TechCrunch |
- Clean energy firm Husk signs UN energy compact as it begins solar mini-grid expansion in Nigeria, rest of Africa
- Baidu’s electric car brand Jidu closes $400M Series A round
- Resilience raises $45 million for its cancer care startup
- PQShield raises $20M for its quantum-ready, future-proof cryptographic security solutions
- Ghana’s OZÉ gets $3M to scale its digital recordkeeping and embedded finance products
- Paack pulls in a $225M Series D led by SoftBank to scale its E-commerce delivery platform
- Infermedica raises $30M to expand its AI-based medical guidance platform
- KKR invests $45M into GrowSari, a B2B platform for Filipino MSMEs
- FTC fines online shop $4M for hiding reviews below 4 stars
- Daily Crunch: Google dumps FloC plan, proposes new Topics API for ad targeting
- Hard cash and soft skills: How to successfully manage an acquisition
- Maybe creator funds are bad
- If the $40B Nvidia-Arm deal is dead, what does it mean to big tech M&A?
- Apple’s updated Personal Safety User Guide addresses the AirTag stalking problem
- On-chain raises are the future of startup funding
- TechCrunch+ roundup: Zero-day exploits, breaking into Japan, algorithmic VC investing
- Sec. Raimondo warns US is far from resolving chip shortage
- Crypto startup Syndicate looks to demystify DAOs with ‘Web3 Investment Clubs’ product
- IBM shrugs off investor EPS concerns, sells growth story
- YouTube’s head of Gaming leaves to join blockchain group Polygon
| Posted: 26 Jan 2022 03:00 AM PST Husk Power Systems, a clean energy company that has been at the forefront of fueling rural electrification since 2008, is planning to launch 500 solar mini-grids in Nigeria over the next five years. The renewable energy firm revealed the plans today when it announced the signing of a voluntary commitment with the United Nations to grow its energy market in sub-Saharan Africa and South Asia. The commitment is contained under the 24/7 Carbon-free Energy Compact, by leading energy buyers, suppliers, equipment manufacturers and governments. The compact represents a global effort to accelerate the uptake of carbon-free electricity as a way of averting the perilous effects of climate change. The startup currently has operations in Nigeria, Tanzania and India (Uttar Pradesh and Bihar), where it has the ambitious goal of installing at least 5,000 mini-grids by 2030 and in the process make 1 million connections – half of which will be micro, small and medium-sized enterprises. Husk launched its first six mini-grids in Nigeria November last year, and it's looking to have 100 mini-grids operational in the country within two years. "Husk is committed to powering households, but our focus is first and foremost on micro, small and medium enterprises (MSMEs), and public institutions like health clinics and schools. MSMEs are the engine of economies in Africa, and powering existing small businesses and encouraging the formation of new MSMEs helps create the type of economic growth and social benefit that carries over to households by creating more opportunity and more jobs," the company's CEO and co-founder Manoj Sinha, told TechCrunch.  The renewable energy firm is planning to launch 500 mini-grids in Nigeria in a period of five years, and is eyeing the rest of Africa for expansion. Image Credits: Husk Power Systems The firm is now exploring growth opportunities in the western, southern and eastern regions of Africa, while prioritizing the countries that have a "supportive regulatory environment" like its current markets. In Nigeria, for example, mini-grid operators are "largely free of permit requirements for either standalone off-grid mini-grids or interconnected mini-grids." The Nigerian Electricity Regulatory Commission Mini-Grid Regulation (2016) stipulates the transfer of assets and financial compensation for mini-grid operators in cases where the national grid finally connects the regions where private mini-grids are operational. Husk is one of the companies participating in the Nigeria Electrification Project, which provides performance-based grants, a sort of capital subsidy, to mini-grid developers — part of the national effort to solve the country’s chronic power supply issues. "In terms of policy frameworks and regulation, the states where Husk works in India (Uttar Pradesh and Bihar) have supportive policies. And the Nigerian mini-grid policy is actually based on those policies, with additional improvements. As a result, Nigeria is seen to have the most conducive policy in sub-Saharan Africa at the moment, which also includes their Nigeria Electrification Project (NEP), a program administered by the Rural Electrification Agency and funded by the World Bank to provide a capital subsidy to mini-grid developers and accelerate market development," said Sinha.  The company plans to have additional technological and business model innovations, and the use of AI and IoT to remotely manage its fleet. Image Credits: Husk Power Systems Nigeria and India are the company's biggest markets at the moment. A supportive environment encourages investments from private players like Husk, and bridges the energy needs of households and small businesses, especially in rural areas. Potential markets for Husk include Kenya, which at the start of this month, recognized mini-grid power systems granting them 50% tax allowance and other tax incentives enjoyed by large-scale generators. “We welcome the Energy Compact commitments made by Husk Power and appreciate their leadership. It showcases the business opportunity presented by the global energy transition, and how private enterprises can drive accelerated action on ending energy poverty, expand renewable energy solutions for consumptive and productive load, and improve the adoption of energy efficiency solutions by end consumers,” said UN Energy programme manager, Kanika Chawla. According to the World Bank, mini-grids have the potential to provide half a billion people with clean energy by the end of this decade (including those using overburdened grids) with the right policies in place. They also provide cleaner and cheaper alternatives of energy, which could transform the lives of millions of people living in darkness. Sub-Saharan Africa accounts for 75% of the world's population with no access to renewable energy solutions and electricity. Countries like South Sudan, Burundi, Chad, Malawi, Burkina Faso, Madagascar, Tanzania are among some of the least electrified countries in the world, and could benefit from clean energy from solar or wind. "For off-grid communities, where diesel generation is the default source of electricity, the savings to our customers are significant. Businesses can expect about a 30% reduction in their monthly energy costs by switching from diesel to solar mini-grid electricity," said Sinha. Husk has to date raised $40 million from investors, including the Shell energy company and the Dutch Development bank FMO. The startup, which also provides financing for household and commercial appliances, was recognized last year by the 2021 Renewables Global Status Report as the only mini-grid developer with over 100 community sites in operation. |
| Baidu’s electric car brand Jidu closes $400M Series A round Posted: 26 Jan 2022 12:11 AM PST Once an industry with long development cycles, the automotive space is being upended by China’s tech giants. One can hardly keep up with all the new electric vehicle brands that come out of the country nowadays. Jidu, an electric carmaking company founded by Baidu and its Chinese auto partner Geely only a year ago, said Wednesday it has banked nearly $400 million in a Series A funding round. The new injection, bankrolled by Baidu and Geely, which owns Volvo, is a boost to the $300 million initiation capital that Jidu closed last March. The proceeds will speed up Jidu’s R&D and mass production process and allow it to showcase its first concept “robocar” — which it classifies as an automotive robot rather than a car — at the Beijing auto show in April. The mass-produced version of the robocar will launch in 2023. Jidu’s chief executive Xia Yiping previously headed the connected car unit of Fiat Chrysler in the APAC region and co-founded Mobike, the Chinese bike-sharing pioneer acquired by Meituan in 2018. The rate at which Jidu has moved forward is remarkable but could easily attract skeptics who question its tech’s viability. The speedy cycle, the carmaker explained, is thanks to its strategy of using a simulated prototype car to develop its smart cockpit and autonomous driving systems, rather than testing individual hardware parts in a mass-produced vehicle. The carmaker said in as short as nine months, it has “tested and proven” the safety and reliability of its Level 4 (autonomous driving without human interaction in most circumstances) capabilities for urban and highway roads. The EV startup is also putting a big emphasis on branding and fan community, something its competitor Nio is known for. In December, it started recruiting car lovers to join its “Jidu Union” to geek out about cars at online and offline events. Moving forward, Jidu will be hiring and training talent specializing in autonomous driving, smart cockpits, smart manufacturing and other related technologies. |
