Monday, February 21, 2022

TechCrunch

TechCrunch

Apple’s standoff with Dutch antitrust authority over dating apps’ payments continues

Posted: 21 Feb 2022 11:44 AM PST

The Netherlands’ competition authority has once again increased a fine levied against Apple for failing to comply with an antitrust order related to payment tech and dating apps.

The fifth penalty payment of €5 million issued today means the tech giant is now on the hook for €25M (out of a possible total of €50M) — and stands accused of continuing to throw up barriers rather than offer solutions by a very exasperated-sounding regulator.

In a statement the Authority for Consumers and Markets (ACM), said:

“In the past week, we did not receive any new proposals from Apple with which they would comply with ACM's requirements. That is why Apple will have to pay a fifth penalty payment. That means that the total amount of all penalty payments currently stands at 25 million euros.

“We have clearly explained to Apple how they can comply with ACM's requirements. So far, however, they have refused to put forward any serious proposals. We find Apple's attitude regrettable, especially so since ACM's requirements were upheld in court on December 24. Apple's so-called 'solutions' continue to create too many barriers for dating-app providers that wish to use their own payment systems.

“We have established that Apple is a company with a dominant position. That comes with extra responsibilities vis-à-vis its buyers and, more broadly, society at large. Apple must set reasonable conditions for the use of its services. In that context, it cannot abuse its dominant position. Apple's conditions will thus have to take into account the interests of buyers.”

A spokesperson for the regulator confirmed that Apple hasn't offered any new proposals since last week’s were found to be “unreasonable“.

“We expect Apple to comply with the order,” they added. “If they fail to do so, we have the opportunity to impose another order subject to periodic penalty payments.”

Apple was contacted for a response to the latest fine from the ACM but the company’s comms department has been keeping its powder dry in recent weeks as the fines and accusations have ticked up.

The tussle between a competition regulator in a single (small) European country trying to enforce a complaint by a subset of apps wanting to sell digital content without being forced to hand Apple a big chunk of their revenue and a platform giant intent on maintaining control of its ecosystem, or — at very least — its ability to charge a sizeable commission fees on in-app purchases howsoever it can — looks instructive in that it foreshadows far bigger battles to come, once the EU (and other jurisdictions) adopt (and enforce) tough new ex ante regulations against digital giants, with penalties to match.

Under the EU’s Digital Markets Act (DMA) proposal, for example — which is speeding towards adoption — platforms that are judged to be “gatekeepers” and found to be breaking a list of pre-set, operational ‘dos and don’ts’ could face penalties of up to 10% of their global annual turnover.

Which — in Apple’s case — would mean a fine that’s closer to €25BN than €25M (so certainly harder for Cupertino to shrug off).

Even so, it’s clear regulators will face a massive task trying to get resource-rich tech giants to dance to their exact tune.

Apple’s response to the ACM complaint has shown it’s not willing to simply abandon a lucrative revenue stream just because a regulator decides it’s unfair — and will instead work against that by reconfiguring its operations to find a new way to extract much the same fee… (Apple said it would charge Dutch dating apps tapping into third party payment tech a 27% fee on sales vs the standard 30% App Store commission).

Staying on top of fast-iterating tech giants — who may be highly incentivized to route around regulatory limitations, especially those that challenge their revenues — is a game we’ve already seen is very easy to lose to endless delay.

Apple to charge 27% fee for Dutch dating apps using alternative payment options

Apple fined again for applying ‘unreasonable’ conditions to dating apps after Dutch antitrust order

 

Meta sent a new draft decision on its EU-US data transfers

Posted: 21 Feb 2022 10:44 AM PST

Facebook has received a “revised” preliminary decision from its lead EU privacy regulator with implications for its ability to continue to export user data to the US, TechCrunch has learned.

“Meta has 28 days to make submissions on this preliminary decision at which point we will prepare a draft Article 60 decision for other Concerned Supervisory Authorities (CSAs). I'd anticipate that this will happen in April,” a deputy commissioner at the Irish Data Protection Commission (DPC), Graham Doyle, told us.

Doyle declined to detail the contents of the preliminary decision.

However, back in September 2020, the DPC sent a preliminary order telling Facebook to suspend data transfers, per a Wall Street Journal report at the time, citing people familiar with the matter.

Meta, as the tech giant has recently rebranded its data-mining empire, has been flagging the ongoing risk to its EU-US data transfers in calls with investors.

It also immediately sought to challenge the DPC’s earlier draft order in the courts — but that legal avenue ran out of road in May last year when the Irish High Court issued a ruling dismissing the challenge to the DPC procedures.

It’s not clear there has been any material change to the facts of the case — which hinges on the clash between European data protection law and US surveillance powers — since the earlier draft order telling the company to suspend transfers that would lead the regulator to arrive at a different conclusion now, regardless of what Meta submits at this next stage.

Moreover, in recent months, other European data protection agencies have been issuing decisions against other US services that involve the transfers of personal data to the US — such as Google Analytics — which is, from an optics perspective at least, amping up the pressure on the DPC to finalize a decision against Meta.

The regulator also faced a procedural challenge by the original complainant, Max Schrems, who extracted an agreement from it, in January 2021, that it would swiftly finalize the long-standing complaint — so that’s another quasi deadline in play.

Under the terms of that settlement, the DPC agreed Schrems would also be heard in its (parallel) "own volition" procedure — which it opened in addition to its complaint-based enquiry related to his original (2013) complaint, and which is now moving forward via this new preliminary decision issued to Meta.

Schrems confirmed he has been sent the decision by the DPC — but made no further comment.

(For yet more twists, back in November, the privacy advocacy group founded by Schrems filed a complaint of criminal corruption against the DPC — accusing the regulator of "procedural blackmail" in relation to attempts to prevent publication of other draft complaints… )

On Meta’s ‘regulatory headwinds’ and adtech’s privacy reckoning

It’s still not clear how long exactly this multi-year data transfer saga could drag on before a final decision hits Meta — potentially ordering it to suspend transfers.

But it should be closer to months than years, now.

The Article 60 process loops in other interested data protection agencies — who have the ability to make reasoned objections to a draft decision by a lead authority within, initially, a month timeframe. Although there can be extensions. And if there is major disagreement between DPAs over a preliminary decision it can add months to the final decision-making process — and could ultimately require the European Data Protection Board to step in and push a final decision.

All that’s still to come; for now the ball is back in Meta’s court to see what fresh blather its lawyers can come up with.

The tech giant was contacted for comment on the latest development and in a statement a Meta spokesperson told us:

"This is not a final decision and the IDPC have asked for further legal submissions. Suspending data transfers would be damaging not only to the millions of people, charities, and businesses in the EU who use our services, but also to thousands of other companies who rely on EU-US data transfers to provide a global service. A long-term solution on EU-US data transfers is needed to keep people, businesses and economies connected."

There is another moving piece to this apparently neverending story — as negotiations between the European Commission and the US on a replacement to the defunct Privacy Shield data transfer arrangement remain ongoing.

