Year: 2018

If there was a word that dominated startup and tech news coverage this year, it was SoftBank. The Japanese telecom conglomerate’s Vision Fund pushed out a prodigious amount of capital this year — quite literally billions of dollars — into companies as diverse as a molecular manufacturer (Zymergen) and a robotic pizza delivery business (Zume Pizza). It was a year of highs as its Flipkart transaction produced billions in returns, as well as a year of incredible lows, what with the crisis over Saudi Arabia’s murder of Jamal Khashoggi. Saudi Arabia is the largest investor in the Vision Fund.

But the Vision Fund is only part of the SoftBank story this year. The company’s mobile unit started trading today on the Tokyo Stock Exchange (ticker: 9434), the second largest IPO of all time after Alibaba, raising $23.6 billion. But after weeks of pushing the stock to Japanese retail stock investors, those same consumers dumped the stock upon its debut, dropping by 15% from its debut at ¥1,463 to its close at ¥1,282. That’s the second worst IPO performance this decade for a Japanese company.

Highs and lows come with any ambitious project, and certainly for Masayoshi Son, the founder and chairman of SoftBank Group, nothing — not even piles of debt — will stand in his way.

Today, Arman and I wanted to look back at SoftBank’s year, and so we’ve compiled ten areas for analysis around the group’s telco business, its Vision Fund, and its other major investments (Sprint, Nvidia, Arm, and Alibaba).

SoftBank: The Telecom

1. Its IPO did what it had to do (raising money), but bad early performance will be a challenge for 2019

At its core, SoftBank Group is fundamentally a telecom, and the third-largest player in the Japanese market. Masayoshi Son has for years wanted to transform SoftBank from a mature telco player into a leading investment house for funding the next-generation of technology companies.

There’s just one problem: SoftBank is sitting on piles of debt. As Arman and I wrote about a few weeks ago:

The bigger number though is sitting on the liabilities side of the company’s balance sheet. As of the end of September, SoftBank had around 18 trillion yen, or about $158.8 billion of current and non-current interest-bearing debt. That’s more than six times the amount the company earns on an operating basis, and just slightly less than the public debt held by Pakistan.

And though SoftBank’s sky-high debt balance tends to be a secondary focus in the company’s media coverage, it’s a figure that SoftBank’s top brass is well aware of, and quite comfortable with. When discussing the company’s financial strategy, Softbank CFO Yoshimitsu Goto stated that the company is in the early stages of a transition from a telco holding company to an investment company, and as a result is “likely to be perceived as a corporate group with significant debt and interest payment burden” with what is “generally considered a high level of debt.”

Those debt loads have made corporate maneuvering quite complicated. And so the company decided to put its mobile telco unit up for public trading as a means of getting a fresh injection of capital and continue its transformation into an investment shop. By raising $23.6 billion today, the company did just that.

The 15% drop in value on its debut though shows that the market has yet to fully buy into Son’s vision for where SoftBank is heading. That lowered price will make the corporate financial math around debt tougher, and will be a key theme for 2019.

2. The Japanese government wants to increase competition in the telco space, putting massive pressure on SoftBank’s financials

Japan’s telco market is quite dormant, with mature, oligopolistic companies charging some of the highest prices on the planet for mobile service. Japan’s government also doesn’t auction off spectrum, which has saved telcos billions of dollars in direct cash costs, helping them to become reliable profit-generating juggernauts.

That cozy world is being shattered by the policy of Japanese prime minister Shinzo Abe, who has made increasing competition in the industry a major policy initiative. That includes putting 5G spectrum up for what will essentially be a competitive auction, demanding lower prices from telcos, and opening the market to new entrants like Rakuten (see #3 below).

As a result, incumbents like NTT DoCoMo have announced rate cuts of up to 40 percent on mobile services, while warning investors that it may take five years for the company to return to current profitability. Those announcements caused stock traders to dump Japanese telco shares this year, shedding $34 billion in the days following the announcements.

At a time when SoftBank most needs its cash flow to pay off its debt, the world is rapidly moving against it. The company has insisted that it can keep revenues and profits stable and even grow into the competition, but the announcements from its larger competitors dump cold water on its claims. SoftBank’s profits surged in its last quarter, but mostly from its Vision Fund investments rather than its core telco business.