| Resilience raises $45 million for its cancer care startup Posted: 26 Jan 2022 12:10 AM PST French startup Resilience announced yesterday that it has raised a $45 million (€40 million) Series A round led by Cathay Innovation. The startup wants to improve the treatment journey when you're diagnosed with cancer so that you live a healthier and longer life. In addition to Cathay Innovation, existing investor Singular is also participating. Other funds are joining the round, such as Exor Seeds, Picus Capital and Seaya Ventures. Finally some healthcare investors are rounding up the round — Fondation Santé Service, MACSF, Ramsay Santé and Vivalto Ventures. I already profiled Resilience in March 2021 so I encourage you to read my previous article to learn more about the company. Co-founded by two serial entrepreneurs, Céline Lazorthes and Jonathan Benhamou, the company wants to help both patients and caregivers when it comes to cancer care. On the patient side, Resilience helps you measure, understand and deal with the effects and side effects of cancer and cancer treatments. Users can track various data points in the app and find content and information about their illness. But Resilience isn't just an app that you use at home. It is also a software-as-a-service solution for hospitals so that they can better personalize their treatments. Resilience has been founded in partnership with Gustave Roussy, one of the leading cancer research institutes in the world. Practitioners will be able to take advantage of all the data that patients have gathered from the app. This way, cancer treatment facilities understand the patient better and can adapt their care more quickly. Resilience has acquired Betterise to gain a head start when it comes to data-driven cancer care. The long-term vision is even more ambitious than that. If you talk with a caregiver working for a cancer treatment facility, they'll tell you they never have enough time. And it's even more difficult to keep track of new treatments that are becoming more and more specialized. Resilience doesn't want to replace doctors. But it wants to help them overcome blindspots. The result should be better care for patients, as well as more support through the Resilience app. Cancer care is a long and painful process, so anything that can improve this process is a good thing. |
| PQShield raises $20M for its quantum-ready, future-proof cryptographic security solutions Posted: 25 Jan 2022 11:59 PM PST Quantum computing promises to unlock a new wave of processing power for the most complex calculations, but that could prove to be just as harmful as it is helpful: security specialists warn that malicious hackers will be able to use quantum machines to break through today’s standards in cryptography and encryption. Today, a startup called PQShield that is working on “future-proof” cryptographic products — software and hardware solutions that not only keep data secure today, but also secure in anticipation of a computationally more sophisticated tomorrow — is announcing some funding as it finds some significant traction for its approach. The startup, spun out of the research labs at Oxford, has raised $20 million, a Series A that it will be using to continue its research and, in conjunction with partners and customers, product development. The startup is already staffed with an impressive number of PhDs and other researchers across the UK (its base remains in Oxford), the U.S., France and the Netherlands, but it will also be using the funds to recruit more talent to the team. Addition, the investment firm founded by Lee Fixel, is leading this round with Oxford Science Enterprises (formerly known as OSI) and Crane also participating. The latter two are previous backers from PQShield’s $7 million seed round in 2020. If machine learning is shaping up to be one of the more popular (and perhaps most obvious) applications for quantum computing, security is perhaps that theme’s most ominous leitmotif. The National Institute of Standards and Technology in the U.S. identified the risks of using quantum computing for malicious security intent some eight years ago and has been receiving research submissions globally in search of coming up with some standards to counteract that threat. (PQShield is one of the contributors.) Based on signals from other government bodies like the Department of Homeland Security — coupled with a memo from the White House just earlier this month mandating that the government’s intelligence and defense services make the switch to “quantum-resistant” algorithms in 180 days — it looks like the standards process will be completed this year, getting the wheels in motion for companies that are building solutions to address all this. “One memo can change everything,” PQShield’s CEO and founder Ali El Kaafarani said in an interview. PQShield (the PQ stands for “post-quantum”) has been working with governments, OEMs and others that are part of the customer base for this technology — adopting it to secure their systems, or building components that will be going into products that will secure their data, or in some cases, both. Its customers includes both private and public organizations impacted by the threat. Bosch is one OEM name that it has disclosed, and El Kaafarani said more will be revealed when PQShield announces its first commercially available solutions. (Other sectors it’s working with include automotive OEM, industrial IoT, and technology consulting, it says.) PQShield’s solutions, meanwhile, are currently coming in three formats. There is a system on a chip that is designed to sit on hardware like smartcards or processors. It also is making software by way of a cryptographic SDK that can be integrated into mobile and server apps and technologies used to process data or run security operations. And thirdly, in a new addition since it raised its seed round, it’s making a toolkit aimed at communications companies designed specifically to secure messaging services. This latter is perhaps the one that might most immediately touch the consumer market, which has been fertile ground for malicious hackers, and has increasingly become a focus for regulators and ordinary people concerned about how and where their data gets used. All of these, El Kaafarani said, are designed to work together, or separately as needed by a would-be customer, with the key being that what it is building now can be used today, as well as in a quantum computing future. The idea of a “quantum threat” might sound remote to most people, considering that we’re still some years away from quantum computing becoming a commercial, scalable industry, but the reality is that malicious hackers have been collecting data that will help them “solve” current cryptographic keys using those machines for years at this point. Some of this data has been publicly shown off, and much has not. All of this has been leading, El Kaafarani noted, to an “inflection point where people are now ready to think about the next phase of public key infrastructure,” which he summed up in layman’s terms as the difference between “math that is still easy to solve, and math that will still be very difficult to solve, even on a quantum computer,” due to particular combinations of math problems and aspects of complexity theory. Quantum computing, even at its still largely nascent stage, has been fueling a lot of startup and big-tech activity. Atom Computing (which designs quantum computing systems) and Terra Quantum (building quantum-computing-as-a-service, given the likely high cost of these machines) each raised $60 million earlier this month. Intel, IBM and Amazon are among those that have making significant investments in quantum servers and processors for years now. There are others also working specifically on quantum security. In that context, PQShield groundbreaking role in helping develop standards, and its existing network of customers and partners, spells a clear opportunity and promise for investors: "Thanks to an industry-leading team, decades of combined experience and a best-in-class product offering, PQShield has quickly emerged as a front runner and true authority in post-quantum cryptography for hardware and software, a field with enormous market potential,” said Fixel in a statement. “PQShield is already helping to define the future of information security, and we are excited to support their ongoing growth." |
