Year: 2018

Fresh from filing for a Hong Kong IPO that could raise as much as $10 billion, the Xiaomi empire is taking big steps in Europe.

The company announced today that it plans to enter France and Italy on May 22 and May 24, respectively. We don’t know what devices will go on sale in those markets, but typically the mix includes smartphones, phone accessories and smart home products. The launches are likely to see Xiaomu open a local online store (via Mi.com) and announce partnerships with local retailers both online and offline.

Xiaomi is making other moves in Europe, too. Last week, it announced a deal with CK Hutchison which will see the operator sell its phones in the UK — via its 3 business — and other parts of Europe. That carrier deal could help Xiaomi identify European markets with the potential for local launches.

Xiaomi’s Android devices — which are known for being both very capable and affordable — first landed in Europe via a launch in Spain last year, but now the company is stepping things up with an aggressive expansion plan.

Seven-year-old Xiaomi has focused on Asia, primarily its Chinese homeland. It has seen success in India, where it is ranked as the top-selling smartphone brand, but it remains heavily dependent on sales in China.

China represented 72 percent of Xiaomi’s 114.6 billion RMB ($18 billion) revenue in 2017, but that figure had been 94 percent and 87 percent, respectively, in 2015 and 2016, so it is begging to wean itself off of that dependency. Xiaomi has designated 30 percent of its IPO funds — the world’s largest since Alibaba in 2014 — for international expansion, with Europe, Southeast Asia and Russia specifically mentioned in its prospectus, so there’s plenty more to come.

One obvious country missing, so far, is the U.S..

Xiaomi CEO Lei Jun previously said he intends to enter the American market by the end 2018 or by early 2019, but that target isn’t mentioned in the IPO papers that were filed last week.

Mesosphere, a company that created an operating system of sorts for the modern datacenter, announced today that it has raised $125 million for their Series D round. Today’s investment brings total funding since it formed in 2013 to almost $250 million.

The round was led by T. Rowe Price Associates and Koch Disruptive Technologies (KDT). New investors ZWC Ventures, Qatar Investment Authority (QIA) and Disruptive Technology Advisers (DTA) also participated along with existing investors Andreessen Horowitz, Two Sigma Ventures, Khosla Ventures and Hewlett Packard Enterprise.

The funding comes at a time when the company has tripled its revenue and wants to take that momentum and expand more into international markets. They currently have 300 employees, 125 customers and are on a $50 million revenue run rate, according to information supplied by Mesosphere .

CEO Florian Leibert says his company decided to take on this money at this point because it sees a market opportunity and needed the funds to expand. “With this latest round, we’ll be able to ramp up R&D and hone our product roadmap toward repeatable, proven solutions around data engineering and data science,” Leibert told TechCrunch.

He wants to take those products to more international markets including Europe, China and the Middle East, while increasing their channel presence, especially with international and regional systems integrators, who can help pave the way into these markets.

Mesosphere’s core technology called DC/OS, provides a way to manage datacenter resources, whether private or in the public cloud, much more efficiently than traditional tools by treating the entire datacenter as a single pool of resources, Tobias Knaup, Mesosphere CTO explained. This allows an operations team to see multiple locations, zones and regions from a single interface, he said.

Mesosphere has taken on a mix of traditional venture capitalists, international funding authorities and strategic corporate backers, but the presence of T Rowe Price and the size of the round could be a signal that the company intends to go public at some point. Leibert wasn’t willing to give anything away, however.

“We are focused on growth and building a self-sustaining company. We certainly haven’t ruled out a public event in the future, but I can’t speak to any specific plans at this time.” In other words, the standard CEO answer to such a question.

The company’s last round was in March 2016 for $73.5 million.

Nokia last week said that it was selling off its digital health business, after failing to develop it into a substantial business itself, but this week the Finnish company is announcing an acquisition that underscores how it is doubling down in another one of its business areas, the Internet of Things. Nokia has acquired SpaceTime Insight, a California-based IoT startup that provides predictive analytics based on machine learning algorithms.

Terms of the deal are not being disclosed, Bhaskar Gorti, president of Nokia Software, said in an interview. The startup had raised between $50 million and $65 million in funding (based on figures from Crunchbase and PitchBook), and PitchBook last estimated its valuation at just over $103 million in 2016. Backers of the startup included the energy giant E.ON, Novus Energy Partners, Zouk Capital and more.