In recent months, Facebook and Google have been making public calls for a new transatlantic data transfer deal to be agreed — urging a high level fix for the legal uncertainty now facing scores of US cloud services (or at least those that refuse to give up their own access to people’s data-in-the-clear).

However the Commission has previously warned there will be no ‘quick fix’ this time — saying back in 2020 that a replacement would only be possible if all the issues identified by the European Court of Justice in its July ruling which invalidated Privacy Shield can be resolved (which means both a legal and accessible means of redress for Europeans and tackling disproportionate US surveillance powers which rely on bulk intercepts of Internet communications).

So, in short, Privacy Shield 3.0 looks like a tall order — certainly in the kind of short order that Meta’s business-as-usual demands… So chief lobbyist, Nick Clegg, certainly has his work cut out!

Facebook told it may have to suspend EU data transfers after Schrems II ruling

As its data flows woes grow, Google lobbies for quickie fix to EU-US transfers

 

Instagram quietly limits ‘daily time limit’ option

Posted: 21 Feb 2022 09:33 AM PST

RIP Mark Zuckerberg’s “time well spent“? In a move that appears to coincide with Facebook/Meta reporting slowing growth, photo-sharing app Instagram appears to have quietly removed the ability for mobile users to set a lower daily time limit reminder than 30 minutes.

Indeed, the app’s UX design nudges people to choose a three hour ‘limit’ (see screengrab below).

This daily time limit setting pops up a notification to the user once their app activity hits their preferred limit, reminding them to be conscious of how much time they are spending on the app — and maybe making it easier for them to choose to quit out of the app voluntarily.

Instagram daily time limit setting

Instagram’s daily time limit setting puts “3 hours” in the top slot — burying lower available limits (Screengrab: TechCrunch)

Previously the company supported a user-defined limit for Instagram that could be as low as 15 minutes — or even 10 minutes — per day, when it was making a big PR push to suggest that more ‘mindful’ usage of its services was possible, as concern over social media addiction surged.

But it seems the attention-loving adtech giant now wants Instagram users to spend longer eyeballing content feeds on the photo- and video-sharing platform where it can cash in by targeting them with ads. Which could be a result of pressure from the business side to eke out growth…

In its earnings earlier this month, Meta reported flat quarter-over-quarter usage for its eponymous app (Facebook) — and near flat growth for its other apps, which it wraps into a “family of apps” moniker, rather than breaking out Instagram, WhatsApp etc usage individually. (Daily active users of this ‘other apps’ category rose from 2.81BN in Q3 to 2.82BN in Q4; while monthly active users rose from 3.58BN in Q3 to 23.59BN in Q4; but usage of Facebook itself stayed entirely flat, quarter-over-quarter, at 1.93BN DAUs and 2.91BN MAUs.)

The disappointing Q4 results wiped 20% off the company’s value when they hit — which could be one reason why Meta’s growth teams may be seeing what levers they can tweak to drive engagement from existing users.

TechCrunch was alerted to the Instagram settings change by an tipster who shared screenshots of their account (see pics below) which show the company nudging them to “set a new value for your daily limit” — because, as it puts it, “the available daily limits are changing as part of an app update”. (Full marks to Meta for penning a sentence that fails to contain any meaningful explanation of why it’s making arbitrary changes to limit users’ control.)

This user had previously specified a 10 minute daily limit. However they’re now suddenly being informed this option is no longer available — and, presumably, any users who had not yet specified a daily limit or had picked a different (higher) limit would be unlikely to even realize that the 10 minute option had been deprecated.

And while Instagram’s notification to the user of this change to daily limits does state that they can retain their current 10 minute limit, the app uses blatant dark patterns to nag them into changing it — including by popping up a notification right above the 10 minute limit that’s indicated on their “time on Instagram” settings page, which further instructs: “This value is no longer supported. Please edit” — all of which is clearly designed to make them think they do actually have to switch to a higher limit.

[gallery ids="2274860,2274861"]

“My choice has gone away, and if I try and change it, my old minimum of 10 minutes triples to 30 minutes as the new minimum,” the tipster told TechCrunch.

The source, who preferred to remain anonymous, likened this silent switch to “a tobacco company saying you can limit your packs a day, as it takes away smaller packs”.

“They don't force the change but if go into the edit screen as it tells you to, then you have to force quit the app to get out without changing it,” they added.

We’ve recently seen Facebook/Meta using a similarly manipulative persistent notification tactic when trying to push a policy update on WhatsApp users in the face of a major T&Cs backlash — which has led to an (ongoing) consumer protection probe in the EU. But the company has a long, ignoble history of this sort of stuff. So none of this is surprising. But ofc that doesn’t make it okay.

It’s getting harder for companies like Meta to pull the wool, though. Oversight bodies are wising up to dark patterns. See for example — again in European Union — lawmakers in the parliament who recently overwhelmingly backed putting explicit restrictions on such manipulative tactics into upcoming rules set to apply widely to digital platforms.

So the scope for platforms to profit off of cynically self-serving defaults (or “available” settings) looks to be shrinking.

European parliament backs big limits on tracking ads

Our tipster wasn’t sure exactly when the 10 minute option they had been able to select previously was discontinued — but they told us the app had been “nagging for a couple of weeks” to press them to “edit” the setting.

We also checked what we could see ourselves to confirm this change applied more widely than to a single Instagram user — and found that 30 minutes seems to be the new ‘norm’ for app users.

A US-based TechCrunch reporter found the app also only offers them 30 minutes as the lowest available daily limit.

As with the tipster, the top option this user was presented with in the list of available times — and thus the option they’re most likely to notice, from a UX design point of view — was “3 hours” (aka 6x 30 minutes).

Another UK-based TCer who checked their app could also only select 30 minutes as the lowest daily limit for the notification on their Instagram.

Interestingly, the picture looked different on the Facebook mobile app. There the options offered to a TechCrunch reporter based in France technically included “0 hours, 0 minutes” — although that did not work when selected. However they were able to select a 5 minute limit (rising in 5 minute increments thereafter) so it looks as if the 30 minute minimum may not have been applied to the Facebook mobile app by Meta (yet).

We were also able to confirm that another UK-based Facebook mobile app user could select a 5 minute minimum on that app.

We asked Meta to confirm any changes it has made to the Instagram daily limits setting — as well as putting a number of other related questions to it — but at the time of writing the company had not responded.

Facebook garnered a lot of press back in 2018 when, with concern surging over the impact of social media platforms on teenagers’ mental health — it announced it was giving Instagram and Facebook users new “time management tools” — which included the ability to set a (soft) daily time on usage.

Users would also be able to view a daily average of time spent on the mobile app, based on a week’s usage.

“We want the time people spend on Instagram and Facebook to be intentional, positive and inspiring,” Ameet Ranadive, product management director at Instagram and David Ginsberg, director of research at Facebook, wrote as they introduced the bundle of time management features.

