Year: 2018

TwelveSouth is one of the most innovative Mac accessory companies out there. From its PlugBug adapter to the AirFly bluetooth headphone receiver, the company makes clever, well-produced products. But the PowerPic — I dunno, man.

I’m sure the build quality is there, as with its other offerings. New Zealand pine sounds nice. At its heart, though, the product is really a wood box around a wireless charging stand. “Wireless charging is awesome, but adding yet another charging gadget to your bedside table is not,” says the press material.

So TwelveSouth built a picture frame with Qi charging built in to hide your gadget-owning shame. It’s a real picture frame — one designed to put real pictures in. Then you place your phone on top. So when it’s not charging, it’s a picture frame. Kind of like how the Google Home Hub or Facebook Portal turn into digital picture frames when not in use. Only this isn’t digital. It’s paper.

The best part of the PowerPic is probably the name — like PowerPC, but with an “i.” Apple homages abound. Ultimately, though, it’s one of those things that seems more like a project you’d find on a DIY YouTube channel. Only it’s a product you can buy for $80. Just in time for the holidays, I guess.

One. More. Day. That’s how long you have until the region’s very best early-stage startup founders compete head-to-head in the first Startup Battlefield Latin America 2018. Those founders have been honing their pitches to perfection, and they’re ready to launch their dream to the world — tomorrow, 8 November — at the Tomie Ohtake Institute in São Paulo, Brazil.

If you haven’t secured your free spectator ticket, apply for it right now. Don’t miss out on a full day of thrilling competition, outstanding panel discussions, networking and the chance to celebrate the entrepreneurial spirit of Latin America’s startup community.

Here’s a quick take on how Startup Battlefield works:

During three preliminary rounds, up to five startups per round will each have six minutes to pitch and present their demo before a panel of expert tech and VC judges. The judges have six minutes following each pitch to ask teams probing questions. Five of the competing startups will move on to the finals and pitch again to a new set of judges.

The judges confer and will declare one startup to be Latin America’s first Startup Battlefield champion. The winning founders receive a $25,000 non-equity cash prize and a trip for two to the next Disrupt, where they can exhibit free of charge in the Startup Alley — and possibly qualify to participate in the Startup Battlefield at Disrupt.

Between rounds, we have an amazing cast of speakers on tap — founders, investors and startup experts who’ve all been busy shaking up the region’s startup scene.

You’ll hear from a bona fide Brazilian unicorn when Nubank founder and CEO David Vélez and co-founder Cristina Junquiera sit down with us to talk about disrupting big banks, securing funding and both the opportunities and challenges facing early-stage startups in Latin America.

You’ll also hear from the latest generation of Latin America’s highly disruptive tech founders — including David Arana (Konfio), Juan Pablo Bruzzo (Moni), Ana McLaren (Enjoie) and Sebastian Mejia (Rappi). They’ll talk about the rising expectations they face — both at home and abroad.

Startup Battlefield Latin America takes place tomorrow, 8 November in São Paulo, Brazil. Come and cheer on the region’s top early-stage startups in the region. Learn from some of the most successful leaders and take advantage of potentially life-changing networking opportunities. This is your last chance to apply for a free spectator ticket. We can’t wait to see you tomorrow!

Tinder has never really shaken its reputation among consumers as a “hook up” app, instead of one designed for more serious dating. Now, it seems Tinder is planning to embrace its status as the default app for younger users who aren’t ready to settle down. According to Match Group CEO Mandy Ginsberg, speaking to investors on its Q3 earnings call this morning, Tinder is preparing to launch its first-ever brand marketing campaign that will promote the “single lifestyle” with billboard campaigns and other digital initiatives.

The move is something of an admission that Tinder isn’t working for helping people find long-term relationships.

“Tinder was such a phenomenon when it launched and spread so quickly that the market defined th brand, versus the business defining the brand,” said Ginsberg, referring to its “hook up app” reputation.

“Tinder’s brand particularly resonated with 18 to 25 year-olds because it provides a fun and easy way to meet people. Tinder sometimes gets a bad rap for being casual,” she then admitted. “But keep in mind that people in the late teens and early 20’s are not looking to settle down. It is a time to explore and discover yourself, meeting lots of people and being social.”