As a measure of the significance of the deal for Nokia, Rob Schilling, who had been CEO of SpaceTime, will become the head of Nokia’s IoT unit.

IoT today is a fairly small part of Nokia’s business: the company reported over €23 billion in annual revenues last year. Of that, the software division reported only €1.6 billion of business, and IoT will sit somewhere within that.

But we’re at a moment right now where a lot of carriers and large industrial businesses are investing in IoT services — the former as a business opportunity to offset declines in more legacy business lines and slower growth in mobile services; and the latter to improve their efficiencies on both legacy and new equipment.

And just as these companies are trying to catch the next big wave, Nokia itself is facing the same declining, levelling and efficiency trends. So it, too, is also looking for ways of diversifying its own communications equipment business. In that context, Gorti said that Nokia is keen to seize the moment and invest in growing its own IoT business.

“All devices [eventually] have to connect,” he said. “IoT is strategic for us, and we are moving in this direction.” He said that Nokia itself is building an IoT network that it plans to offer to service providers. “It’s a multi-prong strategy to address the market segment.”

SpaceTime is an interesting acquisition not only because will help Nokia tap into utilising more artificial intelligence — which by many accounts has become and will be the essential cornerstone of how IT services operate — but because it’s also bringing something else to the business: customers.

SpaceTime is coming to Nokia with an established set of customers, including Entergy, FedEx, NextEra Energy and Singapore Power, and Gorti said that these will continue to be customers and become an opportunity for further business.

“Over the last few years have been selling networking products in hardware and software to industries like utilities and transportation, and this will help us move up the value chain, addressing other business problems our customers have,” he said.

And for SpaceTime, it gives the startup to sell its solutions into much bigger customers that already work with Nokia. (Nokia may no longer be the world’s biggest handset maker, but it still has an extensive relationship with carriers. Among those, some of them, like Verizon — which, disclaimer, also owns us — is also putting a lot of investment into its IoT business, making it a natural target for solutions like these.)

“Today marks a transformational moment for SpaceTime, and I’m delighted to join forces with one of the world’s top organizations,” said Rob Schilling, CEO of SpaceTime Insight. “I am excited for this incredible opportunity to help accelerate and scale Nokia’s IoT business and provide a new class of next-generation IoT solutions customers cannot find anywhere else.”

More generally, Gorti said that there is an interesting period of consolidation underway in the IoT world. As in other areas of tech, a big infusion of cash from the world of VC has led to a large crop of IoT startups sprouting up. But inevitably, we’re now seeing a shift where smaller but promising businesses are looking to come together around bigger platforms.

“I think the landscape is maturing,” he said. “Two to three years ago, there was a lot of hype and noise, with the main focus on connectivity management. Now people are focusing on vertical industries and use cases, whether that is analytics or surveillance or something else. If you look at the value pyramid, 80% is in applications and analytics, and the rest is connectivity. That also means the platform-based approach is starting to build up more.”

iPrice, a service that aggregates Southeast Asia’s e-commerce websites in a single destination, has pulled in new funding led by messaging app Line’s VC arm, Line Ventures.

The round is officially undisclosed, but TechCrunch understands from a source close to negotiations that it is worth around $4 million. Existing iPrice backers Cento Ventures (formerly known as Digital Media Partners) and Venturra Capital also took part in this round.

iPrice, which has its HQ in Malaysia, Kuala Lumpur, previously raised a $4 million Series A in late 2016. Today’s investment takes the startup to $9.7 million raised overall.

The company was started in 2015 in response to the growing number of e-commerce companies in Southeast Asia, and in particular the increasing number of vertical-specific options. Even though there are some giants, such as Alibaba’s Lazada, the region has a number of smaller players that can struggle for visibility. iPrice was initially a coupon site, before pivoting into an aggregation model which essentially acts as a destination for shoppers to then go on and purchase items from e-commerce retailers.

In a way, it is much like flight booking sites — such as Skyscanner — which ask a customer where they want to go before scouring the web for the best travel deals. iPrice does this for e-commerce in Southeast Asia. It hopes that simplifying things through a single destination portal can make it the go-to online buying site for the region, which now has over 330 million internet users — more than the population of the U.S. — according to a recent report co-authored by Google.

iPrice on the web, although its mobile app and mobile browser version are more used

Today, iPrice claims to offer over 500 million SKUs across Malaysia, Singapore, Indonesia, Philippines, Thailand, Vietnam, and Hong Kong. The company said that over 50 million people visited its site since December 2016, and this year alone it is aiming to grow to 150 million visitors.