3. Rakuten’s entrance into the Japanese mobile service market will scramble the traditional three-way oligopoly

One of the big news stories for SoftBank came from ecommerce giant Rakuten, which announced that it will launch a new mobile service in Japan starting as early as next year. As Arman and I wrote about at the time:

Though a new entrant hasn’t been approved to enter the telco market since eAccess in 2007, Rakuten has already gotten the thumbs up to start operations in 2019. The government also instituted regulations that would make the new kid in town more competitive, such as banning telcos from limiting device portability.

Rakuten’s partnerships with key utilities and infrastructure players will also allow it to build out its network quickly, including one with Japan’s second largest mobile service provider, KDDI.

Rakuten has obvious built-in advantages as the second largest ecommerce company in Japan following Amazon, and that will put pressure on other incumbents — including SoftBank — to meet its prices or to compete with more marketing dollars to reach customers. Again, we see a tough road ahead for SoftBank’s telecom business at a very vulnerable time for its balance sheet.

SoftBank: The Vision Fund

4. The Vision Fund actually got bigger this year

The Vision Fund’s massive vision got just a bit bigger this year. When the fund announced its first close in May 2017, it set a target final fund size of $93 billion. In 2018 though, the Vision Fund received another $5 billion in commitments. When we add the $6 billion already committed for SoftBank’s Delta Fund, which is a separate vehicle used to alleviate conflicts around the company’s Didi investment, Masayoshi Son now has more than a $100 billion at his disposal.

But that’s not all! The Vision Fund has also been rumored to be raising $4 billion in debt so that it can fund startups faster (picking up on that debt theme yet?). Its LPs, which include Saudi Arabia, Abu Dhabi, and Apple, are given time to fund their commitments to the Vision Fund, and so the fund wants to have cash in the bank so that it can fund its investments faster. Debt structures in the fund are complicated, to say the least.

Masayoshi Son has repeatedly said that he wants to raise a $300 billion Vision Fund II, possibly as soon as next year, eventually ramping to $880 billion in the coming years. Whether the company’s debt load and controversy over Saudi Arabia (see #6 below) will allow that vision to come to pass is going to be a major question for 2019.

5. Seriously: is there any company not getting a multi-hundred million dollar term sheet from SoftBank these days?

SoftBank dominated headlines throughout 2018 with a steady cadence of monster investments across geographies and industries. Based on data from regulatory filings, Pitchbook, and Crunchbase, SoftBank and its Vision Fund led roughly 35 investment rounds, with total round sizes aggregating to roughly $30 billion, or over $40 billion when including investments in Uber and Grab, which were announced in 2017 but didn’t close until early 2018.

Surprisingly, SoftBank’s latest filings indicate that as of the end of September, the Vision Fund had only deployed roughly $33 billion, or about one-third the total fund, though the actual number might be quite a bit larger. SoftBank has led twelve rounds since September, including buying a $3 billion dollar warrant for WeWork and finalizing a large round that included secondary shares into Chinese news aggregator ByteDance.

In addition to investing directly through its Vision Fund, SoftBank also regularly makes and holds investments at the group level, with the intention of selling or transferring shares to the Vision Fund at a later date. As a result, SoftBank currently holds around $27.7 billion in investments that sit outside the Vision Fund, including the company’s stakes in Uber, Grab and Ola which it expects to eventually transfer to the Vision Fund pending LP and regulatory approvals. Assuming it plans to move the majority of these investments to the Vision Fund, SoftBank might have already deployed close to half the fund.

For all of that money flowing out the door though, there are limits even to the Vision Fund’s ambitions. Just today, the Wall Street Journal reported that LPs are pushing back against a plan to buy out a majority of WeWork, which would push the Vision Fund’s investment in the co-working startup to $24 billion. From the article:

Some of the people said that [Saudi Arabia’s] PIF and [Abu Dhabi’s] Mubadala have questioned the wisdom of doubling down on WeWork, and have cast doubt on its rich valuation. The company is on track to lose around $2 billion this year, and the funds have expressed concern that WeWork’s model could leave it exposed if the economy turns, some of the people said.

If the investment went through, WeWork would represent roughly a quarter of the fund’s capital, an astonishing level of concentration for a venture fund. Its a bold, concentrated bet, exactly the kind of model that entices Son.