Tinder’s new marketing campaign will focus on the “single journey,” the exec said.

The dating app maker has already started publishing content that’s relevant to this “single lifestyle” on its Swipe Life website with stories relating to dating styles, travel, food, and more. For example, some of its recent articles have included things like: “7 Exit Strategies for Terrible Dates,” “Tinder Diaries: Which of these 5 Guys Will Get the Date?,” and “Study Abroad Hookup Confessions.”

Definitely not material for the relationship-minded.

Now, the company will promote Tinder’s “single lifestyle” even further with billboards across major cities throughout the U.S., as well as on digital channels.

The campaign’s goal, explained Ginsberg, is about “further reinforcing how Tinder can enable users to make the most of this fun and adventurous time in their life.”

It’s not difficult to read between the lines here: Tinder’s business model succeeds among people who want to stay single. It succeeds when they’re retained in the app, continually swiping on to the next person they want to meet.

To be fair, Tinder has never really invested in many features that push people to go on dates or exit its app. Instead, it has added addictive features like an in-app news feed – like a social network would have – and tools that enhance in-app chats, like sharing GIFs.

If Tinder was Match’s only dating app, this narrow definition of an app for those embracing their “single lifestyle” would be a problem.

But Match’s strategy has been to diversify its lineup of dating apps. Now it’s a majority owner of dating app Hinge, whose focus has been on helping people get into relationships. In other words, when people are fed up with the ephemeral nature of Tinder, they can just switch apps – while remaining a Match customer, of course!

The company also says it will invest more in Hinge going forward – a move that’s not unrelated to the decisions Match is making around Tinder. 

In fact, in another admission that Tinder wasn’t serving those in search of relationships, Ginsberg said Hinge will help the company to address the “previously underserved” audience of 20-somethings looking for a serious relationship.

She speaks of how Hinge’s user interface is clean and simple, and encourages people to be more thoughtful in their initial conversations. It’s a stark contrast to Tinder, which certainly does not.

Hinge downloads have increased five times since Match invested, the company also noted. It’s gaining traction in major cities throughout the U.S, including New York, as well as in international markets, like London.

The plan is to make Hinge the anti-Tinder, then pull in users as they exit Tinder in search of something real. The company said it’s going to increase the marketing spend on Hinge to drive awareness of the app across the U.S.

“We see a real opportunity to invest meaningful dollars in both products and marketing at hinge to drive long-term growth,” said Ginsberg.

“We think it addresses a great gap in the market,” she continued. “If you think about when Tinder came into the market six years ago, it brought a whole new audience of young users, particularly college-age users. As they start to age…having a product that’s oriented to serious [dating] – but sort of mid-to-late 20’s – is really compelling for us,” she added.

Tinder has evolved over the years from casual dating to include those who are more serious. But with Match’s decision to focus on those not looking for lasting relationships, it risks losing some users going forward. The challenge for the company is to pick them up in another dating app it owns, and not lose them to Bumble…or to an exit from dating apps altogether.

 

 

Chris Hays and Mark Jeffrey wanted to create a way for everyone to be able to tell their loved ones if they were in trouble. Their first product, GuardianCircle did just that, netting a mention in a few years ago. Now the same team is truly decentralizing alerts with a new token called, obviously, Guardium.

The plan is to create an ad hoc network of helpers and first responders. “Guardium and Guardian Circle togther open the emergency response grid to vetted citizens, private response and compatible devices for the very first time,” write the founders. “Providing an economic framework on our global distributed emergency response network; Guardium brings first responders to the 4 billion people on the planet without government sponsored emergency response.”

Since the product already works, the team is taking on the token sale as a new challenge.

“We’re serial entrepreneurs — both of us have been venture-backed in the past by names like Softbank and Intel, and we’ve been senior execs in companies backed by Sequoia and Elon Musk. Transitioning to the token-sale backed universe has been an interesting study in contrasts,” said Hays. “There are a number of ‘panic button apps’ — but without exception, all of them have forgotten ‘the second half of the problem’ — organizing the response. Getting people who do not know one another into instant communication and location sharing during an emergency — the importance of that cannot be overstated.”