The company said electronics has been a particular driver while, outside of working with e-commerce firms to drive business, it has developed a B2B business with media groups and brands, including Mediacorp in Singapore and Samsung in Indonesia, who pay to tailor its service. Last year, it developed an insightful report on the state of e-commerce in Southeast Asia.

The deal makes sense for Line Ventures because of the unique vantage point that iPrice occupies, while it also ties into parent company Line’s desire to go beyond being a messaging app and build out a mobile ecosystem. That’s seen it develop services such as food delivery, ride-hailing, payments and e-commerce, although it has struggled in the latter category. A relationship with iPrice might give it greater insight for future e-commerce ventures in Southeast Asia.

Golden Ventures, a seed-stage outfit with offices in Toronto and Waterloo, has closed it third and newest fund with $57.5 million ($72 million in Canadian dollars), up from the roughly $38 million ($50 million Canadian) that it raised for its second fund in 2014.

The firm — which invests roughly 60 percent of its capital across startups in Toronto, Kitchener, and Waterloo, and the remaining 40 percent across U.S. tech hubs like the Bay Area, New York and Boston — was originally founded in 2011 by Matt Golden, who’d previously been a partner with Blackberry Partners Fund.

Perhaps it’s no surprise then that Golden Ventures was initially focused on “mobile,” says Golden, though he says its early investments eventually led it to a lot of other business models, from SaaS to e-commerce to emerging technologies like AR and VR and even robotics.

In fact, the company has now invested in 42 companies across its three funds, including in Toronto-based Wattpad, an online story-sharing platform that recently raised $51 million in fresh funding led by Tencent Holdings; Toronto-based Ritual, whose app allows restaurant customers to order ahead for takeout food and counts Greylock Partners and Insight Venture Partners among its investors; and the Winnepeg-based food ordering company SkipTheDishes, which was acquired in late 2016 by bigger rival Just Eat, in the U.K.

As for the size of checks Golden Ventures is writing, Golden says first checks typically range from $500,000 to $1.2 million (in U.S. dollars), with reserves for follow-on rounds. He says this will remain the case even though the firm’s newest fund is about 45 percent bigger than its last one.

Golden also says that in exchange for the firm’s money, he and his colleagues expect between 5 and 15 percent ownership in a startup, depending on the “expected level of involvement, physical proximity to the company, and co-investor syndicate.”

Numerous U.S. firms see promise in what Golden Ventures is doing. Among its limited partners in the San Francisco-based fund of funds Cendana Capital, the Boston-based institutional investment firm HarbourVest, and the Boulder, Co., venture firm Foundry Group, which is pouring 25 percent of its current fund into other venture capital firms.

Foundry explained its interest in Golden this week by pointing to the strong startup community in the Toronto-to-Waterloo region, the presence of local universities like the University of Toronto and the University of Waterloo, and the local and regional government programs and accelerators that have been supporting local founders and, in the process, attracting international talent.

The last is especially probably attractive at time when other countries’ immigration policies, ahem, aren’t quite so favorable.

Pictured above: Golden Ventures’s team.

Augmented Reality (AR) is still in its infancy and has a very promising youth and adulthood ahead. It has already become one of the most exciting, dynamic, and pervasive technologies ever developed. Every day someone is creating a novel way to reshape the real world with a new digital innovation.

Over the past couple of decades, the Internet and smartphone revolutions have transformed our lives, and AR has the potential to be that big. We’re already seeing AR act as a catalyst for major change, driving advances in everything from industrial machines to consumer electronics. It’s also pushing new frontiers in education, entertainment, and health care.

But as with any new technology, there are inherent risks we should acknowledge, anticipate, and deal with as soon as possible. If we do so, these technologies are likely to continue to thrive. Some industry watchers are forecasting a combined AR/VR market value of $108 billion by 2021, as businesses of all sizes take advantage of AR to change the way their customers interact with the world around them in ways previously only possible in science fiction.