“Our hope is that these tools give people more control over the time they spend on our platforms and also foster conversations between parents and teens about the online habits that are right for them.”

The feature launch was linked to a wider company push — starting around 2017 — when it appeared to engage publicly with concerns about the negative impacts of social media. However Facebook did so by seeking to reframe the narrative by suggesting any problems with usage are incremental and manageable (i.e. rather than existential for its attention-dependent business) — just so long as the user has “tools” to support what it dubbed “meaningful social interactions”.

Hence the flotilla of tweaks and “controls” Facebook/Meta went on to announce — offering self-serving ‘fixes’ to address concerns about social media with the aim of preventing users actually stopping the habit entirely.

Of course these controls rarely — if ever — actually put users in control.

Moreover the underlying content ranking algorithms actively undermine user autonomy by optimizing for profit-maximizing ‘engagement’ — as Facebook whistleblower, Frances Haugen, went on to detail in hours of detailed testimony to lawmakers last year.

The Instagram daily time limit feature, for example, was a lot more mindfulness theatre than meaningful control right from the get go — since users just got a notification if/when they reached their desired daily time, rather than the app taking firmer action like actually locking them out until the next day.

As Haugen has testified, Facebook has demonstrated a systematic unwillingness to give up little slivers of profitability in service of a greater good (aka the welfare of its users/society) — up to and including, it now seems, letting Instagram users select a 10 minute soft limit on their usage. Which would allow for fewer ads to be served vs a 30 minute minimum — which means less profit for Meta…

So the company’s claim of trying to deliver ‘time well spent’ on its platforms looks to have past its sell by date: Another hollow publicity stunt to buy Fb time while its growth teams drum up new UX hacks to keep the eyeballs busy.

(On the flip side, it’s interesting to consider the recent popularity of viral word game, Wordle, whose creator suggested it should only be played for three minutes a day when he spoke to the BBC last month — while the app itself hard-limits the game to one puzzle per day.)

In any case, the debate about regulating powerful tech platforms has moved on considerably since 2017 — with tech giants like Meta now facing the prospect of hard limits on how they can operate, via incoming regulation such as the EU’s Digital Markets Act. Or the UK’s Age Appropriate Design Code which seeks to safeguard the welfare of children by enforcing strict privacy defaults and standards, and imposing other restrictions such as time limits on when platforms can message child users. 

So if the secret of your ad-platform’s growth is dark pattern design and manipulative messaging — not to mention anti-competitive surveillance — then your investors do, certainly, have reasons for concern.

On Meta’s ‘regulatory headwinds’ and adtech’s privacy reckoning

Facebook knows Instagram harms teens. Now, its plan to open the app to kids looks worse than ever

Seeking to respin Instagram’s toxicity for teens, Facebook publishes annotated slide decks

Trump’s TRUTH Social launches at the top of the App Store, but no one can get in

Posted: 21 Feb 2022 08:40 AM PST

Donald Trump’s media group released its TRUTH Social iOS app today in the U.S., but a scan of the app’s API using publicly available tools revealed that it already closed itself to registrations (also, the scan showed that its “proprietary account registration microservice” is named “Pepe,” which is also the name of a meme with racist connotations).

Though TRUTH Social sits at the #1 spot for free downloads in Apple’s App Store, most users can’t get into the app. When you download TRUTH Social, you’re prompted to enter your email and date of birth (users must be 18+) before waiting for a verification email. But at every step of the process, TechCrunch received error messages. Once we received a verification email, the link yielded more error messages, making it impossible to create an account. Some users have reported being placed on waitlists with over 100,000 users, while others never received verification emails or couldn’t move past the verification step. TechCrunch reached out to the Trump Media & Technology Group (TMTG) for comment on these sign-up difficulties.

Former President Trump became interested in building his own social media platform after he was removed from Twitter, Facebook and YouTube for violating their policies following last year’s attack on the Capitol. In an October press release, the TMTG wrote that its mission is to create "a rival to the liberal media consortium and fight back against the Big Tech companies." 

Truth Social promo images

Image Credits: TRUTH Social

The announcement of TRUTH Social was also rife with growing pains. The new social network used open-source code from Mastodon, yet claimed the code as its own.

"The terms of service included a worrying passage, claiming that the site is proprietary property and all source code and software are owned or controlled by them or licensed to them," Mastodon wrote at the time. "Notably, neither the terms nor any other part of the website contained any references to Mastodon, nor any links to the source code, which are present in Mastodon's user interface by default. Mastodon is free software published under the AGPLv3 license, which requires any over-the-network service using it to make its source code and any modifications to it publicly accessible.”

In December, TRUTH Social finally added Mastodon’s source code to its website on a section labeled “open source.”

“Our goal is to support the open source community no matter what your political beliefs are. That’s why the first place we go to find amazing software is the community and not ‘Big Tech,'” TRUTH Social’s website says.

Mastodon issues 30-day ultimatum to Trump’s social network over misuse of its code

In December, Congressman Devin G. Nunes (R-CA) departed from the House of Representatives to join TMTG as its CEO (Trump serves as Chairman of the company).

In an interview with Fox News this weekend, Nunes said that the full launch of TRUTH Social is a few weeks away — currently, its only available for download on iOS.

“Every day we bring on more and more Americans, and we’re getting to you as soon as possible,” Nunes said on Fox News.

Why Twitter says it banned President Trump

Jambo raises $7.5M from Coinbase, Alameda Research to build “web3 super app” of Africa

Posted: 21 Feb 2022 06:11 AM PST

Jambo, a Congo-based startup building Africa's web3 user acquisition portal through "learn, play, earn" and democratizing access to crypto-based income-generation opportunities, has raised $7.5 million in seed funding.

Experts say Africa is poised to be disrupted by web3 in a similar fashion that has seen Southeast Asia become one of the best markets for web3. The latter is home to startups like Axie Infinity and Yield Guild Games, which have raised millions of dollars in venture capital owing to the adoption of crypto and play-to-earn models.

The mix of positives such as a fast-growing population–the youngest globally–, solid smartphone penetration, increasing crypto adoption, and negatives like low GDP per capita across board and unemployment makes Africa the next ripe ground for web3.

And a few companies, such as Jambo, are positioning themselves for this next boom. According to James Zhang, its co-founder and CEO, Jambo wants to onboard millions of users to web3 in Africa through its applications. He founded the company with his sister — both Congo-born Chinese — in November 2021 after noticing the opportunity to duplicate the success of web3 projects in Southeast Asia across Africa.

Although users of Axie Infinity and other guilds only earn an income while playing games under a revenue-sharing model, Jambo is taking a two-sided approach by allowing its users to do so when they partake in web2 and web3 activities.

For instance, users can save their data spend when they use Jambo. Zhang explains that Jambo partners with telecom providers to get an almost 70% discount and sell directly to its users at a 50% discount from the original cost. "It's one of our main user acquisition strategies where we want to double every Africans airtime and data," Zhang said.

