day online year; here’s what you might have missed

Pear, the eight-year-old, Palo Alto, Calif.-based seed-stage venture firm that has, from its outset, attracted the attention of VCs who think the firm has an eye for nascent talent, staged its seventh annual demo day earlier this week, and while it was virtual, one of the startups has already signed a term sheet from a top-tier venture firm.

To give the rest of you a sneak peak, here’s a bit about all of the startups that presented, in broad strokes:


  1. ) AccessBell

What it does: Video conferencing platform for enterprise workflows

Website: accessbell.com

Founders: Martin Aguinis (CEO), Josh Payne (COO), Kamil Ali (CTO)

The pitch: Video has emerged as one of the prominent ways for enterprises to communicate internally and externally with their customers and partners. Current video conferencing tools like Zoom and WebEx are great for standalone video but they have their own ecosystems and don’t integrate into thousands of enterprise workflows. That means that API tools that do integrate, like Agora and Twilio, still require manual work from developer teams to customize and maintain. AccessBell is aiming to provide the scalability and reliability of Zoom, as well as the customizability and integrations of Twilio, in a low code integration and no code extensible customization platform.

It’s a big market the team is chasing, one that’s expected to grow to $8.6 billion by 2027. The cost right now for users who want to test out AccessBell is $27 per host per month.


2.) FarmRaise

What it does: Unlock financial opportunities for farmers to create sustainable farms and improve their livelihoods.

Website: farmraise.com

Founders: Jayce Hafner (CEO), Sami Tellatin (COO), Albert Abedi (Product)

The pitch: Over half of American farms don’t have the tools or bandwidth they need to identify ways to improve their farms and become profitable. The startup’s API links to farmers’ bank accounts, where its algorithm assesses financials to provide a “farm read,” scoring the farms’ financial health. It then regularly monitors farm data to continuously provide clean financials and recommendations on how to improve its customers’ farms, as well as to connect farmers with capital in order to improve their score. (It might suggest that a farm invest in certain sustainability practices, for example.)

Eventually, the idea is to also use the granular insights it’s garnering and sell these to hedge funds, state governments, and other outfits that want a better handle on what’s coming — be it around food security or climate changes.


3.) Sequel

What it does: Re-engineering life’s essential products – starting with tampons.

Website: thesequelisbetter.com

Founders: Greta Meyer (CEO),  Amanda Calabrese (COO)

The pitch: Founded by student athletes from Stanford, Sequel argues that seven out of 10 women don’t trust tampons, which were first designed in 1931 (by a man). New brands like Lola have catchy brands and new material, but they perform even worse than legacy products. Sequel has focused instead on fluid mechanics and specifically on slowing flow rates so a tampon wont leak before it’s full whether they’re in the “boardroom” or the “stadium.” The company says it has already filed patents and secured manufacturing partners and that it expects that the product will be available for consumers to buy directly from its website, as well as in other stores, next year.


4.) Interface Bio

What it does: Unlocking the therapeutic potential of the microbiome with a high-throughput pipeline for characterizing microbes, metabolites, and therapeutic response, based on years of research at Stanford.

Founders: Will Van Treuren, Hannah Wastyk

The pitch: The microbiome plays a major role in a wide range of human diseases, including heart disease, kidney disease, liver disease, and cancer. In fact, Interface’s founders — both of whom are PhDs —  say that microbiome-influenced diseases are responsible for four of the top 10 causes of death in the United States. So how do they better size on the opportunity to identify therapeutics by harnessing the microbiome? Well, they say they’ll do it via a “high-speed pipeline for characterizing metabolites and their immune phenotypes,” which they’ll create by developing the world’s largest database of microbiome-mediated chemistry, which the startup will then screen for potential metabolites that can lead to new therapies.


5.) Gryps

What it does: Gryps is tackling construction information silos to create a common information layer that gives building and facility owners quick, enriched and permanent access to document-centric information.

Website: gryps.io

Founders: Dareen Salama, Amir Tasbihi

The pitch: The vast size and complexity of the construction industry has resulted in all kinds of software and services that address various aspects of the construction processes, resulting in data and documents being spread across many siloed tools. Gryps says it picks up where all the construction-centered tools leave off: Taking delivery of the projects at the end of a construction job and providing all the information that facility owners need to operate, renovate, or build future projects through a platform that ingests data from various construction tools, mines the embedded information, then provides operational access through owner-centered workflows. 


6.) Expedock

What it does: Automation infrastructure for supply chain businesses, starting with AI-Powered Freight Forwarder solutions.

Website: expedock.com

Founders: King Alandy Dy (CEO), Jeff Tan (COO), Rui Aguiar (CTO)

The pitch: Freight Forwarders take care of all the logistics of shipping containers including financials, approvals and paper work for all the local entities on both sides of the sender and receiver geographies, but communications with these local entities are often done through unstructured data, including forms, documents, and emails and can subsequently eat up to 60% of operational expenses. Expedock is looking to transform the freight forwarding industry by digitizing and automating the processing and inputting of unstructured data into various local partner and governmental systems, including via a “huan in the loop” AI software service.


7.) Illume

What it does: A new way to share praise

Website: illumenotes.com

Founders: Sohale Sizar (CEO), Phil Armour (Engineering), Maxine Stern (Design)

The pitch: The process of thanking people is full of friction. Paper cards have to be purchased, signed, passed around; greetings on Facebook only mean so much. Using Illume, teams and individuals can download its app or come together on Slack and create a customized, private, and also shareable note. The nascent startup says one card typically has 10 contributors; it charging enterprises $3 per user per month, ostensibly so sales teams, among others, can use them.


8.) Quansa

What it does: Quansa improves Latin American workers’ financial lives via employer-based financial care

Website: quansa.io

Founders: Gonzalo Blanco, Mafalda Barros

The pitch: Fully 40% of employees across Latin America have missed work in the past 12 months due to financial problems. Quansa wants to help them get on the right track financially with the help of employers that use its software to link their employees’ payroll data with banks, fintechs and other financial institutions.

There is strength in numbers, says the firm. By funneling more customers to lenders through their employers, for example, these employees should ultimately be able to access to cheaper car loans, among other things.


9.) SpotlightAI

What it does: Spotlight turns sensitive customer information from a burden to an asset by using NLP techniques to identify, anonymize, and manage access to PII and other sensitive business data.

Website: hellospotlight.com

Founder: Austin Osborne (CEO)

The pitch: Data privacy legislation like GDPR and CCPA is creating an era where companies can no longer use their customer data to run their business due to the risks of fines, lawsuits, and negative media coverage. These lawsuits relating to misuse of personal data can reach billions of dollars and take years to settle. Spotlight’s software plugs into existing data storage engines via APIs and operates as a middleware within a company’s network. With advanced NLP and OCR techniques, it says it’s able to detect sensitive information in unstructured data, perform multiple types of anonymization, and provide a deep access control layer.


10.) Bennu

What it does: Bennu closes the loop on management communication

Website: bennu.io

Founder: Brenda Jin (CEO)

The pitch: Today’s work communication is done through forms, email, Slack, and docs; the timelines are unnatural.  Bennu is trying to solve the problem with communication loops that use integrations and smart topic suggestions to help employees prepare for substantive management conversations in seconds, not hours. 


11.) Playbook

What it does: Playbook automates the people coordination in your repeatable workflows with a simple system to create, execute and track any process with your team, customers, and more.

Website: startplaybook.com

Founders: Alkarim Lalani (CEO), Blaise Bradley (CTO)

The pitch: Whether you’re collecting time cards from 20 hourly workers every week, or managing 30 customer onboardings – you’re coordinating repetitive workflows across people over email and tracking it over spreadsheets. Playbook says it coordinates workflows between people at scale by taking programming concepts such as variables and conditional logic that let its customers model any workflow, and all packaged in an interface that enables anyone to build out their workflows in minutes.


12.) June Motherhood

What it does: Community-based care for life’s most important transitions.

Website: junemotherhood.com

Founders: Tina Beilinson (CEO), Julia Cole (COO), Sophia Richter (CPO)

The pitch: June is a digital health company focused on maternal health, with community at the core. Like a Livongo for diabetes management, June combines the latest research around shared appointments, peer-to-peer support and cognitive behavioral therapy to improve outcomes and lower costs, including through weekly programs and social networks that encourage peer-to-peer support. 


13.) Wagr

What it does: Challenge anyone to a friendly bet.

Website: wagr.us

Founders: Mario Malavé (CEO), Eliana Eskinazi (CPO)

The pitch: Wagr will allow sports fans to bet with peers in a social, fair, and simple way. Sending a bet requires just three steps, too: pick a team, set an amount, and send away. Wagr sets the right odds and handles the money.

Users can challenge friends, start groups, track leaderboards, and see what others are betting on, so they feel connected even if they aren’t together in the stadium. Customers pay a commission when they use the platform to find them a match, but bets against friends are free. The plan is to go live in Tennessee first and expand outward from there.


14.) Federato

What it does: Intelligence for a new era of risk

Website: federato.ai

Founders: Will Ross (CEO), William Steenbergen (CTO)

The pitch: Insurance companies are struggling to manage their accumulation of risk as natural catastrophes continue to grow in volume and severity. Reinsurance is no longer a reliable backstop, with some of the largest insurers taking $600 million-plus single-quarter losses net of reinsurance. 

Federato is building an underwriter workflow that uses dynamic optimization across the portfolio to steer underwriters to a better portfolio balance. The software lets actuaries and portfolio analysts drive high-level risk analysis into the hands of underwriters on the front lines to help them understand the “next best action” at a given point in time.


15.) rePurpose Global

What it does: A plastic credit platform to help consumer brands of any size go plastic neutral

Website: business.repurpose.global

Founders: Svanika Balasubramanian (CEO), Aditya Siroya (CIO), Peter Wang Hjemdahl (CMO

The pitch: Consumers worldwide are demanding businesses to take action on eliminating plastic waste, 3.8 million pounds of which are leaked into the environment every few minutes. Yet even as brands try, alternatives are often too expensive or worse for the environment. Through this startup, a brand can commit to the removal of a certain amount of plastic, which will then be removed by the startup’s loal watse management partners and recycled on the brand’s behalf (with rePurpose verifying that the process adheres to certain standards). The startup says it can keep a healthy margin while also running this plastic credit market, and that its ultimate vision is to our vision is to become a “one-stop shop for companies to create social, economic, and environmental impact.”


16.) Ladder

What it does: A professional community platform for the next generation

Website: ladder.io

Founders: Akshaya Dinesh (CEO), Andrew Tan

The pitch: LinkedIn sucks, everyone hates it. Ladder (which may have a trademark infringement battle ahead of it) is building a platform around community instead of networks. The idea is that users will opt in to join communities with like-minded individuals in their respective industries and roles of interest. Once engaged, they can participate in AMAs with industry experts, share opportunities, and have 1:1 conversations.

The longer term ‘moat’ is the data it collects from users, from which it thinks it can generate more revenue per user than LinkedIn. (By the way, this is the startup that has already signed a term sheet with a firm whose team was watching the demo day live on Tuesday.)


Exporta

How it works: Exporta is building a B2B wholesale marketplace connecting suppliers in Latin America with buyers in North America.

Website: exporta.io

Founders: Pierre Thys (CEO), Robert Monaco (President)

The pitch: The U.S. now imports more each year from Latin America than from China, but LatAm sourcing remains fragmented and manual. Exporta builds on-the-ground relationships to bring LatAm suppliers onto a tech-enabled platform that matches them to U.S. buyers looking for faster turnaround times and more transparent manufacturing relationships.


Via

What it does: Via helps companies build their own teams in new countries as simply as if they were in their HQ.

Website: via.work

Founders:  Maite Diez-Canedo, Itziar Diez-Canedo

The pitch: Setting up a team in a new country is very complex. Companies need local entities, contracts, payroll, benefits, accounting, tax, compliance…and the list goes on. Via enables companies to build their own teams in new countries quickly and compliantly by leveraging  local entities to legally employ teams on their behalf, and integrate local contracts, payroll, and benefits in one platform. By plugging into the local hiring ecosystem, Via does all the heavy lifting for its customers, even promising to stand up a team in 48 hours and at less expense than traditional alternatives. (It’s charging $600 per employee per month in Canada and Mexico, where it says it has already launched.)

Sony’s $5,000 3D display (probably) isn’t for you

Sony just announced a $5,000 3D display, but odds are it’s probably not for you. Primarily known for its consumer goods, the company is targeting creative professionals with the Spatial Reality Display — more specifically, those working in fields like computer graphics and visual effects for films. Basically it’s a way for artists to view their 3D creations without having to wear a VR headset.

The company’s not the first to offer up this kind of technology for a fairly niche audience. The Looking Glass display is probably the best-known offering in the space up to this point. But unlike that massive 8K screen, Sony’s product is actually designed for a single user — specifically as a screen for their desktop PC. Also, it kind of looks like an Amazon Echo Show.

Image Credits: Sony

The big differentiator between the product and existing devices is the inclusion of a sensor that determines the user’s viewing position, including vertical and horizontal access, along with distance, and tailors the image to that specific angle, adjusting within the millisecond.

Sony says it’s a “highly-realistic, virtual environment.” It showed off an earlier version of the technology at CES this year, using a rendering of the Ecto-1 from the upcoming Ghostbusters sequel, and planned to give the press a demo of the final version of the screen, but we all had to settle for conference calls instead, because of the COVID-19 pandemic. For that reason, I can’t really speak to the efficacy of the 3D imaging as of this writing.

The company consulted with its Sony Pictures wing, which used the technology for the development of CG effects for the aforementioned Ghostbusters film. Volkswagen has also been involved since the project’s early stages, looking toward the technology’s potential use in the ideation and design processes.

For everyone else, the display goes up for sale through Sony next month.

Gogoro’s Eeyo 1s e-bike goes on sale in France, its first European market

Gogoro announced today that its Eeyo 1s is now available for sale in France, the smart electric bike’s first European market. Another model, the Eeyo 1, will launch over the next few months in France, Belgium, Monaco, Germany, Switzerland, Austria and the Czech Republic.

In France, the Eeyo 1s can be purchased through Fnac, Darty or, in Paris, Les Cyclistes Branchés. The Eeyo 1s is priced at €4699 including VAT, while the the Eeyo 1 will be priced at €4599, also including VAT.

The weight of Eeyo bikes is one of their key selling points and Gogoro says they are about half the weight of most other e-bikes. The Eeyo 1s weighs 11.9 kg and the Eeyo 1 clocks in at 12.4 kg.  Both have carbon fiber frames and forks, but the Eeyo 1s’ seat post, handlebars and rims are also carbon fiber, while on the Eeyo 1 they are made with an alloy.

Based in Taiwan, Gogoro first introduced its Eeyo lineup in May, making them available for sale in the U.S. first. The e-bikes are the company’s second type of vehicle after its SmartScooters, electric scooters that are powered by swappable batteries. The Eeyo bike’s key technology is the SmartWheel, a self-contained hub that integrates its motor, battery, sensor and smart connectivity technology so it can be paired with a smartphone app.

In an interview for the Eeyo’s launch, Gogoro co-founder and chief executive Horace Luke said the company began planning for Eeyo’s launch in 2019, before the COVID-19 pandemic. While sale of e-bikes were already growing steadily before COVID-19, the pandemic has accelerated sales of e-bikes as people avoid public transportation and stay closer to home. Several cities have also closed some streets to car traffic, making riders more willing to use bikes for short commutes and exercise.

Founded in 2011 and backed by investors including Temasek, Sumitomo Corporation, Panasonic, the National Development Fund of Taiwan and Generation (the sustainable tech fund led by former vice president Al Gore), Gogoro is best known for its electric scooters, but it is also working on a turnkey solution for energy-efficient vehicles to license to other companies, with the goal of reducing carbon emissions in cities around the world.

As investors and founders mature, Vienna emerges as a European startup hub

According to Austrian Startup Monitor, entrepreneurs have founded more than 2,200 startups in Austria since 2008, with the number of tech companies growing 12% per year since then, significantly faster than the 3% growth rate for traditional companies.

Home to roughly 50% of Austria’s startups, Vienna has a plethora of VC, corporate and university investors. Top VCs include 3TS Capital Partners, AC & Friends, Cudos Capital, FSP Ventures, Hansmen Group, i4g Investment, i5invest, LilO Ventures, next.march, primeCROWD, Speedinvest and Venionaire Capital, among others.

The local ecosystem benefits from several initiatives, including the Social Impact Awards, Vienna Startup Awards, Design Week, Climate KIC Stage, Innovation Incubation Center and INiTS Accelerator. The well-run Pioneers Festival contributed massively to the ecosystem for several years after a certain TechCrunch editor-at-large gave the organizers an excuse to expand on a simple TechCrunch meetup. But the festival was shuttered last year after its sale to a local accelerator meant that the event itself ran out of steam. Perhaps it was just as well, given this year’s pandemic.

State support for startups is also there. The Austrian government created a comprehensive startup program in 2016 to make the country more attractive to startups setting up there.

Standout exits include fitness app maker Runtastic, acquired by Adidas for $240 million in 2015, as well as listings marketplace Shpock, which was acquired by Norwegian publishing conglomerate Schibsted in 2015. Other notable startups originally from Vienna include mySugr, wikifolio, kompany and Codeship.

There have been jitters on the way, however. The Austrian Private Equity and Venture Capital Organization’s 2019 report found that Austria’s startups saw €237.6 million invested in 2018, but, this number fell 8.2% to €218 million in 2019; the number of deals exceeding €500,000 also dipped by 8.7%. Foreign funding also slowed in 2019 after a few years of a bull run — between 40% and 63% of deals sized €0.25-€1.99 million were significantly funded by foreign investors in 2018.

Despite the decline, local investors have started to pick up the slack, boosting the number of funding rounds over €5 million to 12 deals in 2019 from 11 in 2018. In both years, all but one of those deals drew a substantial part of the funding round from foreign investors.

We expect more to emerge from Vienna’s tech scene in the future. The Pioneers Festival (RIP) proved that Vienna is a fascinating bridge between Western European capital and entrepreneurial culture, and East European entrepreneurs and talent, which it will no doubt continue to benefit from in years to come. But — just as will happen with Lisbon this year and the loss of Web Summit — the loss of a major conference in Vienna to shine a light on the city and ecosystem, combined with the pandemic, may have cooling effects for the next couple of years.


Notable Vienna startups:

  • Newsadoo: Uses artificial intelligence to personalize news.
  • Cashpresso: Links customers, merchants and banks to offer consumer financing options.
  • Jobrocker: An online job search portal that connects applicants’ CVs with job openings.
  • Storyblok: A headless content management system.
  • Byrd: First-mile shipping service that allows customers to ship items hassle-free.
  • Music Traveler: A marketplace that centralizes spaces with musical instruments and equipment.
  • PAYUCA: Provides flexible access to parking spaces in private office and residential buildings.
  • Refurbed: Fast-growing marketplace for refurbished electronics, across the German-speaking world.
  • Presono: A web platform for creating, managing and showing presentations in companies.
  • Blockpit: Develops software for portfolio tracking, tax calculation and compliance reporting of transactions for cryptocurrencies and crypto assets.
  • Robo Wunderkind: A robot for kids to build and program.
  • Medicus: Converts health data with their cryptic numbers and medical language into an easy-to-understand visual experience.
  • Cybershoes: VR accessory that allows you to walk through your favorite VR games.

Here’s who we interviewed:

Eva Arh, principal, Capital 300

What trends are you most excited about investing in, generally?
B2B software, robotics, no/low-code automation, AI-enabled vertical solutions, e-health, companies enabling others to hire and engage talent remotely.

What’s your latest, most exciting investment?
Lokalise.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Companies that enable others to manage and automate billing even further (e.g., per API call), next-gen video conferencing, solutions guiding women through menopause, providing solutions that help companies to offer mental health services to distributed teams, bringing cloud kitchens to the next level (not running central kitchens).

What are you looking for in your next investment, in general?
As always, ambitious, smart, hard-working teams eager to build a category leader in a huge market.

What other types of products/services are you wary or concerned about?
Concerned about solutions that leverage behavioral data to influence people for the sake of optimizing profit, overload of sales and marketing tech, overload of chatbot providers. [It is] hard to compete with players that have benefited from huge network effects such as food delivery.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We focus on German-speaking areas and Central Eastern Europe. Opportunistically we would also invest outside of the region, still in Europe.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
Austria — no specific industry focus within software. However, well-positioned in the biotech space, CEE — given the strong presence of IT outsourcing companies, the region is well-positioned to build solutions in the business-process automation, dev tool space. Storyblok (our portfolio). Others to watch: Anyline, Adverity, Bitpanda, PlanRadar, Refurbed.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Regarding Vienna — we are seeing the first generation of entrepreneurs building global companies. Their and their team experience will be at utmost value creating a new wave of tech companies that compete on a global level.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
Yes, we already see this — exciting companies coming out of small cities in Poland, Germany, etc. and companies going remote.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Telemedicine, online education has been accelerated. We see a shift that otherwise would have taken years, especially in the relatively conservative German-speaking area. As mentioned previously, mental health solutions, hiring and employing remotely are some of the opportunities highlighted by COVID-19. Companies that are heavily exposed are those that have been serving the long tail of companies, small merchants, and local businesses that were closed down or experienced much less traffic in past months and hence are extremely sensitive around their cost base, discontinuing services that are not 110% essential.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
We have always been very selective and focused, partnering up three to four times a year. We continue at the same pace. The companies that perform well despite COVID-19 are still in a strong position for attracting external capital. Of course, we help our portfolio to secure a runway and have a discussion how/whether the situation has impacted their offering/GTM. Some companies have to rethink their value proposition, some rethink their target groups either to make up for slower sales cycles or on the other hand to leverage and benefit from the current situation.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Yes, we see that Lokalise is growing heavily with the current customer base as their customers expand to new markets, likely to make up for slower revenue growth in their existing markets. We see that Nethone (fraud prevention) is able to double down on e-commerce. Online fraud and online transactions are skyrocketing as people spend much more time online. (On the other hand, their airline customers of course show a different trajectory.)

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
It is inspiring to see how founders go through the current situation, act instead of reacting, especially in those countries where there is less government support incentives in place. Personally, I am also happy to see that people use the work from home time to rethink and introduce healthier habits.

Any other thoughts you want to share with TechCrunch readers?
As the world has gone online and the location matters much less, there is an opportunity to distribute the created value and wealth more evenly — be it a company founded in a “non-tech-hub” location or be it talent hired remotely.

Why are VCs launching SPACs? Amish Jani of FirstMark shares his firm’s rationale

It’s happening slowly but surely. With every passing week, more venture firms are beginning to announce SPACs. The veritable blitz of SPACs formed by investor Chamath Palihapitiya notwithstanding, we’ve now seen a SPAC (or plans for a SPAC) revealed by Ribbit Capital, Lux Capital, the travel-focused venture firm Thayer Ventures, Tusk Ventures’s founder Bradley Tusk, the SoftBank Vision Fund, and FirstMark Capital, among others. Indeed, while many firms say they’re still in the information-gathering phase of what could become a sweeping new trend, others are diving in headfirst.