As wonderful as AR is and will continue to be, there are some serious privacy and security pitfalls, including dangers to physical safety, that as an industry we need to collectively avoid. There are also ongoing threats from cyber criminals and nation states bent on political chaos and worse — to say nothing of teenagers who can be easily distracted and fail to exercise judgement — all creating virtual landmines that could slow or even derail the success of AR. We love AR, and that’s why we’re calling out these issues now to raise awareness.

Without widespread familiarity with the potential pitfalls, as well as robust self-regulation, AR will not only suffer from systemic security issues, it may be subject to stringent government oversight, slowing innovation, or even threaten existing First Amendment rights. In a climate where technology has come under attack from many fronts for unintended consequences and vulnerabilities–including Russian interference with the 2016 election as well as ever-growing incidents of hacking and malware–we should work together to make sure this doesn’t happen.

If anything causes government overreach in this area, it’ll likely be safety and privacy issues. An example of these concerns is shown in this dystopian video, in which a fictional engineer is able to manipulate both his own reality and that of others via retinal AR implants. Because AR by design blurs the divide between the digital and real worlds, threats to physical safety, job security, and digital identity can emerge in ways that were simply inconceivable in a world populated solely by traditional computers.

While far from exhaustive, the lists below present some of the pitfalls, as well as possible remedies for AR. Think of these as a starting point, beginning with pitfalls:

• AR can cause big identity and property problems: Catching Pokemons on a sidewalk or receiving a Valentine on a coffee cup at Starbucks is really just scratching the surface of AR capabilities. On a fundamental level, we could lose the power to control how people see us. Imagine a virtual, 21st century equivalent of a sticky note with the words “kick me” stuck to some poor victim’s back. What if that note was digital, and the person couldn’t remove it? Even more seriously, AR could be used to create a digital doppelganger of someone doing something compromising or illegal. AR might also be used to add indelible graffiti to a house, business, sign, product, or art exhibit, raising some serious property concerns.
• AR can threaten our privacy: Remember Google Glass and “Glassholes?” If a woman was physically confronted in a San Francisco dive bar just for wearing Google Glass (reportedly, her ability to capture the happenings at the bar on video was not appreciated by other patrons), imagine what might happen with true AR and privacy. We may soon see the emergence virtual dressing rooms, which would allow customers to try on clothing before purchasing online. A similar technology could be used to overlay virtual nudity onto someone without their permission. With AR wearables, for example, someone could surreptitiously take pictures of another person and publish them in real time, along with geotagged metadata. There are clear points at which the problem moves from the domain of creepiness to harassment and potentially to a safety concern.
• AR can cause physical harm: Although hacking bank accounts and IoT devices can wreak havoc, these events don’t often lead to physical harm. With AR, however, this changes drastically when it is superimposed on the real world. AR can increase distractions and make travel more hazardous. As it becomes more common, over-reliance on AR navigation will leave consumers vulnerable to buggy or hacked GPS overlays that can manipulate drivers or pilots, making our outside world less safe. For example, if a bus driver’s AR headset or heads-up display starts showing illusory deer on the road, that’s a clear physical danger to pedestrians, passengers, and other drivers.
• AR could launch disturbing career arms races: As AR advances, it can improve everything from individual productivity to worker data access, significantly impacting job performance. Eventually, workers with training and experience with AR technology might be preferred over those who don’t. That could lead to an even wider gap between so-called digital elites and those without such digital familiarity. More disturbingly, we might see something of an arms race in which a worker with eye implants as depicted in the film mentioned above might perform with higher productivity, thereby creating a competitive advantage over those who haven’t had the surgery. The person in the next cubicle could then feel pressure to do the same just to remain competitive in the job market.

How can we address and resolve these challenges? Here are some initial suggestions and guidelines to help get the conversation started:

• Industry standards: Establish a sort of AR governing body that would evaluate, debate and then publish standards for developers to follow. Along with this, develop a centralized digital service akin to air traffic control for AR that classifies public, private and commercial spaces as well as establishes public areas as either safe or dangerous for AR use.
• A comprehensive feedback system: Communities should feel empowered to voice their concerns. When it comes to AR, a strong and responsive way for reporting unsecure vendors that don’t comply with AR safety, privacy, and security standards will go a long way in driving consumer trust in next-gen AR products.
• Responsible AR development and investment: Entrepreneurs and investors need to care about these issues when developing and backing AR products. They should follow a basic moral compass and not simply chase dollars and market share.
• Guardrails for real-time AR screenshots: Rather than disallowing real-time AR screenshots entirely, instead control them through mechanisms such as geofencing. For example, an establishment such as a nightclub would need to set and publish its own rules which are then enforced by hardware or software.