Secondly, Jambo is partnering with social media companies so users can earn tokens (which they can convert to income) while watching their content on its app.

"The reason we can do that is via partnerships with these companies as we tokenize a part of their advertising budget and directly provide to the end-user," he said. "Many web2 incumbents or even web3 are having a $100-200 user acquisition costs so we can lower that by order of magnitude by directly incentivizing the end-user."

The last bit is play-to-earn games. There are currently no popularized play-to-earn web3 games from Africa and this is because the infrastructure to create them, which is through Guilds, is lacking. Zhang said Jambo wants to build that infrastructure. Still, unlike well-known guilds whose business models involve taking percentages of profit from its users, his company doesn't plan to take a cut from its users' earnings. Instead, Jambo's revenues would come from web2 models — charging advertising dollars and commissions from selling airtime and data.

Jambo

James Zhang (co-founder and CEO, Jambo)

As the "web3 onboarding portal of Africa," the CEO said Jambo is testing out over 10 play-to-earn games to introduce to its users in the next couple of months. But for a region with little or no understanding of web3 workings, how does Jambo expect its project to take off smoothly?

"Education is at the core of what we do because I think there is no shortcut in Africa. You have to educate the user base before you can even think about monetizing or start to acquire users at the end of the day. This is why we are launching classes with a full curriculum on web3. We plan to launch that in more than five universities in Africa by the end of Q1," he answered.

Since the start of this year, Jambo has already signed up over 12,000 students across 15 countries (Morocco, Nigeria, Ethiopia, Equatorial Guinea, Uganda, Kenya, Congo, Uganda, Rwanda, DR Congo, Tanzania, Zambia, Namibia, Madagascar and South Africa) to take a curated web3 curriculum, both online and offline. The company said this would enable students to explore opportunities in play-to-earn gaming and decentralized finance (DeFi). The 10-week programs are available at colleges and across 600+ physical partner locations where hundreds of ambassadors sign up students.

With nearly 60% of the population under 24 years of age and almost 50% of university graduates in Africa unemployed, Jambo believes its model of educating users about play-to-earn games and DeFi could "lead to financial prosperity in ways Africans could never have accessed before."

Nestcoin raises $6.45M pre-seed to accelerate crypto and web3 adoption in Africa and frontier markets

Educating Africa's young population about web3 and decentralization seems to be a correlating theme with recent web3 upstarts in Africa. Nigeria-based Nestcoin, for instance, raised $6.4 million to scale its web3 initiatives, which include Breach, a media outlet that creates bite-sized and informative crypto content for its users.

Both companies have different play-to-earn models — Nestcoin runs a gaming guild called Metaverse Magna (MVM), Jambo doesn't. Yet, they are similar in setting up a new web3 segment in Africa different from more established platforms such as remittance and crypto exchanges.

For Zhang, the fundamental distinction is that while customary platforms help Africans save and send money, new upstarts are increasing earning and wealth potentials for users.

"I think in Africa, there is no money to save because there's 1% super-rich and 99% the same. So for us, we set out with a different methodology, which is to help the everyday person make money," the chief executive said.

"This is why every component in our super app is actually to help the everyday person make money from play to earn, to making money from watching videos and saving money on data credits. So ideally, in three to six months, once our app comes online, the everyday person can make $50 a month from playing on Axie Infinity, make another $20 a month from watching videos, and they make another $10 bucks a month from the money they save on data credits. That would be the ideal situation our app can accomplish with every person."

Jambo expects to release its beta version by Q2 and go live in Q3. And in a bid to build its super app, the 60-man team spread across sub-Saharan Africa, Santa Clara and Shenzhen raised a party round from investors who have backed prominent web3 companies such as Avalanche, Dharma, BlockFi and Polygon.

They include Coinbase Ventures, Three Arrows Capital (3AC), Alameda Research, Tiger Global, Delphi Ventures, AllianceDAO, DeFiance Capital, Yield Guild Games and Polygon Studios. And a couple of angel investors from the web3 ecosystem like Polygon co-founder and CEO Sandeep Nailwal; ex-ParaFi partner Santiago R Santos; Terraform Labs co-founder and CEO Do Kwon; and partner at Delphi Digital Piers Kicks.

"What WeChat did in China, Jambo will do in Africa. Excited to back this A+ team in becoming the Web3 super app of the continent," said Santiago R Santos, a web3 investor and ex-ParaFi partner, in a statement.

Groundfloor steps up its real estate debt crowdfunding platform with fresh capital

Posted: 21 Feb 2022 04:15 AM PST

Crowdfunding has become an increasingly popular way for companies to raise capital, and investors are taking notice. Groundfloor, the first real estate crowdfunding platform to gain regulatory approval, announced today that it raised its first round of institutional capital since 2015.

Brian Dally, a former mobile network exec, and Nick Bhargava, a co-author of the bipartisan JOBS (Jumpstart Our Business Startups) Act, founded Groundfloor in 2013. The Atlanta-based company raised its $5 million Series A led by Fintech Ventures shortly after new crowdfunding rules under the JOBS Act took effect, allowing small businesses to fundraise up to $75 million from non-accredited investors without needing to register the offering.

Groundfloor’s platform offers investments in real estate debt to its 150,000+ users, with a minimum investment of $10. Nearly all of the products available on its platform are open to non-accredited investors, Dally, who serves as CEO, told TechCrunch. Groundfloor users have a wide range of reasons for using the platform, from new investors who are looking for a safer alternative to public markets to experienced investors who prefer investing through an app instead of using the broker, Dally said.

Dally and Bhargava started Groundfloor to help average investors access opportunities similar in their risk-return profile to those available to institutions, according to Dally. Groundfloor offers an alternative way for these investors to access real estate “without having to buy a publicly-traded REIT (real estate investment trust) or having to go buy a whole rental property and take on the operational risk and concentration risk,” Dally said.

Groundfloor co-founders Brian Dally and Nick Bhargava Image Credits: Groundfloor

The company’s “secret sauce” comes from its deep understanding of regulatory frameworks, according to Dally. Launching its first product felt like waiting for regulators to approve a new drug, he added, noting that it took two years and roughly $1 million for Groundfloor to gain Securities and Exchange Commission (SEC) approval to operate in its first U.S. state. Today, the company sells securities in 49 of 50 U.S. states and lends capital to real estate projects in 35 states.

Groundfloor underwrites the loans on its platform using an algorithm that assigns each loan a grade based on its risk across six different factors, with an emphasis on the track record and experience of the real estate investor receiving the loan, Dally said. Investors on Groundfloor can then make allocation decisions that are appropriate for their own risk tolerance levels based on these scores, he continued.

Groundfloor has scaled its platform by adding new debt investment products, including a saving and investing app called Stairs that it launched last fall, which now has $22 million in assets invested. On Stairs, users earn between 4% and 6% interest on cash held in what is essentially a checking account. Groundfloor uses the capital it gets from Stairs users to make loans to real estate entrepreneurs, which it holds briefly on its own books before selling them to investors, Dally said. Stairs users have constant liquidity and can take their money out of the app whenever they want, he added — a novel structure that he said took nine months to qualify with the SEC.