| Ghana’s OZÉ gets $3M to scale its digital recordkeeping and embedded finance products Posted: 25 Jan 2022 11:58 PM PST OZÉ, a Ghanaian fintech startup that provides digital recordkeeping tools with embedded finance products to medium and small businesses, has raised a $3 million pre-Series A round. The startup's new financing round was led by European early-stage VC Speedinvest, with participation from Cathay AfricInvest Innovation Fund, Savannah Capital and other unnamed angel investors. This news follows the $700,000 seed funding OZÉ secured last year. In the past 18 months, several startups serving medium and small businesses with credit, bookkeeping tools and an operating system to manage their operations have increased immensely. A few of them include Kippa, Bumpa and Sabi Cash. But OZÉ launched a while back before the space became hot owing to newfound investor interest in African startups. CEO Meghan McCormick and chief operating officer, Dave Emnett founded the company in 2018 following a series of travels McCormick made across Africa, where she noticed the challenges small businesses face and their dire need for financial and recordkeeping tools to thrive. "Working so closely with small business owners, I understood the problems they faced. And having seen how small businesses in the U.S. operated as a child, and seeing kind of the tech stack or the service stack that SMEs have over there, I had a good understanding of the solution set," said McCormick on a call with TechCrunch. "And putting those two things together, we've been able to create a platform tailored to the realities of today. But also really pushing towards what's possible for business owners in Ghana and Nigeria, who has a smartphone in their pocket." OZÉ boasts of a client base of more than 125,000 business owners in Ghana and Nigeria. That number is just a drop in the ocean of more than 100 million small businesses across West Africa that OZÉ says is its addressable market. Traditionally these businesses have operated as brick-and-mortar enterprises running on pen-and-paper. Now, as they look to build online presences, demand for technology and financial products to digitize businesses is increasing. OZÉ's business app helps these medium and small businesses collate sales, expenses, payables, receivables and customer data. This data is analyzed to provide businesses with support ranging from tailored recommendations, reports through daily business tips, monthly business seminars and access to an on-demand business coach. Based on how businesses use the platform, OZÉ generates performance and behavioural data, which it uses to predict their credit risks and create alternative credit scores. The startup partners with financial institutions (banks and fintechs) to lend to businesses that need loans. "OZÉ's methods and relationship to business owners mean that loans made through the platform can be collateral-free, larger and paid back over a longer period without increasing risk," the company said in a statement. On the call, McCormick said credit is primarily provided to customers who are active on the OZÉ app for at least 30 days. The more robust the business' behavioural component and credit score, the longer such business will have, she said. Also, businesses on the platform take an average loan of $5,000 while paying up to 36% APR. Similar platforms provide credit and recordkeeping services, but McCormick quickly points out what makes her company stand out. "I think the tight integration between record keeping, credit and now payments is a real competitive factor in terms of the business model that we can run. And it sets off a flywheel in the way that just being a record keeper and company or just being a digital lender wouldn't," the chief executive said. "Most of the small businesses know that they should be keeping records. But keeping any records, digital or not, is a behavioural change. And so, we've built a strong foundation of behavioural science into our app so that OZÉ becomes habit-forming." OZÉ's positioning as the coach, partner and advisor of the businesses on its platform ensures that they have access to a community of other business owners, learn, grow and do commerce together. The platform is trying to take this idea of making accounting social, she said. On the credit end, OZÉ can tap into businesses' cash-based performance data and offer better loans after getting psychological insight into automatically recorded transactions. The Ghanaian fintech recently launched a payments integration to allow its businesses to collect payments on the platform. In Ghana, businesses can accept payments via mobile money or card and a bank transfer or card in Nigeria. According to the company, businesses that use OZÉ as a choice of payment instead of using other platforms or cash will have higher credit limits and lower interest rates. Last year, OZÉ's active monthly users grew by 1,200%. The company said that the number of loans granted on the platform also increased by 200% from Q3 to Q4 of 2021. OZE also claims that 97% of business owners using the platform run businesses that are growing, profitable, or both. On the company's next steps following its recent funding, McCormick said OZÉ would build out its team, acquire more customers, deepen its presence in Ghana and Nigeria, and begin expansion plans into new African markets. |
| Paack pulls in a $225M Series D led by SoftBank to scale its E-commerce delivery platform Posted: 25 Jan 2022 09:50 PM PST By now, many of us are familiar with the warehouse robots which populate those vast spaces occupied by the likes of Amazon and others. In particular, Amazon was very much a pioneer of the technology. But it's 2021 now, and allying warehouse robots with a software logistics platform is no longer the monopoly of one company. One late-stage startup which has been 'making hay' with the whole idea is Paack, an e-commerce delivery platform which a sophisticated software platform that integrates with the robotics which are essential to modern-day logistics operations. It's now raised €200m ($225m) in a Series D funding round led by SoftBank Vision Fund 2. The capital will be used for product development and European expansion. New participants for this round also include Infravia Capital Partners, First Bridge Ventures, and Endeavor Catalyst. Returning investors include Unbound, Kibo Ventures, Big Sur Ventures, RPS Ventures, Fuse Partners, Rider Global, Castel Capital, and Iñaki Berenguer. This funding round comes after the creation of a profitable position in its home market of Spain, but Paack claims it's on track to achieve similar across its European operations, Such as in the UK, France, and Portugal. Founded by Fernando Benito, Xavier Rosales and Suraj Shirvankar, Paack now says it’s delivering several million orders per month from 150 international clients, processing 10,000 parcels per hour, per site. Some 17 of them are amongst the largest e-commerce retailers in Spain. The startup's systems integrate with e-commerce sites. This means consumers are able to customize their delivery schedule at checkout, says the company. Benito, CEO and Co-founder, said: "Demand for convenient, timely, and more sustainable methods of delivery is going to explode over the next few years and Paack is providing the solution. We use technology to provide consumers with control and choice over their deliveries, and reduce the carbon footprint of our distribution." Max Ohrstrand, Investment Director at SoftBank Investment Advisers said: "As the e-commerce sector continues to flourish and same-day delivery is increasingly the norm for consumers, we believe Paack is well-positioned to become the category leader both in terms of its technology and commitment to sustainability." According to research from the World Economic Forum (WEF), the last-mile delivery business is expected to grow 78% by 2030, causing a rise in CO2 emissions of nearly one-third. As a result, Paack claim it aims to deliver all parcels at carbon net-zero by measuring its environmental impact, using electric last-mile delivery vehicles. It is now seeking certification with The Carbon Trust and United Nations. In an interview Benito told me: "We have a very clear short term vision which is to lead sustainable e-commerce delivers in Europe… through technology via what we think is perhaps the most advanced tech delivery platform for last-mile delivery. Our CTO was the CTO and co-founder of Google Cloud, for instance." "We are developing everything from warehouse automation, time windows, routing integrations etc. in order to achieve the best delivery experience." Paack says it is able to work with more than one robotics partner, but presently it is using robots from Chinese firm GEEK. The company hopes it can compete with the likes of DHL, Instabox, and La Poste in Europe, which are large incumbents. |