6. The Vision Fund generated its first massive returns with Flipkart, Guardant and Ping An, with a huge roster to come

In just the first full year of operations, the Vision Fund has already begun to see the fruits of its investments with several portfolio company exits.

It made a spectacular return on Indian ecommerce startup Flipkart, where SoftBank realized a $1.5 billion gain on its $2.5 billion investment in just about a year. Walmart, which bought a 77% stake in Flipkart as part of its ambitious overseas strategy, valued the company at $21 billion.

Flipkart may have been the year’s largest highlight for the Vision Fund, but it wasn’t the only liquidity the fund saw. Its pre-IPO investment in Ping An Health & Technology Co, which produces the popular Chinese medical app Good Doctor, debuted on the Hong Kong Stock Exchange, and Guardant Health, which makes blood tests for disease detection, went public in October to rabid investor enthusiasm.

While those early wins are positive signs, the proof of the Vision Fund’s thesis will come early next year, when companies like Uber, Slack and Didi are expected to go public. If the returns prove favorable, then the fundraise for Vision Fund II may well come together quickly. But if the markets turn south and complicate the roadshows for these unicorns, it could complicate the story of how the Vision Fund exits out of these high-flying investments.

7. Murder is wrong. That makes the math for SoftBank really hard.

The tech media world went into a frenzy over Saudi Arabia’s horrific and horrifically public killing of dissident journalist Jamal Khashoggi. That put enormous pressure on SoftBank and its Vision Fund, where Saudi Arabia’s Public Investment Fund (PIF) is the largest LP with a $45 billion commitment.

There have been strong calls for Masayoshi Son to avoid Saudi Arabia in future fundraises, but that is complicated for one simple reason: there are just not that many money managers in the world who can a) invest tens of billions of dollars into firms backing risky technology investments, and b) are willing to ignore SoftBank’s massive debt stack and existential risks.

So SoftBank faces a tough choice. It can have its fund, but will need to get money from unsavory people. That might be fine — after all, Saudi Arabia is also the largest investor in Silicon Valley. Or it can walk away and try to find another LP that might replace the Kingdom’s huge fund commitment.

If the Vision Fund’s numbers look good after the early IPOs in 2019, I can imagine it being able to paper around Saudi Arabia’s commitment with a broader set of LPs that might be intrigued with technology investing and trust the numbers a bit more. If the IPOs stall though, whether because of internal company challenges à la pre-Dara Uber or broader market challenges, then expect a next fundraise to feature Saudi Arabia prominently, or for no fundraise to take place at all.

SoftBank: The Other Stuff

8. Good news on SoftBank’s Sprint side with its merger with T-Mobile looking like it will move forward

Since SoftBank acquired Sprint for $20 billion back in 2013, Sprint’s heavy debt balance has led to lackluster performance and the downgrade of SoftBank’s credit ratings to junk, where they’ve remained since.

After initial discussions stalled in 2017, SoftBank reinitiated merger discussions with T-Mobile’s German parent, Deutsche Telekom in 2018, eventually reaching an agreement for a Sprint/T-Mobile merger that would see SoftBank’s ownership stake fall from just over 80% of Sprint to just 27% of the combined entity.

Despite the poor track record for telco deal approvals and the increased scrutiny of cross-border M&A from U.S. regulators, SoftBank’s proposed merger recently received key approvals from the Committee on Foreign Investment in the United States (CFIUS), the Department of Justice, the Department of Homeland Security, and the Department of Defense. Part of that agreement came when SoftBank agreed to eliminate Huawei equipment from its infrastructure. While the deal still needs approval from the Federal Communications Commission, the road forward seems to be relatively clear.

If the deal ultimately goes through, SoftBank will no longer have to consolidate Sprint financials with its own and can instead report only its owned share of Sprint financials (and debt expense), improving (at least the optics of) SoftBank’s balance sheet.

9. SoftBank’s massive bet on Nvidia could be a $3 billion winner even as Nvidia faces crash

SoftBank became Nvidia’s fourth largest shareholder in 2017 after building up a roughly $4 billion stake in the company’s shares. As I detailed last week, Nvidia’s stock has gone into free fall over the past two months, as the company faces geopolitical turmoil, the loss of a huge revenue stream with the collapse in crypto, and an increasingly competitive battle in the next-generation application workflow space.