To better understand what’s happening out there, we talked on Friday with Amish Jani, the cofounder of FirstMark Capital in New York and the president of a new $360 million tech-focused blank-check company organized by Jani and his partner, Rick Heitzmann. We wanted to know why a venture firm that has historically focused on early-stage, privately held companies would be interested in public market investing, how Jani and Heitzmann will manage the regulatory requirements, and whether the firm may encounter conflicts of interest, among other things.

If you’re curious about starting a SPAC or investing in one or just want to understand how they relate to venture firms, we hope it’s useful reading. Our chat has been edited for length and clarity.

TC: Why SPACs right now? Is it fair to say it’s a shortcut to a hot public market, in a time when no one quite knows when the markets could shift?

AJ: There are a couple of different threads that are coming together. I think the first one is the the possibility that [SPACs] works and really well. [Our portfolio company] DraftKings [reverse-merged into a SPAC] and did a [private investment in public equity deal]; it was a fairly complicated transaction and they used this to go public and the stock has done incredibly well.

In parallel, [privately held companies] over the last five or six years could raise large sums of capital, and that was pushing out the the timeline [to going public] fairly substantially. [Now there are] tens of billions of dollars in value sitting in the private markets and [at the same time] an opportunity to go public and build trust with public shareholders and leverage the early tailwinds of growth.

TC: DraftKings was valued at $3 billion when it came out and it’s now valued at $17 billion, so it has performed really, really well. What makes an ideal target for a SPAC versus a traditional IPO? Does having a consumer-facing business help get public market investors excited? That seems the case.

AJ: It comes down to the nature and the growth characteristics and the sustainability of the business. The early businesses that are going out, as you point out, tend to be consumer based, but I think there’s as good an opportunity for enterprise software companies to use the SPAC to go public.

SPAC [targets] are very similar to what you would want in a traditional IPO: companies with large markets, extremely strong management teams, operating profiles that are attractive, and long term margin profiles that are sustainable, and to be able to articulate [all of that] and have the governance and infrastructure to operate in a public context. You need to be able to do that across any of these products that you use to get public.

TC: DraftKings CEO Jason Robins is an advisor on your SPAC. Why jump into sponsoring one of these yourselves?

AJ: When he was initially approached, we were, like most folks, pretty skeptical. But as the conversations evolved, and we began to understand the amount of customization and flexibility [a SPAC can offer], it felt very familiar. [Also] the whole point of backing entrepreneurs is they do things differently. They’re disruptive, they like to try different formats, and really innovate, and when we saw through the SPAC and the [actual merger] this complex transaction where you’re going through an M&A and raising capital alongside that and it’s all happening between an entrepreneur and a trusted partner, and they’ve coming to terms before even having to talk about all of these things very publicly, that felt like a really interesting avenue to create innovation.

For us, we’re lead partners and directors in the companies that we’re involved with; we start at the early stages at the seed [round] and Series A and work with these entrepreneurs for over a decade, and if we can step in with this product and innovate on behalf of our entrepreneurs and entrepreneurs in tech more broadly, we think there’s a really great opportunity to push forward the process for how companies get public.

TC: You raised $360 million for your SPAC. Who are its investors? Are the same institutional investors who invest in your venture fund? Are these hedge funds that are looking to deploy money and also potentially get their money out faster?

AJ: I think a bit of a misconception is this idea that most investors in the public markets want to be hot money or fast money. You know, there are a lot of investors that are interested in being part of a company’s journey and who’ve been frustrated because they’ve been frozen out of being able to access these companies as they’ve stayed private longe. So our investors are some are our [limited partners], but the vast majority are long-only funds, alternative investment managers, and people who are really excited about technology asa long term disrupter and want to be aligned with this next generation of iconic companies.

TC: How big a transaction are you looking to make with what you’ve raised?

AJ: The targets that we’re looking for are going to look very similar to the kind of dilution that a great company would take going public —  think of that 15%, plus or minus, around that envelope. As you do the math on that, you’re looking at a company that’s somewhere around $3 billion in value.  We’re going to have conversations with a lot of different folks who we know well, but that’s that’s generally what we’re looking for.

TC: Can you talk about your “promote,” meaning how the economics are going to work for your team?

AJ: Ours [terms] are very standard to the typical SPAC. We have 20% of the original founders shares. And that’s a very traditional structure as you think about venture funds and private equity firms and hedge funds: 20% is is very typical.

TC: It sounds like your SPAC might be one in a series.

AJ: Well, one step at a time. The job is to do this really well and focus on this task. And then we’ll see based on the reaction that we’re getting as we talk to targets and how the world evolves whether we do a second or third one.

TC: How involved would you be with the management of the merged company and if the answer is very, does that limit the number of companies that might want to reverse-merge into your SPAC?

AJ: The management teams of the companies that we will target will continue to run their businesses. When we talk about active involvement, it’s very much consistent with how we operate as a venture firm, [meaning] we’re a strong partner to the entrepreneur, we are a sounding board, we help them accelerate their businesses, we give them access to resources, and we leverage the FirstMark platform. When you go through the [merger], you look at what the existing board looks like, you look at our board and what we bring to bear there, and then you decide what makes the most sense going forward. And I think that’s going to be the approach that we take.

TC: Chamath Palihapitiya tweeted yesterday about a day when there could be so many VCs with SPACs that two board members from the same portfolio company might approach it to take it public. Does that sound like a plausible scenario and if so, what would you do?

AJ: That’s a really provocative and interesting idea and you could take that further and say, maybe they’ll form a syndicate of SPACs. The way I think about it is that competition is a good thing. It’s a great thing for entrepreneurship, it’s a good thing overall.

The market is actually really broad. I think there’s something like 700-plus private unicorns that are out there. And while there are a lot of headlines around the SPAC, if you think about technology-focused people with deep tech backgrounds, that pool gets very, very limited, very quickly. So we’re pretty excited about the ability to go have these conversations.

You can listen in on more of this conversation, including around liquidation issues and whether FirstMark will target its own portfolio companies or a broader group or targets, here.

China’s digital yuan tests leap forward in Shenzhen

Shenzhen, known for its maker community and manufacturing resources, is taking the lead in trialing China’s digital yuan.

Last week, the city issued 10 million yuan worth of digital currency to 50,000 randomly selected residents. The government doled out the money through mobile “red envelopes,” a tool designed to digitize the custom of gifting money in red packets and first popularized by WeChat’s e-wallet.

The digital yuan is not to be mistaken as a form of cryptocurrency. Rather, it is issued and managed by the central bank, serving as the statutory, digital version of China’s physical currency and giving Beijing a better grasp of its currency circulation. It’s meant to supplement, not replace, third-party payments apps like WeChat Pay and Alipay in a country where cash is dying out.

For example, the central government may in the future issue subsidies to local offices by sending digital yuan, which can help tackle issues like corruption.

Shenzhen is one of the four Chinese cities to begin internal testing of the digital yuan, announced a government notice in August without going into the specifics. The latest distribution to consumers is seen as the country’s first large-scale, public test of the centrally issued virtual currency.

Nearly 2 million individuals in Shenzhen signed up for the lottery, according to a post from the local government. Winners could redeem the 200 yuan red envelope within the official digital yuan app and spend the virtual money at over 3,000 retail outlets in the city.

As its next step, Shenzhen will launch a (vaguely defined) “fintech innovation platform” through its official digital currency institute, said a new central government document detailing the city’s five-year development measures, including attracting more foreign investment in cutting-edge technologies. The city will also play a key role in furthering the digital yuan’s research and development, application and international collaboration.

In April, the city’s digital currency vehicle launched a wave of recruiting for technical positions like mobile app architects and Android developers.

Shenzhen was established in 1980 as China’s first special economic zones and is now home to tech behemoths like Tencent, Huawei and DJI and innovation hubs like HAX and Trouble Maker. President Xi Jinping is scheduled to visit the city this week to commemorate the city’s 40th anniversary.

While the central bank provides logic and infrastructure undergirding the digital yuan, there’s much room for commercial banks and private firms to innovate on the application level. Both ride-hailing platform Didi and JD’s fintech arm have recently unveiled steps to help accelerate the digital yuan’s real-life implementation.

Venture capital gets less diverse in 2020

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. You can subscribe here.


First, a big congrats on making it through the week. If you live in the United States, you just endured one of the wildest news weeks ever. Rapid-fire headlines and nigh-panic have been our lot since last Friday when the president announced he was COVID-19 positive. We’re all very tired. You get points for just surviving.

Second, I wanted to bring you something uplifting this weekend, as you deserve it. Sadly, that’s not what we’re going to talk about.

On Friday, The Exchange covered new data concerning the venture capital results of female founders during the third quarter. The data set was U.S.-focused, but we can presume that it is illustrative of global trends. Regardless of that nuance, the data was depressing.

In the third quarter, U.S.-based female founders and co-founders raised 136 rounds worth $434 million, per PitchBook data. That was a handful more rounds than Q2 2020, but far fewer dollars. And it was down across the board compared to Q3 2019. Even more, as we noted in the piece, the aggregate venture capital world did very well.

Here’s some PwC data making that point, and a bit more from my old employer Crunchbase. What matters is that female founders are doing worse when VCs are super active. This will only perpetuate inequalities and inequities in the startup market.

Speaking of which, here’s some more bad news. Vern Howard Jr., the co-founder and CEO of Hallo, a startup that has raised nearly $2 million, according to Crunchbase, compiled some data on Black founders’ VC performance in Q3. Here’s what he set out to do:

[W]e wanted to put hard numbers behind the promises of so many venture capitalists and create a benchmark for how we can track the investment into black founders over time. So our team pulled a list from Crunchbase of all the startups globally with a total funding amount of $500,000 — $20,000,000 and who raised a round between July 1 and October 1. There were over 1383 companies here and our team went through one by one, to see how many Black founders there were.

There were 31.

Now, you could open up the funding bands to include both smaller and larger funding events, but regardless of the data boundaries, the resulting number — just 2.2% of the total — is a disgrace.

Market Notes

Various and Sundry

  • Continuing our coverage of the savings and investing boom that fintech startups around the world have been riding this year, Freetrade, a British Robinhood if you will, told The Exchange that it crossed £1 billion in September order volume. That’s not bad!
  • Freetrade also recently launched a paid version of its service, as the payment-for-order-flow method of generating revenue that Robinhood is growing on the back of is not allowed across the pond.
  • Sticking to the fintech world, Yotta Savings is a startup that provides a savings option to its users, with the added chance of winning a big monetary prize for having stored their money with the startup. Folks have been whispering in my ear about the company for a bit, but I’ve held off writing about it until now as it was not clear to me if the model was merely a gimmick, or something that would actually attract customers.
  • Well, Yotta grew from 8,000 accounts to more than 30,000 in the past few weeks and has reached the $100 million deposit mark. So, I guess we now care.
  • Coinbase lost one in 20 employees to its new strategy of standing neutral during political times on anything that its CEO deems as unrelated to its core mission, which, as a for-profit company with tectonic financial backing, is making money.
  • On the same topic, Can from The Margins made a salient point that “no politics is a political stance.” Correct, and it is a very conservative one at that.
  • Even more, Coinbase’s CEO made noise about how his company will “work to create an environment where everyone is welcome and can do their best work, regardless of background, sexual orientation, race, gender, age, etc.” Whether he likes it or not, this is a political stance, and one that has nothing to do with the company’s stated core mission. And a political fight earned it — namely, equal access to the workplace.
  • I’ll toss in a plug for this piece on the matter from a VC that TechCrunch published, and these thoughts from a tech denizen on how to guarantee that your company lands on the wrong side of history on essentially everything.
  • Wrapping our grab-bag this week, Ping Identity bought ShoCard. Ping is now a public company, so normally its deals would land outside our wheelhouse. But we care in this case because TechCrunch has covered ShoCard (2015: “ShoCard Is A Digital Identity Card On The Blockchain”), and because the startup does crypto-related work.
  • Seeing a public company snap up a blockchain startup for real money, on purpose and out loud, doesn’t happen every day. More here if you want to read about the deal.

Wrapping, this newsletter is a lot of fun and I appreciate your reading it. It is, also, a work in progress. So feel free to hit respond to it and let me know what you want to see more of. Or hit respond and send me a cute pic of your pet. Either is fine by me.

Chat soon,

Alex

Brian Armstrong’s new problem: 60-plus free agents

A lot has been made of the open memo that Coinbase CEO Brian Armstrong published nearly two weekends ago, essentially barring political activism at work because he sees it as a distraction. He also made it clear that employees who disagreed with the decision — and he foresaw that some would not be happy — were free to leave.

“I recognize that our approach is not for everyone, and may be controversial. I know that many people may not agree, and some employees may resign. I also know that some of what I’ve written above will be misinterpreted, whether accidentally or on purpose. But I believe it’s the right approach for Coinbase that will set us up for success long term, and I would rather be honest and transparent about that than equivocate and work in a company that is not aligned,” he wrote.

Perhaps owing to an almost immediate backlash, Armstrong sent a separate, internal memo the next day detailing separation packages for employees who might be upset and looking for the exits. Coinbase was willing to be very generous, too, offering four months’ severance pay for those who have been at the exchange for less than three years, and paying longer-term employees six months of severance. (Worth noting: Coinbase also gives employees up to seven years to exercise their stock options.)

Whether Armstrong expected that more than 60 employees of Coinbase’s staff of 1,200 would take him up on the offer is something only he knows. As he disclosed in a follow-up post yesterday, that’s how many people had alerted the company by its October 7th deadline that they are quitting, and Coinbase expects the number to inch higher, based on a “handful” of ongoing conversations.

Either way, if I were Armstrong, I might be a little nervous about that number. Though small in the grand scheme of the company’s ambitions, that’s 60-plus people who have Coinbase on their resume, institutional knowledge about the company in their head, and potentially money in the bank, between their severance and equity.

More worrisome, they might also have a bit of an axe to grind against a company that told them it was changing the world, then changed the terms of its pact with them in the middle of an already trying time for most people.

That frustration — if it exists — could come out in potential leaks to the press, though presumably every employee had to sign a lengthy non-disparagement agreement on their way out the door.

The bigger threat is that one or numerous of these employees might now start their own crypto-related business, or else join rival companies that could use their skills. (Non-compete agreements are famously difficult to enforce in the state of California.) As crypto enthusiasts like to say, it’s still early innings when it comes to decentralized finance.

Certainly, taking on Coinbase is a very tall order at this point. Two years ago, when the company closed on $300 million in Series E funding, it did so at a post-money valuation of more than $8 billion, putting it leaps and bounds ahead of numerous other crypto exchanges.

No matter what you think of Armstrong’s new policy, there aren’t a lot of founders with the stuff to grow a company as strong and fast as he has, either.

Still, it happens all the time that people launch companies to take down other companies. It’s human nature.

Given that a number of former Coinbase employees has already raised funding for projects after leaving Coinbase, combined with so many investing dollars sloshing around out there looking to be put to use, the risk of this happening to Coinbase because of Armstrong’s memo and its aftermath may be small. But it isn’t zero.

Hong Kong logistics unicorn Lalamove unveils foray into the US

Lalamove, an on-demand logistics service active in China, Southeast Asia, and Latin America, has officially entered the U.S. seven years after launch.

As the COVID-19 pandemic keeps millions of Americans home, Hong Kong-based Lalamove believes it can seize the growing demand for delivery services in the country. It makes its debut in the Dallas Fort-Worth area, a major hub for distribution and logistics in the U.S. In days the service will launch in Chicago and Houston.

The startup was one of the first in Hong Kong to hit the $1 billion unicorn valuation mark alongside its archrival GoGoVan. Its business is multifold and highly localized, but essentially it works as an Uber for businesses and individuals that need to move goods within the city.

In China, where it’s known as Huolala (货拉拉), it primarily serves as a broker between shippers who need to send cargo and a network of truck drivers. In Southeast Asia, the business functions similarly with the addition of food delivery for restaurants, a crowded and cash-burning space. In the U.S., its fleet of sedans, SUVs and pickup trucks are available 24/7, allowing it to target customers spanning catering, retail, e-commerce, manufacturing and construction, with fees starting at $8.90.

“Delivery is essential, especially during the pandemic. But many local businesses don’t have or cannot afford in-house fleets, so we’re excited to work with businesses in the Dallas Fort-Worth area to provide same-day, on-demand delivery services to their customers,” said Blake Larson, international managing director at Lalamove and formerly co-founder of Rocket Internet’s Asia-focused e-hailing startup Easy Taxi.

Like GoGoVan, Lalamove was founded by a Hong Kong entrepreneur who was educated in the U.S. Both companies have scored fundings from heavyweight institutions from China and elsewhere.

Lalamove’s investors included Hillhouse Capital, Sequoia Capital China and Xiaomi founder’s Shunwei Capital. Through a merger with China’s 58 Suyun, GoGoVan counts Tencent, Alibaba, KKR and New Horizon Capital amongst its backers.

The Hong Kong startup’s global expansion comes at a time when TikTok stumbles in the U.S. due to its links to China. In the logistics startup’s case, a Chinese team operates the Chinese division Huolala, while separate international teams manage the overseas segments of Lalamove, TechCrunch understands. The core of TikTok’s challenge in the U.S. is the video app’s dependence on its Chinese parent ByteDance’s technological capabilities.

To date, Lalamove has verified and onboarded more than 500 partner drivers in Dallas Fort-Worth, with plans to add another 500 in the area by the end of this year. It’s also hiring for its regional operational office at a time when the U.S. is struck by widespread virus-induced layoffs, furloughs and slowdown in hiring.

Lalamove claims it has to date matched more than 7 million users with a pool of over 700,000 delivery partners in 22 markets around the world.

Tech for Campaigns, created to get Democrats elected, on the parties’ biggest differences

Yesterday, a 450-page “investigation on competition in digital markets” was published by the House based on 16 months of evidence gathering, including interviews with employees and past employees and others with first-hand knowledge of the inner workings of Facebook, Google, Amazon and Apple.

The picture it paints is of companies that have abused their power to enrich themselves in ways previously known and unknown based on evidence collected directly from their current and former employees, as well as others with first-hand knowledge of the company’s internal workings. But House Democrats and Republicans disagree on some of the proposed remedies.

It probably doesn’t surprise Jessica Alter, the cofounder of Tech for Campaigns, an organization that was once described as a Democratic Geek Squad owing to its mission to match volunteers from the tech world — engineers, data scientists, product managers, marketing pros — with Democratic campaigns in need of a winning digital strategy.

Alter, who says Tech for Campaigns’s volunteer network now numbers more than 14,000, talked with us late last week about just how different the political parties are fundamentally, likening the Republican National Committee to a “conglomerate,” and the Democrats’s approach as far more decentralized — often to the latter’s disadvantage. Our conversation (which you can hear here) has been edited lightly for length and clarity.

TC: You were previously a tech founder. For those who don’t know you, why start this organization?

JA: I was pretty uninvolved in politics. I was just a typical techie working at early-stage companies, and I’d started one as well. But in 2017, my cofounders and I got very frustrated. I think the crucible moment for me was the first Muslim ban. And given what our skill sets are and who we know, we decided, ‘Let’s just try to look at helping on the tech and digital front.’

We had a hunch that in the 2016 election, Trump sort of wiped the floor with [the Democrats] on tech and digital, and we were more right [about that hunch] than we wanted it to be. We realized pretty quickly that the Democrats are probably 8 to 10 years behind the Republicans. That’s hard for people to believe, and usually people say, ‘But what about Obama? [His campaign] was good at tech and digital.” But all of that was thrown out. I mean that in the most literal sense.

TC: What percentage of donor dollars go to digital advertising?

JA: TV and [snail] mail still really rules the roost. In 2018, as just one example, for all of the media attention that digital advertising gets, only three to five cents went to digital for every donor dollar that was given. Most of the rest went to TV and mail.

On the tech tools and data side, we’re also far behind. Part of the problem is that there really isn’t an organization whose main thrust is to focus on tech and digital. It’s a part of every organization but it’s siloed, and no one really focuses on it, and no one organization is permanently focused on it. That’s the hole that [we’re] filling, and the way that we do that is through our full time team of. about two dozen people and our now more than 14,000 tech and digital volunteers.

TC: Are all of these volunteers finding you? And when they do offer to help, do they have a campaign in mind or do you assign them to whomever needs the help most?

JA: It’s sort of a double-opt-in system that we’ve built, so you sign up, you tell us your hometown, in addition to where you live now and we will try to match on affinity. But we first match on skill set. So we talked to all the campaign and we develop projects with them, and we know if it’s an email project, it needs these skill sets. Then an  email goes out to people with those skill sets.

TC: You’ve suggested that part of why Democrats have fallen so far behind is because of the way their campaigns are structured. Is it different on the Republican side? Do they have a more unified digital operation?

JA: It’s different on the Republican side — and not exclusively about tech and digital — for a couple of reasons. The Republicans in general are a much more centralized organization. When the RNC or [other] leaders say to do things, it trickles down, and people do it. I’m sure a lot of people have heard the saying that Republicans fall in line and Democrats fall in love. There’s nothing that I’ve heard and understood to be more true than that. The Democrats are just much more decentralized, so it’s hard for things to trickle down as much.

The Republicans also started focusing on digital maybe 10 years ago and they operate much more on their donor side like a conglomerate [whereas] the Democrats operate much more like a portfolio [and] there’s not as much cooperation; it’s just that’s it’s just not happening. So [major donors like the] Koch [brothers] and the Mercer [family] not only believed In digital, but there’s a shared infrastructure there. They have, for example, a data exchange that they’ve had for eight years. The Democrats are still building a first version of theirs, and there are two or three versions of a centralized data exchange, which is the opposite of the point of centralization.

TC: Where are you focusing most of your time and energy?

JA: At the state legislative level, which is where Republican fight, too. The elbows are a lot less sharp, so we’ve been able to make inroads there, helping almost 500 campaigns on almost 700 projects over the last three years. But also, the state level campaigns are these concentric circles that overlap between incredibly strategic, incredibly cheap, and incredibly ignored.

State legislatures control basically every major issue that anyone cares about. That includes health care, voting rights, the environment, education, [and] a woman’s right to choose. If Roe v. Wade gets overturned. It’s not that abortion [becomes] illegal; it’s that the states will decide. The state legislatures in most states also control federal redistricting. So if you own the state legislatures, you actually own all those issues.