“These are heavy RegTech lifts. A lot of legal engineering goes into it. So that process takes a lot takes a long time, but we think it’s worth it,” Dally said.

In 2018, the company began raising capital from its own users through its own platform and equity crowdfunding platform SeedInvest, totaling $30 million over four public equity raises since then. Individual investors now own about 30% of Groundfloor, Dally said.

The newly-announced Series B comes on the heels of substantial growth for Groundfloor, which saw revenue grow 114% to $12 million in 2021, according to the company. Groundfloor said its investors enjoyed an average return of 10% across all its real estate loans during the year.

Groundfloor's real estate loan crowdfunding platform

Groundfloor’s real estate loan crowdfunding platform Image Credits: Groundfloor

The latest round brought in a total of $118 million for the company, with $5.8 million in equity coming from Israeli real estate company Medipower and $7.2 million from 3,600+ individual investors who back Groundfloor through crowdfunding platform SeedInvest. 86 individuals also participated in the round directly through the Groundfloor app, with their investment comprising $5.0 in convertible notes. Dally noted that convertible notes are one of the only products on Groundfloor that aren’t available to non-accredited investors, partially because the company rarely raises them.

Groundfloor announced a strategic partnership with Medipower, which specializes in shopping centers and retail real estate, as part of the funding news. Medipower plans to invest up to $100 million this year in loans on Groundfloor, and up to an additional $220 million next year. The company, which is traded on the Tel Aviv Stock Exchange under the ticker MDPR, will invest in these loans on the same terms as individual investors on the platform and will be limited in how much it can invest to ensure other investors don’t get crowded out. As part of the deal, Medipower founder and chairman Yair Goldfinger will join the Groundfloor board.

Medipower’s investments could amount to 25% of Groundfloor’s assets under management by the end of 2022, Dally said. He sees the Medipower loan investments as a non-dilutive source of financing because he expects the institutional validation from Medipower investing on Groundfloor to attract revenue for the company from other sources.

“That [capital] is going to be directly benefiting real estate entrepreneurs who are doing new construction projects and building housing all over the country,” Dally said.

Groundfloor plans to use the proceeds from the fundraise, in part, to add 50 new employees to its team, which is currently composed of about 70 people. Around 40% of these new hires will be engineers to support the company’s growth plans, particularly on the product side, Dally said.

“We’re getting ready to go from 160,000 investors to a million investors in the next couple years,” Dally said.

The Station: DeLorean teases an EV, VW and Huawei are ‘talking’ and feds investigate Tesla

Posted: 21 Feb 2022 04:00 AM PST

The Station is a weekly newsletter dedicated to all things transportation. Sign up here — just click The Station — to receive it every weekend in your inbox.

Hello readers: Welcome to The Station, your central hub for all past, present and future means of moving people and packages from Point A to Point B.

Before you dive into our weekly roundup of news and analysis, I wanted to flag two items. First up, the founders series returned this month with Anjali Jindal Naik, co-founder and COO of autonomous sidewalk robot maker Cartken.

Secondly, SXSW is coming up and I will be there IRL. Reach out if there’s a talk or presentation you believe I simply must see or a person I just have to meet. It’ll be a quick trip, but I am looking for any and all compelling transportation goings on. I am also moderating two panels: one is on sustainable mobility with folks from Arrival, Uber and autonomous vehicle consultant Selika Talbott. The other one, with Enel and Uber, is focused on EV charging infrastructure and the electrification of ride sharing, corporate fleets and service fleets.

Bah! wait, how could I forget … this is huge and finally we can have cars in the U.S. that don’t blind people! The National Highway Traffic Safety Administration issued a final rule allowing automakers to install adaptive driving beam headlights, which automatically adjusts as you are driving, on new vehicles. These systems are already in Europe.

As always, you can email me at kirsten.korosec@techcrunch.com to share thoughts, criticisms, opinions or tips. You also can send a direct message to Kirsten at Twitter — @kirstenkorosec.

Micromobbin’

One of my favorite podcast and newsletter hosts, Azeem Azhar, dedicated a whole podcast to micromobility! On his latest show, Exponential View, where Azhar explores the impact of technology on business and society, he had on micromobility expert Horace Dediu. They talked about the role of software in driving the adoption of micromobility (a trend that some people questioned and even gave me a lot of flack for writing about a year ago), the integration of AR and micromobility and how big tech companies will integrate into micromobility.

There’s really no end to the companies trying to fuel the micromobility revolution, so catch up with just a few of them here.

Cogo is consolidating a less talked-about market in the micromobility world: shared mobility aggregating. The company just acquired another aggregator, eScoot, so that it can better offer comprehensive price comparisons for shared mobility. This helps users check the price, availability and travel time from multiple operators in one search. Funnily enough, this is something Dediu has said big tech companies, like Google, have an opportunity to capitalize on via Maps, so we’ll see how this kind of service unfolds in the long run.

Bird is extending its permits and increasing its fleet size in a few markets. It’ll be sticking around a little while longer in Long Beach, Portland and Decatur, and adding more vehicles to Durham, Isla Vista and Arlington.

Mundimoto, an online motorcycle buying and selling startup, raised $22.6 million to expand its platform outside of Spain and into the rest of Europe.

Lyft is starting to double down on its bikeshare business, per its Q4 2021 earnings. This supports comments that Tony Ho of Segway made to TechCrunch last year when he forecast that some of the “big rideshare guys” would be “coming back to play.”

Lightning Motorcycles is designing an electric two-wheeler that has a top speed of 250 mph (!!!). It’ll need a special metal called niobium that is found on rocket ships.

— Rebecca Bellan

Deal of the week

money the station

This isn’t a deal, so much as a rumored one. Still, it’s worth noting because of the implications.

German media reported that Volkswagen is in talks with Huawei to acquire the latter’s nascent autonomous driving unit for billions of euros. Huawei said it had no immediate comment when contacted by TechCrunch. VW China said it has no comment.

As TC reporter Rita Liao notes, the potential merger will be a powerful one. Huawei’s autonomous unit sits under the telecom equipment and smartphone behemoth’s “smart vehicle solution” business unit, which started only in 2019. The founding of the smart car BU spurred much speculation over whether Huawei would develop its own cars, though the firm has repeatedly denied any manufacturing plans and said it instead wants to be the “Bosch of China”, or a components supplier for car brands.

Other deals that got my attention this week …

Carbar, the Australian car subscription company, raised $28.9 million in a round led by Insurance Australia Group and Seven West Media.

CelLink, a California startup that developed a way to replace traditional wiring harnesses in vehicles, raised $250 million in a funding round backed by several strategic investors, including BMW iVentures, Lear Corp., Robert Bosch Venture Capital and 3M. Previous investor Ford Motor did not join the latest round.