The founders found that their idea wasn’t fundable in the valley. After all, what VC wants to help people when they can invest in Snapchat? Instead, Hays and Jeffrey are aiming bigger.

“We’re rebooting the world’s safety grid,” said Hays. “We’re creating a new global public utility. And we want it to service everyone, everywhere on earth. Although it is a very big vision, and it is a capitalist, multibillion dollar ecosystem that we’re chasing — it’s still a very different vision, and not the one venture capitalists are looking for.”

The token works to create a flash mob of help. Guard tokens pay first responders and dispatchers and “cities, campuses, and resorts stake $GUARD to access Alerts created within their geofenced borders,” allowing local folks to help immediately. They’ve sold half of their hard cap of $10 million thus far.

While tokens are always an iffy investment, this team has produced product and, more important, it’s clear they’ll never raise venture. A token, no matter how it’s used in the future, seems like a solid solution.

The UK’s privacy watchdog has asked Facebook’s lead EU regulator to look into ongoing data protection concerns about its ad platform — including how its platform is being used to target and spread fake adverts to try to manipulate voters.

Facebook’s international HQ is in Ireland so the regulator in play here is the Irish Data Protection Commission.

The ICO noted the action in a 113-page report to parliament yesterday giving an update on its long-running investigation into the use of data analytics in political campaigns — writing:

We have referred our ongoing concerns about Facebook’s targeting functions and techniques that are used to monitor individuals’ browsing habits, interactions and behaviour across the internet and different devices to the to the IDPC. Under the GDPR, the IDPC is the lead authority for Facebook in the EU. We will work with both the Irish regulator and other national data protection authorities to develop a longterm strategy on how we address these issues.

A spokesperson for the watchdog told us these concerns fall outside the remit of that still partially ongoing investigation, which was triggered by the Cambridge Analytica data misuse scandal.

So the issues of concern are not the same issues that the ICO fined Facebook for last month, when it handed the company the maximum possible penalty under the UK’s previous data protection regime. Hence the referral to the Irish DPC.

We’ve reached out to Facebook for comment on the referral.

A spokesman for the Irish regulator told us: “The DPC has yet to receive any information from the ICO.”

Giving one example of its concerns, the ICO’s spokesperson pointed to recent news reports flagging fake political ads that had passed Facebook’s checks and been able to circulate on the platform — until being spotted by journalists, after which they got pulled by Facebook.

Responding to the above ad, badged as being paid for by the now defunct and disgraced data company Cambridge Analytica, Facebook said: “This ad was not created by Cambridge Analytica. It is fake, violates our policies and has been taken down. We believe people on Facebook should know who is behind the political ads they’re seeing which is why we are creating the Ads Library so that you can see who is accountable for any political ad. We have tools for anyone to report suspicious activity such as this.”

Such an obvious fake slipping through Facebook’s checks on political ads — which were only rolled out in the UK a few weeks ago, in first phase form — suggests they can be trivially gamed.

In related news, the Guardian reports that Facebook has delayed a requirement that UK political advertisers verify their identity — pushing it back from an initial deadline of today to sometime in “the next month”, with the company saying it wants to take more time to strengthen the system after a spate of failures.

“We have learnt that some people may try to game the disclaimer system by entering inaccurate details and have been working to improve our review process to detect and prevent this kind of abuse,” a Facebook spokesperson told the newspaper.

The fake ads issue also highlights how self-styled ‘transparency’ without proper accountability can just further muddy already murky waters — where masses of personal data and opaque ad platforms are concerned.

During a hearing in front of the UK’s DCMS committee yesterday, the UK’s information commissioner, Elizabeth Denham, also raised concerns about the use of so-called ‘lookalike audiences’ for targeting voters on Facebook — saying a system that makes inferences in order to target people with political ads needs to be looked at closely in light of Europe’s new GDPR privacy framework.

She also told policymakers that Facebook needs to change its business model. And said all platforms “need to take much greater responsibility”.