State legislators are about one 100th of the cost of a federal race, too. It’s just a good ROI decision. People need to understand that Republicans run things like a business, and they make very good ROI-based decisions. I don’t find that to be true with Democrats nearly enough. You have very analytical people who, in their normal lives, are extremely focused on ROI, yet when it comes to politics, they’re just purely emotional. I understand it, but it doesn’t serve the end goal.

TC: This is because they’re decentralized?

JA: We were showing one of our tools to one of the state Democratic parties, and their comment was, ‘Oh, we try to build this every two years.’ When they build [something], they don’t if that’s happening in Maine. They don’t show it to Michigan. It’s not because they don’t like each other. They just don’t talk. And so every two years, your donors are paying to rebuild the same thing. And there isn’t any standard tech or digital training for candidates or their staffers.

When we go into states, we provide that, [and] not in the sense that we’re going to make them gurus of how to run digital ads or data, but so they understand why it’s different and what the power of digital to make them more demanding of whoever they’re working [including paid consultants] on the digital side.

TC: You’re saying it’s chaos out there. You’re giving these campaigns tools and information they didn’t have, but of course, campaigns disband. Is anyone holding on to the tools and information that you’re providing them?

JA: The whole mission of tech for campaigns is to be the permanent tech and digital arm for the Democrats. As you rightly said, campaigns disband every two years and break down completely. Within a week and a half, everyone scatters. So you can’t expect that to change completely. [But we hope to be] this lasting presence in tech and digital that subsists cycle over cycle and in between cycles — to be this permanent presence that can build a real competitive advantage. Because if you break everything down every two years, you’ll never win at tech and digital.

TC: How do you fund your work? Through donations? Grants? Is there a money-making component of this business?

JA: We’re a 527 nonprofit, so we are mostly sustained by donations from individuals and organization. Because of campaign finance, we do sell software that we build, but it’s not going to be a it’s not a big business.

TC: In ‘Silicon Valley,’ politics have become so charged. Are the people who volunteer fearful of revealing their political affiliations in a way that they perhaps weren’t before? Or is the opposite happening?

JA:  I feel like there’s a lot more desire for people to be outspoken in the last few years, even more so than  between 2016 and 2018. Because things have gotten so out of control, people really want a way to channel their frustration and anger and sadness. So we don’t we don’t find that people want to hide it, no.

TC: Some readers are Donald Trump supporters. Some are Biden supporters who might want to help. Is there anything specific you’d want them to know, heading into the election?

JA: First, I’d say, don’t despair. We are we are solving this. [But] it’s not a one-month or even a one-cycle solve, so  get in touch with us about what you can do.

Helsinki rides the Slush wave toward a booming startup future

In September 2020, Helsinki’s City Council approved plans for an expansion of the existing “Maria 01 Campus,” a former downtown hospital complex. Even before it starts spreading its acreage, the facility is already home to 120 startups and 12 venture capital funds. The campus is owned by the biggest startup conference in the Nordics, Slush, the City of Helsinki and Helsinki Enterprise Agency and is slated to become one of the largest, if not — possibly — the largest tech startup campus in Europe, at 70,000 square meters (or 75,3473 square feet) by 2023.

The scale of the project speaks to the confidence and ambition of the Helsinki startup ecosystem, which has grown immeasurably over the last 10-15 years.

The fact that Slush, a conference, is involved is no accident. The event is a nonprofit created by the university. This has enabled it to scale to one of Europe’s largest tech events (pre-COVID) at over 20,000 attendees. Its success has also led to traditionally conservative Finns embracing entrepreneurship. The entire city gets involved, and thousands of university students volunteer for the good of the city and the ecosystem. The collegiate nature of the Slush experience has reflected how Helsinki has grabbed the opportunities of tech with both hands.

Born of Aalto University and its student society for entrepreneurship, AaltoES, Slush originally started as a tech meetup. Indeed, I went to some of the first ones. But with the 2010’s success of local startup Rovio, creator of Angry Birds, as well as Supercell, creator of Clash of Clans, the event took off. It helped that Peter Vesterbacka (previously a pioneer at HP Bazaar Labs) was a tireless promoter of Slush and egged it on from being a meetup into a full-blown conference that could attract the biggest names in tech.

Slush’s ability to attract VCs to a Northern European country in the middle of winter was impressive. The city rolled out the red carpet. That meant inbound VC exploded. According to the Finnish Venture Capital Association (FVCA), VC investment into Finland grew almost five times to €188 million between 2014 and 2018. Finland is now a European leader in terms of venture capital (says the FVCA) as a percentage of GDP, and foreign VC investments grew by 58% between 2017-18.

VC has grown leaps and bounds in the city itself. Crunchbase lists 54 venture funds of various guises in Helsinki. They include Conor Venture Partners, Inventure, VNT Management, Icebreaker.vc, Superhero Capital, Evli Growth Partners, OpenOcean, Loudspring, Norsepower Oy, Tesi, NordicNinja VC and Maki.vc.

Slush has even seen ex-employees go on to found big startups. Food delivery startup Wolt, co-founded by Miki Kuusi an early CEO of Slush, has raised $160 million. Other big startup companies from Helsinki’s ecosystem include Smartly, Singa, Giosg, ZenRobotics and Blok. And let’s not forget it produced MySQL and CRF Health back in the day. In 2018, Small Giant Games, was acquired by Zynga in a deal worth up to $700 million.

Startup Genome marks out Helsinki as one of the top global ecosystems. For 2020, it valued the Helsinki startup ecosystem at $5.8 billion, with total early-stage funding of $511 million, higher than the global average for emerging ecosystems.

Helsinki has around 250 gaming enterprises and 30 of them exceed $1 million in annual sales. In 2017 Finland was the first EU country to publish a national AI strategy and the University of Helsinki created a free AI education program that saw approximately 90,000 people from 80 different countries enroll in the first four months.

Over the whole country, nearly 300,000 Finns work in tech, an enormous amount when you consider the population of Helsinki is 1.3 million.

According to analysts Tracxn top startups include:

  • Canatu (transparent conductive films and touch sensors using carbon nanomaterial): Raised $74 million.
  • Kiosked (smart native advertising technology): Raised $64 million.
  • ICEYE (developer of SAR microsatellite for earth observation applications): Raised $152 million.
  • Varjo (provider of head-mounted display with resolution matching a human eye): Raised $100 million.

To learn more about Finland’s startup ecosystem, we spoke to these investors:

Pirkka Palomaki, partner, Maki.vc

What trends are you most excited about investing in, generally?
We are a generalist but are keen on deep tech and brand-driven companies both in B2C and B2B. We have been tracking closely new materials-based innovations, as well as breakthrough innovations in quantum computing. Breakthroughs happen also elsewhere and [we] have invested in B2B SaaS as well as one cloud-native massive multiplayer game company.

What’s your latest, most exciting investment?
One the latest investments is in a Swedish company called Carbon Cloud. They make it easy to discover your climate footprint and show it to the world — they can be found, for example, on the side of Oatly’s packaging. Carbon dioxide impact of consumer goods should be as visible as the nutrition values in food.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
Femtech. There’s still quite little competition, but tremendous amount of work to do. Our team is keen to see more solutions on reproductive health, but also going beyond to solutions e.g., in syncing female’s personal cycle with optimal nutrition or training.

What are you looking for in your next investment, in general?
The team is always in the center and we are looking for entrepreneurs that are rewriting the future in global markets.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Free-to-play games is a tough and competitive market. There will likely be new winners, but also even greater number of companies that don’t make it compared to many other industries.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
We have a global mandate, but the Nordics is our home and where we have done most of our investments.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
There are several, but the first on the top of mind is sustainability and new materials. Spinnova is a great example providing the textile industry with the most sustainable fibre in the world, produced with minimal harm to the environment, at a reasonable cost. With the stretch and strength qualities of cotton and the insulation of lamb’s wool, it can suit apparel, footwear, accessories, [and] home textiles to name a few applications. I’m also looking forward to seeing a great ecosystem and several startups being built around quantum computing. There are already a number of promising quantum technology companies, such as the Finnish IQM that builds world-class quantum computers and Bluefors that specialize in cryogen-free dilution refrigerator systems for quantum computing.

How should investors in other cities think about the overall investment climate and opportunities in your city?
There is strong supporting ecosystem in Finland for startups, strong engineering history and great culture of getting things done.

Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
The beauty of the startup ecosystem is that is built on innovation. We will most likely see more distributed organizations in the future, but I believe the major hubs will maintain their attractiveness in the future as well.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
Travel and hospitality has naturally taken a big hit. It will take time for the industry to fully recover and I would expect innovations in the domain in the future, whether it is in virtual travel or creating confidence in worry-free travel in the future.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
Extending the runway has been a general rule for many and making the company stronger and more competitive when things start picking up again.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
Customer support agents have been strained during the pandemic. Our portfolio company Ultimate.ai has been well-positioned to scale the customer support with their virtual agents while maintaining or even improving customer experience. I’ve been super happy to see them grow and expand rapidly.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.

Faraday Future plans to go public through a SPAC deal

Faraday Future, the electric vehicle startup with a messy and complicated past, is planning to go public through a special-purchase acquisition company (SPAC) deal.

The company’s chief executive Carsten Breitfeld told Reuters that the company is working on a reverse merger with a SPAC and “will be able to announce something hopefully quite soon.”

Breitfeld, formerly the co-founder of Chinese EV startup Byton, declined to give more information about who Faraday is talking to or when the deal will closed. A Faraday Future spokesperson contacted by TechCrunch also said the company had no further details to share at this time.

SPACs are blank-check companies that are formed to raise money through an initial public offering in order to merge or acquire other companies. As TechCrunch’s Connie Loizos wrote in an explainer, they’ve become more popular among tech companies recently because many had their initial public offering plans delayed by the pandemic. SPACs also present an alternative to the regulatory issues surrounding traditional IPOs.

Shortly after being appointed CEO in September 2019, Breitfeld told Automotive News that Faraday Future wanted to raise about $850 million by the first quarter of 2020. By that time, company had already received $225 million in bridge financing led by Birch Lake Associates. The funding’s purpose is to finally bring Faraday’s flagship vehicle, the FF91 luxury electric SUV, to market.

Though the SPAC deal’s timeline is still undisclosed, Breitfeld told Reuters that Faraday Future plans to start volume production of the FF91, its first electric luxury SUV, 12 months after securing funding. This would represent a major milestone for the company, which was founded in 2015 but hasn’t produced a production vehicle yet. Faraday Future has made several prototypes, including one that went up for auction in August.

If the deal is successful, Breitfeld told Reuters that Faraday Future will first build the FF91 at its Hanford, California plant, but then work with a contract manufacturer in Asia that it has already entered into an agreement with.

Faraday Future’s financial issues date back to 2017, when LeEco, the Chinese tech company it was closely linked to, began dealing with multiple financial headaches of its own. They worsened when Faraday Future fell out with its main backer, Evergrande Health, in 2018.

Many of those issues were tied to Jia Yueting, founder and former CEO of LeEco and Faraday Future, who filed for personal bankruptcy earlier this year. Filings in the case revealed that Jia’s bankruptcy was funded by one of Faraday Future’s main holding companies, Pacific Technology. The documents also revealed that Faraday Future had just $6.8 million in cash at the end of July 2019.

Breitfeld told Reuters that Jia no longer owns stock in Faraday Future. The approval of Jia’s bankruptcy enabled Faraday Future to once again pursue investments to produce its electric vehicles, though now that may hinge on the success of its SPAC deal. Breitfeld acknowledged that Faraday Future’s past raises questions. “Because of the history and sometimes the bad news of the company, not everyone is really trusting us,” he told Reuters. “They want to see that we’ve become a stable company.”

Google delays mandating Play Store’s 30% cut in India to April 2022

Google is postponing the enforcement of its new Play Store billing policy in India to April 2022, days after more than 150 startups in the world’s second largest internet market forged an informal coalition to express concerns over the 30% charge the Android-maker plans to mandate on its store and started to explore an alternative marketplace for their apps.

The company, which is going live globally with the new Play Store rule in September 2021, is deferring the enforcement of the policy only in India, it said. It is also listening to developers and willing to engage to allay their concerns, it said.

“We are setting up listening sessions with leading Indian startups to understand their concerns more deeply. We will be setting up Policy Workshops to help clear any additional questions about our Play Store policies. And we’re also extending the time for developers in India to integrate with the Play billing system, to ensure they have enough time to implement the UPI for subscription payment option that will be made available on Google Play — for all apps that currently use an alternative payment system we set a timeline of 31st March 2022,” said Purnima Kochikar, Director of Business Development of Games & Applications at Google Play, in a statement.

“We have always said developers should have a choice in how they distribute their apps, and that stores should compete for consumers’ and developers’ business,” she added.

Last week, Google said it would no longer allow any apps to circumvent its payment system within the Play Store. The move, pitched by Google as a “clarification” of its existing policy, would allow the company to ensure it gets as high as a 30% cut on in-app purchases made through Android apps operating in a range of a categories.

Google’s announcement today is a direct response to the loudest scrutiny it has received in a decade in India — its biggest market by users but also a place where, compared to Western markets, it generates little revenue. More than 150 startups in India last week formed an informal coalition to fight the company’s strong hold on Indian app ecosystem. Google commands 99% of the smartphone market in India, according to research firm Counterpoint.

Among the startups that have expressed concerns over Google’s new policy are Paytm, India’s most valuable startup, payments processor Razorpay, fantasy sports firm Dream11, social network ShareChat, and business e-commerce IndiaMART.

More than 50 Indian executives relayed these concerns to India’s Ministry of Electronics and Information Technology over a video call on Saturday, according to three people who attended the call.

Several businesses in India have long expressed concerns with the way Google has enforced its policies in India, but the matter escalated last month after the company temporarily pulled Paytm app from the Play Store for promoting gambling.

Google said Paytm had repeatedly violated its policies, and the company’s Play Store has long prohibited apps that promote gambling in India. Google has sent notices about warnings over gambling to several more firms in India in recent weeks.

A senior industry executive told TechCrunch that the company should have expressed these concerns months before the popular cricket tournament IPL was scheduled to commence. Fantasy sports apps allow users to pick their favorite players and teams. These players stand to win real money or points that they can redeem for physical goods purchase based on the real-world performance of their preferred teams and players. IPL season sees a huge surge in popularity of such fantasy sports apps.

“The IPL even got delayed by months. Why did Google wait for so long? And why does the company have a problem with so-called gambling in India, when it permits such activities in other markets? The Indian government has no problem with it,” the executive said, requesting anonymity.

Paytm mini app store

Paytm on Monday announced its own mini-app store featuring several popular services including ride-hailing firm Ola, health care provides 1mg and Practo, fitness startup Cure.fit, music-streaming service Gaana, car-rental provider Zoomcar, Booking.com, and eateries Faasos, Domino’s Pizza, and McDonald’s. The startup claimed that more than 300 firms have signed up for its mini store and that its app reaches more than 150 million users each month. (In a written statement to TechCrunch, Paytm said in June its app reached more than 50 million users in India each month.

Paytm, which says its mini-app store is open to any developer, will provide a range of features including the ability to support subscriptions and one-step login. The startup, which claims  said it will not charge any commission to developers for using its payments system or UPI payments infrastructure, but will levy a 2% charge on “other instruments such as credit cards.”

“There are many challenges with traditional mobile apps such as maintaining multiple codebases across platforms (iOS, Android or Web), costly user acquisition and requirement of app release and then a waiting period for user adoption for any change made in the app. Launching as a Mini Apps gives you freedom from all these hassles: implying lesser development/testing and maintenance costs which help you reach millions of Paytm users in a Jiffy,” the Indian firm said in its pitch.

The launch of a mini-store further cements Alibaba-backed Paytm’s push into turning itself into a super-app. Its chief rivals, Walmart-backed PhonePe and Google Pay, also operate similar mini stores on their apps.

Whether Paytm’s own mini app store and postponement of Google’s new Play Store policy are enough to calm other startups’ complaints remain to be seen. PhonePe is not one of the mini apps on Paytm’s store, a Paytm spokesperson told TechCrunch.

“I am proud that we are today launching something that creates an opportunity for every Indian app developer. Paytm mini app store empowers our young Indian developers to leverage our reach and payments to build new innovative services,” said Vijay Shekhar Sharma, co-founder and chief executive of Paytm, in a statement.

Airbnb nears IPO as Asana and Palantir land their direct listings

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

The going has not always been easy but the tech IPOs keep coming. Airbnb itself is almost here, in what is likely to be the ultimate stock market listing of this dramatic year. After the pandemic triggered mass layoffs for the short-term rental marketplace, it has managed to make up all of the lost ground to pre-pandemic projections, TechCrunch and others have reported. Now, news is leaking out that it could seek to raise up to $3 billion at a $30 billion valuation.

The US presidential election in a month, Trump’s positive COVID-19 diagnosis, and various other world events have yet to stop the tech IPO momentum.

This past Wednesday, Palantir and Asana both opted to put a limited number of shares up for sale directly instead of working with a bank to pre-sell portions to favored clients, following in the direct-listings footsteps of Spotify and Slack.

Palantir, which is continuing to get political scrutiny around its government data businesses, and Asana both finished the first few days of trading without any pop to speak of for initial public investors (although other things have been impacting markets in the same time frame). However, both companies have already turned billions of paper funding rounds into liquid money that can start going back to the employees and investors, as intended. And now, each can sail the high seas of public markets with a smaller, friendlier group of stockholders than many, many other public companies have.

We’ve been covering Palantir in great detail recently, but Asana’s entrance provides a broader lesson for the many aspiring SaaS startups out there.

Dustin Moskovitz, who has retained a huge amount of control as a cofounder/investor, told Danny Crichton for Extra Crunch that more than 40% of the task-focused work management provider’s revenue is now coming from outside of North America, with ongoing growth, high customer loyalty and big integrations with other SaaS providers. The results bode well for other SaaS companies considering direct listings, as Alex Wilhelm analyzes for EC:

Asana grew 63% in the six months ending July 31, 2020, compared to the same period of 2019, though that growth rate decelerated to around 57% when only looking at the most recent quarter and its historical analog. Good growth then, if slowing. And Asana’s gross margins were good and improving, coming in at 86% in the six months ending July 31, 2019, and 87% in the same period of 2020. But the company’s net losses were rising in gross and relative terms at the same time. In the six months ending July 31, 2020, Asana lost $76.9 million, up from $30.5 million in the same period of 2019. And, the company’s 77% net loss as a percent of revenue in the two quarters ending in July of 2020 was up from a 50% loss during the same period of the preceding year. Asana also consumed more cash this year than last year, with its operating cash burn rising from $13.1 million during the six months ending July 31, 2019 to $40.3 million in the same period of 2020.

And yet, from a reference price of $21, valuing the company at around $4 billion on a fully diluted basis, shares of Asana have risen to $25.14 at the open of trading this morning (though Asana lost several points today thanks to general market carnage). Current market trackers value the company at $3.86 billion.

Now, on to Airbnb! (And also, Datto!)

Source: Getty Images

Pandemic upsides arrive for cannabis, mental health and language learning

As the world tries to make sense of fresh Q3 data, we took a closer look at a few fresh startup trends. First, the cannabis market seems to be as strong as you’d expect. Matt Burns caught up with a range of weed-tech founders, investors and analysts, who shared almost entirely good news for the emerging sector. Here’s a highlight from Andy Lytwynec, VP, Global Vape Business at Canopy Growth, the cannabis holding company for a range of brands, including the vaporizer preferred by your self-medicated correspondent:

Lytwynec points to Storz & Bickle as a barometer of sorts in judging the impact of COVID-19. The German-based vaporizer company saw an uptick in sales, as reported in Canopy Growth’s latest quarterly report. The company reported a 71% increase during the first quarter ending on June 30. The financial report pointed to Storz & Bickel’s increased sales and distribution expansion as a primary reason for the increase. 

Just try getting a replacement for that mouthpiece you tragically broke at the start of quarantine. And don’t fall for that fake stuff on Amazon or you’ll be huffing plastic. Anyway…

Alex also checked in on mental health funding, which were already coming into their own before the pandemic. The first half of the year was the sector’s biggest yet, with a focus on remote therapy, virtual coaching and anxiety alleviation, although Q2 was down slightly from Q1. More, from Extra Crunch:

Investors are putting dollars to work in 2020 to further the growth mental health startups managed in 2018 and 2019. Per the CB Insights dataset, in Q1 and Q2 2020, these startups saw 106 rounds worth $1.08 billion. In the year-ago period, the figures were 87 rounds worth $750 million. (Unlike some subcategories of wellness startups that CB Insights detailed, mental health upstarts have enough regular VC volume to make year-over-year comparisons reasonable.)

In a different sector of tech-powered mind improvement, Duolingo is now on track to hit $180 million bookings, chief executive Luis von Ahn tells Natasha Mascarenhas for EC. While the language-learning company has seen usage surge from 30 million to 42 million monthly active users this year, it only makes money from 3% of them (those who want to pay to avoid seeing ads, get download access, and other features).

The future of transportation

From Kirsten Korosec, our resident mobility expert and host of our next event:

If you’re interested in tech, transportation and startups — of course you are — you should make our next event a priority. And it’s coming up in just a few days. TechCrunch is hosting TC Sessions: Mobility 2020 on October 6 & 7, a virtual event that will bring together the best and brightest minds working on automated vehicle technology, shared micromobility and electrification. We’ll be talking to former Tesla co-founder and CTO JB Straubel about his new venture Redwood Materials, the CEOs of EV newcomers Polestar and Lucid Motors, Formula E driver Lucas di Grassi about a new kind of racing event (hint, scooters!), early stage-investors from Trucks VC, Hemi Ventures and Maniv as well as Uber’s director of policy for cities Shin-Pei Tsay, to name a few. Plus there will be a dedicated networking time, a pitch night on October 5 and a virtual expo. There are a variety of ticket prices to meet your budget, including one for students. But I’m also here bearing gifts: Startups Weekly readers can get 50% off the full price at this link. If you’d just like to check out the startups expo portion, Startups Weekly readers can get in free with this link.

Photographer: Anindito Mukherjee/Bloomberg via Getty Images

Top Indian app developers join global platform rebellion

Manish Singh, our lead reporter covering Indian startups, has been breaking news on the growing dissent against app platform policies. It’s getting epic:

More than 150 startups and firms in India are working to form an alliance and toying with the idea of launching an app store to cut their reliance on Google, five people familiar with the matter told TechCrunch.

The list of entrepreneurs includes high-profile names, such as Vijay Shekhar Sharma, co-founder and chief executive of Paytm (India’s most valuable startup); Deep Kalra of travel ticketing firm MakeMyTrip; and executives from PolicyBazaar, RazorPay and ShareChat. The growing list of founders expressed deep concerns about Google’s “monopolistic” hold on India, home to one of the world’s largest startup ecosystems, and discussed what they alleged was unfair and inconsistent enforcement of Play Store’s guidelines in the country.