Cepton, a lidar company that went public via a merger with SPAC partner Growth Capital Acquisition Corp, held its opening bell ringing ceremony at Nasdaq on February 17.

Haul, a company that developed software to connect CDL drivers to trucking companies with assignments, announced it raised $10 million in a round led by B Capital Group. Other investors included previous funders, Hack VC, Next Coast Ventures, Pipeline Capital Partners, RPM Ventures, Value Chain Ventures, as well as new participants, Bam Elevate, FJ Labs, WTI and angel investor Will Redd (cofounder of ZipRecruiter).

Ibex Investors has a new $113 million fund focused on early-stage mobility companies. The firm, which is based in Denver with offices in New York and Tel Aviv, has already tapped into the fund to invest in Aifleet and Visionary.ai.

Liefergrün, a German-based startup that offers emissions-free last-mile delivery services, raised €3 million in a seed funding round led by SpeedInvest and with participation from Norrsken VC.

Motorq, a connected car API startup, said it raised $40 million in a Series B funding round led by Insight Partners. Existing investors also joined including Story Ventures, FM Capital, Monta Vista Capital and Avanta Ventures.

Parallel Systems, an autonomous electric rail company, received $4.5 million in grant money from the Department of Energy as part of its Advanced Research Projects Agency-Energy initiative.

RideCo, a Canadian company offering cities on-demand transit tech, closed a $15.8 million (CAD $20 million) Series A round. RideCo’s funding round, which was led by Eclipse Ventures, represents the first time the company has raised institutional investment in the seven years since its founding.

Notable news and other tidbits

Autonomous vehicles

Argo AI is launching a new engineering and development office in Los Angeles where researchers will engage in R&D to advance its self-driving tech. Argo is bringing on Caltech professor Yisong Yue as principal scientist, who bring an expertise in ML and a connection to the university. Argo’s new office is close by Caltech, which will allow Argo to tap into that university-to-startup pipeline.

Aurora announced in a blog post that it is partnering with USXpress “to design optimal deployment strategies for autonomous technology in its commercial operations.” Think of this as a data exchange mission to find the lanes that would most benefit from early deployment of Aurora’s self-driving trucking technology.

Separately, Aurora reported its first earnings (Q4 and full year) as a publicly traded company. There weren’t too many surprises for a company that is still developing its technology and therefore pre-revenue. It’s R&D spend caught my eye though. Whooo weee! Aurora reported it spent $697.3 million on research and development in 2021, compared to $179.4 million in 2020. Aurora has $1.6 billion in cash on hand.

Baidu is launching its autonomous ride-hailing service, Apollo Go, in yet another city. Shenzhen will be the company’s seventh city where it’s introduced robotaxi services, starting with the Nanshan District, which is home to companies like Huawei and Tencent, as well as many tourist attractions. The company will be deploying Apollo’s 4th gen vehicle, the Hongqi EV, and has promised to bring its 5th gen robotaxi onto the fleet soon. Users will be able to hail a robotaxi via the Apollo Go app at one of 50 stations from 9am to 5pm. Baidu hopes to expand to more than 300 stations by the end of the year.

Important to note: This is still a trial operation. Baidu has gone commercial in Beijing and will be bringing a commercial service to Cangzhou in March. The Shenzhen service will also involve “drivered” autonomous vehicles (human safety operator is still behind the wheel) while Baidu seeks permission to test driverless in the city.

Cruise plans to expand the self-driving delivery pilot it has with Walmart in Arizona to eight stores. Today, that pilot involves just one Walmart store located on Salt River Pima-Maricopa Indian Community lands near Scottsdale.

Starship Technologies launched an on-demand delivery service in Pleasanton, California, which is in the Bay Area. This is an expansion of its existing partnership deploying autonomous sidewalk robots for The Save Mart companies, which began in 2020.

Waymo’s autonomous trucking and cargo division Waymo Via and freight logistics company C.H. Robinson are gearing up to launch a pilot. The companies said within the coming months Waymo’s test fleet will be delivering freight in Texas for one of C.H. Robinson’s customers. The pilot is part of a larger partnership between the two companies that aims to combine Waymo’s AV technology, which is available to any carrier, with C.H. Robinson’s logistics data on over 3 million trucking lanes and access to a network of nearly 200,000 shippers and carriers, many of which are medium and small carriers that Waymo is interested in reaching.

Electric vehicles

Remember all of those electric vehicle ads that aired during the Super Bowl? Apparently, Cars.com saw an 80% increase in EV page views after all that marketing. TechCrunch reporter Rebecca Bellan tells me she loved this ad from General Motors, featuring Dr. Evil and crew from the Austin Powers movies, in part because it went nicely with the throwbacks from the halftime show.

Putting aside my Gen Xer reaction to the word “throwbacks” (we’ll talk later, Rebecca) I was struck by how many of the EVs in these ads are not yet on sale. When all those people turned to the internet to find these EVs were they disappointed? Or excited for what was to come?

Delorean is coming back as an EV! Or at least that’s the intention of some Texas executives who are working with Stephen Wynne, Bloomberg reported. Wynne owns the DeLorean branding rights and supplies parts for the 6,000 or so remaining vehicles. DeLorean Motor Company ReImagined LLC tweeted out a video that teases the upcoming EV; no word on timing.

Fisker confirmed in an earnings call that it’s still on track to start production of the Ocean SUV in November, with reservations for its first electric vehicle jumping to 31,000. Interestingly, there are 1,600 fleet reservations for the Ocean, including an incremental 200-unit order from software company ServiceNow.

Redwood Materials, the startup founded by former Tesla CTO JB Straubel, is launching an electric vehicle battery recycling program in California with Ford and Volvo as inaugural partners as pressure mounts to source materials for EVs. The two automakers will cover some of the cost of retrieving, properly packaging and then transporting the batteries back to Redwood’s recycling facility in northern Nevada.

The program will be free for those turning in vehicle batteries. Redwood says it will accept all lithium-ion and nickel metal hydride batteries in the state, regardless of the make or model of the vehicle.

Tesla said non-Tesla owners can charge their electric vehicles at all Supercharger stations in the Netherlands, marking an expansion of a pilot program that kicked off in November 2021 with 10 stations.

Speaking of Tesla, the company fell seven spots to No. 23 out of 32 brands in Consumer Reports’ annual auto brand rankings. And not to pile on, but … federal safety regulators opened an investigation into Tesla after receiving hundreds of reports alleging “phantom braking.” The investigation covers an estimated 416,000 Tesla Model 3 and Model Y vehicles from the 2021-22 model years.

Volta is expanding its collaboration with Walgreens and will install 1,000 DC fast charging stalls at over stores throughout the U.S.

Future of flight

AirAsia signed a non-binding MoU with Avolon, an aircraft leasing company, to lease a minimum of 100 eVTOLs that were built by Vertical Aerospace.