| Infermedica raises $30M to expand its AI-based medical guidance platform Posted: 25 Jan 2022 09:01 PM PST Infermedica, a Poland-founded digital health company that offers AI-powered solutions for symptom analysis and patient triage, has raised $30 million in Series B funding. The round was led by One Peak and included participation from previous investors Karma Ventures, European Bank for Reconstruction and Development, Heal Capital and Inovo Venture Partners. The new capital means the startup has raised $45 million in total to date. Founded in 2012, Infermedica aims to make it easier for doctors to pre-diagnose, triage and direct their patients to appropriate medical services. The company’s mission is to make primary care more accessible and affordable by introducing automation into healthcare. Infermedica has created a B2B platform for health systems, payers and providers that automates patient triage, the intake process and follow-up after a visit. Since its launch, Infermedica is being used in more than 30 countries in 19 languages and has completed more than 10 million health checks. The company offers a preliminary diagnosis symptom checker, an AI-driven software that supports call operators making timely triage recommendations and an application programming interface that allows users to build customized diagnostic solutions from scratch. Like a plethora of competitors, such as Ada Health and Babylon, Infermedica combines the expertise of physicians with its own algorithms to offer symptom triage and patient advice. In terms of the new funding, Infermedica CEO Piotr Orzechowski told TechCrunch in an email that the investment will be used to further develop the company’s Medical Guidance Platform and add new modules to cover the full primary care journey. Last year, Infermedica's team grew by 80% to 180 specialists, including physicians, data scientists and engineers. Orzechowski says Infermedica has an ambitious plan to nearly double its team in the next 12 months.  Image Credits: Infermedica “We will invest heavily into our people and our products, rolling out new modules of our platform as well as expanding our underlying AI capabilities in terms of disease coverage and accuracy,” Orzechowski said. “From the commercial perspective, our goal is to strengthen our position in the US and DACH and we will focus the majority of our sales and marketing efforts there.” Regarding the future, Orzechowski said he’s a firm believer that there will be fully automated self-care bots in 5-10 years that will be available 24/7 to help providers find solutions to low acuity health concerns, such as a cold or UTI. “According to WHO, by 2030 we might see a shortage of almost 10 million doctors, nurses and midwives globally,” Orzechowski said. “Having certain constraints on how fast we can train healthcare professionals, our long-term plan assumes that AI will become a core element of every modern healthcare system by navigating patients and automating mundane tasks, saving the precious time of clinical staff and supporting them with clinically accurate technology.” Infermedica’s Series B round follows its $10 million Series A investment announced in August 2020. The round was led by the European Bank for Reconstruction and Development (EBRD) and digital health fund Heal Capital. Existing investors Karma Ventures, Inovo Venture Partners and Dreamit Ventures also participated in the round. |
| KKR invests $45M into GrowSari, a B2B platform for Filipino MSMEs Posted: 25 Jan 2022 07:32 PM PST  A sari-sari store owner who uses GrowSari GrowSari, the Manila-based startup that helps small shops grow and digitize, announced today that KKR will lead its Series C round with a $45 million investment. The funds will be used to enter new regions in the Philippines and expand its financial products. The Series C round is still ongoing and the startup says it is already oversubscribed, with the final composition currently being finalized. Before its Series C, GrowSari's total raised was $30 million. TechCrunch last wrote about GrowSari in June 2021, when it announced its Series B. Since then, it has expanded the number of municipalities it serves from 100 to 220, and now has a customer base of 100,000 micro, small and mid-sized enterprise (MSME) store owners. Founded in 2016, GrowSari is a B2B platform that offers almost every kind of service that small- to medium-sized retailers, including neighborhood stores that carry daily necessities (called sari-saris), roadside and market shops and pharmacies, need. For example, it has a wholesale marketplace with products from major fast-moving consumer goods (FMCG) brands like Unilever, P&G and Nestle. It partners with over 200 providers, like telecoms, fintechs and subscription plans, so sari-saris can offer services like top-ups and bill payments to their customers. Sari-sari operators can also use GrowSari to launch e-commerce stores and access short-term working capital loans to buy inventory. The startup's other financial products include digital wallets and cash-in services, and it is looking at adding remittance, insurance and loans in partnership with other providers. The new funding will be used to expand into the Visayas and Mindanao, the two other main geographical regions in the Philippines, with the goal of covering all 1.1 million "mom and pop" stores in the Philippines. |
| FTC fines online shop $4M for hiding reviews below 4 stars Posted: 25 Jan 2022 04:20 PM PST We all know online reviews must be taken with a grain of salt, but generally you’d like to think that a product with a 4.5-star average is better than one with a 3.5-star average. You might be wrong, since the site you’re looking at might not even permit bad reviews to appear — like Fashion Nova, which just incurred a $4.2 million settlement order from the FTC. What happened was this: Fashion Nova used a third-party review management tool, which is surely a common thing for anyone running a site that lets users review the items they buy. But then they did a bad thing: from 2015 to 2019, they had 4- and 5-star reviews appear automatically on the site, while anything lower than that would require approval. And they didn’t approve hundreds of thousands of them, artificially inflating the perceived quality of the goods on the site. “Fashion Nova misrepresented that the reviews on its website accurately reflected the views of all purchasers who submitted reviews to the website. The proposed settlement puts provisions in place to address Fashion Nova's deceptive practice and orders Fashion Nova to pay $4.2 million for harm consumers incurred,” wrote the FTC in a blog post explaining the situation. You can see the various documents related to the case here. It seems the agency caught the scent of other scams like this being perpetrated under the auspices of third-party review platforms, since it has since sent letters of warning to 10 other (like the original, unnamed) companies that operate them. And it made a broader “watch yourself” announcement back in October regarding fake reviews and deceptive endorsements. In case you’re worried Fashion Nova is just an innocent victim here, it is worth noting that this isn’t the company’s first brush with the feds, as back in 2020 it agree to pay $9 million over shady cancellation and return policies. Caveat emptor! (Sadly, it’s anyone’s guess whether these fines will be paid in full.) Separately, but probably timed to harmonize with this announcement, the FTC updated its guidelines for marketers looking to pay for or solicit online reviews. There are ways to to do it right, like being transparent and allowing both positive and negative reviews to appear once they have been solicited. And there are… other ways. And it issued new guidance for platforms publishing reviews that they should think twice about manipulating the source, incentives or visibility of reviews to their own advantage. Fake reviews are a plague on the online economy, but so far either no one has solved the problem or the cure is — for retailers — worse than the disease, like it requires lots of work or the collapse of various lucrative arrangements. Perhaps this little flex by the FTC will help nudge them in the right direction. |
| Daily Crunch: Google dumps FloC plan, proposes new Topics API for ad targeting Posted: 25 Jan 2022 03:13 PM PST To get a roundup of TechCrunch's biggest and most important stories delivered to your inbox every day at 3 p.m. PST, subscribe here. Hello and welcome to Daily Crunch for January 25, 2022! Today our cup overflows with news. There's simply too much going on to cover in a single newsletter, so I've tried to fit as much as possible below. Some sections are condensed, but you'll see why. No more delay, the news! – Alex The TechCrunch Top 4
Startups/VCTechCrunch Disrupt Startup Battlefield startup Cellino Bio raises $80M: This is the leading story from startup-land today, I reckon. Just a few months after winning our own startup pitch competition, Cellino has raised a massive Series A that should provide the startup with plenty of runway. For more on what the startup does, head here. And now, highlights from the day's startup news:
To close out our early-stage coverage, Greg Kumparak takes a look at the 29th batch of startups from the Alchemist Accelerator, which has an enterprise focus. Crypto pioneer David Chaum says web3 is 'computing with a conscience' Image Credits: PATRICIA DE MELO MOREIRA (opens in a new window) / Getty Images In 1982, computer scientist David Chaum wrote a dissertation that described a blockchain protocol, along with the code for implementing it. Since then, his cryptologic research has led to developments like digital cash and anonymous communication networks. Today, he launched xxmessenger, which the company describes as the first "quantum-resistant" messaging app. When we asked him what has changed in the past few years, Chaum said, "Seems to me that Bitcoin and the like have created something that could no longer be ignored. Now the question is: How can it be brought to the general public in a way that they can readily adopt this next generation of information technology?" Big Tech Inc.