“I don’t think that we want to use the same model that sells us holidays and shoes and cars to engage with people and voters. I think that people expect more than that. This is a time for a pause, to look at codes, to look at the practices of social media companies, to take action where they’ve broken the law,” she said.

Committee members raised some of their own political ad concerns with Denham, querying the lawfulness of a crop of ads recently circulating on Facebook, targeting MPs and their constituents, urging policymakers to ‘chuck chequers’ — a reference to the UK prime minister’s current Brexit proposal to the EU — which are badged as being paid for by an organization called ‘Mainstream Network’, without it being clear who on earth is behind that…

“We are investigating those matters and will be looking at whether or not there was a contravention of the GDPR by that organization in sending out those communications,” Denham told the committee.

But wider concerns about how Facebook’s ad platform operates have now been handed over to the Irish DPC to investigate — a far smaller, less well resourced watchdog than the ICO; the largest such agency in Europe.

Any future audit of Facebook’s platform — as has been recently called for by the EU parliament — would also be led by Ireland, Denham confirmed to the committee.

She was asked whether she had any concerns about the smaller regulator being able to handle its burgeoning caseload. “We can work with,” she replied, noting the ICO likely has greater capacity to conduct technical audits. “We certainly can support them and work with them.”

She noted too that the newly established European Data Protection Board — which is responsible for ensuring consistency in the application of the GDPR — is working on “a more holistic way” to co-ordinate regulating social media platforms across Europe.

“[It] is looking at… what we need to do as a community with Facebook and other social media platforms,” she told the committee, adding that under the GDPR the Irish DPC is the “lead authority on Facebook because that’s where Facebook is based in Europe so they would the lead on an audit that’s going forward in the future”.

“Regulators need to look at the effectiveness of their processes,” she added. “That’s really at the heart of this — and there’s a fundamental tension between the advertising business model of Facebook and fundamental rights like protection of privacy. And that’s where we’re at right now.

“It’s a very big job both for the regulators but for the policymakers to ensure that the right requirements and oversight and sanctions are in place.”

Alexa’s path to AI global domination continues apace with the addition of Mexico to its growing list of markets. Amazon today opened up pre-orders for the Echo, Dot, Plus, Spot and  Smart Plug. The devices are set to start shipping next week.

Of course, bringing such devices to new markets is more complicated than just supply chain issues. Ever new location means new accents and cultural nuances.

Amazon brought the Alexa to Spain earlier this year, but the the distinction between that brand of Spanish and the one spoken in Mexico is broad enough to require some massive changes, not to mention a spate of different local customs that need to be adhered to with the building of Skills. 

The smart assistant is currently available in around 40 countries, including the addition of Italy and Spain late last month. Google’s Assistant, meanwhile, launched in Mexico over the summer via the arrival of Home and Home Mini.

Disrupt Berlin 2018 (29-30 November) will be here before you know it and we’re excited to announce a few of the participants in the Q&A Sessions at the event. If you’ve been to a Disrupt before, you know that the Q&A Sessions are one of the most engaging parts of the event. During Q&A Sessions, select speakers and category experts from the Main Stage will head to the more intimate Next Stage to answer questions posed by the audience. But not only will Disrupt attendees have a chance to engage in discussions with speakers but you may also walk away with some quality connections. Here’s what one Disrupt attendee had to say about them:

“I thought the niche Q&A sessions were a brilliant way to put people of similar interests in the same room. By the last day any Q&A session I entered, I walked out with at least two new contacts.”

Q&A Sessions last about 30-45 minutes and are open to Disrupt all attendees. Sessions will feature speakers across key topics like Blockchain, VC/Investor Topics, Fintech and Space and it’s your chance to ask questions to some of the greatest minds in technology. You’ll want to make sure you are there in person as these sessions will not be recorded or broadcast. Here are just a few speakers you’ll engage with during Disrupt Berlin:

Jamie Burke, CEO & founder, Outlier Ventures

 

Kaidi Ruusalepp, CEO & founder, Funderbeam

 

Ricky Knox, CEO & co-founder, Tandem

 

Niko Bonatsos, Managing Director, General Catalyst

The only way to get involved is to snag a pass to Disrupt Berlin. Single attendee and exhibitor packages are still available at Late Registration prices — you can save up to €350 if you act fast. For the full Disrupt Berlin agenda, click here. We’ll be adding speakers in the weeks leading up to Disrupt, so check back often for updates. Hope to see you there.