Their effort comes days after a small group of firms — including Epic Games, Spotify, Basecamp, Match Group and ProtonMail — forged their own coalition to pressure Apple and Google to make changes to their marketplace rules.

“Where else do these dollars go?”

Danny interviewed SF-based Index Ventures partners Nina Achadjian and Sarah Cannon about the latest trends in startup fundraising. Here’s a key part about the macro trends, that also explains why all those tech IPOs continue to happen (and do well):

TechCrunch: Given the amount of capital flowing into venture these days, have you noticed any LPs starting to pull back from the market?

Cannon: They’re not pulling back. In fact, it’s like, “Could you potentially take more allocation? And what do you think of these other seed managers?”

I think the way that I’ve got my mind around this is, where else would these dollars go? What are the alternatives for the dollars that are rushing into tech? I don’t know the latest numbers, but it was something like 40% of stock market returns are actually concentrated in Apple [and FAANG]. And then we’re seeing IPOs perform the same.

We’re in a global pandemic that could easily cause [another] recession. A lot of industries like airlines and travel have more exposure. Tech is just relatively more attractive. So if the interest rates are low, which they are, and [economists] have said that they’re going to be low for the coming decades, then you’re going to have lots of capital chasing returns.

Across the week

TechCrunch

Allbirds CEO Joey Zwillinger on the startup’s $100 million round, profitability and SPAC mania

How Twilio built its own conference platform

Working for social justice isn’t a ‘distraction’ for mission-focused companies

Apple removes two RSS feed readers from China App Store

Calling VCs in Rome and Milan: Be featured in The Great TechCrunch Survey of European VC

Extra Crunch

News apps in the US and China use algorithms to drive engagement, discovery

Which neobanks will rise or fall?

9 VCs in Madrid and Barcelona discuss the COVID-19 era and look to the future

Spain’s startup ecosystem: 9 investors on remote work, green shoots and 2020 trends

Healthcare entrepreneurs should prepare for an upcoming VC/PE bubble

#EquityPod

From Natasha:

Hello and welcome back to Equity, TechCrunch’s VC-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week, Alex is on a much-deserved vacation (but not from Twitter, it seems) so Danny Crichton and I chatted through the news and happenings of the week. Somehow we winded our way through the latest tech controversies, gave Chris Wallace a shout out and ended with some funding rounds. I’ll be out next week so don’t miss me too much, but expect the entire Equity team to be back full-speed in mid-October. Thanks, as always, to our producer Chris Gates for his patience and diligence.

Now, onto a sneak peek of what we got into:

  • Moderation continues to be the root of all problems. We got into the anti-semitic comments that were spewed on Clubhouse, and what that means for the future of the audio-only platform. As Danny so eloquently put it: if Clubhouse is having moderation problems even with an exclusive invite-only user base, the problem will grow.
  • We also talked about Coinbase CEO Brian Armstrong’s blog post, which triggered a debate between us on whether tech companies can even choose to not be political. For the record, Black Lives Matter is not a political statement. It’s a human statement. Read this op-ed for more.
  • I wrote a piece about how a new program wants to be the Y Combinator for emerging fund managers. The whole “YC for X” model usually makes me roll my eyes, but listen to hear why I’m actually optimistic and bullish on programs like these taking off within tech.
  • Silver Lake added a $2 billion “long-term” hedge fund backed by Abu Dhabi to its tech finance toolkit. The strategy is a signal to privately backed startups, and potentially a slap in the face to SoftBank.
  • For a quick edtech note, I caught up with Duolingo’s CEO this week in one of his rare press interviews. Luis von Ahn explained the app’s surge in bookings, and there’s one key metric we pull out to noodle over.
  • Danny explained Gusto’s latest product launch with, wait for it, Gusto. In all seriousness, he brings up interesting points about the future of fintech feeling more full-suite, and free.
  • Funding round chatter continued when we unpacked Lee Fixel’s latest investment in India’s Inshorts.
  • Finally, we ended with LiquidDeath, which is not the name of a drinking game, but instead the name of a startup that has successfully attracted millions in venture capital for mountain water.

And with that, we will be back next week. Vote like your life depends on it, because it does.

Equity  drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Google research lets sign language switch ‘active speaker’ in video calls

An aspect of video calls that many of us take for granted is the way they can switch between feeds to highlight whoever’s speaking. Great — if speaking is how you communicate. Silent speech like sign language doesn’t trigger those algorithms, unfortunately, but this research from Google might change that.

It’s a real-time sign language detection engine that can tell when someone is signing (as opposed to just moving around) and when they’re done. Of course it’s trivial for humans to tell this sort of thing, but it’s harder for a video call system that’s used to just pushing pixels.

A new paper from Google researchers, presented (virtually, of course) at ECCV, shows how it can be done efficiency and with very little latency. It would defeat the point if the sign language detection worked but it resulted in delayed or degraded video, so their goal was to make sure the model was both lightweight and reliable.

The system first runs the video through a model called PoseNet, which estimates the positions of the body and limbs in each frame. This simplified visual information (essentially a stick figure) is sent to a model trained on pose data from video of people using German Sign Language, and it compares the live image to what it thinks signing looks like.

Image showing automatic detection of a person signing.

Image Credits: Google

This simple process already produces 80 percent accuracy in predicting whether a person is signing or not, and with some additional optimizing gets up to 91.5 percent accuracy. Considering how the “active speaker” detection on most calls is only so-so at telling whether a person is talking or coughing, those numbers are pretty respectable.

In order to work without adding some new “a person is signing” signal to existing calls, the system pulls clever a little trick. It uses a virtual audio source to generate a 20 kHz tone, which is outside the range of human hearing, but noticed by computer audio systems. This signal is generated whenever the person is signing, making the speech detection algorithms think that they are speaking out loud.

Right now it’s just a demo, which you can try here, but there doesn’t seem to be any reason why it couldn’t be built right into existing video call systems or even as an app that piggybacks on them. You can read the full paper here.

Nintendo’s new RC Mario Kart looks terrific

In a year, Nintendo would have demoed, in person, Mario Kart Live: Home Circuit. The company would have invited select members of the press into some rented event space and let us experience the game first-hand, like it had with Labo and Ring Fit Adventures. It’s 2020, however, and that’s just not how we do things.

Watching someone else play an RC game over teleconference software is not ideal. But it’s nothing if not extremely of the moment. And more importantly, it’s probably a testament to what Nintendo has built here that it translates so well with a less than ideal setup. Granted, I won’t feel comfortable offering a proper review until I’ve played the game on my Switch, but I can confidently say that Mario Kart Live makes for one hell of an impressive demo.

Image Credits: Nintendo

Like the recently released Mario Lego sets, this is the kind of toy that makes me jealous of kids today. It also, frankly, bums me out that I don’t have more space at home to lay out a track. I’ve heard it was a buyer’s market, so maybe I’ll go buy a house. Whatever the case, bringing Mario to a real-world RC car is one of those no-brainer ideas, and the execution looks great.

The game also finds Nintendo embracing augmented reality in a really convincing and clever way. We’ve seen some AR from the company, most notably in the form of Pokémon GO — which, to be fair, was more of a Niantic joint and, as plenty will happily point out, not really proper AR. And like that title, Nintendo worked closely with a third party. In this case, it’s the New York-state based Velan Studios, which was started by brothers Guha and Karthik Bala who also founded Vicarious Visions, an Albany-based game developer now owned by Activision.

“It started as an experiment by a small team at Velan,” the startup said in a blog post today. “Like many prototypes, the main goal was to “find the fun”. We built an RC car by kitbashing together drone parts, cameras, and sensors to create a unique thirdperson view driving experience. It gave us the exhilaration of speed and allowed us to see the world from a totally different perspective.”

Image Credits: Nintendo

The execution of Mario Kart Live is a perfect bit of synergy in that it leverages the Switch to really bring the whole thing to life — in a manner similar to what the company has already done with Labo and Ring Fit. Of course, much or most of the real magic here comes courtesy of the racer. Currently limited to Mario and Luigi (no word yet on additional characters), the cars feature both a camera for FPV on the Switch and all of the requisite sensors.

Nintendo declined to answer specific questions about the on-board sensors and other hardware, but one assumes depth-sensing plays a big role here. There’s no calibration out of the box. You can pretty much start it up and start driving around. Once you actually unfold and set up the three gates to create the circular course, however, that will require some driving to generate the lay of the land. Nintendo’s employed a clever graphic for that, with Lakitu dropping a bucket of paint the character drives over and tracks with his wheels.

Image Credits: Nintendo

The game also employs some clever physics, with game action impacting speed and steering. There’s a range of top speeds, from 50 to 200 cc. A demo stripped of AR shows how in-game elements impact the actual kart speed. Other elements, like the sudden occasional sand storm, cause the kart to drift to the sides. The game will also react, if, say, you crash it into a table leg — sending coins flying just as it would in a Mario Kart game.

On that note, the company tells me that the karts are quite robust, with a bumper that’s essentially designed to run into stuff. That shouldn’t cause any damage, given the top speeds here. Though the company notes that if, say, a heavy book falls on top of the kart after it jostled it loose from a shelf, that could ultimately be an issue. Nintendo says there will be a way to repair the karts, but offered no specifics on warranty.

Image Credits: Nintendo

Races can be played with up to four, though a kart is required to play. In fact, the actual game will be free to download from the Nintendo store, but is essentially worthless without a kart. Until that’s set up, the only thing you’ll be able to access is a game trailer. At the moment, the in-game opponents are just the Koopalings.

Image Credits: Nintendo

Like the karts themselves, however, it seems likely — or even certain — that the company will introduce additional characters down the road. Perhaps we can look for expansions along the lines of what the company has done with Smash Bros. Also, like Mario Maker, you can customize both your character and car for the in-game FPV AR overlays (though these won’t be visible to other players).

Mario Kart Live: Home Circuit arrives October 16, priced at $100 a kart. You’ll need either a Switch or Switch Lite to play.

Allbirds CEO Joey Zwillinger on the startup’s $100 million round, profitability, and SPAC mania

As people spend less time out in the world and more time daydreaming about when a vaccine will arrive, lifestyle shoes are only gaining traction.

One obvious beneficiary is Allbirds, the San Francisco-based maker of comfortable, sustainable kicks that launched in 2016 and quickly became a favorite in Silicon Valley circles before taking off elsewhere.

Though the company saw its business slow this year because of the pandemic, its products are now available to purchase in 35 countries and its 20 brick-and-mortar stores are sprinkled throughout the U.S. and Europe, with another outpost in Tokyo and several shops in China.

Investors clearly see room for more growth. Allbirds just closed on $100 million in Series E funding at roughly the same $1.6 billion valuation it was assigned after closing on $27 million in Series D funding earlier this year, and blank-check companies have been calling, says cofounder and CEO Joey Zwillinger. He talked with us earlier this week in a chat that has been edited for length and clarity.

TC: Your shoes are sold worldwide. What are your biggest markets?

JZ: The biggest market by far is the U.S., and the same day that we started here in 2016, we also launched in New Zealand, so that’s been very good to us over the last four years, too. But we’ve seen growth in Japan and Korea and China and Canada and Australia. We have a network of warehouses globally that lets us reach 2.5 billion people [who], if they were so inclined, could get their product in three days. We’re proud of the infrastructure we’ve set up.

TC: We’ve all worn shoes a lot less than we might have expected in 2020. How has that impacted your business?

JZ: We’re growing but definitely not at the same pace we would be had the pandemic not occurred. We’re predominantly digital in terms of how we reach people, but stores are important for us. And we had to switch [those] off completely and lost a portion of our sales for a long time.

TC: Did you have to lay off your retail employees?

JZ: A large portion of our retail force was unable to work, but we were luckily able to keep them fully paid for four months, plus [some received] government benefits if they got that. And now all of our 20 stores are up and running again in a way that’s totally safe and everyone feels really comfortable.

We also donated shoes to frontline workers — 10,000 pairs or around a million dollars’ worth.

TC: What does Allbirds have up its sleeve, in terms of new offerings?

JZ: We just launched our native mobile app, and through it we’re able to give our more loyal fans exclusives. It’s a really cool experience that blends technology with fashion. You can try on shoes in a virtual mirror; you’re given information [about different looks] that you wouldn’t have otherwise.

We also launched wool-based weather-proofed running shoes in April that have blown away our expectations but [were fast discovered by] people who haven’t really been running for 10 to 15 years and are running again [because of gym closures]. It’s a super high-stakes category and one that’s hard to break into because people buy on repeat. But we spent two years making it. It’s not like we launched it because of the pandemic. It’s a shoe for 5K to 10K distances — it’s not a marathon shoe or a trail shoe — and that we’ve been able to clearly articulate that speaks to its success, I think.

TC: What about clothing?

We launched underwear and socks last year in a small launch. We developed a textile that hasn’t been used before — it’s a blend of tree fiber and merino wool because our view is that nature can unlock magic. Underwear is typically synthetic — it’s made from plastics — or cotton, which isn’t a great material for a whole bunch of reasons. [Meanwhile] ours is phenomenal for temperature control; it also feels like cashmere.

TC: Patagonia really advertises its social and environmental values. Do you see Allbirds evolving in a similar way, with a growing spate of offerings?

JZ: I’m incredibly humbled by [the comparison]. Given their environmental stewardship of the retail sector, we hope we’re compared to them. But they are much more of an outdoor brand — not a competitor so to speak. And we’d love to share more of the retail world with them so we can do our environmental thing together.

TC: You just raised funding. Are you profitable and, if not, is profitability in sight?

JZ: We’ve been profitable for most of our existence. Having some discipline as we grow is good. We’re not close to the profitability that we’ll eventually have, but we’re still a small company in investment mode. After we emerge from the pandemic, we’ll enter a ramping-up phase.

TC: Everyone and their brother is raising money for a blank-check company, or SPAC, which can make it a lot faster for a private company to go public. Have you been approached, and might this option interest you?

JZ: Yes and no. Yes we’ve been approached, and no, we’re [not interested]. We want to build a great company and being public might be something that helps enable that for a whole bunch of reasons. But we want to do it at the right time, in a way that helps the business grow in the most durable and sustainable fashion. Just jumping at the opportunity of a SPAC without doing the rigorous prep the way we want to, we’re not super focused on that

E-scooter startup Neuron Mobility adds $12M to its Series A for expansion in Australia and New Zealand

Neuron Mobility, a Singapore-based e-scooter rental startup, announced today that it has added $12 million to its Series A. Led by Square Peg, an Australian venture capital firm and GSR Ventures, this increases the round’s new total to $30.5 million. The company, which operates in Australia and New Zealand in addition to Southeast Asian markets, first announced its Series A in December 2019.

Part of Neuron Mobility’s growth plans hinges on the increased adoption of electric scooters and bikes during the COVID-19 pandemic. Many people are using their cars less frequently because they are working remotely or there are movement restrictions where they live. When they do go out, electric bikes and scooters offer an alternative to public transportation and ride-hailing services for short trips.

Neuron Mobility’s chief executive Zachary Wang said the company raised a Series A+ instead of moving onto a Series B because more cities are “opening up to the possibility of micromobility, particularly rental e-scooters as they present an individual transport option that takes pressure off public transport and allows people to continue social distancing.”

“We’ve been experiencing tremendous growth in ANZ and the pandemic has made us fast track our plans,” he added.

Though Neuron Mobility currently does not operate in other Southeast Asian countries besides Singapore, Wang said it is “constantly evaluating opportunities across APAC.”

The new funding will be used to speed up Neuron Mobility’s expansion plans in Australia and New Zealand, where it claims to be the leading electric scooter rental operator. The company is currently present in nine locations, including Auckland, New Zealand, and Australian cities Adelaide, Brisbane, Darwin, Canberra and Townsville. Neuron Mobility plans to expand into five new cities over the next two months and part of that involves hiring 400 more people in Australia, New Zealand and Singapore. In addition to the Asia-Pacific, Neuron Mobility will also launch in Slough, it’s first location in the United Kingdom, by the end of this year.

Neuron Mobility’s research found that before the COVID-19 lockdowns in Australia, one in five of its users had never used an e-scooter before. But now Australian and New Zealand users have increased their average e-scooter trip distances by 23% to 2.6 kilometers, with the average duration of rides rising by 10% to more than 14 minutes. Neuron Mobility’s pricing is meant to be affordable depending on different markets. For example, in Brisbane, users pay one Australian dollar (about 68 U.S. cents) to begin a trip and then 38 Australian cents for each minute of the ride. Its e-scooters can go up to speeds of about 25 kilometers (15.5 miles) per hour.

Other “micromobility” companies, including Ofo, Reddy Go, Obike and Lime, have also offered rental services in Australia and New Zealand, but ran into trouble. Bike-sharing startups Ofo, Reddy Go and Obike withdrew from Australia in part because city councils were frustrated by bikes were being abandoned on sidewalks and in parks. Lime still operates in Australian cities, but in June, the Australian Competition and Consumer Commission found that the company failed to disclose safety issues with its Generation 2 scooters (in response, Lime said it would implement new compliance procedures and upgrade to its new Generation 3 scooter).

Wang said Neuron Mobility avoids those issues by strategically planning which cities it will launch in, instead of focusing on rapid expansion, partnering with city councils and “continually shifting and adapting to meet their needs.” Several of Neuron Mobility’s features, including geofencing to control where and how fast e-scooters can be ridden, and a “Helmet Lock” to make helmets available for all scooters, were developed after discussions with city councils. Neuron Mobility’s scooters, designed by the company specifically for renting, also use swappable batteries to decrease pollution.

After launching in Singapore, Neuron Mobility decided to focus on Australia and New Zealand because “both countries have cities that are highly suitable for micromobility in terms of infrastructure and regulations,” Wang said. City councils have also “been keen to push the boundaries of what can be done with technology to make programs better and safer and that really suits our way of thinking.”

 

Russian surveillance tech startup NtechLab nets $13M from sovereign wealth funds

NtechLab, a startup that helps analyze footage captured by Moscow’s 100,000 surveillance cameras, just closed an investment of more than 1RUB billion ($13 million) to further global expansion.

The five-year-old company sells software that recognizes faces, silhouettes and actions on videos. It’s able to do so on a vast scale in real time, allowing clients to react promptly to situations It’s a key “differentiator” of the company, co-founder Artem Kukharenko told TechCrunch.

“There could be systems which can process, for example, 100 cameras. When there are a lot of cameras in a city, [these systems] connect 100 cameras from one part of the city, then disconnect them and connect another hundred cameras in another part of the city, so it’s not so interesting,” he suggested.

The latest round, financed by Russia’s sovereign wealth fund, the Russian Direct Investment Fund, and an undisclosed sovereign wealth fund from the Middle East, certainly carries more strategic than financial importance. The company broke even last year with revenue reaching $8 million, three times the number from the previous year, ane expects to finish 2020 at a similar growth pace.

Nonetheless, the new round will enable the startup to develop new capabilities such as automatic detection of aggressive behavior and vehicle recognition as it seeks new customers in its key markets of the Middle East, Southeast Asia and Latin America. City contracts have a major revenue driver for the firm, but it has plans to woo non-government clients, such as those in the entertainment industry, finance, trade and hospitality.

The company currently boasts clients in 30 cities across 15 countries in the Commonwealth of Independent States (CIS) bloc, Middle East, Latin America, Southeast Asia and Europe.

These customers may procure from a variety of hardware vendors featuring different graphic processing units (GPUs) to carry out computer vision tasks. As such, NtechLab needs to ensure it’s constantly in tune with different GPU suppliers. Ten years ago, Nvidia was the go-to solution, recalled Kukharenko, but rivals such as Intel and Huawei have cropped up in recent times.

The Moscow-based startup began life as a consumer software that allowed users to find someone’s online profile by uploading a photo of the person. It later pivoted to video and has since attracted government clients keen to deploy facial recognition in law enforcement. For instance, during the COVID-19 pandemic, the Russian government uses NtechLab’s system to monitor large gatherings and implement access control.

Around the world, authorities have rushed to implement similar forms of public health monitoring and tracking for virus control. While these projects are usually well-meaning, they inspire a much-needed debate around privacy, discrimination, and other consequences brought by the scramble for large-scale data solutions. NtechLab’s view is that when used properly, video surveillance generally does more good than harm.

“If you can monitor people quite [effectively], you don’t need to close all people in the city… The problem is people who don’t respect the laws. When you can monitor these people and [impose] a penalty on them, you can control the situation better,” argued Alexander Kabakov, the other co-founder of the company.

As it expands globally, NtechLab inevitably comes across customers who misuse or abuse its algorithms. While it claimed to keep all customer data private and have no control over how its software is used, the company strives to “create a process that can be in compliance with local laws,” said Kukharenko.

“We vet our partners so we can trust them, and we know that they will not use our technology for bad purposes.”

Philippines payment processing startup PayMongo lands $12 million Series A led by Stripe

Stripe has led a $12 million Series A round in Manila-based online payment platform PayMongo, the startup announced today.

PayMongo, which offers an online payments API for businesses in the Philippines, was the first Filipino-owned financial tech startup to take part in Y Combinator’s accelerator program. Y Combinator and Global Founders Capital, another previous investor, both returned for the Series A, which also included participation from new backer BedRock Capital.

PayMongo partners with financial institutions, and its products include a payments API that can be integrated into websites and apps, allowing them to accept payments from bank cards and digital wallets like GrabPay and GCash. For social commerce sellers and other people who sell mostly through messaging apps, the startup offers PayMongo Links, which buyers can click on to send money. PayMongo’s platform also includes features like a fraud and risk detection system.

In a statement, Stripe’s APAC business lead Noah Pepper said it invested in PayMongo because “we’ve been impressed with the PayMongo team and the speed at which they’ve made digital payments more accessible to so many businesses across the Philippines.”

The startup launched in June 2019 with $2.7 million in seed funding, which the founders said was one of the largest seed rounds ever raised by a Philippines-based fintech startup. PayMongo has now raised a total of almost $15 million in funding.

Co-founder and chief executive Francis Plaza said PayMongo has processed a total of almost $20 million in payments since launching, and grown at an average of 60% since the start of the year, with a surge after lockdowns began in March.

He added that the company originally planned to start raising its Series A in in the first half of next year, but the growth in demand for its services during COVID-19 prompted it to start the round earlier so it could hire for its product, design and engineering teams and speed up the release of new features. These will include more online payment options; features for invoicing and marketplaces; support for business models like subscriptions; and faster payout cycles.

PayMongo also plans to add more partnerships with financial service providers, improve its fraud and risk detection systems and secure more licenses from the central bank so it can start working on other types of financial products.

The startup is among fintech companies in Southeast Asia that have seen accelerated growth as the COVID-19 pandemic prompted many businesses to digitize more of their operations. Plaza said that overall digital transactions in the Philippines grew 42% between January and April because of the country’s lockdowns.