TechCrunch Experts Image Credits: SEAN GLADWELL / Getty Images TechCrunch wants to know which software consultants you've worked with for anything from UI/UX to cloud architecture. Let us know here. ICYMI, check out this interview Miranda Halpern did with Georgina Lupu-Florian last week: "How should nontechnical founders collaborate with software developers?" |
| Hard cash and soft skills: How to successfully manage an acquisition Posted: 25 Jan 2022 02:30 PM PST Companies make acquisitions for a host of reasons. Sometimes it’s about filling a hole in a product road map, or expanding market share, or finding good people. Finding the right company to acquire takes special talent. But once the deal is through, it takes skill and a deft hand to integrate the acquired company smoothly into the mothership without losing key talent or making its staff feel like they have gone from building something great to being cogs in a huge machine. The acquirer has to decide whether to incorporate their culture into the acquired company or let it maintain its own culture and identity. It can be a difficult line to walk, and the success of the transaction can often hinge on how well the cultural integration is carried out. Beyond culture and people, though, there is also a critical nuts-and-bolts side to acquisitions. Do you keep the same benefits and compensation packages in place, or do you move people to new plans? That process can be disruptive for employees. Worst of all, do you lay people off? Then there’s tooling. Each company has its own way of doing things, and has unique tools used by sales and marketing, HR and finance. The acquirer and acquired company have to sit down and decide which tools they will keep or abandon without making the smaller firm feel like it’s a “my way or the highway” situation — unless that’s how you do business. It’s a balancing act. If you care to make the company you’re acquiring feel part of the team rather than a bolted-on component, the entire exercise will get harder. In an effort to answer all these questions, we’re examining how good acquisitions work in a two-part series. For this first part, we spoke to executives from three companies that have made many acquisitions to get their take on the process and how they ensure the post-deal integration goes smoothly. In the next part, we will feature executives from three companies that were acquired by the same organizations. It’s worth noting that everyone involved here is trying to put their best foot forward, and nobody is going to air any dirty laundry on either side of the acquisition equation. The goal of these articles is to learn what the process is like for each side of the transaction, and just how much of a challenge this whole undertaking can be after the contracts are signed and the checks clear. Looking for the right companyWhile there isn’t necessarily a formula for finding good companies, the executives we spoke to all discussed a process that they have developed over time based on their experiences acquiring companies. Ashley Andersen Zantop, COO at edtech firm Cambium Learning Group, has been involved in a number of acquisitions in her time with the company. She said Cambium has pursued an acquisition strategy over the years to complement the company’s organic growth, and for starters, a good fit would be digital edtech businesses aimed at the K-12 market. |
| Posted: 25 Jan 2022 02:17 PM PST In the summer of 2020, TikTok set aside $200 million to pay U.S. creators in what it called a “creator fund.” This wasn’t a common practice at the time. The more seasoned platform YouTube paid creators by distributing funds through its partner program, established in 2007, which enables revenue sharing on the advertisements that play on creators’ uploads. But over the last few years, as every social media company has tried to compete with TikTok’s growing popularity, these platforms all created their own creator programs: YouTube established a $100 million creator fund for Shorts, Snapchat is offering cash prizes for submissions to Spotlight challenges and Instagram is showering Reels creators with gamified cash bonuses. Objectively, it should be a good thing for creators when big tech companies funnel large sums of money to them, right? But, as VidCon founder/recent TikTok star/longtime YouTuber Hank Green pointed out in a recent video essay, creator funds may not be all they’re cracked up to be. It’s possible that these funds function better as a way to make the companies look good — “Hey! We’re paying independent artists!” — than they do as a way for creators to make money. While the YouTube Partner Program distributes a percentage of ad revenue to creators, creator funds like TikTok’s pay out from a static pool of money. So, as YouTube grows, the total amount of money paid out to creators will grow — over the last three years, the platform paid creators $30 billion. (Through YouTube’s partner program, creators get 55% of the money generated through ads on their videos.) But as TikTok grows, the size of its creator fund does not. So, Green claims, TikTok creators are making less money as a result of the platform growing — and we know it’s growing fast. Plus, you could argue that the platform is growing, in part, because users are posting good content on it. And those users don’t seem to be getting properly compensated for the value they bring to these massive tech companies. “The Creator Fund is one of many ways that creators can make money on TikTok,” a TikTok spokesperson told TechCrunch, in response to our inquires about Green’s video and the creator fund. They pointed to new initiatives like the TikTok Creator Marketplace, which helps brands easily connect with content creators, and last month’s launch of a feature that lets creators receive tips at any point, not just during livestreams. Of course, YouTube has monetization features like these as well. “We continue to listen to and seek feedback from our creator community and evolve our features to improve the experience for those in the program,” TikTok told TechCrunch. Green, who has meticulously tracked his TikTok earnings for over a year, says he used to make 5 cents per thousand views, but over the last few months, he’s made 2 cents per thousand views. He claims this is because there are more views on the platform, since it’s growing, meaning that creator payouts are shrinking. Sure, these programs aren’t intended to fund a full-time creator’s entire business, but the payout amounts undervalue the actual contribution that creators give to social platforms. We don’t know if the creator fund is TikTok’s long-term creator monetization plan — for Instagram, YouTube and Snapchat, these funds are basically just incentives to get creators to use their platforms as much as TikTok — but the short-form video race is getting a bit exhausting for creators. Other full-time creators back up Green’s observation. British tech YouTuber Safwan AhmedMia tweeted that he earned £112.04 (about $150) from amassing over 25 million views on TikTok since April 2021. YouTube’s top U.S. creator, MrBeast responded to the tweet saying that he made $14,910.92 for “prob over a billion views.” Their calculations are less exact than Green’s — TikTok doesn’t show you how many total views you have unless you manually count them. But by their estimations, MrBeast and AhmedMia both would be making less than two cents per thousand views. Generally, creators make more money through brand deals than through sheer video impressions, whether they’re on YouTube, TikTok, Snapchat or wherever else. But creators still want to see payment for the value that they bring to the platforms for which they make content. “When TikTok makes more, creators make less — the slogan writes itself,” Green said in his video. “If the fund were a percentage of revenue rather than a static pool, that would be very bad for TikTok’s bottom line […] But it would be very good for creators! TikTok can get on PRNewswire and be like, ‘over the next three years, we’re sending a billion dollars to creators,’ and that sounds like a huge amount of money, right? But they remain entirely in control of how much they pay, and as more creators join the fund, and as the app continues to succeed, creators make less money per view.” Though we don’t know exactly how much the TikTok app itself raked in, its parent company ByteDance made $58 billion last year, which makes the $200 million creator fund — deployed almost two years ago — feel small. Comparing TikTok and YouTube is like comparing apples and oranges, though. A 30-second TikTok will inherently pay out less than a 20-minute YouTube video. Plus, ads are served differently on these platforms — YouTube has pre-roll, mid-roll and end-roll ads, while TikTok ads appear between videos (and advertisers are getting smart, making their content look like it’s just an ordinary TikTok, iterating on the same viral trends as everyone else, until suddenly you realize the video is trying to sell you a face wash or something). But an advertisement will never play in the middle of a TikTok, offering a less intrusive user experience — but by contrast, YouTube also offers its ad-free YouTube Premium plan for $11.99/month. TikTok could follow YouTube’s playbook, interspersing more ads to generate more revenue to fund greater creator payouts. But that would be really annoying, and it would be hard to believe that TikTok is really hurting for money. Again: ByteDance made $58 billion in 2021. TikTok’s Creator Fund is $200 million. That’s 0.3% of TikTok’s parent company’s revenue spent on its Creator Fund, which straddles multiple fiscal years. |