While ambitious companies focus on innovation, they must also be vigilant about the potential hazards of those breakthroughs. In the case of AR, working to proactively wrestle with the challenges around identity, privacy and security will help mitigate the biggest hurdles to the success of this exciting new technology.

Recognizing risks to consumer safety and privacy is only the first step to resolving long-term vulnerabilities that rapidly emerging new technologies like AR create. Since AR blurs the line between the real world and the digital one, it’s imperative that we consider the repercussions of this technology alongside its compelling possibilities. As innovators, we have a duty to usher in new technologies responsibly and thoughtfully so that they’re improving society in ways that can’t also be abused -we need to anticipate problems and police ourselves. If we don’t safeguard our breakthroughs and the consumers who use them, someone else will.

There is a peculiar pattern that I have noticed among elites in the United States outside Silicon Valley, which is the almost boastful ignorance of technology. As my colleague Jon Shieber pointed out today, you can see that ignorance among congressmen throughout the whole Facebook/Cambridge Analytica saga. Our president has rarely sent an email, and seems to confine his mobile phone activities to Twitter. One senior policymaker told me a few months ago that she doesn’t know how to turn on her computer.

Such a pattern is hardly unique to politics though. Hang out with enough business executives, lawyers, doctors, or consultants, and you will hear the inevitable “I don’t really do the computer,” with an air of detached disdain.

Yet it isn’t just the technical challenges that this class avoids, but anything to do with implementation in general. In the policy world, wonks spend decades debating the finer points of healthcare and social spending, only to be wholly ignorant at how their decisions are actually implemented into code. There is an elitism in policy between those who make the decisions and those who implement them, just as much as there is a social distinction between corporate executives and the people who have to carry out their directives.

In many ways, this disdain for the technical mirrors the disdain for math, where the phrase “I’m not a math person” has become sufficiently ubiquitous in the U.S. as to be covered regularly in the press. Being bad at math is a way to signal that someone isn’t one of the worker bees who actually have to care about calculations — they just read the reports prepared by others.

Yet, that ignorance of technology is increasingly untenable. Decisions are only as good as the implementation that results. Marketing isn’t a plan, it’s a system of feedback loops from the market that need to be adjusted in real-time. It’s one thing for politicians to sign a bill into law, but another to ensure that the bill’s intentions are actually encoded into the software that powers government.

The gap between decision and implementations was at the core of a conversation I had this past week with Jennifer Pahlka, who founded and heads Code for America, a nonprofit whose mission is to bridge the divide between government and technologists.

To show how far a policy and its implementation can be, she pointed me to Proposition 47 in California. That initiative, which was passed by voters in 2014, was designed to allow individuals to retroactively expunge or reclassify certain nonviolent felonies to misdemeanors, allowing individuals to become eligible again to work, vote, and receive some government benefits.

Yet, several years after the approval of Prop 47, a single digit percentage of eligible people have taken advantage of the program. The reason is classic government: incredibly convoluted paperwork, which is exponentially worse since every one of California’s 58 counties has to implement the program independently. “If you are a voter and you voted for a specific referendum,” Palhka explained, then you expect a certain outcome. But, “if none of the benefits that you expected to change” materialized, then cynicism mounts quickly.

To help bridge the gap, Code for America launched Clear My Record, a service designed to automate many of the steps involved in the Prop 47 process and make it more accessible. It’s just one of a bunch of services that the group has launched to improve government services ranging from food assistance through GetCalFresh to improving case manager communication through ClientComm.

Palhka’s mission isn’t to just offer point solutions for specific government programs, but to completely overhaul the latent anti-tech culture of government officials. “Digital competence is core to successful government,” she explained, and yet, “If you are a powerful person, you don’t have to understand how the digital world works … but what we are saying is that you do have to care.” Her goal is straightforward: “how do you get policy, operations, and tech to all work together?”

While Palhka and her organization focuses on the public sector, their framework is perhaps even more important to the private sector. There isn’t a company today that can survive without technical leadership in the C-suite, and yet, we still see an astonishing lack of awareness about the internet and its potential from corporate executives. Software increasingly intermediates all relationships with customers, whether though digital commerce or enterprise services. If the software is bad, no amount of decision-making in a mahogany-paneled board room is going to change it.