PayMongo is currently the only payments company in the Philippines with an onboarding process that was developed to be completely online, he added, which makes it attractive to merchants who are accepting online payments for the first time. “We have a more efficient review of compliance requirements for the expeditious approval of applications so that our merchants can use our platform right away and we make sure we have a fast payout to our merchants,” said Plaza.

If the momentum continues even as lockdowns are lifted in different cities, that means the Philippine’s central bank is on track to reach its goal of increasing the volume of e-payment transactions to 20% of total transactions in the country this year. The government began setting policies in 2015 to encourage more online payments, in a bid to bolster economic growth and financial inclusion, since smartphone penetration in the Philippines is high, but many people don’t have a traditional bank account, which often charge high fees.

Though lockdown restrictions in the Philippines have eased, Plaza said PayMongo is still seeing strong traction. “We believe the digital shift by Filipino businesses will continue, largely because both merchants and customers continue to practice safety measures such as staying at home and choosing online shopping despite the more lenient quarantine levels. Online will be the new normal for commerce.”

Is your startup the next TikTok?

Editor’s note: Get this free weekly recap of TechCrunch news that any startup can use by email every Saturday morning (7 a.m. PT). Subscribe here.

And I don’t mean building an app that gets the world addicted to short-form videos. I mean, where you build a huge company that spans the world and then get turned into a political football.

The Bytedance-owned app developer still appears headed for a shutdown in the US, after the already convoluted talks stalled out this past week. Each national government appears to require local ownership of a new entity, as Catherine Shu details, and the business partners are each claiming ownership. It’s a zero sum global game now for control of data and algorithms.

On the other side of the world, Facebook was quick to state that it would not be pulling out of the European Union this week even if it is forced to keep EU user data local, as Natasha Lomas covered. The company was clarifying a recent filing it had made that seemed to threaten otherwise — it doesn’t want to get TikTok’d.

For startups with physical supply chains, existing tensions are squeezing business activity from Chimerica out into other parts of the world, as Brian Heater wrote about the topic for Extra Crunch this week. Here’s what one founder told him:

Many [companies] are considering manufacturing in areas like Southeast Asia and India. Vietnam, in particular, has offered an appealing proposition for a labor pool, notes Ho Chi Minh City-based Sonny Vu, CEO of carbon-fiber products manufacturer Arevo and founder of deep tech VC fund Alabaster. “We’re friendly [with] the Americans and the West in general. Vietnam, they’ve got 100 million people, they can make stuff,” Vu explains. “The supply chains are getting more and more sophisticated. One of the issues has been the subpar supply chain … it’s not as deep and broad as as other places like China. That’s changing really fast and people are willing to do manufacturing. I’ve heard from my friends trying to make stuff in China, labor’s always this chronic issue.”

Danny Crichton blamed nationalistic US policies for undermining the country’s long-term commitment to leading global free trade and threatening its competitive future, in a provocative rant last weekend. There’s truth to that, but the underlying truth is that globalization worked, it just hasn’t work as well as hoped for a lot of people in the US and some other parts of the world. In addition to phenomenon like China’s industrial engine, for example, those cross-border flows of money and technology have helped nurture the startup ecosystem in Europe.

Mike Butcher, who has been covering startups for TechCrunch from London since last decade, writes about a new report from Index Ventures about this trend.

It used to be the case that in order to scale globally, European companies needed to spend big on launching in the U.S. to achieve the kind of growth they wanted. That usually meant relocating large swathes of the team to the San Francisco Bay Area, or New York. New research suggests that is no longer the case, as the U.S. has become more expensive, and as the opportunity in Europe has improved. This means European startups are committing much less of their team and resources to a U.S. launch, but still getting decent results…. Between 2008-2014, almost two-thirds (59%) of European startups expanded, or moved entirely, to the U.S. ahead of Series A funding rounds. However, between 2015-2019, this number decreased to a third (33%).

The report also highlights the economic problem of dividing up markets into political blocks. “European corporates invest three-quarters (76%) less than their U.S. counterparts on software,” Butcher adds about the report. “And this is normally on compliance rather than innovation. This means European startups are likely to continue to look to the U.S. for exits to corporates.”

The pain from failing to trade will come home sooner or later to each government, as Danny observes. But that could be longer than your current company exists. Instead, now is the time to pick the markets you can win, and plan for a world where success has a lower ceiling. And hey, if you’re lucky, your national government could pick you as its winner!

Want $100m ARR? Fix your churn

We’ve been recapping key moments from the Extra Crunch Stage at Disrupt this week, here’s a key segment from a panel Alex Wilhelm hosted about how to achieve the $100m ARR dream, featuring Egnyte CEO Vineet Jain:

After explaining that in the early stages of building a SaaS company it’s common to focus more on adding new revenue than “plugging the holes at the bottom,” [Jain] added that as a company matures and grows, more focus has to be paid to managing churn and retention. He said that dollar-based retention is a key metric in the SaaS world that startups are valued by, meaning that after securing a customer, your ability to upsell that same account over a “defined window of time” really matters.

Noting the impacts of the COVID-19 pandemic and the fact that bonuses at Egnyte are tied to retention, “I say, managing churn is the new revenue,” he added. “Focus on that disproportionately more than you would focus on just top-line growth” … . Egnyte, Jain added, drives to just one or two metrics (net new MRR, or gross MRR adds and churn). “Everything that we’re doing, all of us [at Egnyte] have to be measured with that number to say, ‘How are we doing as a company?’” So if your startup is post-Series A, listen to what Jain says on managing churn. After all his company reached $100 million ARR, has a few dozen million in the bank, grew 22% in Q2 and is EBITDA positive.

Summer of tech IPOs continues with Root, Corsair Gaming and of course, Palantir

While public markets have waffled on tech stocks lately, the overall momentum of unicorn IPOs has continued.

Except, Danny may have slowed things down a bit for Palantir? Here are the key headlines from the week:

As tech stocks dip, is insurtech startup Root targeting an IPO? (EC)

Chamath launches SPAC, SPAC and SPAC as he SPACs the world with SPACs

Palantir publishes 2020 revenue guidance of $1.05B, will trade starting Sept 30th

Following TechCrunch reporting, Palantir rapidly removes language allowing founders to ‘unilaterally adjust their total voting power’

In its 5th filing with the SEC, Palantir finally admits it is not a democracy

How has Corsair Gaming posted such impressive pre-IPO numbers? (EC)

Even more info about the best investors for you

We’re making another big update to The TechCrunch List of startup investors who write the first checks and lead the scary rounds, based on thousands of recommendations that we’ve been receiving from founders. Here’s more, from Danny:

Since the launch of the List, we’ve seen great engagement: tens of thousands of founders have each come back multiple times to use the List to scout out their next fundraising moves and understand the ever-changing landscape of venture investing.

We last revised The TechCrunch List at the end of July 30 with 116 new VCs based on founder recommendations, but as with all things venture capital, the investing world moves quickly. That means it’s already time to begin another update.

To make sure we have the best information, we need founders — from new founders who might have just raised their VC rounds to experienced founders adding another round to their cap tables — to submit recommendations. Thankfully, our survey is pretty short (about two minutes), and the help you can give other founders fundraising is invaluable. Please submit your recommendation soon.

Since our last update in July, we have already had 840 founders submit new recommendations, and we are now sitting at about 3,500 recommendations in total now. Every recommendation helps us identify promising and thoughtful VCs, helping founders globally cut through the noise of the industry and find the leads for their next checks.

Around TechCrunch

Extra Crunch Live: Join Index Ventures VCs Nina Achadjian and Sarah Cannon Sept 29 at 2 pm EDT/11 am PDT on the future of startup investing

TC Sessions Mobility 2020 kicks off in two weeks

Announcing the final agenda for TC Sessions: Mobility 2020

Explore the global markets of micromobility at TC Sessions: Mobility

Don’t miss the Q&A sessions at TC Sessions: Mobility 2020

Across the week

TechCrunch

Calling Helsinki VCs: Be featured in The Great TechCrunch Survey of European VC

The highest valued company in Bessemer’s annual cloud report has defied convention by staying private

Human Capital: The Black founder’s burden

Thanks to Google, app store monopoly concerns have now reached India

Free VPNs are bad for your privacy

Extra Crunch

The Peloton effect

Edtech investors are panning for gold

3 founders on why they pursued alternative startup ownership structures

How Robinhood and Chime raised $2B+ in the last year

Dear Sophie: Possible to still get through I-751 and citizenship after divorce?

Equity: Why isn’t Robinhood a verb yet?

From Alex Wilhelm:

Hello and welcome back to Equity, TechCrunch’s VC-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

This week Natasha MascarenhasDanny Crichton and your humble servant gathered to chat through a host of rounds and venture capital news for your enjoyment. As a programming note, I am off next week effectively, so look for Natasha to lead on Equity Monday and then both her and Danny to rock the Thursday show. I will miss everyone.

But onto the show itself, here’s what we got into:

Bon voyage for a week, please stay safe and don’t forget to register to vote.

Equity drops every Monday at 7:00 a.m. PDT and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Postmates cuts losses in Q2 as it heads towards tie-up with Uber

Popular food delivery service Postmates is in the process of merging with Uber in a blockbuster $2.65 billion deal that would see it join forces with its food delivery competitor, Uber Eats. The deal remains under antitrust scrutiny, and has not yet been approved for closing. The deal is expected to close in the first half of 2021.

However, a new SEC filing posted after hours this Friday gives us a glimpse into how Postmates is faring in the new world of global pandemics and sit-in dining closures across the United States.

Postmates posted a loss of just $32.2 million in Q2, compared to a loss of $73 million in Q1, nearly cutting its cash burning in half. That compares to Uber Eats’ results, which showed a loss of $286 million in the first quarter of 2020 and a loss of $232 million in the second quarter — an improvement of roughly 20%, according to Uber’s most recent financial reports.

Altogether, Postmates lost $105.2 million in the first half of 2020, compared to a loss of $239 million in the same period of 2019.

Uber through its filing today also disclosed the cap table for Postmates in full detail for the first time. On a fully diluted basis, the largest shareholder in Postmates is Tiger Global, which owns 27.2% of the company. Following up is Founders Fund with 11.4%, Spark Capital with 6.9% and GPI Capital with 5.3%. At Uber’s $2.65 billion all-stock deal, that nets Tiger Global roughly $720 million and Founders Fund roughly $302 million, not including some stock preferences and dividends that certain owners of the company hold.

While Postmates and Uber continue to go through the antitrust review process at the federal level, the companies also face legal pressure in their own backyards. Uber noted in its filing today that it and Postmates face headwinds due to California’s AB 5 bill, which is designed to give additional employment protections to freelance workers. However, the company notes that such litigation “may not, in and of itself, give rise to a right of either party to terminate the transaction.”

Indonesian cloud kitchen startup Yummy gets $12 million Series B led by SoftBank Ventures Asia

Yummy Corporation, which claims to be the largest cloud kitchen management company in Indonesia, has raised $12 million in Series B funding, led by SoftBank Ventures Asia. Co-founder and chief executive officer Mario Suntanu told TechCrunch that the capital will be used to expand into more major cities and on developing its tech platform, including data analytics.

Other participants in the round included returning investors Intudo Ventures and Sovereign’s Capital, and new backers Vectr Ventures, AppWorks, Quest Ventures, Coca Cola Amatil X and Palm Drive Capital. The Series B brings Yummy Corporation’s total raised so far to $19.5 million.

Launched in June 2019, Yummy Corporation’s network of cloud kitchens, called Yummykitchen, now includes more than 70 HACCP-certified facilities in Jakarta, Bandung and Medan. It partners with more than 50 food and beverage (F&B) companies, including major brands like Ismaya Group and Sour Sally Group.

During COVID-19 movement restrictions, Suntanu said Yummykitchen’s business showed “healthy growth” as people, confined mostly to their homes, ordered food for delivery. Funding will be used to get more partners, especially brands that want to digitize their operations and expand deliveries to cope with the continuing impact of COVID-19.

The number of cloud kitchens in Southeast Asia has grown quickly over the past year, driven by demand for food deliveries that began increasing even before the pandemic. But for F&B brands that rely on deliveries for a good part of their revenue, running their own kitchens and staff can be cost-prohibitive. Sharing cloud kitchens with other businesses can help increase their margins.

Other cloud kitchen startups serving Indonesia include Hangry and Everplate, but these companies and Yummy Corporation are all up against two major players: “super apps” Grab and Gojek, which both operate large networks of cloud kitchens that have the advantage of being integrated with their on-demand delivery services.

Suntanu said Yummy’s main edge compared to other cloud kitchens is that it also offers fully-managed location and kitchen operation services, in addition to kitchen facilities. This means Yummy’s partners, including restaurants and and F&B brands, don’t need to hire their own teams. Instead, food preparation and delivery is handled by Yummy’s workers. The company also provides its clients with a data analytics platform to help them with targeted ad campaigns and making their listings more visible on food delivery apps.

In a statement, Harris Yang, Souteast Asia associate at SoftBank Ventures Asia, said the firm invested in Yummy because “given the company’s strong expertise in the F&B industry and unique value proposition to brands, we believe that Yummy will continue to be the leader in this space. We are excited to support the team and help them scale their business in this emerging sector.”

WeWork sells majority stake in Chinese entity, seeks localization

Four years after its foray into the Chinese market followed by rapid and cash-hemorrhaging expansion, WeWork decided to wind down its involvement in the country.

WeWork’s Chinese unit has secured a $200 million investment led by Shanghai-based equity firm Trustbridge Partners, which first backed WeWork China in its Series B round in 2018, the American co-working giant announced. What the release didn’t emphasize is that the latest financing effectively makes Trustbridge Partners the controlling shareholder, leaving WeWork with a minority stake in its Chinese entity.

The investment marks WeWork China’s transition from a subsidiary of a multinational into a Chinese-owned company — with a globally recognized brand, sort of like franchising.

WeWork China will continue its close cooperation with WeWork’s global headquarters to “ensure the consistency of the WeWork brand and satisfication of global members and employees,” a spokesperson said in a statement to TechCrunch.

Other changes are already underway, though. There have been layoffs as part of the sale and “many things remain uncertain,” said the person with knowledge of the matter. WeWork China declined to comment on the matter.

WeWork arrived in China at the height of the country’s co-working boom. Its brand, service and chic design have long attracted well-financed startups and open-minded big corps. Since 2016, more than 100 WeWork spaces have sprung up across 12 cities in China, including dozens it acquired from local rival Naked Hub. It now claims 65,000 members in the country.

It’s also launched a range of initiatives in China, including an on-demand service for customers who don’t want to commit to long-term leases, which could help drive in more revenue.

Globally, WeWork serves 612,000 members in 843 offices across 38 countries. China accounts for roughly one-eight of its locations, down from a share of one-sixth in 2018.

WeWork China is not only competing with cheaper, home-grown alternatives — both private and government-subsidized — but also dealing with a weakening economy in COVID-19 times and uncertain U.S.-China relations. Relinquishing operational control in a cash-burning market seems logical, given all the troubles it already faces back home.

Ahead of its planned initial public offering, which was later postponed, WeWork said trade policy uncertainty could have an adverse impact on its business. It also highlighted China, a lower-priced market, as a drag on its profit margin.

Following the investment, Trustbridge Partners will launch an extensive localization makeover for WeWork China, from “decision-making and management, product and business, through to operations and productivity,” said the WeWork China representative. The new owner will also seek partnerships with local communities, real estate firms and Chinese enterprises during the process.

WeWork China gets a new boss as a result of the sale. Michael Jiang, ann operating partner at Trustbridge Partners, will serve as the acting chief executive. Jiang was previously a senior vice presidnet at Meituan, China’s food delivery and on-demand services giant.

Apple launches its online store in India

For the first time in more than 20 years since Apple began its operations in India, the iPhone-maker has started selling its products directly to consumers in the world’s second largest smartphone market.

Apple launched its online store in India on Wednesday, which in addition to offering nearly the entire line-up of its products, also brings a range of services for the first time to consumers in the country. India is the 38th market for Apple where it has launched its online store.

Consumers in India can now purchase AppleCare+, which extends warranty on products, and access the trade-in program to get a discount on new hardware purchases. The company said it will also offer customers support through chat or telephone, and let users consult its team of specialists before they make a purchase. The company is also letting customers order customized versions of iMac, MacBook Air, Mac Mini and other Mac computers — something it started offline through its authorized partners only in late May in India.

The company is also offering customers the ability to pay for their purchases in monthly instalments. TechCrunch reported in January that the company was planning to open its online store in India in the quarter that ends in September. The company plans to open its first physical retail store in the country next year, it has said.

Jayanth Kolla, chief analyst at consultancy firm Convergence Catalyst, argued that the launch of the Apple’s online store in India is a bigger deal for the company than consumers in the country.

Apple typically starts investing in marketing, brand building and other investments in a market only after it launches a store there, he told TechCrunch.

Apple does oversee billboards and ads of iPhones and other products that are displayed in India, but it’s the third-party partners that are running and bankrolling them, said Kolla. “Apple might provide some marketing dollars, but those efforts are always led by their partners,” he said.

In recent years, Apple has visibly grown more interested in India, one of the world’s fastest growing smartphones markets. The company’s contract manufacturers today locally assemble the latest generation of iPhone models and some accessories — an effort the company kickstarted two years ago.

The move has allowed Apple to lower prices of some iPhone models in India, where for years the company has passed custom duty charges to customers. The starting price of iPhone 11 Pro Max is $1,487 in India, compared to $1,099 in the U.S. (It started to assemble some iPhone 11 models in India only recently.) The AirPods Pro, which sells at $249 in the U.S., was made available in India at $341 at the time of launch.

Apple has also been trying to open its store in India for several years, but local regulations made it difficult for the company to expand in the country. But in recent quarters, India has eased many of its regulations. Last year, New Delhi eased sourcing norms for single-brand retailers, paving the way for companies like Apple to open online stores before they set up presence in the brick-and-mortar market.

This year, India also launched a $6.6 billion incentive program aimed at boosting the local smartphone manufacturing. South Korean giant Samsung, and Apple’s contract manufacturing partners Foxconn, Wistron and Pegatron among others have applied for the incentive program.

Unlike most foreign firms that offer their products and services for free in India or at some of the world’s cheapest prices, Apple has focused entirely on a small fraction of the population that can afford to pay big bucks, Kolla said. And that strategy has worked fine for the company, Kolla argued. Apple commands the segment of premium smartphones in India.

That’s not to say that Apple has not made some changes to its price strategy for India. The monthly cost of Apple Music is $1.35 in India, compared to $9.99 in the U.S. Its Apple One bundle, which includes Apple Music, TV+, Arcade, and iCloud, costs $2.65 a month in India.

Some Apple customers say that even as they prefer the iPhone-maker’s ecosystem of products over Android makers’ offerings, they wish Apple made more of its services available in the country. A range of Apple services including Apple News and Apple Pay are still not available in India.

The launch of Apple’s online store in India comes weeks before the company is expected to unveil the new-generation iPhone models and a month before the festival of Diwali, which sees hundreds of millions of Indians spend lavishly.

China’s electric carmaker WM Motor pulls in $1.47 billion Series D

Chinese electric vehicle startup WM Motor just pocketed an outsize investment to fuel growth in a competitive landscape increasingly coveted by foreign rival Tesla. The five-year-old company raised 10 billion yuan ($1.47 billion) in a Series D round, it announced on Tuesday, which will pay for research and development, branding, marketing and expansion of sales channel.

WM Motor, backed by Baidu and Tencent, is one of the highest funded EV startups in China alongside NIO, Xpeng and Li Auto, all of which have gone public in New York. With its latest capital boost, WM Motor could be gearing up for an initial public offering. As Bloomberg’s sources in July said, the company was weighing a listing on China’s Nasdaq-style STAR board as soon as this year.

Days before its funding news, WM Motor unveiled its key partners and suppliers: Qualcomm Snapdragon’s cockpit chips will power the startup’s in-cabin experience; Baidu’s Apollo autonomous driving system will give WM vehicles self-parking capability; Unisplendour, rooted in China’s Tsinghua University, will take care of the hardware side of autonomous driving; and lastly, integrated circuit company Sino IC Leasing will work on “car connectivity” for WM Motor, whatever that term entails.

It’s not uncommon to see the new generation of EV makers seeking external partnerships given their limited experience in manufacturing. WM Motor’s rival Xpeng similarly works with Blackberry, Desay EV and Nvidia to deliver its smart EVs.

WM Motor was founded by automotive veteran Freeman Shen, who previously held executive positions at Volvo, Fiat and Geely in China.

The startup recently announced an ambitious plan for the next 3-5 years to allocate 20 billion yuan ($2.95 billion) and 3,000 engineers to work on 5G-powered smart cockpits, Level-4 driving and other futuristic auto technologies. That’s a big chunk of the startup’s total raise, which is estimated to be north of $3 billion, based on Crunchbase data and its latest funding figure.

Regional governments are often seen rooting for companies partaking in China’s strategic industries such as semiconductors and electric cars. WM Motor’s latest round, for instance, is led by a state-owned investment platform and state-owned carmaker SAIC Motor, both based in Shanghai where the startup’s headquarters resides. The city is also home to Tesla’s Gigafactory where the American giant churns out made-in-China vehicles.

In July, the Chinese EV upstart delivered its 30,000th EX5 SUV vehicle, which comes at about $22,000 with state subsidy and features the likes of in-car video streaming and air purification. The company claimed that parents of young children account for nearly 70% of its customers.

Kindred Capital closes £81M second fund to back early-stage European startups

Kindred Capital, the London-based VC that backs early-stage founders in Europe, has closed its second seed fund at £81 million.

That’s only a tad larger than the the firm’s first fund, which invested in 29 companies and was raised in 2018. Portfolio companies from fund one include Five, which is building software for autonomous vehicles; Paddle, the SaaS for software e-commerce; Pollen, the peer-to-peer marketplace for experiences and travel; and Farewill, which lets you create a will online.

However, perhaps what really sets Kindred apart from most other seed VCs is its “Equitable Venture”. This sees the founders it backs get carry in the fund, effectively becoming co-owners of Kindred. Once the VC’s LPs have their investment returned, like the firm’s partners, the founders also share any subsequent fund profits, as long as they have passed the vesting period.

More broadly, Kindred says the idea is this extra incentive encourages a collective model, in which founders actively help each other achieve their goals. “This has also had a positive impact on deal flow, with entrepreneurs sourcing 38% of Kindred’s dealflow at the top of the funnel,” says the VC.

Notably, Kindred projects that around £5 million will be returned to founders from the first find, profit that would otherwise have gone to its own General Partners. Presuming those exits are realised, based on two founders per startup, a quick back of the napkin calculation suggests that’s just over £80,000 each.

Meanwhile, Kindred already begun investing from its second fund. It has led 10 seed investments in companies such as BotsAndUs, Gravity Sketch and Beit.