| If the $40B Nvidia-Arm deal is dead, what does it mean to big tech M&A? Posted: 25 Jan 2022 01:36 PM PST News reports surfaced over the past 24 hours that the $40 billion Nvidia-Arm deal, which ranks among the most expensive tech deals ever, is in peril. Nvidia is reportedly ready to walk away due to regulatory pressure. The question is, what does it mean for tech M&A if this deal falls apart? Let’s not forget that last year at this time Visa shut down a $5.3 billion deal to acquire Plaid after the U.S. Justice Department gave it a closer look than made the credit card giant comfortable. Just last month, the U.K.’s antitrust watchdog announced it was holding up Microsoft’s proposed $20 billion acquisition of Nuance Communications. That deal remains in limbo while it decides what to do with it, and there is also a possibility that the country’s Competition and Markets Authority (CMA) will open an investigation as well. It’s worth noting that EU authorities cleared the deal last month without conditions. Now we have Nvidia facing much broader regulatory scrutiny as international regulators worry about the combined companies shifting the competitive balance in the chip market. Geoff Blaber, chief executive officer at analyst firm CCS Insight, says that this deal faced tough regulatory headwinds since it was announced, and it’s not surprising to him that Nvidia would decide to walk away. “The Nvidia-Arm deal has faced intense scrutiny and pressure from the start and it's no surprise the deal is in danger of collapse. Finding a way to appease regulators whilst maintaining the value and justifying the $40 billion price tag has proven overwhelmingly challenging,” Blaber said. He added that the company could try an alternate exit, but it won’t provide the same rate of return for investors that the Nvidia deal would have. “It has also proven disruptive to Arm and its ecosystem in the process. An IPO is an alternative path, but is unlikely to provide Softbank (Arm’s primary investor) a comparable return.” Patrick Moorhead, founder and principal analyst at Moor Insight & Strategies, agrees that it puts Arm in a more difficult financial position, but he sees Nvidia coming out pretty much unscathed, even if it was not able to get the company it wanted. “For Arm, it means an IPO and a slightly weaker company without Nvidia’s capitalization. For Nvidia, it’s business as usual. Nvidia gets an architectural license if the deal falls apart, which means it can, for no license fee, create its own custom CPUs,” putting the company in good shape no matter what happens in this deal. That could be a big part of why Nvidia with so much regulatory scrutiny simply decided it was no longer worth the effort, especially since it could essentially have its cake and eat it too and it could put that $40 billion into other areas of investment to drive growth in the future. It could be that this is a unique situation and that it doesn’t really have much impact on the broader M&A landscape, but as we see more careful oversight of deals, and the ongoing antitrust efforts in the U.S. involving big tech, it certainly feels like there could be more here than one company growing tired of a bureaucratic process. There has been talk of governments in general looking at tech deals more closely than in the past, but with the EU all but rubber stamping the Microsoft-Nuance deal, it could depend on the mechanics of each deal, the companies involved and especially the perceived impact on competitive balance. |
| Apple’s updated Personal Safety User Guide addresses the AirTag stalking problem Posted: 25 Jan 2022 01:33 PM PST After a number of stories in recent weeks have highlighted how Apple’s AirTags are being used for stalking purposes, the company has today updated its existing “Personal Safety User Guide” with new information on what consumers should do in the event they find an unknown AirTag in their presence or hear one make a sound. The guide specifically explains what the AirTag’s alerts mean, and what to do if they find an AirTag or other Find My network accessory following them. It even contains instructions for Android users, too. The addition to the guide was first spotted by the sites 9to5Mac and AppleInsider. Apple confirmed to TechCrunch the guide was updated today with the AirTag-related information. However, the guide itself isn’t new. The same manual had previously offered information designed to help people who were worried their personal safety was at risk or who were concerned about other ways they could be stalked or tracked via Apple devices. In general, it focused on helping people who had previously shared information with a partner, and who now wanted to ensure that person no longer could access their account, their data or their location, among other things. In the case of AirTag, though, it’s not always a partner abuse situation leading to the stalking. A report by The New York Times, for example, highlighted how car thieves were using AirTag devices to track and locate high-end vehicles they planned to steal. Others said they were getting alerts about being tracked by an AirTag after they left a public place, like their local gym. Some parents were also using the devices to track their teenage children without informing them, the story noted. As Apple is the first major tech company in the lost-item tracker space to have implemented proactive alerts about unknown Bluetooth trackers nearby, it’s brought the stalking situation to light. As The NYT noted, some researchers believe Apple’s AirTag didn’t necessarily create the tech-enabled stalking problem itself. Instead, it’s possible that the AirTag’s built-in alerts system has actually revealed what was already a widespread problem. Unfortunately for Apple, this situation has become a PR liability given how heavily the company has marketed itself as being focused on user safety and privacy. While various Apple spokespersons have provided statements to reporters covering AirTag stalking cases, the new guide now serves as a more official form of documentation on the matter. It explains to users what it means when they receive an alert, why they might hear an AirTag make a sound and how to use the new Tracker Detect app for Android. Most importantly, it points to the Apple support documentation about what to do if you find an unknown AirTag following you, and how to make it play a sound if you can’t otherwise find it. With the documentation update, the guide has now been published as a searchable website instead of just a PDF. This allows Google and other search engines to better index its contents in order to point web users to the right page based on their search query. It may also be easier to keep the guide updated as new personal safety documentation and guidance becomes available. Beyond the AirTag information, the refreshed guide also now includes information on newer Apple features that weren’t available when it was first published — like Apple’s App Privacy Report or information on how to set up recovery contacts. Other new sections cover Home Kit and the Home App, private browsing mode, how to block people through messages, phone, FaceTime and email, how to take a screenshot to document suspicious activity, and how to set up account recovery contacts. Combined with the existing information on managing account security and privacy, the new guide makes for a more comprehensive document than the earlier version. However, the issue with AirTag, specifically, was not really about the lack of documentation or consumer confusion over what to do, but the fact that AirTags themselves are simply too easy to use for stalking purposes. In addition to being affordable devices, their ring isn’t loud enough to notice, at times — especially if the AirTag has been placed somewhere like on the underside of a car or behind a license plate. And the alerts about unknown AirTags are too infrequent, privacy advocates have argued. Apple has yet to address these and other complaints by changing AirTag’s functionality, but the guide’s publication indicates the company is at least well aware of the problem and looking to provide some sort of resource to consumers. |
| On-chain raises are the future of startup funding Posted: 25 Jan 2022 12:43 PM PST Web3 is owned by the VCs, Jack Dorsey says. Well, I'd argue that web3 is whatever we make it – and the VCs only own it if we allow them to. We are building web3 right now and we have the power to control where it goes and how it is funded on the way there. If we take decentralization and autonomy seriously, there is no good reason we must follow outmoded venture capital standards. Other means exist, such as smart contract-controlled, on-chain funding, which is more intuitive for projects to utilize, more equitable, completely transparent, and more adaptable for investors and developers alike. This is why I consider entirely on-chain methods to be the future (or at least the next great evolution) of fundraising. The long, winding roadIf web3 is set to be owned by VCs, let’s agree that Web 2.0 is already owned by billionaires, conglomerates and multinational corporations with cultural influence, political power and the largest allocations of wealth humanity has ever seen. Fine then, no use raging against the dying light – but herein lies the rub: Literally everything we do on the Internet is designed to generate more capital for them while further monopolizing their power. Every time we log on, we're actually clocking in. With that in mind, is it any wonder that seasoned Web 2.0 players like Jack Dorsey are cynical about the future of web3? The main thing we should all remember moving forward is that web3 stands alone – it doesn't replace Web 2.0 – that sandbox continues to survive as-is. Web3 will exist concurrently, independent of Web 2.0. Believe it or not, some of us look at this opportunity as an ethical imperative, and think it is necessary to iterate upon the concept of the Internet, correct the sins of the father, and perhaps begin influencing the way our society functions at its most fundamental. Rather than empowering companies, we should be empowering communities. At the end of the day, that is precisely what web3 is: An open source way to give the same platform to individuals that corporations currently dominate. Our new framework's entire reason for existing is to