Spotify’s ad-supported tier has long been one of the service’s differentiators. Naturally, the model’s not nearly as feature rich as its paid counterpart, though the company’s removing one of those key distinctions as this morning.

In a press release, the company notes that free users will soon be able to stream music through Spotify Connect-sporting speakers. The newfound integration will work with hardware companies that switch to the new SDK.

Here’s your standard game changer quote, this time from Senior Product Director, Michael Ericsson: “The release of our new eSDK will change the game for Spotify’s Free users who want to enjoy music on their connected speakers. We look forward to supporting our partners over the coming months as they update existing speakers and bring new products to market.”

Most (around 104 million) of Spotify’s 191 million subscribers are free users. The tier has been a tremendous part of the service’s global growth, and it continues to be a difference as Apple Music gains a foothold, particularly here in the U.S.

Earlier this year, Spotify fleshed out its free offering, but Premium continues to offer some marked advantages. Along with getting rid of ads, it includes higher quality streams and the ability to download offline tracks.

It appears Dish’s live TV streaming service, Sling TV, has been impacted by the increased competition from rivals like YouTube TV, Hulu with Live TV, AT&T’s DirecTV Now, and others. Sling TV still leads the market with 2.37 million subscribers for its TV service aimed at cord cutters, Dish reported in its Q3 2018 earnings, but its momentum is slowing.

In the first quarter of the year, Sling TV added 91,000 subscribers, followed by 41,000 in Q2, and now just 26,000 additions in Q3, according to Dish’s earnings results out today.

That allows it to retain its first place position, but that lead may not last for much longer.

AT&T’s DirecTV Now had been catching up to Sling TV in recent months, leading some to believe it would surpass Sling TV by year-end.

Launched two years ago, DirecTV Now added 49,000 subscribers in its Q3, it reported in October – much worse than the 247,000 added last year, when the service was newer and promos were more plentiful. But its price hikes, technical issues, and poor customer service have turned some customers off, leaving it still shy of 2 million subscribers by the end of the third quarter.

Meanwhile, newcomer Hulu with Live TV just topped a million subscribers in September – growth that may have come at the expense of Sling TV and others, it seems.

In addition, YouTube TV hit 800,000 around May, while Sony’s PlayStation Vue is trailing with somewhere over half a million.

Sling TV’s slowing growth may not be all chalked up to the competitive landscape, either. Its price increases introduced this June may have also impacted sign-ups. And there’s the fact that streaming TV services simply may not ever see the sort of demand that subscription VOD offerings, like Netflix, do.

Sling TV’s too-small gains were only one blip in an otherwise dismal quarter for Dish, which saw its worst net subscriber losses to date thanks to the loss of satellite TV customers. The company dropped 367,000 satellite customers to end the quarter with 10.29 Dish TV subscribers. It also recently saw HBO and Cinemax removed from Dish and Sling TV lineups, due to a programming fight. That was the first time HBO had ever gone dark, too.

One thing that is clear from Dish’s earnings, and AT&T’s prior to this, is that the market for traditional pay TV is still in decline thanks to cord cutting – and the “TV” landscape in the future will look very different, as a result.

 

We are experimenting with new content forms at TechCrunch. This is a rough draft of something new – provide your feedback directly to the authors: Danny at danny@techcrunch.com or Arman at Arman.Tabatabai@techcrunch.com if you like or hate something here.

Ignoring the midterm hysteria, we continue our obsession with SoftBank today by looking at the group’s IPO of its telecom unit, but first, some thoughts about Form Ds.

Recently, I was looking up the investment history of Patreon (note: I was an investor in the company through my previous venture firm CRV). I did what I normally do: I went straight to the SEC’s EDGAR system and started searching for the company and its filings. And came up with nothing. Full-text search, office address searches, and founder name searches — nothing was returned.

And yet, the company has publicly raised more than $100 million in venture capital according to Crunchbase, and to my knowledge, is not incorporated outside of the United States.