LPs in Fund two include: University of Chicago, Industry Ventures, Generation Ventures, Sands Capital, British Patient Capital, Isomer, and Legal & General. Founders such as Taavet Hinrikus (TransferWise), Carsten Thoma (Hybris), and Rishi Khosla (Oak North), have also invested in Kindred’s second fund.

The TikTok deal solves quite literally nothing

Well… that was pointless.

After debasing the idea of free commerce in the U.S in the name of a misplaced security concern, stringing along several multi-billion dollar companies that embarrassed themselves in the interest of naked greed, and demanding that the U.S. government get a cut of the profits, the TikTok saga we’ve been watching the past few weeks finally appears to be over.

A flurry of announcement late Saturday night indicate that the TikTok deal was actually a politically-oriented shakedown to boost the cloud infrastructure business of key supporters of the President of the United States.

Oracle, whose cloud infrastructure services run a laughable fourth to AWS, Alphabet*, and Microsoft, will be taking a 20 percent stake in TikTok alongside partner Walmart in what will be an investment round before TikTok Global (as the new entity will be called) goes public on an American stock exchange.

According to a statement from TikTok, Oracle will become TikTok’s “trusted technology partner” and will be responsible for hosting all U.S. user data and securing associated computer systems to ensure U.S. national security requirements are fully satisfied. “We are currently working with Walmart on a commercial partnership as well,” according to the statement from TikTok.

pic.twitter.com/jWxjnAIwZQ

— TikTok_Comms (@tiktok_comms) September 19, 2020

Meanwhile, Oracle indicated that all the concerns from the White House, U.S. Treasury, and Congress over TikTok had nothing to do with the service’s selection of Oracle as its cloud provider. In its statement, Oracle said that “This technical decision by TikTok was heavily influenced by Zoom’s recent success in moving a large portion of its video conferencing capacity to the Oracle Public Cloud.”

Here’s how CNBC reporter Alex Sherman has the ownership structure breaking down, per “a person familiar with the matter. Oracle gets 12.5%, Walmart gets 7.5% and ByteDance gets the remaining 80%. The Trump administration is claiming that US investors will own 53% of TikTok because ByteDance (TikTok’s parent) is backed by venture capital investors that hold a 40% stake in the parent company.

So the ownership of TikTok Global will be, according to a person familiar with the matter:
Oracle – 12.5%
Walmart – 7.5%
ByteDance – 80% …

But 40% of ByteDance’s ownership is US venture capital funding. That’s how the Trump admin is calculating this deal as “majority US $”

— Alex Sherman (@sherman4949) September 20, 2020

 

The deal benefits everyone except U.S. consumers and people who have actual security concerns about TikTok’s algorithms and the ways they can be used to influence opinion in the U.S.

TikTok’s parent company ByteDance gets to maintain ownership of the U.S. entity, Oracle gets a huge new cloud customer to boost its ailing business, Walmart gets access to teens to sell stuff, and U.S. customer data is no safer (it’s just now in the hands of U.S. predators instead of foreign ones).

To be clear, data privacy and security is a major concern, but it’s not one that’s a concern when it comes to TikTok necessarily (and besides, the Chinese government has likely already acquired whatever data they want to on U.S. customers).

For many observers, the real concern with TikTok was that the company’s Chinese owners may be pressured by Beijing to manipulate its algorithm to promote or suppress content. Companies in China — including its internet giants — are required to follow the country’s intelligence and cloud security law mandating complete adherence with all government orders for data.

The Commerce Department in its statement said that “In light of recent positive developments, Secretary of Commerce Wilbur Ross, at the direction of President Trump, will delay the prohibition of identified transactions pursuant to Executive Order 13942, related to the TikTok mobile application that would have been effective on Sunday, September 20, 2020, until September 27, 2020 at 11:59 p.m.” So that’s a week reprieve.

So all this sound and fury … for what? The best investment return in all of these shenanigans is almost certainly Oracle co-CEO Safra Catz’ investment into Trump, who in addition to being a heavy donor to the Trump administration, also joined the presidential transition committee back in 2016. Thank god the U.S. saved TikTok from the crony capitalism of China. Let’s just hope they enjoy the crony capitalism of Washington DC.

*An earlier version of this article referred to AWS, Amazon and Microsoft. AWS and Amazon are the same company. I was typing fast. I’ve corrected the error.

Unity Software has strong opening, gaining 31% after pricing above its raised range

Whoever said you can’t make money playing video games clearly hasn’t taken a look at Unity Software’s stock price.

On its first official day of trading, the company rose more than 31%, opening at $75 per share before closing the day at $68.35. Unity’s share price gains came after last night’s pricing of the company’s stock at $52 per share, well above the range of $44 to $48 which was itself an upward revision of the company’s initial target.

Games like “Pokémon GO” and “Iron Man VR” rely on the company’s software, as do untold numbers of other mobile gaming applications that use the company’s toolkit for support. The company’s customers range from small gaming publishers to large gaming giants like Electronic Arts, Niantic, Ubisoft and Tencent.

Unity’s IPO comes on the heels of other well-received debuts, including Sumo Logic, Snowflake and JFrog .

TechCrunch caught up with Unity’s CFO, Kim Jabal, after-hours today to dig in a bit on the transaction.

According to Jabal, hosting her company’s roadshow over Zoom had some advantages, as her team didn’t have to focus on tackling a single geography per day, allowing Unity to “optimize” its time based on who the company wanted to meet, instead, of say, whomever was free in Boston or Chicago on a particular Tuesday morning.

Jabal’s comments aren’t the first that TechCrunch has heard regarding roadshows going well in a digital format instead of as an in-person presentation. If the old-school roadshow survives, we’ll be surprised, though private jet companies will miss the business.

Talking about the transaction itself, Jabal stressed the connection between her company’s employees, value  and their access to that same value. Unity’s IPO was unique in that existing and former employees were able to trade 15% of their vested holdings in the company on day one, excluding “current executive officers and directors,” per SEC filings.

That act does not seemed to have dampened enthusiasm for the company’s shares, and could have helped boost early float, allowing for the two sides of the supply and demand curves to more quickly meet close to the company’s real value, instead of a scarcity-driven, more artificial figure.

Regarding Unity’s IPO pricing, Jabal discussed what she called a “very data-driven process.” The result of that process was an IPO price that came in above its raised range, and still rose during its first day’s trading, but less than 50%. That’s about as good an outcome as you can hope for in an IPO.

One final thing for the SaaS nerds out there. Unity’s “dollar-based net expansion rate” went from very good to outstanding in 2020, or in the words of the S-1/A:

Our dollar-based net expansion rate, which measures expansion in existing customers’ revenue over a trailing 12-month period, grew from 124% as of December 31, 2018 to 133% as of December 31, 2019, and from 129% as of June 30, 2019 to 142% as of June 30, 2020, demonstrating the power of this strategy.

We had to ask. And the answer, per Jabal, was a combination of the company’s platform strength and how customers tend to use more of Unity’s services over time, which she described as growing with their customers. And the second key element was 2020’s unique dynamics that gave Unity a “tailwind” thanks to “increased usage, particularly in gaming.”

Looking at our own gaming levels in 2020 compared to 2019, that checks out.

This post closes the book on this week’s IPO class. Tired yet? Don’t be. Palantir is up next, and then Asana .

Apple will launch its online store in India next week

Apple will launch its online store in India on September 23, bringing a range of services directly to customers in the world’s second largest smartphone market for the first time in over 20 years since it began operations in the country.

The company, which currently relies on third-party online and offline retailers to sell its products in India, said its online store will offer AppleCare+, which extends the warranty on its hardware products by up to two years, as well as a trade-in program to let customers access discounts on purchase of new iPhones by returning previous models. These programs were previously not available in India. Customers will also be able to buy Macs with custom configuration

“We know our users are relying on technology to stay connected, engage in learning, and tap into their creativity, and by bringing the Apple Store online to India, we are offering our customers the very best of Apple at this important time,” said Deirdre O’Brien, Apple’s senior vice president of Retail + People, in a statement.

TechCrunch reported in January that the iPhone-maker was planning to launch its online store in India in Q3 this year. A month later, Apple CEO Tim Cook confirmed the development, adding that Apple will also launch its first physical store in the country next year.

On its website, Apple says it also plans to offer financing options to customers in India, and students will receive additional discounts on Apple products and accessories. Starting next month, it will also let customers check out free online sessions on music and photography from professional creatives. And if they wish, they can engrave emoji or text on their AirPods in several Indian languages.

The launch of the online store will mark a new chapter in Apple’s business in India, where about 99% of the market is commanded by Android smartphones. The iPhone-maker has become visibly more aggressive in India in recent years. In July, the company’s contract manufacturing partner (Foxconn) began assembling the iPhone 11 in India. This was the first time the company was locally assembling a current-generation iPhone model in the country.

Assembling handsets in India enables smartphone vendors — including Apple — to avoid roughly 20% import duty that the Indian government levies on imported electronics products. Lowering the cost of its products is crucial for Apple in India, which already sells several of its services including Apple Music and TV+ at record-low price in the country.

The starting price of iPhone 11 Pro Max is $1,487 in India, compared to $1,099 in the U.S. The AirPods Pro, which sells at $249 in the U.S., was made available in India at $341 at the time of launch.

We know how important it is for our customers to stay in touch with those they love and the world around them. We can’t wait to connect with our customers and expand support in India with the Apple Store online on September 23! 🇮🇳https://t.co/UjR31jzEaY

— Tim Cook (@tim_cook) September 18, 2020

TechCrunch statement on sweep at our venue

There have been a couple of articles published in the last two days reporting on an impromptu sweep that took place outside of a venue we are using for our TechCrunch Disrupt event in San Francisco this week. We wanted to detail what we know about what happened and the steps that are being taken to make this right.

This week we are hosting a virtual version of our TechCrunch Disrupt conference from a studio in San Francisco. In order to stage the show we rented a venue from a company named Non Plus Ultra

Yesterday we were informed by Non Plus Ultra that a reporter had reached out to ask about a sweep that had taken place in the early hours of last Thursday morning before our team arrived. This was the first time we had heard about Non Plus Ultra having coordinated an unsanctioned sweep outside of their building. 

This was not an action that we asked Non Plus Ultra to perform and is not something that we would ever ask them to do. Upon further investigation, we discovered that belongings and personal effects had been removed or discarded by a private company hired by Non Plus Ultra.

This is absolutely unacceptable, and we’re working to take immediate action. First, we will no longer be working with Non Plus Ultra at any of their venues in San Francisco for any TechCrunch event in the future. 

In addition, Non Plus Ultra has committed to working with local partners Community Housing Partnership, and DISH to support the homeless community on 12th Street. They are also committing to set up a system to replace or, where possible, return property to the people who were unfairly targeted by this sweep. TechCrunch will ensure that Non Plus Ultra follows through on these commitments. 

The city of San Francisco continues to struggle with a housing crisis and a large houseless population. Our neighbors who are living on the streets are suffering even more as they endure a pandemic and hazardous air quality from the California wildfires.

Everyone deserves to be treated with compassion and humanity, regardless of how or where they live. TechCrunch focuses on technology and the economy that drives it; much of that economy is centered in and around the Bay Area. 

Many of us live in San Francisco and in the surrounding areas and we feel it is our basic duty as humans to see that our events benefit the community and do no harm to our neighbors. 

To those affected by this situation we are deeply sorry. We will make every effort to see that this is made right.

Thank you.

 

Crista Galli Ventures outs ‘evergreen’ fund to back European health tech startups at seed and Series A

Crista Galli Ventures, an early-stage health tech fund in Europe, is officially launching today. The firm offers “patient capital” — with only a single LP (the Danish family office IPQ Capital) — and promises to provide portfolio companies with deep healthcare expertise and the extra runway needed to get over regulatory and efficacy hurdles and to the next stage.

Companies already backed by Crista Galli Ventures (CGV) include Skin Analytics, which is using AI to improve diagnosis of skin cancer; Quibim, which is applying AI to the field of radiomics; and Ampersand Health, which is developing digital therapies for patients with inflammatory conditions such as Crohn’s disease, to name just three out of 15.

Led by consultant radiologist Dr. Fiona Pathiraja, and with offices in London and Copenhagen, CGV operates as an “evergreen” fund, meaning it doesn’t follow traditional five-year VC fundraising cycles. Initially, the VC firm has $65 million in deployable — so called — patient capital.

“We like to invest across the broad areas of deep tech, digital health and personalised healthcare,” Pathiraja tells TechCrunch. “We prefer technology solutions that make the lives of patients easier and better and, in some cases, that help support people’s health before they become patients. Part of our remit is also for tech solutions within the healthcare industry that improve efficiency and productivity of providers.”

Alongside the main fund, CGV is also unveiling Crista Galli LABS, which, in part, aims for greater diversity in health tech by backing founders from underrepresented backgrounds at the pre-seed stage. In addition to pre-seed investment, startups accepted into the program have access to mentoring and coaching from the CGV team.

“When I was in hospital, there were people from all backgrounds there and this was the norm… [but] this really wasn’t my experience when I started investing,” explains Pathiraja. “I am struck by how homogeneous both founder teams and investment teams can be. Whilst our core investment focus is seed and Series A, Crista Galli LABS invests smaller ticket sizes in outstanding pre-seed founders and ensures that at least 50% of these are from under-represented backgrounds. This means those who are female, BAME, LGBT to start with.”

Homage announces strategic partnership with Infocom, one of Japan’s largest healthcare IT providers

Homage, a Singapore-based caregiving and telehealth company, has taken a major step in its global expansion plan. The startup announced today that it has received strategic investment from Infocom, the Japanese information and communications technology company that runs one of the largest healthcare IT businesses in the country. Infocom’s solutions are used by more than 13,000 healthcare facilities in Japan.

During an interview with TechCrunch that will air as part of Disrupt tomorrow, Homage co-founder and chief executive Gillian Tee said “Japan has one of the most ageing populations in the world, and the problem is that we need to start building infrastructure to enable people to be able to access the kind of care services that they need.” She added that Homage and Infocom’s missions align because the latter is also building a platform for caregivers in Japan, in a bid to help solve the shortage of carers in the country.

Homage raised a Series B earlier this year with the goal of entering new Asian markets. The company, which currently operates in Singapore and Malaysia, focuses on patients who need long-term rehabilitation or care services, especially elderly people. This makes it a good match for Japan, where more than one in five of its population is currently aged 65 or over. In the next decade, that number is expected to increase to about one in three, making the need for caregiving services especially acute.

The deal includes a regional partnership that will enable Homage to launch its services into Japan, and Infocom to expand its reach in Southeast Asia. Homage’s services include a caregiver-client matching platform and a home medical service that includes online consultations and house calls, while Infocom’s technology covers a wide range of verticals, including digital healthcare, radiology, pharmaceuticals, medical imaging and hospital information management.

In a statement about the strategic investment, Mototaka Kuboi, Infocom’s managing executive officer and head of its healthcare business division, said, “We see Homage as an ideal partner given the company’s unique cutting-edge technology and market leadership in the long-term care segment, and we aim to drive business growth not only in Homage’s core and rapidly growing market in Southeast Asia, but also regionally.”

‪CBP seized a shipment of OnePlus Buds thinking they were “counterfeit” Apple AirPods‬

U.S. Customs and Border Protection proudly announced in a press release on Friday a seizure of 2,000 boxes of “counterfeit” Apple AirPods, said to be worth about $400,000, from a shipment at John F. Kennedy Airport in New York.

But the photos in the press release appear to show boxes of OnePlus Buds, the wireless earphones made by smartphone maker OnePlus, and not Apple AirPods as CBP had claimed.

Here’s CBP’s photo of the allegedly counterfeit goods:

And this is what a box of OnePlus Buds looks like:

A photo of a box of OnePlus Buds that CBP mistook for Apple AirPods.

(Image: @yschugh/Twitter)

We reached out to OnePlus and CBP but did not hear back.

According to the press release: “The interception of these counterfeit earbuds is a direct reflection of the vigilance and commitment to mission success by our CBP Officers daily,” said Troy Miller, director of CBP’s New York Field Operations.

If only it was.

Check out these Breakout Sessions at Disrupt 2020

We’re on the brink of the biggest Disrupt in TechCrunch history. It’s five days of education, exhibition, competition and connection that spans the globe. As you plan your schedule, keep this in mind: You’ll find some of the most insightful and downright interesting programming at Disrupt 2020 in our Breakout Sessions. And that, given our powerhouse agenda, is saying something.

Every Disrupt attendee can take part in the breakout sessions — they’re open to every pass level. Breakouts cover a range of topics and formats. You might watch startups pitch, attend a workshop or take in a panel discussion. No matter what, you’re bound to receive valuable insight that can inspire you and help your business.

Take advantage of our partners’ expertise and check out any (or all) of these breakout sessions. You’ll be glad you did.

 

Monday, September 14

11:00 am – 11:50 am

Sponsored by Adobe

How to Invest in Infrastructure to Deliver Experience 

Gabie Boko, Global VP Digital, Hewlett Packard Enterprise & Adobe VP of Platform Engineering, Anjul Bhambhri discuss digital transformation and experience delivery. 

 

12:00 pm – 12:30 pm

Sponsored by Taiwan Tech Arena

Taiwan Pavilion Pitch-off session 1

Featuring twenty startups in healthcare, IoT, blockchain, AR-VR, cyber security, E-learning, and green technology

 

Tuesday, September 15

9:00 am – 9:50 am

Sponsored by Silicon Valley Bank

Diversity as Disruption: Take action now to create a more diverse ecosystem

Recent events continue to demonstrate that change is not happening fast enough. How can we ensure the current social justice momentum is more than just talk? Guided by SVB’s recent research into the “4th wave of venture capital,” learn how three industry leaders are tackling the problem with real actions. By the close of the session, leave with tangible steps you can take today – whether as an individual or as a firm — to make a meaningful, move-the-needle impact in your organization.

 

9:00 am – 10:30 am

Sponsored by Taiwan Tech Arena

Taiwan Reception: Innovations and investment opportunities amid COVID19 Pandemics with Christine Tsai (500 Startups), Allan May (Life Science Angels)

Join Christine, Allan, Tico Blumenthal (Life Sciences Angels), and Laura Dietch (BioTrace Medical) to explore the investment and innovation framework in post-COVID19, and to discuss the driver of innovation healthcare amid the pandemic and economic collapse. TTA will also present the key anti-COVID19 innovative measurements in Taiwan to achieve the lowest infection rate around the world.

 

10:00 am – 10:30am

Sponsored by hub.brussels

Belgian Startup Pitch Competition

Hub.brussels invites you to join us for the 6th edition of our Belgian startup pitch competition.

 

12:00 pm – 12:30 pm

Taiwan Pavilion Pitch-off Session 2

Sponsored by Taiwan Tech Arena

Featuring twenty startups in AI solutions, softwares, big data, edge computing, and space technology

 

2:30 pm – 4:00 pm 

TC Include Reception sponsored by Sootchy

Sponsored by Sootchy

INVITE ONLY – TC Include kicks off this year’s founder cohort with organizational partners Black Female Founders, Female Founders Alliance, Latinx Startup Alliance and StartOut with remarks by Sootchy.

 

Wednesday, September 16

9:00 am – 9:50 am

Sponsored by Consulate General of Canada in San Francisco

“Grow North”: How Canada Empowers Investors and Founders

Come listen to a group of Canadian founders who will talk about their start-ups and how Canada has helped them grow and succeed globally.

 

10:00 am – 11:00 am

Sponsored by StartUp Bahrain

Bahrain: Your gateway to the Middle East and beyond

INVITE ONLY – With its supportive ecosystem, advanced digital infrastructure, flexible and pioneering regulations; rapid growth in funding opportunities and a liberal market, Bahrain is the ideal testbed for startups and scaleups to test their products and solutions before growing and expanding across the Middle East

 

10:00 am – 10:30 am 

Sponsored by JETRO

Japanese Startup Pitches

Come see the latest exciting technology and services coming from Japan.

 

11:00 am – 11:30 am 

Sponsored by KOCCA

Join Us to Watch Seven Amazing Startups from Korea

K-pop? K-Drama? K-Games? K-Entertainment? All startups with K-contents will show off during this Pitch Off

 

12:00 pm – 12:50 pm 

Sponsored by Envestnet | Yodlee

Making Data Meaningful for the FinTech Ecosystem

Open finance/banking represents a new era of financial data transparency. It brings an unprecedented opportunity for FinTechs to provide personalized guidance consumers need to improve financial wellness. Envestnet | Yodlee experts will discuss empowering the entire FinTech ecosystem with enriched financial data and insights, plus the future of open banking in the U.S.

 

Thursday, September 17

10:00 am – 11:30 am

Sponsored by Dassault Systèmes

Dassault Systemes’s 3DEXPERIENCE Lab Global Accelerator Program

INVITE ONLY – 3DEXPERIENCE Lab is Dassault Systèmes’s global innovation program that offers innovative startups free access to Dassault Systèmes collaborative Design, Engineering, Simulation & Data Intelligence solutions, along with mentoring, and marketing support for two years. Come; learn how the Lab selects, mentors and supports its startups!

 

10:00 am – 10:50 am

Sponsored by AppsFlyer

Advertising Disrupted: What User Privacy Means For Marketers

This session offers the unique opportunity to join a live recording of AppsFlyer’s industry podcast, Next in Marketing. Mike Shields, podcast host and former Wall Street Journal, Business Insider, AdWeek and Digiday editor along with guests (Brian Quinn, US President & GM, AppsFlyer and Ana Milicevic, Co-founder and Principal, Sparrow Advisers) will delve into the ecosystem’s pivotal privacy updates, including Apple’s IDFA opt-out and the impact of iOS 14 to measurement and attribution, as well as targeting in a cookieless world. You’ll also hear about the future of personalization post-regulations in this session that is sure to address the most pressing issues and headlines on the mind of marketers globally.

 

12:00 pm – 12:50 pm

Sponsored by KITE

It Takes An Ecosystem To Innovate: Startups, Corporations and the Connectors that Bring Them Together

Startups plus large enterprises can fuel each other’s growth and bottom line, whether it’s a partnership, investment or acquisition. But bringing the right ones together needs more than serendipity: it requires a dynamic ecosystem that includes consultants, accelerators and VCs (aka the connectors). We sit down with top leaders from around the ecosystem to learn how they discover innovative solutions — and get to outcomes — faster.