Now, SoftBank is reportedly looking to sell its Nvidia shares for possible profits of around $3 billion. As Bloomberg reported, that’s because the acquisition was built as a “collar trade” that protected SoftBank against a drop in Nvidia’s share price (a good reminder that even when a stock loses half of its value, it is entirely possible for people to still make money).

The opportunity though is that SoftBank almost certainly still wants to continue to play in the next-generation AI chip space, and needs to find another vehicle for it to hitch a ride on.

10. ARM could be the saving grace of chips for SoftBank

In 2016, SoftBank made its biggest purchase ever when it acquired system-on-a-chip designer ARM Holdings for $32 billion. ARM’s designs were dominant among smartphones, which at the time was seeing rapid adoption and growth worldwide.

The good news hasn’t stopped since, although ARM has had to pivot its strategy in 2018 to adapt to changing market dynamics. Apple, which has seen its next-generation iPhone sales stalling, has been rumored to be moving to using ARM chips for a wider array of its products, including its Mac lineup. Beyond that expansion, ARM is now increasingly designing chips for the data center, and engaging in next-generation markets around artificial intelligence and automotive. ARM’s CEO has said that he sees a path to doubling revenues by 2022, which shows a healthy clip of growth if that pans out.

There are headwinds though. Consolidation in the semiconductor space has been a theme the past two years, and that will allow the surviving companies to be more ferocious competitors against ARM. Up-and-coming startups could also crimp the company’s growth in next-generation workloads, a risk shared with other incumbents like Nvidia.

That said, ARM seems to be in a much more strategic position than Nvidia these days, as ARM has managed to maintain its linchpin role, and that should ultimately roll up to a valuation that SoftBank will be excited about.

11. Alibaba is putting heavy pressure on SoftBank’s balance sheet

While SoftBank has slowly been cashing in after winning big on its early backing of Alibaba, the company’s ownership stake still sits at roughly 29%.

SoftBank’s Alibaba ties have helped the company fuel its incessant appetite for leverage, with SoftBank using its stake in Alibaba as collateral for an $8 billion off-balance sheet loan, which prevented additional downgrades of Softbank’s credit. But a tougher macro backdrop and slowing sales growth have caused Alibaba to follow the precipitous decline of other Chinese tech stocks in 2018, falling nearly 20% year-to-date and 30% in the last 6 months.

That decline means tens of billions of dollars of losses for SoftBank’s already overstretched balance sheet, and as with many of these stories, will make financing its vision challenging in 2019.

And so we get back to the core theme of 2018 for SoftBank: debt, leverage, and financial wizardry in pursuit of a bold transformation into a technology investment firm. That transformation has certainly not been smooth, but it has moved forward bit by bit. If SoftBank can navigate the changes in the Japanese telco market, exit some major investments in its Vision Fund, and manage its big commitments in Sprint and Alibaba, it will reach its destination, with a few ultimately superficial bruises along the way.

Microsoft today announced a new Office app that’s now available to Windows Insiders and that will soon roll out to all Windows 10 users. The new Office app will replace the existing My Office app (yeah, those names…). While the existing app was mostly about managing Office 365 subscriptions, the new app provides significantly more features and will essentially become the central hub for Office users to switch between apps, see their pinned documents and access other Office features.

The company notes that this launch is part of its efforts to make using Office easier and help users “get the most out of Office and getting them back into their work quickly.” For many Office users, Outlook, Word, PowerPoint and Excel are basically their central tools for getting work done, so it makes sense to give them a single app that combines in a single place all the information about their work.

Using the app, users can switch between apps, see everything they’ve been working on, as well as recommended documents based on what I assume is data from the Microsoft Graph. There’s also an integrated search feature and admins will be able to customize the app with other line of business applications and their company’s branding.

The app is free and will be available in the oft-forgotten Microsoft Store. It’ll work for all users with Office 365 subscriptions or access to Office 2019, Office 2016 or Office Online.

Say what you will about MoviePass (and there’s plenty to be said), the company doesn’t give up. The theater ticket subscription service’s production wing has dried the ink on a three picture deal with John McClane himself, Bruce Willis.

Deadline, which first broke the news, notes that Willis has a long standing relationship with Randall Emmett and George Furla, MoviePass Films’ dual CEOs, who founded the company as Emmett/Furla Films way back in 1998.