AutoFlight, a Chinese eVTOL company, completed the proof-of-concept, transition test flight for its air taxi Prosperity I, in which the aircraft switches from a vertical take-off motion to horizontal flight and back to vertical flight before landing — an important milestone for an eVTOL startup trying to make it in the business.

Joby Aviation is partnering with Japanese airline ANA to bring aerial ridesharing services to Japan. Toyota Motor Corporation will be partnering with the two companies, as well, in order to explore ways to connect the air taxis to ground-based transportation. In other Joby news, the company reported one of its test vehicles crashed. NTSB is investigating.

Gig economy and delivery

Doordash is launching express grocery delivery, which brings customer groceries in under 30 minutes, in partnership with Albertsons, which owns stores like Safeway, Vons, Tom Thumb, ACME Markets and more.

In-vehicle tech

Nvidia keeps scoring those automaker partnerships. This time, it is Jaguar Land Rover. The automaker said it will use Nvidia’s end-to-end Drive Hyperion platform in all of its vehicles starting in 2025. This platform will be used to power features like advanced driver assistance systems and autonomous driving.

People stuff

Caribou, the auto fintech startup formerly called MotoRefi, has hired or promoted 10 new executives. The company promoted former COO and Uber alum Eric Stradley to the role of president, appointed Jason Tepperman as chief lending officer, hired Arlene Dzurnak as the company’s chief compliance officer and named Jennifer Khazai chief accounting officer.

P.J. O’Rourke, the satirist and bestselling author who also wrote for Car and Driver, died February 15. Car and Driver has a nice send off piece featuring some of his work for the magazine.

Steve Taub left In-Q-Tel, where he was partner, and is now managing director of investments at JetBlue Technology Ventures.

Virgin Galactic announced that Chairman Chamath Palihapitiya, whose SPAC took the company public in 2019, is stepping down from the space-tourism company’s board of directors, effective immediately, CNBC reported.

Sweden’s Volta raises $260M at a $490M valuation to get its all-electric trucks into production by the end of this year

Posted: 21 Feb 2022 03:22 AM PST

Volta Trucks — the Swedish electric vehicle startup that believes it can build better urban delivery vehicles and other trucks that are safer and take up a smaller carbon footprint than their gas-guzzling, more clumsy, existing counterparts — has closed a big round of funding to help it through that last mile of work before its Volta Zero trucks go into commercial production later this year.

The company has raised €230 million (around $260 million), a Series C round of funding that appears to value the company at just over $490 million (€433 million). Volta will be using the money to fund engineering and business operations ahead of its first trucks rolling off the assembly line, on the back of what looks like a healthy list of customers: Volta said that its pre-order book for its all-electric Volta Zero — said to be the first fully electric, purpose-built commercial freight vehicle designed for urban freight distribution — is currently totaling over €1.2 billion, covering more than 5,000 vehicles. Volta’s wider business strategy will be based both on selling trucks as well as offering its vehicles on a trucking-as-a-service model.

New York-based Luxor Capital, which led the company’s €37 million Series B in September 2021, is also leading this round. Real estate investment firm Byggmästare Anders J Ahlström (like Volta, based in Stockholm), supply chain services giant Agility, and B-FLEXION (formerly Waypoint Capital) also participated. While Volta has not disclosed its valuation, Pitchbook data notes that it is now just over $490 million — a figure that we have now confirmed also with sources close to the company.

Volta’s growth, and the large amount of capital it has now raised — over $325 million to date — are part of a bigger sea change in the automotive world. Startups, tapping into new manufacturing techniques, new batter technology, and new energy infrastructure, see a ripe opportunity to build new vehicles to disrupt the current status quo with safer and cleaner alternatives.

Investors — likely wowed by the success of electric efforts like Tesla’s with smaller cars — are putting their money behind these ventures to give them more firepower, and more credibility with would-be customers. These are all essential building blocks for catapulting cars into the next wave of technological innovation, where trucks like Volta’s become hardware platforms capable of gathering and working with massive data sets to help the vehicles and the businesses using them operate at new levels of productivity.

That is the theory, at least. The process of getting there inevitably ends up being slower, and more costly, than initial rosy projects, which is another reason why it’s important for companies in the space to raise large rounds and corral together groups of strategic backers to help them get to market.

Volta’s roadmap this year will include investing in its engineering and production operations to build prototypes to verify its designs for the Volta Zero.

These in turn will be rolled out to early customers for pilots in London and Paris, cities where delivery trucks are commonplace but also dangerous, given traffic congestion, narrow streets and the proliferation of cyclists and other micromobility users, making them ideal markets for Volta’s trucks, which claim not only to produce less emissions — the first trucks will have a pure-electric range of 150 – 200 kms (95 – 125 miles) and eliminate an estimated 1.2M tonnes of CO2 by 2025, the company claims — but have significantly better visibility (220 degrees, with the driver sitting in the center of the front seat) for its drivers. Initially, what they will not have, it seems, are self-driving capabilities.

“We are investigating autonomy / self-driving for the future but as a vehicle that's specifically designed as a city centre distribution and delivery vehicle, the goods within the vehicle will need delivering from the vehicle to their end destination. As a result, the purpose of the vehicle will always need a person involved, making self-driving less relevant for this type of vehicle,” said a spokesperson.

Volta said it will also use some of the funding to continue developing smaller 7.5- and 12-tonne full-electric Volta Zero derivatives (the first model will be 16 tonnes), and eventually a larger 18-tonne model.

The company is building a production facility in Austria, with plans to produce 5,000 vehicles in 2023; 14,000 trucks in 2024; and up to 27,000 trucks in 2025.

"The successful and oversubscribed conclusion of our Series C funding round gives us a positive external validation of our journey,” said Essa Al-Saleh, CEO of Volta Trucks, in a statement. “As an innovator and disruptor in commercial vehicles, we are working at industry-leading pace and have significant ambitions. Today's closing of the Series C funding round, bringing €230 million into the company, gives us the financial runway to be able to deliver on all our goals as we transition from a start-up to a manufacturer of full-electric trucks. The confirmation of our orderbook of over 5,000 vehicles with an orderbook value exceeding €1.2 billion, gives us and our investors, confidence that our pioneering product and service offering is both wanted and needed by our customers."

 

Philippines payment gateway PayMongo gets $31M Series B, will explore regional expansion

Posted: 20 Feb 2022 06:00 PM PST

PayMongo founders (from left to right): Jaime Hing III, Chief Technology Officer, Francis Plaza, Chief Executive Officer and Luis Sia, Chief Commercial Officer

PayMongo founders (from left to right): Jaime Hing III, Chief Technology Officer, Francis Plaza, Chief Executive Officer and Luis Sia, Chief Commercial Officer

Philippines-based fintech PayMongo, which enables merchants to accept digital payments, announced today it has raised $31 million in Series B funding with an eye on regional expansion. Investors include Justin Mateen's JAM Fund, ICCP-SBI Venture Partners and Lisa Gokongwei's Kaya Founders, along with returning investors Global Founders Capital and SOMA Capital. The startup says the round also included founders from European fintechs like Qonto, Viva Wallet, Billie and Scalable.