 

And for those who want to upgrade to a Disrupt Digital PRO Pass you can get access to these sessions:

Tuesday, September 15

10:30 am – 10:50 am

Sponsored by All Raise

Showing Your Work: VCs Investing in Diversity Share Their Secrets

More than 80% of venture capital firms don’t have a single Black investor and 68% of firms don’t have any female partners. As VCs across the country urgently seek to diversify both their investing teams and their portfolios, they could learn a lot from these amazing investors, who have made diversity a central part of their investing thesis from the start. Join us for a candid conversation about the power of investing in underrepresented founders and tapping into over $4.4 trillion in value. This panel will be moderated by Pam Kostka, CEO of All Raise featuring Sarah Kunst, Founder & Managing Director at Cleo Capital and Christie Pitts, General Partner at Backstage Capital who are both leading VCs who focus their investments on founders from underrepresented backgrounds.

 

11:30 am – 11:50 am

Sponsored by Toyota

Innovating with Fuel Cells

James Kast demonstrates how Toyota continues to navigate the innovation of fuel cells and the implementation across numerous industries.

 

That’s a mighty fine breakout lineup if we do say so ourselves. Yep, we’re tooting our own horn. Don’t let all that valuable expertise go to waste. Make sure you carve out time in your Disrupt schedule for insight and inspiration!

Extra Crunch Friday roundup: Edtech funding surges, Poland VC survey, inside Shift’s SPAC plan, more

I live in San Francisco, but I work an East Coast schedule to get a jump on the news day. So I’d already been at my desk for a couple of hours on Wednesday morning when I looked up and saw this:

What color is the sky this morning pic.twitter.com/nt5dZp5wWc

— Walter Thompson (@YourProtagonist) September 9, 2020

As unsettling as it was to see the natural environment so transformed, I still got my work done. This is not to boast: I have a desk job and a working air filter. (People who make deliveries in the toxic air or are homeschooling their children while working from home during a global pandemic, however, impress the hell out of me.)

Not coincidentally, two of the Extra Crunch stories that ran since our Tuesday newsletter tie directly into what’s going on outside my window:

As this guest post predicted, a suboptimal attempt I made to track a delayed package using interactive voice response (IVR) indeed poisoned my customer experience, and;

Sheltering in place to avoid the novel coronavirus — and wildfire smoke — is fueling growth in the video-game industry, perhaps one factor in Unity Software Inc.’s plan to go public ahead of competitor Epic Games. In a two-part series, we looked at how the company has expanded beyond games and shared a detailed financial breakdown.

We covered a lot of ground this week, so scroll down or visit the recently redesigned Extra Crunch home page. If you’d like to receive this roundup via email each Tuesday and Friday, please click here.

Thanks very much for reading Extra Crunch; I hope you have a relaxing and safe weekend.

Walter Thompson
Senior Editor
@yourprotagonist


Bear and bull cases for Unity’s IPO

In a two-part series that ran on TechCrunch and Extra Crunch, former media columnist Eric Peckham returned to share his analysis of Unity Software Inc.’s S-1 filing.

Part one is a deep dive that explains how the company has grown beyond gaming to develop multiple revenue streams and where it’s headed.

For part two on Extra Crunch, he studied the company’s numbers to offer some context for its approximately $11 billion valuation.


10 Poland-based investors discuss trends, opportunities and the road ahead

The Palace of Culture and Science is standing reminder of communism in Warsaw, Masovian Voivodeship, Poland.

Image Credits: Edwin Remsberg (opens in a new window) / Getty Images

As we’ve covered previously, the COVID-19 pandemic is making the world a lot smaller.

Investors who focus on their own backyards still have an advantage, but the ability to set up a quick coffee meeting with a promising investor is no longer one of them.

Even though some VCs are cutting first checks after Zoom calls, regional investors’ personal networks are still a trump card. Tourists will always rely on guide books, however, which is why we continue to survey investors around the world.

A Dealroom report issued this summer determined that 97 VC funds backed more than 1,600 funding rounds in Poland last year. With over 2,400 early- and late-stage startups and 400,000 engineers in the country, it’s easy to see why foreign investors are taking notice.

Editor-at-large Mike Butcher reached out to several investors who focus on Warsaw and Poland in general to learn more about the startups fueling their interest across fintech, gaming, security and other sectors:

  • Bryony Cooper, managing partner, Arkley Brinc VC
  • Anna Wnuk-Błażejczyk, investor relations manager, Experior.vc
  • Rafał Roszak, investment director, YouNick Mint
  • Michal Mroczkowski, partner, Market One Capital
  • Marcus Erken, partner, Sunfish Partners
  • Borys Musielak, partner, SMOK Ventures
  • Mathias Åsberg, partner, Nextgrid
  • Kuba Dudek, SpeedUp Venture Capital Group
  • Marcin Laczynski, partner, Next Road Ventures
  • Michał Rokosz, partner, Inovo Venture Partners

We’ll run the conclusion of his survey next Tuesday.


Brands that hyper-personalize will win the next decade

Customer Relationship Management and Leader Concepts on Whiteboard

Image Credits: cnythzl (opens in a new window) / Getty Images

Even for fledgling startups, creating a robust customer service channel — or at least one that doesn’t annoy people — is a reliable way to keep users in the sales funnel.

Using AI and automation is fine, but now that consumers have grown used to asking phones and smart speakers to predict the weather and read recipe instructions, their expectations are higher than ever.

If you’re trying to figure out what people want from hyper-personalized customer experiences and how you can operationalize AI to give them what they’re after, start here.


VCs pour funding into edtech startups as COVID-19 shakes up the market

For today’s edition of The Exchange, Natasha Mascarenhas joined Alex Wilhelm to examine how the pandemic-fueled surge of interest in edtech is manifesting on the funding front.

The numbers suggest that funding will far surpass the sector’s high-water mark set in 2018, so the duo studied the numbers through August 31, which included a number of mega-rounds that exceeded $100 million.

“Now the challenge for the sector will be keeping its growth alive in 2021, showing investors that their 2020 bets were not merely wagers made during a single, overheated year,” they conclude.


How to respond to a data breach

Digital Binary Code on Red Background. Cybercrime Concept

Image Credits: WhataWin (opens in a new window) / Getty Images

The odds are low that someone’s going to enter my home and steal my belongings. I still lock my door when I leave the house, however, and my valuables are insured. I’m an optimist, not a fool.

Similarly: Is your startup’s cybersecurity strategy based on optimism, or do you have an actual response plan in case of a data breach?

Security reporter Zack Whittaker has seen some shambolic reactions to security lapses, which is why he turned in a post-mortem about a corporation that got it right.

“Once in a while, a company’s response almost makes up for the daily deluge of hypocrisy, obfuscation and downright lies,” says Zack.


Shift’s George Arison shares 6 tips for taking your company public via a SPAC

Number 6 By Railroad Tracks During Sunset

Image Credits: Eric Burger/EyeEm (opens in a new window) / Getty Images

There’s a lot of buzz about special purpose acquisition companies these days.

Used-car marketplace Shift announced its SPAC in June 2020, and is on track to complete the process in the next few months, so co-founder/co-CEO George Arison wrote an Extra Crunch guest post to share what he has learned.

Step one: “If you go the SPAC route, you’ll need to become an expert at financial engineering.”


Dear Sophie: What is a J-1 visa and how can we use it?

Image Credits: Sophie Alcorn

Dear Sophie:

I am a software engineer and have been looking at job postings in the U.S. I’ve heard from my friends about J-1 Visa Training or J-1 Research.

What is a J-1 status? What are the requirements to qualify? Do I need to find a U.S. employer willing to sponsor me before I apply for one? Can I get a visa? How long could I stay?

— Determined in Delhi


As direct listing looms, Palantir insiders are accelerating stock sales

While we count down to the September 23 premiere of NYSE: PLTR, Danny Crichton looked at the “robust secondary market” that has allowed some investors to acquire shares early.

“Given the number of people involved and the number of shares bought and sold over the past 18 months, we can get some insight regarding how insiders perceive Palantir’s value,” he writes.


Use ‘productive paranoia’ to build cybersecurity culture at your startup

Vector illustration of padlocks and keys in a repeating pattern against a blue background.

Image Credits: JakeOlimb / Getty Images

Zack Whittaker interviewed Bugcrowd CTO, founder and chairman Casey Ellis about the best practices he recommends for creating a startup culture that takes security seriously.

“It’s an everyone problem,” said Ellis, who encouraged founders to promote the notion of “productive paranoia.”

Now that the threat envelope includes everyone from marketing to engineering, employees need to “internalize the fact that bad stuff can and does happen if you do it wrong,” Ellis said.

Santander spins out its $400M fintech venture capital arm, now called Mouro Capital

Santander, the Spanish multinational banking giant, is announcing that its fintech venture arm is to be spun out and will be managed more autonomously going forward.

Previously known as Santander Innoventures and first established in 2014, the VC is being re-branded to Mouro Capital. It will continue to be headed up by general partner Manuel Silva Martínez, who joined Innoventures five years ago and has led the fund since 2018, and senior advisor Chris Gottschalk, who joined from Blumberg Capital last year.

Noteworthy, despite its new-founded independence, Santander will remain Mouro Capital’s sole investor/LP, including doubling its current commitment, seeing the VC have $400 million in allotted funds.

However, my understanding is that by being managed autonomously from the multinational bank, Mouro will be able to invest more nimbly, including placing bets adjacent to pure fintech or financial services and in startups that could more directly compete with Santander’s own product lines. It should also help remove any market perception that portfolio companies aren’t independent of the incumbent bank, in terms of future investment or partnerships with Santander competitors.

Meanwhile, Santander Innoventures was an early backer of a number of so-called unicorns (companies valued at more than a billion dollars). They include Ripple, Tradeshift, and Upgrade. It has sees a number of exits, too, including iZettle to PayPal in 2018 for $2 billion, and Kabbage acquired by Amex last month.

“Mouro Capital aims to bring its fintech expertise, global network and strong track-record in successful investments to early and growth stage startups globally. The fund will continue to deploy capital across Europe and the Americas, primarily leading investment rounds with initial investments of up to $15 million and further follow-on reserves,” says Santander.

I put written questions to Mouro Capital general partner Manuel Silva Martínez to find out more. The following Q&A has been lightly edited.

TechCrunch: What does this enable the fund to do that it couldn’t already? Does its independence enable it to be more aggressive with investing in products that could compete directly with Santander’s own services and products? Or it is more about speed in relation to the investment committee making quicker decisions?

Manuel Silva Martínez: Santander InnoVentures was fairly optimized as a corporate venture capital fund in terms of operations and speed of investment. However, the evolution into the Mouro Capital structure allows for extra alignment with entrepreneurs and co-investors (their success being the #1 objective), even faster/nimbler processes, and potentially a bolder investment strategy within the themes and investment policy agreed with our Limited Partner.

Shifting to a separate brand also reduces any potential affiliation that entrepreneurs may fear as potentially conflicting (commercially, IP), further reassured by a cleaner legal separation. On the change of the investment policy point, indeed Mouro will deploy a bolder investment strategy, that may involve investing in perceived competitors (which has been done in the past, e.g. neobank Klar in Mexico, lender Creditas in Brazil, or Curve in the UK), but this still fits into the logic that, if a venture capital affiliated with an industrial player should be a lighthouse for the ‘industry to come’, investing in emerging competitors that may reshape the future/long-term competitive landscape is just as aligned as any other topic.

In addition to that, Mouro will also explore the ‘boundaries’ of financial services, so you can expect to see Mouro invest from time to time in areas such as proptech, mobility, logistics, edtech, etc.

How big is the current team in terms of investment members and other support? And how is this going to change going forward? i.e. further operational/portfolio support or new investment partner members etc.

The current investment team has six members, with the Finance, Legal/Compliance and Communications also internalised (so, extra three people). The team will indeed grow. Still early to say, but we would expect the investment team to add another 3-4 professionals with backgrounds aligned with our values (fintech expertise, entrepreneurial/operational expertise, exposure to specific networks we are interested in, esp. in Europe).

In addition to that, we will be building a ‘business development’ and operations support team to assist our companies with their growth needs and also with building mutually beneficial relationships with Santander and across the portfolio.

Aside from being broadly fintech/financial services focused, perhaps you can share a bit more on the Mouro thesis going forward.

As you say, we take a very broad view to the future of financial services, looking even beyond today’s industry boundaries. We ask ourselves fundamental questions and build strong theses around topics we are passionate about while keeping an open mind to new ideas that challenge our beliefs. In a way, we operate along three horizons that are complementary in addressing different angles of where we see the industry going:

  • In the short term, we invest in technologies that allow incumbents to make the transition into digital throught better processes. Questions like: how can we bring automation and real-time applications into banking infrastructure? How can we build richer data ecosystems? What new client value propositions are emerging in developed and developing markets? How can banking services be delivered through APIs? How can finance be embedded in third-party journeys?
  • There are also companies that have superior capabilities (technology, data science, installed capacity) that, combined with banks or other startups, could build new businesses or re-engineer businesses from scratch. Questions like: how are novel technologies and new engineering paradigms (artificial intelligence, blockchain, quantum computing) changing how banks work? What emerging enterprise software utilities and platforms will be the gateway to tomorrow’s financial services? This is about building new businesses within the status quo of today’s industry by lining up the right resources and players.

  • More for the long term, we also look at how the industry is meant to evolve and reinvent itself, potentially by even transcending itself and crossing over with other industries to create new white-spaces. Questions like: how can industries be more integrated and converge into new white spaces fueled by finance? What is the role of money in a data-rich world?

Times Internet is growing despite influx of US tech firms in India

Times Internet said on Thursday it reaches more than 557 million active users in India each month and over 111 million users a day as several of its digital offerings demonstrated strong growth in the past year.

The Indian conglomerate — which operates over three-dozen properties, including on-demand streaming services MX Player and Gaana, and newspapers Times of India and Economic Times — added 107 million monthly active users in the financial year that ended in March, it said.

Its platform clocked over 67 billion page views in FY 2020, up from 47 billion from the year prior.

MX Player, which has now amassed over 200 million monthly active users, and Gaana, which now reaches 185 million monthly active users, grew 75% in the year, Satyan Gajwani, vice chairman of Times Internet told TechCrunch in an interview.

These figures put Times Internet, a subsidiary of 182-year-old Bennett Coleman and Company Limited (BCCL), at the centre of the world’s largest open battleground (well, almost), which is otherwise dominated by Google, Facebook and Amazon.

According to analytics firm Comscore, Google reached 98% of the digital population in India on web (desktop as well as mobile) in the month of June. During the same month, Facebook reached 94.9% of the population, Times Internet 77.7% and Amazon settled at fourth place with 76%. (The figures do not include app usage data.)

Founded over 20 years ago, Times Internet had a huge headstart over nearly every firm that dominates the digital landscape today. But it largely failed to cash in on that for several years, critics say. Under the current leadership, however, the firm has followed a steady path and grown.

Comscore data for the month of May (Image credit: Times Internet)

Gajwani acknowledged that some of Times Internet’s offerings weren’t in great shape at the beginning of the last decade. “So we put a lot more emphasis on just product quality during 2013 to 2016. The next few years after that we also bought and built good products.”

“We’ve sold products or exited products where we didn’t think we could be competitive. We’ve got a reasonably strong portfolio now,” he added.

The most recent phase of Times Internet’s growth, said Gajwani, is the push to find revenue channels beyond ads. Gaana, MX Player, ET Prime (ad-free tier for Economic Times) and Times Prime (which bundles and resells a range of third-party subscription offerings) are helping it find subscribers, while MensXP’s e-commerce section, ETMoney, MagicBricks, GradeUp and Dineout are driving transactions.

Overall, Times Internet said its revenue grew 24% to $221.5 million in FY20. The firm did not disclose how much revenue it clocked from subscriptions, but said it had over 2 million paying subscribers and its transacting businesses grew 68%. Its ad business was also up 22%.

But its heavy reliance on ads means it has also been hit by the coronavirus, which slashed consumers’ spendings across the industry, resulting in advertisers cutting their budget.

Gajwani said the month of March saw a “big drop” in ad revenue for the firm, but the next three months were “soft” and July and August delivered a big rebound. “The gains of July and August have now made up for the losses of April, May, June in terms of our net year over year,” he added.

The virus and New Delhi’s ban on Chinese apps in recent months haven’t been a complete downer. Both MX Player and Gaana are attempting to fill the void left by the ban on TikTok in India and have received better traction than some of the more heavily-funded firms such as Twitter-backed ShareChat, according to mobile insight firm App Annie, data of which an industry executive shared with TechCrunch.

MX TakaTak, the short-video app from MX Player, has amassed over 10 million daily active users and 45 million monthly active users, it claimed earlier this week. Users have uploaded more than 15 million videos on the app and clocked over a billion views within a month, it said.

Moving forward, Gajwani said the firm will also continue to try to deepen its relationship with users. “The number of people who consumed two or more of our businesses grew 48%. And the number of people who consumed three or more of our businesses, grew 120%,” he said, without disclosing the number of users.

BCCL has engaged in conversations with investors in recent months to sell stake in Times Internet, a person familiar with the matter said. The deal, if secured, would make Times Internet — which employs more than 6,000 people, up from 5,000 last year — financially stronger to explore more acquisition opportunities, the person said. Gajwani declined to comment. Bloomberg first reported about the talks.

Dawn Capital closes another $400M fund to focus on B2B software

Dawn Capital, the London-based VC that focuses on B2B software, has closed its fourth and largest fund: $400 million that it plans to use to continue investing in early stage startups. Oversubscribed and closed (all remotely) within six months of launching in the midst of a global health pandemic, the news underscores how VCs — and their investors — continue to see opportunity in the region, despite the many uncertainties that hang over us right now.

“European founders are doing really well, with lots of good stories in our portfolio already, and they’re just getting better,” said Haakon Overli, Dawn’s co-founder and a general partner, in an interview.

Overli believes we’re in the beginning of a big wave in Europe, where we will see not just more promising B2B startups emerge, but more of them scale within Europe rather than decamp to the US, or sell early to a bigger rival.

Dawn’s focus is currently on four main areas: data and analytics, security, fintech and “the future of work” — all categories that have seen a significant fillip in recent months as companies are forced to rethink how they operate — with significantly more employees working remotely — and are investing in updated systems to do so. Dawn estimates that the B2B software market in Europe is currently worth some $1 trillion.

To date, Dawn has invested in some 40 companies, and some of the notable names in its portfolio include data analytics startup Collibra, IZettle (which was acquired by PayPal) and machine learning company Dataiku. Last year, it closed a $125 million “opportunities” fund to make growth-stage, later investments but this current fund will bring it back to focus on smaller investments of between $5 million and $20 million. Considering that this a $400 million fund, that likely means a sizeable volume of startups entering Dawn’s portfolio, setting the VC up to remain a steady and strong player in Europe for years to come.

“Innovation thrives on instability. System-wide shocks drive change that startups can exploit ruthlessly, while incumbents are incapable of adjusting,” said Dawn cofounder and GP Norman Fiore, in a statement. “Historically, these shocks were either financial, technological or societal. In 2020, we’ve had all three at once: technology shock as the cloud came into its own, financial shock which will force society to do more with less, and a fundamental change to the way our working society is organised. We can’t wait to see where our entrepreneurs take us as we invest Dawn IV and greatly appreciate the support of all our investors in making this a successful fundraise.”

Do Ventures launches $50 million fund for Vietnamese startups, backed by Naver, Vertex and other notable LPs

Vy Le and Dzung Nguyen, the founders and general partners of Do Ventures, an investment firm focused on early-stage Vietnamese startups

Vy Le and Dzung Nguyen, the founders and general partners of Do Ventures, an investment firm focused on early-stage Vietnamese startups

New investment firm Do Ventures announced today the first closing of its fund for Vietnamese startups, which is backed by several of Asia’s most notable institutional investors. Called Do Ventures Fund I, the investment vehicle has hit more than half of its $50 million target, with limited partners including Korean internet giant Naver; Sea, whose businesses include Garena and Shopee; Singapore-based venture capital firm Vertex Holdings; and Korean app developer Woowa Brothers.

Do Ventures was founded by general partners Nguyen Manh Dung, former CEO of CyberAgent Ventures Vietnam and Thailand, and Vy Hoang Uyen Le, previously a general partner at ESP Capital. Its first fund will focus on early-stage companies and invest in seed to Series B rounds.

Both of its founders have a long track record of working with Vietnamese startups. Nguyen was an early investor in companies including Tiki.vn, one of Vietnam’s largest online marketplaces; food delivery platform Foody.vn; and digital marketing company CleverAds. Before she became an investor, Le was a serial entrepreneur and served as chief executive officer at fashion e-commerce company Chon.vn and VinEcom, the e-commerce project launched by Vietnamese real estate conglomerate Vingroup.

In an email, Le told TechCrunch that Do Ventures Fund I is industry agnostic, but will structure its investments into two tiers. The first will consist of B2C platforms, including education, healthcare and social commerce, that serve younger users, and are addressing changes in consumer behavior caused by the COVID-19 pandemic. The second tier will include B2B platforms that can provide services for companies in the first tier, and allow them to expand regionally with SaaS solutions for data and e-commerce services.

Do Ventures’ founders say that between 2016 and 2019, the amount of startup funding in Vietnam grew eight-fold to $861 million last year. But there are still only a few funds that focus specifically on the country, which means early-stage Vietnamese startups often run into funding gaps.

One of the firm’s goals is to help founders weather the impact of COVID-19, so their companies can continue growing in spite of the pandemic.

“We hope tech startups can enable traditional businesses to digitize faster and better adapt to the new normal,” Le said. “For consumers, we hope tech startups can transform customer experience in all aspects of daily life, and bring more accessibility to consumers in remote areas.”

The firm will take a hands-on approach to its investments, helping companies develop new business models. Do Ventures plans to set up an automatic reporting system that collects data about how its portfolio companies are performing, which its general partners say will enable them support startups’ operations, including product development, business organization, supply chain development, and overseas expansion.

The Disrupt 2020 Labor Day flash sale ends tonight

As the Labor Day weekend winds down here in the states, so too does our flash sale and your chance to save $100 on a Digital Pro pass to Disrupt 2020. Fight off your holiday food coma long enough to buy your pass before 11:59 p.m. (PT) tonight.

Disrupt 2020 takes place September 14-18, and you can’t afford to miss this global opportunity to learn new startup skills, add to your investment portfolio, build brand awareness, expand your network and do whatever it takes to drive your business forward.

We’re also celebrating 10 years of Disrupt. How crazy is that? As part of the celebration, we formed the TC10 — a remarkable group of entrepreneurs and investors who’ve been a big part of Disrupt for the past 10 years. Meet the TC10 here.

They’ll show up throughout Disrupt 2020 and play an important role in our newest event, the Pitch Deck Teardown sessions. Throughout Disrupt, top VCs and entrepreneurs will look at submitted pitch decks, dissect them slide-by-slide and discuss what works and what doesn’t. Want the Teardown treatment? Submit your pitch deck here.