MoviePass’s parent Helios and Matheson Analytics acquired the assets to Emmett Furla Oasis Films back in May, transforming it into a film financing wing of the then-popular theater service. Since then, the studio’s track record has been hit or miss with the first major film Gotti proving a near-historic stinker.

Even so, it’s faring better than MoviePass itself, which has proven something of an inextinguishable garbage fire over the last several months. CEO Mitch Lowe acknowledged as much in a recent interview, noting, “we’re in the process of fixing all the things that went wrong.”

TechCrunch is working on a new project to help you build a better company.

We’re looking for the great service providers in the startup world: the lawyers, accountants, recruiters, human resource managers, project managers and other experts you need to help you succeed. We’re putting together detailed lists of experts based on recommendations from our readers, and our own research, so that you can quickly find the right person to bring on — so you can go back to focusing on your core product.

We’re kicking off this project today by trying to identify the startup lawyers that founders love to work with.

Have you worked with an attorney who, say, helped you clean up a messy business contract, or set up a compelling compensation structure for your team, or saw around a corner on a big legal issue you didn’t know about?

Tell us more by filling out this two-minute survey.

We will keep all of your information anonymous, unless you tell us you want your name attached.

Over the coming months, we’ll be sharing our findings from this first project, and begin looking for more types of great service providers.

Finding a great first startup lawyer

Startup legal requirements have been getting more and more streamlined in recent years, to the point that you don’t even need much legal advice to get pretty far. You can download boilerplate early-stage funding agreements and contracts offered by venture firm Y Combinator, top tech law firm Cooley LLP or the Series Seed site. And you can find great outside lawyers and get their help quickly via legal startups like Atrium, UpCounsel or the broader range of legal review sites.

But who exactly should you work with, and why? Right now, there’s not a single source that answers these questions for people going through the tough early stages of company-building. The way I have found lawyers while co-founding companies over the years has been through word-of-mouth recommendations from other entrepreneurs and investors. One of these lawyers was great — he helped us figure out the right compensation structure, handle a tough funding negotiation and he made the right call on how to determine asset value. He’ll almost certainly make the list.

But not everyone will.

There are thousands of lawyers out there working with tech companies around the world. You won’t need (or want) some of them until you are raising later-stage rounds, dealing with conflicting international laws, getting embroiled in litigation or working on a big liquidity event. Many attorneys will be too expensive, too focused on one specialization or another or simply too busy to bother with smaller companies. Meanwhile, there are plenty of great lawyers without much experience in tech… they may not give you the best advice if you’re trying to navigate the norms and patterns of the startup world.

The lawyers who work with startups — and are good at it — are a special breed. Chances are, other people in the startup world know about them even if you don’t. But that knowledge has never existed all in one place.

Now, help us understand this opaque world by filling out this first survey.

In exchange, we’ll provide you with special access to the results when we have them ready.

TechCrunch is experimenting with new editorial ideas. Please provide your feedback directly to the author (Eric at eldon@techcrunch.com).

Facebook users might have already moved on to the company’s next notable outrage, but the company is still answering for its privacy missteps from earlier this year.

Washington D.C. Attorney General Karl Racine filed a lawsuit against Facebook on Wednesday, alleging that the company has not fulfilled its responsibility to protect user data. Racine’s office specifically cites the Cambridge Analytica scandal in the suit, noting that Facebook’s lax data sharing policies with third-parties led to users having their personal data harvested for profit without their consent.

“Facebook failed to protect the privacy of its users and deceived them about who had access to their data and how it was used,” Attorney General Racine said of his decision to sue the company. “Facebook put users at risk of manipulation by allowing companies like Cambridge Analytica and other third-party applications to collect personal data without users’ permission. Today’s lawsuit is about making Facebook live up to its promise to protect its users’ privacy.”

According to its announcement, the D.C. AG’s office will seek an injunction to pressure Facebook to implement “protocols and safeguards” to oversee user data sharing as well as privacy tools that simplify protections for users. The full text of the suit is embedded below.

Cloud Spanner, Google’s globally distributed relational database service, is getting a bit more distributed today with the launch of a new region and new ways to set up multi-region configurations. The service is also getting a new feature that gives developers deeper insights into their most resource-consuming queries.