This brings PayMongo's total funding to just under $46 million. Its last funding was a $12 million Series A announced in 2020 and led by Stripe.

The company works with businesses of all sizes, but targets micro-, small- and medium-sized businesses in particular, enabling them to accept different forms of payments, including credit cards, online wallets and over-the-counter. Its products include PayMongo API and e-commerce plugins. The new funding will be used to further develop PayMongo's current payments infrastructure and add more financial services, including disbursements, capital lending, BNPL, and subscriptions and recurring payments.

Part of PayMongo's product roadmap includes acquiring new licenses that will allow it to operate more financial services. At the same time, the company is also exploring regional expansion.

"There is so much more work to do in the Philippines. We also forecast more than doubling our team size to support this increasing demand and deliver on our aggressive product roadmap. In parallel, we have started some initial exploration and leg work to expand in the SE Asia region, a work we have kicked off last year," co-founder and CEO Francis Plaza told TechCrunch in an email.

Other digital payment gateways in the Philippines include DragonPay, PesoPay, PayMaya and Paynamics. Plaza told TechCrunch in an email that the company differentiates itself by its focus on SMBs and high-growth startups and companies since it was founded in 2019.

PayMaya owner Voyager Innovation raises $167M from KKR, Tencent and IFC, to launch digital bank in the Philippines

"Beyond that, as we work with thousands of businesses on the platform, we are geared towards building more products and services that not only enables merchants to easily accept payments but also to grow through access to other financial services," he said. "From the ability to move money, store balances, access to credit and other expanded payment options for customers." Plaza added that it is already testing out several new products and services in beta with merchants.

In a statement, Justin Mateen, the founder of Tinder and JAM Fund, said "As one of PayMongo's first investors, I've seen their path from simplifying payments for a handful of businesses to now being a company that thousands of merchants depend on for their day-to-day operations. I'm excited by their progress and thrilled to support the team once again as they generate greater economic opportunities through the digital economy."

Predicting the next wave of Southeast Asia tech giants

PrimaryBid raises $190M to double down on making it easier for ordinary people to invest in IPOs and follow-on fundraises

Posted: 20 Feb 2022 04:22 PM PST

Thanks to the growth of fintech, financial services like investing are getting ever more accessible to the wider population of consumers. Now, one of the bigger players pushing the boundaries of that concept is announcing a big round of funding on the heels of strong demand and what it believes are even bigger opportunities ahead. PrimaryBid — which helps companies that are going public, or public companies that are raising more money, offer their shares to retail investors (that is, ordinary people, not professionals) alongside more traditional share sales — has raised $190 million.

Anand Sambasivan, the CEO and co-founder of PrimaryBid, said the London-based startup plans to use the funding both to continue building out the products that it offers to companies, such as the ability to invest in SPAC-based public listings and investments in retail bonds; and to expand to new geographies, specifically with an eye on building out an office in the U.S., where it is going through the process of getting regulatory approvals to work with companies listing in that market and is likely to launch in late 2022 or 2023.

PrimaryBid today interoperates with some 60 channels to enable investments, which include brokerages and apps that people use to make investments today, and that list also is likely to continue growing.

The company’s mission is to bring the “public” back into the concept of a public offering, giving ordinary people a chance to invest directly in IPOs alongside banks and other large, professional investors, Sambasivan said.

If public markets were invented today, would they look like they did 100 years ago? No, services would interoperate with APIs, with mobile apps, and more accessible investing,” he said. “It’s a system in need of an upgrade.”

SoftBank, via its Vision Fund 2, is leading this round, a Series C, along with participation from previous, unnamed investors (previous backers in its $50 million Series B in October 2020 included the London Stock Exchange Group, Draper Esprit, OMERS Ventures, Fidelity International Strategic Ventures, ABN AMRO Ventures, Pentech and Outward Ventures).

Sambasivan said that PrimaryBid is not disclosing a valuation, although a note on the round in PitchBook, from January when it noted $150 million had been secured, pegged the valuation at $650 million. That may have followed from a report on Sky News at the time that first floated rumors of the round and put the pre-money valuation at $500 million. If those figures are accurate, PrimaryBid’s valuation now is around $690 million.

Between that Series B and now, PrimaryBid has been on a growth tear, fueled by an increasing appetite among everyday people to get more involved in the world of investment. The company says that in the past 18 months it has helped facilitate share offerings for retail investors for some 150 IPOs and follow-on share issues. These have been primarily in the U.K., although the company is now also starting to work with companies in France, and — with the help of its investor ABN AMRO, it is also looking to open for business in The Netherlands. Some of the bigger share sales that it has powered include sales for Deliveroo, PensionBee and the US IPO of MCG Group (Soho House) in 2021, which was done via a share sale in the U.K.

“We’ve found a foothold in the capital markets in a big way,” he said in an interview. “The notion that [we are battling is that] the public is no longer included in the public markets, and some of the best companies going public have a strong ethos of their stakeholders, and they were unable to include that in an IPO. They all see the value of including them in a thoughtful and robust way and we are giving them the ability to do that through our platform. Now we are seeing sustained growth and [we believe] what we are doing is too big to fail.”

PrimaryBid is riding on a wave of interest that has been a long time in the forming, helped by a series of other developments. Financial apps like Robinhood and Revolut, and the growth of a new approach to investing popular in Europe, the ETF, have made it much easier for ordinary consumers to invest in public companies and currencies (including cryptocurrencies) that interest them or that they think might bring them good returns — something that previously would have been only possible for high net-worth individuals working with brokers, or professional investors.

And events like the Gamestop stock frenzy of 2021 may have also highlighted the pitfalls of that democratization, but nevertheless underscored just how powerful general public investing had become. It was only a matter of time before that democratization moved to IPO and follow-on share issues.

There is a strong argument for B2C companies offering shares to their users as part of a public offering or fundraise, not least because those customers want to back the companies they believe in and already use. That’s something that will only grow. (Case in point: Reddit’s CEO has stated that the company wants to offer shares to individual investors when it goes public.)

But Sambasivan points out that consumer-focused businesses are not the only ones that are benefitting from that market demand, either on the part of companies or investors themselves. In fact B2C forms only about 10% of the trades that PrimaryBid has worked with, he said.

"PrimaryBid is powering inclusivity in the capital markets by making it simple and easy for anyone to access stock issuances previously reserved for institutional or professional investors,” said Anthony Doeh, a partner at SoftBank Investment Advisers, in a statement. “We believe the team has created a platform that combines technology, data and an 'ecosystem friendly' approach to the challenge of widening participation, including developing a unique Community IPO platform for corporate issuers. We're excited to partner with them and believe we can add significant value to the business through our global network and expertise.”
at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)

guest post needed

Hi I hope you're doing well. I'm reaching out to discuss the possibility of publishing articles on your website. Along with guest ...