What else can you do with your Digital Pro pass? Take a deep dive into the Disrupt 2020 agenda where you’ll find an incredible line up of experts, founders, investors, tech icons and visionaries. You’ll lean in and learn from folks like Bumble CEO, Whitney Wolfe Herd, Cloudflare Co-founder, Michelle Zatlyn and Sequoia Capital’s Roelof Botha. You’ll even hear from celebrities like Kerry Washington, who’s making quite a name for herself as a tech investor.

Explore hundreds of early-stage startups — including the TC Top Picks —  in Digital Startup Alley. Our virtual venue makes it easy to find them and connect.

Take your networking global. The virtual nature of Disrupt 2020 allows anyone from any location to participate, and that spells exponential opportunity. Keep organized and on schedule with CrunchMatch, our AI-powered platform that doesn’t just connect you with people, it connects you with the right people. Simply answer a few quick questions during registration, and you’re ready to schedule 1:1 virtual meetings with founders, investors or other Disrupt attendees.

There’s a metric ton more — the Extra Crunch Stage, Startup Battlefield, interactive Q&As and breakout sessions. TL;DR — you can’t afford to miss the abundant opportunities waiting for you at Disrupt 2020. Buy your Digital Pro Pass before the flash sale ends tonight at 11:59 p.m. (PT) and save $100.

Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.

Meet the TC Top Picks for Disrupt 2020

We’ve been extremely privileged to witness thousands of early stage startups launch and take flight at Disrupt over the past 10 years, and they just keep getting bettter. You’ll be hard-pressed to find more creative, game-changing startups than the ones that earned our TC Top Picks designation for Disrupt 2020.

The all-virtual nature of this Disrupt meant we received applications from startups around the world. Talk about a tough vetting process! Highly determined and highly caffeinated TechCrunch editors took on the task of narrowing the field to find the best of the best.

The TC Top Picks program showcases outstanding early-stage startups across these categories: Artificial Intelligence/Machine Learning, Biotech/HealthTech, Education/Social Impact, Enterprise/SaaS, Fintech, Mobility, Retail/E-commerce, Robotics/Hardware/IOT and Security/Privacy.

Each TC Top Pick will exhibit in Digital Startup Alley Package and have an exclusive, virtual interview with a TechCrunch writer. We record the interviews and promote them across our social media platforms. It’s terrific exposure and they make a killer long-term marketing tool, so consider applying to the TC Top Pick program next year.

It’s time to announce the Disrupt 2020 TC Top Picks cohort. Peruse these 26 impressive startups, buy your pass to Disrupt, and make a plan to connect with them in Digital Startup Alley. Opportunity knocks!

AI/Machine Learning

iLoF – Intelligent Lab on Fiber

Kings Distributed Systems

Resonance AI

 

Biotech/HealthTech

Nutrix

Parrots Inc.

SmartTab

 

Education/Social Impact

CPRWrap Inc

Platform Good

Rocky.ai

 

Enterprise/SaaS

Aurelius

Evertracker

 

FinTech

Crediverso

Kaoshi

Lizuna

 

Retail/E-commerce

ecosavers club

Patturn

Thelittleloop

 

Mobility

Bonnet

ConnectMyEV Inc.

Eambu

 

Robotics/Hardware/IOT

Kibus Petcare

LimeLoop

WATTS Battery

 

Security + Privacy

Allthenticate

Hummingbirds AI

WebTotem

How one VC firm wound up with no-code startups as part of its investing thesis

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. 

Ready? Let’s talk money, startups and spicy IPO rumors.

How one VC firm wound up with no-code startups as part of its investing thesis

Throughout all the chaos of 2020’s economic upheaval in the startup world, I’ve worked to pay more attention to low-code and no-code services. The short gist of chats I’ve had with investors and founders and public company execs in the past few weeks is that market awareness of no-code/low-code terminology is starting to spread more broadly.

Why? Again, summarizing aggressively, it seems that the gap between what different business units need (marketing, say) and what in-house or external engineering teams are capable of providing is widening. This means there is more total pain in the market, hunting for a solution, often with a tooling budget in hand.

Enter no-code and low-code startups, and even big-company services alike that can help non-developers do more without having to beg for engineering inputs.

I spoke with Arun Mathew this week. He’s a partner at Accel, a venture firm that has invested in all sorts of companies that you’ve heard of — including Webflow, which raised a $72 million Series A last August that Mathew led for his firm. (More on the round here, and notes from TechCrunch on Webflow’s early days here, and here, if you are curious.)

More interesting than that single round is how Accel wound up building a thesis around no-code startups. According to Mathew, Accel had made large investments into companies like Qualtrics, for example, when they were already pretty big and had found product-market fit. That same general approach led to the Webflow deal last year.

At the time, Webflow “wasn’t really defining what they were doing as n- code, they just said ‘we have a very simple drag and drop UI, to build websites, and soon full web applications, very simply,’ ” he told TechCrunch. But, according to Mathew, what Webflow was doing “lined up really well” with the “rising movement of no-code.”

From there, Accel “made a couple [more no-code] investments in Europe where [it has] an early-stage team and a growth team,” along with a few more in India. In the investor’s view, some of the investing activity was “thesis driven because we think [no-code is] a really interesting theme,” but some of the deals “happened opportunistically” where Accel had found “really talented founders in the space that we thought was interesting, executing on a vision that we found appealing.”

In the “span of a year, year-and-a-half,” Accel totted up “seven or eight companies in this no-code space,” which over the last five or six quarters became “a real thesis” for the firm, Mathew said. Accel now has “a global team” of around a dozen people “spending a lot of our time in and around no-code” he added.

Apologies for the length there, but what Mathew said makes me feel a bit less behind. After dipping a toe into learning more about no-code services and tooling (and, yes, low-code as well) it felt somewhat like I was playing catch-up. But as I covered that Webflow round and have since started paying more attention to no-code as well, perhaps you and I are right on time.

(We also recently ran an investor survey on the no-code topic, so hit it up if you want more VC scribbles on the topic.)

Market Notes

For Market Notes this week, we have four things. First, riffs from chats with two public company execs about the software market, some public market stuff and then some neat Airbnb spend data by which I am confounded:

  • I spoke with Apple MDM company Jamf’s CFO Jill Putman this week, after her company reported its first set of earnings as a public company. I wanted to know a bit more about the education market — a hot topic here at TechCrunch, given outsized rounds and huge market demand — and the medical world.
  • Regarding the software market for education, Putman noted that schools are buying lots of hardware, and that software sales should follow. Our read from that is that the boom in education software is not going to slow for some time as schools work on reopening.
  • Ditto the medical market, where Jamf has found uptake as hospitals roll out hardware to patients and families thereof to facilitate all sorts of demand that COVID has engendered. (Hardware needs software, enter Jamf!)
  • Chatting with the CFO our key takeaway was that there are still sectors that could generate a continued COVID tailwind, even if not all Jamf customers fit that bill. For startups that did catch a wave, this is probably good news.
  • And then there was Yext, a company that helps other companies’ customers find accurate information about them around the Web, and has recently gotten into the search game. Yext launched at a TechCrunch conference back in 2009, which is a neat bit of history. Anyway, Yext is public company now and we wanted to chat about which industries are driving growth for the former startup, and how the general climate for software is for the company, so we got on Zoom with its CEO, Howard Lerman.
  • So, which sectors are accelerating from Yext’s perspective? Government, education (again), insurance and financial services. Let that guide your take on the health of various startups.
  • Turning to the business climate, Lerman had some notes: “I will tell you in Q2,” he said, “things came back a bit from Q1.” In what sense? Retention rates, for one, according to the CEO. A return to form is welcome, but Lerman did caution that some companies were slower to “pull the trigger on big deals.”
  • Lerman also said that his perspective on the macro-climate has bounced back as well from a local-minima set around 30 days ago.

Public company execs are pretty guarded in how they talk because they have to be. But what Putman and Lerman seemed to intimate is that economic damage — provided you are selling to business, and not individuals — seems more contained on a per-sector basis than I would have anticipated. And that there are some good things ahead, at least in a handful of hot sectors.

Opening our aperture a bit, some SaaS companies struggled this week to meet investor expectations, even as more companies added themselves to the IPO queue. It’s going to be very busy for a few quarters. (Speaking of which, you can find the good and bad from the new Sumo IPO filing here.)

The economy is still garbage for many, but at least for companies it’s improving. And on that note, some data regarding Airbnb. According to the folks over at Edison Trends, things are going better for the home-booking site than I would have guessed. Per the group:

  • Airbnb’s bookings recovery outstripped its traditional rivals, growing “32% week-over-week” from late April into early June.
  • And, most critically: “Airbnb spending in July was up 22% over the previous July, and spending the week of August 17 was 75% higher than the equivalent week in 2019.”

Wild, right? Perhaps that’s why Airbnb has filed to go public.

Various and Sundry

We’re a tiny bit short on space, so I’ll keep our V&S dose short this week to respect your time. Here’s what I couldn’t not share:

And with that, we are out of room. Hugs, fist bumps and good vibes, and thank you so much for reading this little newsletter on the weekends. It’s a treat to write, and I hope you like it.

Hit me up with notes at alex.wilhelm@techcrunch.com. (I don’t know if you reply to this email if I will get the response. But try it so that we can find out?)

Alex

That Whole Foods is an Amazon warehouse; get used to it

Earlier this week, in Brooklyn, near the waterfront, Amazon opened what looks from the outside like a typical Whole Foods store. It isn’t open to the public, however; it’s a new fulfillment center.

“Grocery delivery continues to be one of the fastest-growing businesses at Amazon,” the company said in a statement about the location, noting that it has hired hundreds of new employees to aid in its operations. “We’re thrilled to increase access to grocery delivery.”

Americans sort of knew this was coming. Still, the pace at which buildings of all sizes are being either built or converted into e-commerce fulfillment centers — and closer to city centers — has become a bit breathtaking. According to the commercial real estate services firm CBRE, since 2017 at least 59 projects in the U.S. have centered on converting 14 million square feet of retail space into 15.5 million square feet of industrial space, and that trend is “absolutely going to continue,” says Matthew Walaszek, an associate director of industrial and logistics research at CBRE.

It has played out fairly quietly to date, save for the occasional headline about, well, Amazon, typically. Last month, for example, the Wall Street Journal reported that the ever-expanding conglomerate is in talks with the largest mall owner in the U.S., Simon Property Group, about converting both former and current JCPenney and Sears stores into distribution hubs from which it can deliver its products more quickly.

Amazon needs the space. Meanwhile, Simon needs a tenant that can pay its bills. That’s a tall order right now for many brick-and-mortar retailers that were already under pressure and watched foot traffic disappear entirely with as the country largely shut down in March in response to the pandemic threat.

In fact, despite that Simon recently partnered with another outfit to buy retailers Brooks Brothers and Lucky Brand out of bankruptcy (Simon and fellow mall operator Brookfield are also reportedly in advanced talks to buy J.C. Penney), some view the moves as a means to buy time as it reconfigures its properties to accommodate one anchor tenant.

That exact scenario has already played out at Randall Park Mall in a Northeast Ohio suburb (a mall, incidentally, that this editor occasionally frequented as a teenager growing up in Cleveland). Once filled with gaudy stores like Piercing Pagoda and Spencer’s Gifts, the mall — among the world’s largest enclosed shopping centers when it opened in 1976 —  is now the site of an 855,000-square-foot facility filled with mobile robotic fulfillment systems.

A local outlet reported its conveyor belts would stretch farther than 10 miles if laid in a straight line.

It isn’t always Amazon that’s snapping up these properties, of course. There are a number of other large e-commerce players that are rapidly expanding their physical footprint right now, along with opportunistic developers betting the U.S. will also focus more on domestic manufacturing facilities in a post-COVID world.

There are other big grocery chains that, like Amazon’s Whole Foods, are increasingly focused on developing fulfillment centers — sometimes right inside a store that sees foot traffic. At an Albertson’s in South San Francisco, for example, customers blithely shop around an automated rack-and-tote system at the store’s center that preps orders for pickup and delivery.

To a certain extent, this ongoing shift in use was inevitable. The U.S. has the strange distinction of featuring 24 square feet of retail space per capita. By comparison, Canada and Australia have 16.8 square feet and 11.2 square feet per capita, respectively. “We just have a lot of retail — we are over-retailed — so it’s not surprising that properties are struggling,” Walaszek says.

The pandemic has only poured figurative fuel on fire. Forbes estimates that upwards of 14,000 real-world retail stores will close in the U.S. this year. Meanwhile, during the first six months of the year, consumers spent $347.26 billion online with U.S. retailers, up 30.1% from $266.84 billion for the same period in 2019, according to U.S. Department of Commerce data parsed by the news and research outfit Digital Commerce.

It’s still a niche trend — retail properties being converted to industrial use. While 14 million square feet has been converted in recent years, it’s a drop in the bucket compared with the 14.5 billion square feet of industrial real estate in the U.S.

That won’t change overnight, either. For one thing, retail-to-industrial conversions involve buy-in from local zoning officials whose constituents are often concerned about congestion, noise and pollution, among other things. Retail rents are also significantly higher than industrial rents — more than double in some markets — so it’s “a hard sell to a retail landlord to convert to industrial where revenues aren’t going to be as high,” notes Walaszek.

Still, thanks to a confluence of events — from a battering of the broader retail industry to the runaway growth of Amazon specifically –  both big and small fulfillment centers are beginning to spring up and fast.

As Amazon’s first “permanent online-only” Whole Foods in Brooklyn underscores, they may wind up in what seem like the unlikeliest of places, too.

Facebook bans politician of India’s ruling party for violating hate speech

Facebook has banned a politician from India’s ruling party, Bharatiya Janata Party, for violating its policies against hate speech on its platform, the company said today, weeks after inaction on the politician’s posts landed the social giant in hot water in its biggest market by users.

The company said it had removed profiles of T. Raja Singh, who had posted about Rohingya Muslim immigrants to be shot among other anti-Muslim sentiments. Singh will no longer be allowed to create profiles across Facebook services and unofficial groups and posts affiliated to him will also be nuked.

Singh, termed as a “dangerous individual” by Facebook, has a history of voicing problematic and hateful views on social platforms and in public appearances. Several of those posts, for which Facebook has banned him, remain online on Twitter and YouTube.

Today’s move comes weeks after the Wall Street Journal reported that a top Facebook executive in India had chosen to not take any actions on Singh’s posts because she was afraid it could hurt the company’s business prospects in the country.

A person familiar with the matter and local media reports claim that Facebook had removed some of Singh’s posts in the past. The Wall Street Journal also reported that the aforementioned Facebook executive — Ankhi Das — also showed support to BJP’s Narendra Modi before he was elected as Prime Minister in 2014 and disparaged the opposition party, Indian National Congress.

In a statement today, a Facebook spokesperson said, “the process for evaluating potential violators is extensive and it is what led us to our decision to remove his account.” 

In the last few weeks, Facebook has received some of the harshest criticism to date in India, where it reaches more than 400 million users. Politicians from both sides — the opposition and ruling party — have accused the company of having political biases.

In a letter to Facebook chief executive Mark Zuckerberg, India’s IT Minister Ravi Shankar Prasad earlier this month expressed concerns about the alleged political leanings of the company’s staff and accused them of suppressing pages that support right-wing views.

GM, Ford wrap up ventilator production and shift back to auto business

As the COVID-19 pandemic spread to the United States, a number of automakers and other manufacturers announced plans to retrofit factories to help ease the shortage of personal protective gear and ventilators.

Now, two U.S. automakers have fulfilled their separate multi-million-dollar ventilator contracts — together delivering 80,000 of the devices to the U.S. government.

General Motors said Tuesday that it has completed its contract with the U.S. Department of Health and Human Services for 30,000 critical care ventilators delivered to the Strategic National Stockpile. GM said many of its ventilators have been deployed to hospitals. Ford has also completed its 50,000-ventilator contract, Bloomberg reported.

GM and Ford didn’t go it alone. Both automakers partnered with companies to accelerate the ramp up from 0 to thousands of ventilators within five months. GM partnered with Ventec Life Systems to produce ventilators at its engine plant in Kokomo, Ind., using about 1,000 workers. The GM-Ventec partnership grew out of  StopTheSpread.org, a coordinated effort of private companies to respond to COVID-19.

Meanwhile, Ford teamed up with GE Healthcare to produce ventilators at the automaker’s Rawsonville Road plant in Michigan. Ford’s $336 million contract wrapped up August 28 when it shipped its final Model A-E ventilator unit. Ford’s contract was supposed to be fulfilled by mid-July, but said it was delayed by new suppliers that were ramping up parts production, according to Bloomberg. The company was granted an extension by HHS.

In the early days of the contracts, GM and Ford were criticized, and even attacked, by President Trump, although ultimately he applauded the efforts.

Both efforts stretched and showcased the capabilities of the automakers to convert portions of factories used to assemble vehicles and parts into facilities cranking out medical devices. Before GM even announced its partnership with Ventec, the automaker investigated the feasibility of sourcing more than 700 components needed to build Ventec’s critical care ventilators called VOCSN. Ventec describes these VOCSN devices as multi-function ventilators that were cleared in 2017 by the FDA.

GM initially estimated it would cost about $750 million, a price that included retrofitting a portion of the engine plant, purchasing materials to make the ventilators and paying the 1,000 workers needed to scale up production, the source said. However, the Trump Administration balked at the price tag, putting a contract with the U.S. government in limbo. Eventually, GM reached a $490 million contract with the federal government to produce 30,000 ventilators by the end of August. Under the contract, GM produced a different critical care ventilator from Ventec called the VOCSN V+Pro, a simpler device that has 400 parts. The other more expensive and complex machine had a multi-function capability.

Ford and GM also produced other medical supplies. Ford, which called its effort Project Apollo, said it produced more than 75 million pieces of personal protective equipment, including 19 million face shields, 42 million face masks,1.6 million washable isolation gowns and more than 32,000 powered air-purifying respirators in collaboration with 3M.

GM said its Warren facility has two production lines for face masks and a third line making N95 face respirators. To date, the facility has produced more than 10 million masks, with production going to employees at GM facilities or donated to community organizations, the company said.

Apple alum’s jobs app for India’s workers secures $8 million

Javed, a middle-aged man, worked as a driver before losing that job earlier this year as coronavirus spread across India, prompting New Delhi to enforce a nationwide lockdown and temporarily curb several business activities.

There are millions of people like Javed in India today who have lost their livelihood in recent months. They are low-skilled workers and are currently struggling to secure another job.

An Apple alum thinks he can help. Through his app startup Apna, Nirmit Parikh is helping India’s workers learn new skills, connect with one another, and find jobs.

Parikh’s app is already changing lives. Javed, who could barely speak a few words in English before, recently posted a video on Apna app where he talked about his new job — processing raisins — in English.

In less than one year of its existence, Apna app — available on Android — has amassed over 1.2 million users.

The startup announced on Tuesday it has raised $8 million in its Series A financing round led by Lightspeed India and Sequoia Capital India . Greenoaks Capital and Rocketship VC also participated in the round.

In an interview with TechCrunch last week, Parikh said that these workers lack an organized community. “They are daily-wage workers. They rely on their friends to find jobs. This makes the prospects of them finding a job very difficult,” he said.

Apna app comprises of vertical communities for skilled professionals like carpenters, painters, field sales agents and many others.

“The most powerful thing for me about Apna is its communities — I’ve seen people help each other start a business, learn a new language or find a gig! Communities harbinger trust and make the model infinitely scalable,” said Vaibhav Agrawal, a Partner at Lightspeed India, in a statement.

The other issue they struggle with is their skillset. “An electrician would end up working decades doing the same job. If only they had access to upskilling courses — and just knew how beneficial it could be to them — they would stand to broaden their scope of work and significantly increase their earnings,” said Parikh.

Apna is addressing this gap in multiple ways. In addition to establishing a community, and rolling out upskilling courses, the startup allows users — most of whom are first time internet users — easily generate a virtual business card. The startup then shares these profiles with prospective employers. (Some of the firms that have hired from Apna app in recent weeks include Amazon, Big Basket, and HDFC Bank.)

In the last one month, Parikh said Apna has facilitated more than 1 million job interviews — up more than 3X month-on-month. During the same period, more than 3 million professional conversations occurred on the platform.

Parikh said he plans to use the fresh capital to expand Apna’s offerings, and help users launch their own businesses. He also plans to expand Apna, currently available in five Indian cities, outside of India in the future.

There are over 250 million blue and grey collar workers in India and providing them meaningful employment opportunities is one of the biggest challenges in our country, said Harshjit Sethi, Principal at Sequoia Capital India, in a statement.

“With internet usage in this demographic growing rapidly, further catalysed by the Jio effect, apps such as Apna can play a meaningful role in democratizing access to employment and skilling. Apna has built a unique product where users quickly come together in professional communities, an unmet need so far,” he added.

A handful of other players are also looking for ways to help. Last month, Google rolled out a feature in its search engine in India that allows users to create their virtual business card. The Android-maker also launched its jobs app Kormo in the country.

Twitter flags Republican leader’s video as ‘manipulated’ for altering disabled activist’s words

Twitter flagged an inflammatory video by House Republican Whip Steve Scalise on Sunday for altering footage of a conversation between progressive activist Ady Barkan and Joe Biden. The video is now labeled as “manipulated media” in a tweet from Scalise, though remains online.

The inflammatory video pulls in out-of-context quotes from a number of Democrats and activists, but appears to have crossed a line by altering Barkan’s words from a portion of the conversation about policing reform. Barkan, who has ALS, speaks with an assistive eye-tracking device.

“These are not my words. I have lost my ability to speak, but not my agency or my thoughts,” Barkan tweeted in response, adding “…You owe the entire disability community an apology.”

.@SteveScalise,

These are not my words.

I have lost my ability to speak, but not my agency or my thoughts.

You and your team have doctored my words for your own political gain.

Please remove this video immediately. You owe the entire disability community an apology. https://t.co/N6G5RgMXlO

— Ady Barkan (@AdyBarkan) August 30, 2020

In the video excerpt, taken from a longer conversation about policing and social services, Barkan appears to say “Do we agree that we can redirect some of the funding for police?” In reality, Barkan interrupted Biden during the conversation to ask “Do we agree that we can redirect some of the funding?”

In the video, Barkan’s altered sentence is followed by a dramatic black background stamped with the words “No police. Mob rule. Total chaos. Coming to a town near you?” Those ominous warnings are followed by a logo for Scalise’s reelection campaign.

The addition of the two words, falsely rendered in Barkan’s voice, don’t significantly change the meaning of his question, but the edit still crossed a line. A Twitter spokesperson confirmed that the tweet violated the company’s policy for “synthetic and manipulated media,” though did not specify which part of the video broke the rules.

The synthetic and manipulated media policy states that Twitter “may label Tweets containing synthetic and manipulated media to help people understand their authenticity and to provide additional context.” In the policy, Twitter explains specifically that “new video frames, overdubbed audio” and other edits count as deceptive and significant manipulation.