With this update, Google is adding to the Cloud Spanner lineup Hong Kong (asia-east2), its newest data center location. With this, Cloud Spanner is now available in 14 out of 18 Google Cloud Platform (GCP) regions, including seven the company added this year alone. The plan is to bring Cloud Spanner to every new GCP region as they come online.

The other new region-related news is the launch of two new configurations for multi-region coverage. One, called eur3, focuses on the European Union, and is obviously meant for users there who mostly serve a local customer base. The other is called nam6 and focuses on North America, with coverage across both costs and the middle of the country, using data centers in Oregon, Los Angeles, South Carolina and Iowa. Previously, the service only offered a North American configuration with three regions and a global configuration with three data centers spread across North America, Europe and Asia.

While Cloud Spanner is obviously meant for global deployments, these new configurations are great for users who only need to serve certain markets.

As far as the new query features are concerned, Cloud Spanner is now making it easier for developers to view, inspect and debug queries. The idea here is to give developers better visibility into their most frequent and expensive queries (and maybe make them less expensive in the process).

In addition to the Cloud Spanner news, Google Cloud today announced that its Cloud Dataproc Hadoop and Spark service now supports the R language, in addition to Python 3.7 support on App Engine.

Adtech cybersecurity company Devcon announced today that it has raised $4.5 million in seed funding.

Over the past couple of years, ad fraud has become a bigger concern in the industry, but Devcon co-founder and CEO Maggie Louie said most existing solutions focus on things like verifying ad quality and confirming that impressions aren’t coming from bots. Devcon, in contrast, functions more like “a Norton AntiVirus of adtech” preventing attempts by bad actors who are “using adtech as a catalyst to attack consumers and companies.”

In other words, Louie said Devcon works with ad networks and publishers to “eliminate 99 percent of the nefarious things that are making their way through the system.” It says it can block malicious ads on an individual basis, whether they include pop-ups and redirects or unauthorized tag injectors. Customers can then view the individually blocked ads and see where they came from, and there’s also a dashboard that shows how much money is being lost to fraud.

Louie pointed to the recent DOJ indictment of eight individuals allegedly involved in a digital ad fraud scheme as a sign that the issue is becoming more serious.

“Some of these attacks have some very concerning potential outcomes [for consumers], so being able to stop those before they get out is akin to stopping a water contamination at the source level,” she added.

At the same time, she argued that this is a particularly challenging area for security, because there’s been “a lack of crossover between cybersecurity and ad ops,” leading to a dearth of “security people or cybersecurity people who understand adtech.”

In contrast, the Devcon team combines media veterans like Louie (who was recently vice president of audience at the Athens Banner-Herald and also worked at the Los Angeles Times) with “white hat” hackers like co-founder and CTO Josh Summitt (who was previously on the ethical hacking team at Bank of America). It’s also hired former FBI Cyber Squad Supervisor Michael F. D. Anaya as its head of global cyber investigations and government relations.

In fact, Devcon says it assisted law enforcement in the first-ever conviction for online ad theft and money laundering, which resulted in a four-year prison sentence.

Devcon was founded in Memphis, Tennessee but has since expanded its headquarters to Atlanta, and it was part of this year’s Techstars Barclay accelerator in London. The seed funding was led by Las Olas VC — among other things, Louie said it will allow Devcon to further develop its machine learning technology to automatically identify emerging threats.

Google just released an advert for Google Assistant and its band of merry products. It’s really good. Basically the ad is Home Alone reimagined, but this time Macaulay Culkin plays an adult Kevin who home alone with a house full of devices controlled by Google Assistant. Obviously.

And for the sake of objectivity, I need to point out a home outfitted with Amazon or Apple’s voice assistants could do the same thing.

PetaGene, the Cambridge, U.K.-based genomics data compression startup, has raised $2.1 million in further funding. Leading the round is U.S. venture firm Romulus Capital, with participation from other unnamed investors Silicon Valley and London. It brings total funding to $3.2 million.

Previous investor Entrepreneur First, the company builder backed by Greylock Partners, also followed on. PetaGene is an alumnus of EF6, although notably its two founders Dan Greenfield and Vaughan Wittorff already knew each other from their time at the Computer Laboratory in Cambridge University. Both hold PhDs from Cambridge University, too.