The good news is that ignorance has an easy solution: education. The computer is not some mystery box. It’s well-documented, and all kinds of resources are available to learn how they work and how to think about their capabilities and nuances. If someone can run a multinational company, they can probably ask smart questions about algorithms or machine learning even if they don’t realistically implement the linear algebra themselves.

CEOs, senators, and other leaders are synthesizers — they rely on staff to handle the details so they can focus on strategy. We would never trust a CEO who brushed off an accountant by saying “I don’t do cash flows,” and we shouldn’t trust a CEO who doesn’t understand how the internet works. Changing times require adaptable leaders, and today those leaders need tech literacy just as much as our grade-school children do. It’s the only way leadership can move forward today.

Global Founders Capital, the venture capital arm of Rocket Internet, has seen a number of its London investment team leave over the last couple of years, but the most significant departure may have only just happened.

According to multiple sources, Daniel Jones, General Partner at GFC, has left the VC firm and is thought to be planning to raise his own fund. A spokesperson for GFC declined to comment on the record when asked to confirm he is no longer at GFC. Jones couldn’t be reached for comment at the time of publication.

Rumours of Jones’ departure began circulating in late March, and sometime in April portfolio companies were informed by GFC about changes in the U.K. team and specifically that he was leaving. Separately I understand from several sources that the reason being given by GFC is that Jones has decided to take up the challenge of raising a fund of his own.

Perhaps a sign of how depleted the GFC London team is right now — in the last two years, the firm has lost associate Julien Bek to Accel, associate Julia Morrongiello to Point Nine Capital, and principle Nicholas Stocks to White Star Capital — a number of portfolio companies are being told that Rocket Internet co-founder and CEO Oli Samwer is to be their main contact for now going forward. He’s primarily being supported by GFC Partner Levin Bunz, according to a person familiar with the matter.

Meanwhile, Jones’ exit from GFC is bound to be a loss to the U.K. tech startup scene, even if he does go on to eventually raise his own fund. He was and remains a popular figure amongst GFC portfolio companies and as a General Partner was always somebody thought to have the ear of Samwer, and therefore an influential figure at GFC and Rocket Internet.

As one source with knowledge of how GFC operated in the U.K. put it: “Daniel Jones was the most important non-Samwer at Global Founders. He constituted at least half of the decision-making and the majority of the legwork on every term sheet GFC issued.”

According to his LinkedIn profile, Jones’ U.K. GFC investments include Goodlord, Echo and Nested. In the last few years, the stage-agnostic VC firm has also backed U.K. startups Quiqup, OpenRent, and HomeTouch, amongst others.

While the cryptocurrency craze last year brought more consumer attention to blockchain technology, the future of this movement will be in the enterprise. Blockchain’s true potential is its ability to replace the archaic and centralized infrastructure that powers everything from payments to land registries with digital-first, decentralized, and trusted networks of data.

Skepticism, though, abounds. Jamie Dimon, CEO of J.P. Morgan Chase, has called bitcoin a “fraud,” only to walk back those comments later. He has more recently said that blockchain is “real”. The challenge of course is it is exactly people like Dimon who ultimately control the destiny of blockchain in the enterprise. Without leadership from the top, few CIOs and other buyers are willing to consider such a wildly disruptive new technology.

That has been the experience of Manifold Technology founder and CEO Chris Finan and his co-founder Robert Seger. The two have an intelligence background, with Finan working at DARPA and Defense more broadly and Seger working at the NSA. Seger would go on to become CTO of Morta Security, which was acquired by Palo Alto Networks, while Finan became director of cybersecurity legislation for the White House before heading to the Valley and working at Impermium, a cybersecurity startup acquired by Google.

Taking advantage of their backgrounds, they got together in 2014 to try to connect blockchain into the enterprise. “We wanted to be the Cisco of enterprise blockchain providers,” Finan explained to me. “We were looking at what we can do to leverage cryptography to build the picks and shovels.”

Over the next few years, they built out a distributed ledger technology built on top of Amazon Lambda. The idea was that serverless technology like Lambda could offer quick scalability to a blockchain from day one, without requiring the kinds of decentralized technology adoption seen in cryptocurrencies like Bitcoin. “In that way, we try to let Amazon handle this scalability for us,” Finan explained.