There should be a whole spate of filings and yet none exist. What’s up with that?

After some investigation, my working hypothesis is that startups are (increasingly?) not filing disclosures with the SEC as a specific strategy to avoid scrutiny.

To take a step back, when companies take money from investors, they sell those investors securities. Under American laws, all securities need to be registered with the Securities and Exchange Commission using pre-defined templates (such as an S-1 registration form) to ensure that all investors know exactly what they are buying.

However, registration is expensive and time-consuming, and so U.S. law also provides a set of exemptions from registration for companies where that process is impractical. Startups take advantage of these exemptions and stay private, until they eventually want to become public through a registration with the SEC.

One mandated component of taking advantage of these registration exemptions is that the startup needs to file a Form D with the SEC. The Form D is free to file and relatively simple, requiring basic information such as the amount of capital fundraised and who the investors were in the round. It’s required to be filed 15 days after the first sale of securities, and conveniently, the form pre-empts most state securities laws so that startups don’t have to file in state jurisdictions.

There are theoretically large penalties for failing to file — a company could open itself to investor lawsuits, and there are various financial felonies available that could be applied as well.

But that’s legal theory, and the practicalities are that almost nothing bad happens to startups who fail to file a Form D. American courts along with the SEC have upheld that a startup does not lose its covered security exemption by failing to file the form. The only additional requirement is generally to file state security forms in lieu of the federal form.

A bigger question is why go through this when filing is easy and free? The obvious answer is that startups don’t want to put their round’s information out in the public eye where the good people at TechCrunch will see it and report on it. Of course, the whole point of Form D disclosure is to provide the public a modicum of information about what is happening in the economy.

But actually, the motivations go far beyond that. One reader, Paul David Shrader, saw our note yesterday that we were investigating Form Ds and offered this list of reasons on why companies in general (and to be clear, not specific to any company he has advised) choose to forego filing:

As for the “why,” there are a few reasons why management, the board of directors, or even investors may be sensitive to fundraising disclosures:

1. The company doesn’t want the increased scrutiny internally that comes along with a new funding round. This can come from employees demanding different levels of compensation.

2. The company doesn’t want increased regulatory scrutiny. Many startups operate in regulatory gray areas, and increased attention from regulators before they are ready can be a Bad Thing.

3. The company has security concerns. For startups that operate in certain environments internationally, raising a monster round can place a target on the backs of its employees. This has been an issue in Latin America from time to time.

4. The company has competitive concerns. Raising a big round may attract new entrants to the market or heighten attention from existing competitors before a startup has solidified its position in the market.

5. Investors don’t want disclosure. Some investors want to disclose new investments on their own timeframe, and they make this a condition of their investment. Publicly-traded investors or sovereign wealth funds (SoftBank included!) may only want to disclose at the time of their quarterly reports.

6. Flat rounds or down rounds can suck away any positive momentum. When founders are trying to convince customers and employees to join the rocket ship that is their company, a flatlining fundraise can look like… well, a flatlining company.

7. The round may not be closed yet. Companies sometimes have optimistic goals about the size of a round (“We’re raising $4 million!”), but only have a smaller amount committed at the outset of the round. Sometimes a single round can take 18+ months to close, even though a sizable (or not so sizable) percentage closed at the outset.

Some of these are obvious, but others, such as internal compensation concerns or international security concerns were more surprising to me. Thanks Paul David for the thoughts.

Now, I said at the outset that my hypothesis is that startups are increasingly foregoing Form D disclosure. Arman and I are still doing work on this (the SEC has some datasets), but to be frank, it is very hard to operationalize and prove. Form D filings are up or steady, which makes sense given that the number of startups in areas like San Francisco have skyrocketed over the past decade. We are trying to prove something that doesn’t exist, and Karl Popper has helpfully explained that that is impossible.

Nonetheless, we are still interested in whether the legal norms have shifted here, and will hopefully report back on this again. If you are a startup attorney with an opinion here, please email Danny@techcrunch.com or Arman.tabatabai@techcrunch.com with your thoughts.