The new funding will be used by the company to grow its technical team based in Cambridge, its global sales team, and further expand PetaGene’s product offerings. I’m also told the new funding comes off the back of signing a large contract with a major undisclosed pharmaceutical company.

“As whole genome sequencing becomes more and more commonplace, the amount of data it creates places great strain on infrastructure. We help organisations with managing that data,” says PetaGene co-founder Dan Greenfield. “Through our compression technology, we make that data up to ten times smaller and faster to transfer for research and analysis, democratising precision medicine in the process”.

As it stands, the storage and processing of genomics data adds a significant extra cost and acts as a bottleneck for how fast data can be worked with. By some estimates genomics data will reach 40 exabytes per year by 2025 (exabytes, by the way, is a lot of data!). Therefore, better file compression technology has the potential to be a major enabler of innovation and research based on genomics, including developing new personalised medicine and treatments.

Key to this, PetaGene says its software enables compression of huge amounts of genomic data without compromising on access and data quality. The company claims its products go beyond regular data reduction techniques.

“We have dedicated extensive R&D to building extremely high performance compressors for genomic data, the result being that we outperform existing state-of-the-art compression, sometimes by a factor of 6x or more,” explains Greenfield.

“At the same time our customers want to be assured that the original file can be exactly recovered. Other compression solutions unfortunately aren’t able to restore the original file, and can even sometimes discard or modify internal content without telling their users. We’ve spent a great deal of effort to make sure we preserve the original file bit-for-bit, even providing commercial guarantees to our customers. I can’t really go into the details of our secret sauce here, but we’re very proud of our industry-leading performance, and we continue to keep improving it”.

Krishna K. Gupta, founder and general partner of Romulus Capital, says he was impressed by the part of the genomics value chain PetaGene is targeting, which led the firm to first invest in 2017. “Since then, their ability to successfully develop their product for the cloud and the strong interest from potential customers have only served to reinforce our view,” he says.

Meanwhile, PetaGene’s target customers span pharmaceutical companies, academic research institutions, clinical labs in hospitals, and genomic sequencing companies.

“Our clients pay for our software according to the savings they make,” adds the PetaGene co-founder. “The greater the reduction in size of their data files, the more revenue we receive, and the more they are saving in storage and data transfer costs. We don’t charge our clients for accessing or decompressing the compressed data”.

Candid, a teeth aligner startup that aims to make straight teeth more accessible and more affordable than Invisalign, is evolving its direct-to-consumer business. In addition to its at-home impression process, Candid recently started enabling people to come into a physical office to get their teeth scans completed.

Today, Candid is opening physical storefronts in San Francisco, Austin, Columbus, Ohio and Santa Monica, Calif. This is in addition to the two locations in New York City, one in Boston and one West Hollywood, Calif. By the end of next year, Candid aims to have 75 locations across the U.S.

Candid, which 3D prints its FDA-approved aligners, is designed for people who need mild to moderate orthodontic work. It costs $1,900 upfront or $88 per month over two years, while braces can cost up to $7,000 and Invisalign can cost up to $8,000.

In Candid’s physical locations, customers can get their teeth scanned and order aligners within 30 minutes. The studios are operated by Candid’s orthodontists and dental assistants.

This is on the heels of Candid’s $15 million Series A round led by Greycroft last November. SmileDirectClub, a major competitor of Candid, raised $380 million in October at a $3.2 billion valuation.

But Candid doesn’t seem too fazed, having seen 15x growth year over year and expecting to potentially raise more funding in Q1 of next year, Greenfield told TechCrunch

“The advantage is, if you don’t have access or live two hours away from the city, the impression kit is a viable and effective way,” Greenfield said. “But if you live in a city with a Candid studio, we recommend you come in for a scan.”

This is similar to Uniform Teeth’s strategy. Uniform Teeth, which raised $4 million earlier this year, is a clear teeth aligner startup that competes with the likes of Invisalign and Smile Direct Club. The startup takes a One Medical-like approach in that it provides real, licensed orthodontists to see you and treat your bite.

It’s worth noting that the in-person approach aligns more with the values of the American Association of Orthodontists, which has taken issue with the likes of SmileDirectClub and other teeth-straightening services that don’t require in-person visits with a licensed orthodontist.

As Candid grows and opens more physical locations, it wouldn’t be surprising if the company starts to try to funnel more people through the door than through the virtual shopping cart.