empower individuals and to be more equitable and accessible to all people, regardless of age, race, sex and nationality. The status quo will not disrupt itself, so somebody has to do it. The future is ours to writeHow exactly does this disruption occur? The starting point is entirely on-chain. The majority of developers currently building the protocols and DApps of web3 are a new generation of creators who come to their work with a philosophical bone to pick. They know how the old models work, who they service and how it is designed to stay that way. Coming from traditional startup accelerators where the experience consists of building a company, raising capital, forming a board, and hiring employees provide us a solid foundation to work from and improve upon. Blockchain technology already provides us with open source, immutable ledgers that we can use to facilitate all our funding needs in a way that directly aligns with the ethos that has driven web3 from its inception. Utilizing self-executing smart contracts, we can control the open and closing points of a raise and make every investment and their terms open and verifiable to everyone. Transparency is vital to any web3 project worth its salt, so by utilizing these on-chain, publicly verifiable fundraising methods, we can ensure there is no favoritism. This model doesn't allow for back-room deals because everything is out in the open and everyone can see that all investors are on the same playing field. Better still, share deals and structures are revealed every single time an investment is confirmed on the blockchain. Another tactic we can utilize is whitelisting, which can ensure the people who are genuinely passionate about a project and involved with the space end up holding the most economic influence. By pre-selecting crypto addresses, all the vetting and due diligence can be completed beforehand and streamline the process. Funding contracts are generic and can whitelist any address for any reason, so the power rests entirely with the team issuing the smart contract. This is granular-level control over a process that tends to be messy and time-consuming. Conscientious creationOn-chain funding models also offer a more equitable approach to developers, allowing them to circumvent certain socio-economic barriers like education, employment, credit, connections, etc. These models let developers get their projects off the ground even if all they have is the project they are building. The entire framework offers a more meritocratic way of functioning, where all that matters is the project and its potential. Smaller projects can save resources and time by eliminating the need for building a pitch deck, opening a bank account, and actively seeking out investors in the traditional sense. This is the community-driven spirit that the blockchain industry was born from. We can put simple tools in place to help foster growth and funding in a way that makes sense for each project, and that is what will enable web3 to be owned by the developers, the enthusiasts and the users. And still, more remainsOn-chain raises are not meant to kill the traditional VC model altogether, because after all, working with sophisticated investors offers builders valuable perspectives. VCs are experts at analyzing business and financial models, planning for scaling, and evaluating execution risk and where companies stand in a market. VCs who prioritize these traits will remain as valuable as they are today. Every project wants and needs people who have a proven track record of helping companies grow and succeed. On-chain funding is not a magic bullet — it is simply the best framework we currently have to align the funding process closer with the mechanisms the developers find most useful while keeping the process open and equitable. We should pay close attention to these new innovations and welcome them to help this new Internet realize its full potential. |
| TechCrunch+ roundup: Zero-day exploits, breaking into Japan, algorithmic VC investing Posted: 25 Jan 2022 11:39 AM PST We work with contributors to develop guest posts that will help TechCrunch+ readers solve actual problems, so it’s always a delight to present a comprehensive “how to” article. In this case, Barnabas Birmacher, CEO of Platform as a Service company Bitrise, shared the lessons he learned as his team attempted to enter Japan. Launching a product in a foreign market where you’re unfamiliar with the language and culture is a necessary step for growing companies, “but the barriers to entry are high” in Japan, Birrmacher notes, which is why building community was foundational to their expansion. Instead of relying solely on strategic partners, his team visited Japan before ramping up to host events and engage directly with early adopters. Full TechCrunch+ articles are only available to members Setting aside traditional media and marketing tactics, Bitrise hired a manga artist to create a comic featuring a mobile developer, developed “Japan-first” swag to hand out, and even crafted a full-sized mascot costume for conferences. “We left the suit with one of our customers and now people wear it while they're drinking,” he writes. If your startup is at or near the point where you’re considering an international expansion, this post contains several tactics you can adapt and test. “Whether or not these things make sense for you, the most important thing to do while you're there is to show up and be a part of the community,” says Birmacher. Thanks very much for reading TechCrunch+, and I hope you have a great week. Walter Thompson A CISO's playbook for responding to zero-day exploits Image Credits: Kalawin (opens in a new window) / Getty Images The Log4Shell exploit that gave bad actors the ability to execute malicious code on infiltrated servers made global headlines and ruined many cybersecurity professionals' holidays. Despite a series of high-profile attacks, many companies still lack a response plan, writes Jonathan Trull, SVP of customer solutions, architecture and engineering at Qualys. Drawing on his experience as a CISO, Trull outlines three steps companies can take to develop a playbook:
For the first time in 4 years, profitability beats growth Image Credits: gabetcarlson (opens in a new window) / Getty Images Venture capitalists pin their hopes and expectations on revenue because it's a clear signal of how quickly their investment may grow. But lately, profitability has quietly overtaken revenue growth as the metric of choice, according to Jeremy Abelson and Jacob Sonnenberg of Irving Investors.
Abelson and Sonnenberg unpack the factors that are pushing investors to sell high-growth stocks and share “some of our favorite metrics as the profitability versus growth dynamic continues to play out.” 2022 crypto predictions from Prime Trust CFO Rodrigo Vicuna Image Credits: Klaus Vedfelt (opens in a new window) / Getty Images New York City Mayor Eric Adams converted his first paycheck into Ether and Bitcoin; Burger King is slapping QR codes on 6 million meal boxes that unlock NFTs. Cryptocurrency is having a cultural moment, but we’ve yet to reach mass adoption, despite what marketing campaigns might have you believe. Rodrigo Vicuna, CFO at fintech-focused bank Prime Trust, shares his predictions for this year’s crypto market, suggesting that tighter rules might bring more consumers into the fold: “It might seem counterintuitive, but more regulation provides more guidance, which provides reassurance for institutional and mass use." Will the latest selloff finally shake up how investors value startups? Image Credits: Nigel Sussman (opens in a new window) The public markets have gone downhill in the past few weeks, but early-stage investments in startups aren't showing any signs of slowing. It may be that investors are taking off their hype hats and valuing companies based on how profitable they are rather than how fast they're growing their revenue, wrote Alex Wilhelm in the Exchange. "A shift toward a more P/E world for tech companies over a P/S stance would make profit more, well, profitable for companies. More valuable, in other words. That, in turn, could change how companies — startups included — invest and what they prioritize." Is algorithmic VC investment compatible with due diligence? Image Credits: Andy Roberts (opens in a new window) / Getty Images Increasingly, investors are spending more time looking at the numbers and less on founders’ personalities before cutting a check. “In practice, attempts to remove bias can create newer, blind spots that are harder to identify,” writes Natasha Mascarenhas, who interviewed people who use algorithmic investment to guide their decision-making. "Every little while, we hear more rumblings that the industry will shift to lean in this direction, but candidly, it's hard," said Clearco co-founder Michele Romanow. "It requires deep technical expertise and a product to match, so while it sounds nice on the surface, people generally revert to what they know, which is the traditional gated system with humans making decisions based on intangible factors." 3 ways investors can assess the strength of an NFT opportunity Choosing between Orange fruit and peeled orange skin without fruit. Non-fungible tokens are highly speculative, but Clara Bullrich, co-founder of TheVentureCity, says green flags are just as easy to spot as red ones — if investors know what to look for. “Investors need to know the basics of NFTs and their potential, but they don't need deep technical knowledge,” writes Bullrich. “That's because the real value of any NFT project lies with the people building it.” |