SoftBank’s telecom IPO weirdness

Talking about filings, one of the most complicated filings in the world is underway. While we were digging into SoftBank’s financing strategies yesterday, all the activity around the looming IPO of its telco business caught our attention.

As we analyzed yesterday, though SoftBank’s debt balance continues to balloon, the company’s balance sheet has rarely prevented it from pursuing investments in the past.

SoftBank continues to dole out multi-billion dollar checks with stunning regularity, having invested around one third of its $90+ billion Vision Fund. And we know SoftBank has no intention of slowing its torrid pace, with Chairman and CEO Masayoshi Son previously stating he plans to raise $100 billion funds that would spend around $50 billion annually, every two or three years.

One way SoftBank is looking to access additional funding to pour into the next batch of unicorns is by taking a portion of its Japanese mobile business public. For some context, SoftBank is generally considered to be the third largest telco in Japan behind NTT DoCoMo and KDDI.

Even though initial estimates expect SoftBank to only sell around 30-40% of the company’s shares, the offering is widely expected to be one of the largest listings ever at potentially more than $25 billion, which would value the overall business at $90 billion on the high end. Reuters recently reported via a Japanese news service that the Tokyo Stock Exchange is expected to give SoftBank approval to list shares next Monday, with a likely listing date of December 19th.

But the progression of the IPO has been oddly complex and unique from the beginning.

First, there was an issue with a set of bonds SoftBank had issued in 2013, which were guaranteed by the telecom business and had covenants requiring that the company hold investment grade credit ratings before pursuing a sale of any sort. However, SoftBank’s bonds hold junk status from major credit ratings agencies. To fix that roadblock, SoftBank issued a new set of bonds with better terms to buy back the bonds with the prohibitive covenants, undercutting and aggravating some investors of the initial bonds.

Then, it was reported that while lining up the underwriting banks for the IPO, SoftBank reportedly asked banks to commit to loans to the Vision Fund that total around $9 billion, a claim SoftBank has not commented on. As reported by Bloomberg:

The IPO’s top underwriters, which include Nomura Holdings Inc. and Goldman Sachs Group Inc., have given non-binding assurances while they finalize terms of the loan to the Vision Fund, the people said. Stakes in around five of the investment fund’s holdings will be used as collateral, according to the people, who asked not to be identified because the information is private.

Deutsche Bank AG, Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. were also among banks chosen to lead SoftBank’s wireless unit IPO, Bloomberg News reported last week. Details of the loan are still being worked out, and terms could change, the people said. Meanwhile, Deutsche Bank and Goldman Sachs committed about $1 billion each, they said.

While the fund’s holdings (perhaps Uber or WeWork or others) would be set as collateral, Bloomberg also reported in the same article that the loans were non-recourse, meaning that if for some reason SoftBank were unable to repay the loan, the lenders would have no claim to any assets outside of the company stakes set as collateral. The loan terms become more concerning with the Vision Fund since it invests in many unlisted and, in many cases, unprofitable companies. As we noted yesterday, at least one potential lender, Bank of America, decided not to participate due to concerns that the terms were too risky.

Such sausage-making isn’t usually visible to the public, which would seem to indicate that at least some of the banks are grousing to reporters about terms they find egregious. As always, feel free to grouse to us as well.

What’s next

• Definitely drop us a line if you have thoughts about Form Ds or SoftBank – we are continuing to investigate

Reading docket

What we are reading (or at least, trying to read)

• Politico EU’s What the US midterms mean for the world
• The Atlantic’s The Bus Is the Best Public Transit for Cities
• Daniel J Hopkins’ The Increasingly United States (about how U.S. elections are more national and less local than ever before).
• Bloomberg’s piece called “ The $6 Trillion Barrier Holding Electric Cars Back ”
• The New Yorker piece called “ Why Doctors Hate Their Computers ”
• Eliot Peper’s new science fiction novel Borderless
• A new report about China’s military and its deep connections into American academic research
• “LA Is Trying to Fix its Prostitution Problem by Banning Right Turns at Night—and it Might be Working” — intriguing headline , let’s see if it follows through
• The Information’s deep dive into white-collar crime and lack of prosecution thereof in Silicon Valley