| Sec. Raimondo warns US is far from resolving chip shortage Posted: 25 Jan 2022 11:25 AM PST The United States Department of Commerce Tuesday released results from a survey of 150 companies, aimed at getting a better picture of just how widespread of a supply crunch is currently plaguing the semiconductor market. The automotive and medical industries have been disproportionately impacted by the shortage. In a press briefing accompanying the findings, Commerce Secretary Gina Raimondo described the issue in stark terms, noting, "We aren't even close to being out of the woods as it relates to the supply problems with semiconductors." She added that the crunch is likely to last into the second half of the year — if not longer. Raimondo urged Congress to pass the U.S. Innovation and Competition Act (USICA) currently being drafted by the House, citing its inclusion of $52 billion in funding to ramp up domestic semiconductor production. The study notes that demand increased 17% from 2019 to 2021 — a number that's only going to grow. It goes on to describe thin margins that could have catastrophic results in the face of an unexpected event. The median inventory of chips has fallen from 40 days in 2019 to less than five days. These inventories are even smaller in key industries. That means if a COVID outbreak, a natural disaster or political instability disrupts a foreign semiconductor facility for even just a few weeks, it has the potential to shut down a manufacturing facility in the U.S., putting American workers and their families at risk. Most fabrication facilities, it notes, are currently running at north of 90% capacity, making it impossible to further increase production without opening more factories. Intel, notably, announced a large investment in two Ohio plants — though the first one isn't set to come online until 2025. Presumably much of the action being taken now is targeted at avoiding future shortages. "Despite the progress made since early 2021, the semiconductor shortage persists," the DoC report adds. "That's due in part to the complexity of the semiconductor supply chain. Producers don't always have a clear sense of demand, and chip consumers don't always know where the chips they need originate. These barriers make it harder to develop solutions." |
| Crypto startup Syndicate looks to demystify DAOs with ‘Web3 Investment Clubs’ product Posted: 25 Jan 2022 11:24 AM PST Over the past year, crypto acolytes have aimed to sell the world on an internet transformed by tokens and NFTs. All the while, a smaller subsection has pushed DAOs, or decentralized autonomous organizations, as a way to transform democracies and revamp stodgy organizations for an online age. Both groups have struggled with messaging and stateside legal guidelines, but the technical challenges for onboarding new users has been particularly strong for those looking to build their own DAO. Syndicate, a DAO services startup which raised $20 million from Andreessen Horowitz last year, is looking to simplify the DAO creation process (as much as legally possible) with the launch of their new product called “Web3 Investment Clubs.” The tooling allows users to spin up a group of up to 99 participants, pool their capital and vote as a group on where to invest those funds. Syndicate co-founder Ian Lee tells TechCrunch that the product offers users the ability to form a DAO with the “peace of mind to help maintain compliance and do the right thing for their their members.” The startup’s wider goal is to make forming these groups and investing in tokens and NFTs collectively as “easy as a group chat.” The “investment club” branding is part of an effort to demystify DAOs for a broader group of users — in this case investors — and create an alternative path for users that may have been considering the formation of a similar investment vehicle using more traditional non-crypto financial services. The startup’s step-by-step guide to setting up a DAO showcases just how complicated the weave of services still can be for those less familiar with crypto best practices, but also how quickly one can form one of the groups if they can breeze through the technical onboarding. In addition to the setup guidelines, Syndicate offers a dashboard where users can peruse the holdings of their club and past activity.  Image via Syndicate Syndicate is aiming to make these clubs flexible for users depending on their specific situations and tolerance for legal ambiguities. Certain guidelines exist for accredited and non-accredited users as well as DAOs that have members in the United States. The startup offers up basic guidelines that prospective club admins should be aware of — for clubs comprised of unaccredited investors in the U.S., every member must vote on every decision — but leaves the implementation up to end users. Syndicate’s suite of smart contracts can walk users through the process of formalizing their club with a legal entity and handling things like setting up a bank account and getting tax forms to ensure stuff stays above-board. Syndicate is looking to position itself at the center of the DAO infrastructure ecosystem and get as many curious users familiar with their offerings. As such, this new service is free and Syndicate isn’t charging any fees for setup or maintenance. |
| IBM shrugs off investor EPS concerns, sells growth story Posted: 25 Jan 2022 11:08 AM PST By all accounts, yesterday was a great day in IBM’s recent financial history. It said its revenue rose 6.5% in Q4, the highest in years. Investors liked the results, and the stock rose in after-hours trading. That is, until CFO Jim Kavanaugh answered a question on the company’s earnings call about its earnings per share projections for next year, and the rally sputtered — at least for a time. Fast forward to this morning, and investors are apparently focusing more on the good news and ignoring the bad. What did Kavanaugh say that briefly caused the stocks to reverse direction? Stifel Financial Corp. analyst David Grossman asked a question about EPS (earnings per share estimate), and that’s when Kavanaugh made clear the company wasn’t going to be playing that game. “And I’m a very big believer in focus. And that focus is around two measures: revenue growth and free cash flow. So, I am not going to talk about EPS guidance. And by the way, EPS, as you know quite well, there are many ways of getting to an EPS number,” he said on the call. What's the CFO on about?Putting on our accounting hats, what the CFO is discussing is not corporate pablum. IBM is aiming to reignite growth, the revenue component of Kavanaugh's comments. The free cash flow piece is a bit more nuanced, but it matters that IBM is focusing on growth more than profitability. |
| YouTube’s head of Gaming leaves to join blockchain group Polygon Posted: 25 Jan 2022 11:07 AM PST Ryan Wyatt describes himself on Twitter as YouTube’s head of Gaming by day, and a “web3 & crypto advisor/investor by night.” Now, he’ll be working in crypto during the day, too. Today, Wyatt announced that he will be leaving YouTube after almost eight years to join the team at Polygon, a blockchain scaling network built on Ethereum. His role at the crypto organization will be leading Polygon Studios, an effort to bring games and other media entities onto the platform. “I will miss YouTube dearly, but it’s time for me to pursue other endeavors in life and where my passions are taking me,” Wyatt wrote in a note posted on Twitter. “I am fascinated by blockchain app development and am beyond thrilled to enter the web3 space.”
His move comes at an interesting time for YouTube, which is still figuring whether crypto technologies should be part of its future. The Google-owned video platform is flirting with the idea of NFTs, according to a letter published today by YouTube CEO Susan Wojcicki. "The past year in the world of crypto, nonfungible tokens (NFTs), and even decentralized autonomous organizations (DAOs) has highlighted a previously unimaginable opportunity to grow the connection between creators and their fans," she wrote. "We're always focused on expanding the YouTube ecosystem to help creators capitalize on emerging technologies, including things like NFTs, while continuing to strengthen and enhance the experiences creators and fans have on YouTube." When reached for comment, a YouTube spokesperson did not elaborate further about the platform’s potential plans for NFTs. Wyatt’s exit showcases a sustained trend of executives embracing web3 technologies and leaving their high-profile roles for existing tech giants, sometimes taking similar positions at much younger companies or organizations. A few weeks ago, the CFO of Lyft stepped down from his position to join NFT auction house OpenSea in the same role. More tech companies and video game studios are confronting the question of how to implement blockchain technology. Last month, for instance, Ubisoft introduced the beta test of its Ubisoft Quartz platform, which will allow players to buy NFT assets to use in gameplay. “The main reason why blockchain has been successfully applied to gaming is because of the idea of digital ownership, which was never possible with traditional centralized games,” Beryl Li, co-founder of Yield Guild Games, told TechCrunch. But many video game fans are skeptical of how crypto might change their playing experience. In October, the video game distributor Steam announced that it would no longer host games that enable NFT and crypto trading. There is concern among some players that crypto developments in gaming are just predatory money grabs — many NFT items on DMarket, a virtual items marketplace, sell for upwards of $1,000 (still, it’s not as though you can’t buy expensive rare Pokémon on eBay). Last month, just a day after it was announced, GSC Game World walked back its decision to implement NFTs in the S.T.A.L.K.E.R. franchise through DMarket due to fan backlash. Along with Wyatt, multiple YouTube executives have left the company recently. Susanne Daniels, the founding global head of YouTube Originals, announced her departure, followed soon after by YouTube’s own announcement that it would close its original content studio after six years. YouTube’s senior director of creator partnerships Jamie Byrne and VP and global head of product partnerships Heather Rivera are also leaving. |
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