There was just one problem: enterprise hasn’t gotten on the blockchain bandwagon yet. “They don’t want to buy a blockchain, they want to flip a switch and have it,” Finan said. He didn’t see institutions looking to migrate their infrastructure to a blockchain model, and “we found ourselves to be an engine manufacturer in a sector that wasn’t buying many engines.“ Even worse, “you definitely see VC interest in the enterprise infrastructure market definitely waning” when it comes to blockchain.

Stymied by the enterprise market, the team started investigating whether it could build consumer applications on top of its infrastructure. What they came up with is Volley, a blockchain-backed augmented reality marketplace to buy and sell goods, which is currently in beta and available in the Apple App Store. This new direction connected with investor appetites, and the company raised a $7 million series A from MalibuIQ, Westlake, and other investors.

The idea of Volley is that current online marketplaces for goods are filled with scams and other security issues. To improve trust and safety issues, Manifold has built a reputation system for buyers and sellers so that transactions are decentralized, but trusted. “We wanted to make it very expensive to make a fake account,” Finan said.

Using augmented reality, the app allows users to explore their world and see things for sale. The hope is that at scale, the app would show users hundreds of things all around them that they might purchase, from the backpack of the person in front of them to a car parked on the street. Right now, the technology only works with iOS and the ARKit library, with the company hoping to launch an Android version shortly.

Finan believes that a consumer marketplace is a near-perfect application of blockchain. “There has to be some sort of need for independent trust guarantees,” he said, which requires that a marketplace be filled with people who don’t trade often with each other and has goods that are not trivially cheap to replace if fraud were to occur. In addition, he believes you have to have “auditability” as well as high throughput for blockchain to make sense.

It’s easy to be cynical about two cybersecurity veterans diving into the consumer world. While Volley has to prove itself as a potential consumer winner, to me what makes the investment here more interesting is that there are two ways to win. Volley itself could become an interesting consumer play, or Volley might help to prove out Manifold’s serverless blockchain technology, which could find renewed adoption in the enterprise in the future. It’s the sort of hedged bet that investors are making in the blockchain space, as we await the further maturation of this brand new market.

Canada will be home to a new venture capital fund that will invest in enterprise cloud startups. Its backer? Salesforce Ventures, the global investment arm of Salesforce, a leading cloud-hosted business software provider.

According to a recent press release from Salesforce, the $100 million Canada Trailblazer Fund has already taken stakes in four Canadian startups building cloud-based tools for the enterprise, including Tier1CRM, Traction Guest, Tulip and OSF Commerce.

(Disclosure: Salesforce’s venture arm is an investor in Crunchbase News’s parent, Crunchbase. As with all investors in Crunchbase, Salesforce Ventures has zero input in the operation or coverage of the News team.)

The companies mentioned above join a handful of other Canadian enterprise cloud companies in Salesforce’s broader investment portfolio. In the years prior to announcing the new Canada Trailblazer Fund, Salesforce Ventures made investments in Aislelabs, Vidyard and LeadSift. And Salesforce itself participated in Fredericton, New Brunswick-based Introhive’s $7.3 million Series B round back in 2015.

Almost exactly one year ago, Crunchbase News profiled Salesforce Ventures and a new AI-focused fund it announced at the time. But instead of revisiting the firm and its investments, this time we’re going to take a look at the state of the market it’s jumping into. 

Investors’ growing appetite for Canada’s cloud companies

Specifically, using Crunchbase data, we’re going to take a quick peek at Canadian companies in the “enterprise cloud” sector. To do so, we’ve pulled together a list of more than 1,000 companies in a wide variety of categories in Crunchbase. We used the enterprise applications, enterprise software, SaaS, CRM, sales automation, ERP, billing, meeting software, marketing animation, contact management and scheduling categories as a rough proxy for the kinds of markets on which Salesforce’s new fund may be interested.

And what did we find? 

For one, there’s been a general uptick in venture investment activity in Canadian cloud companies, but that growth has come in fits and starts. Below, you’ll find a chart displaying aggregated annual venture investment data for Canadian cloud companies.

The above chart is based on reported data in Crunchbase, which, especially for seed and early-stage rounds, carries some reporting delays. These may not affect dollar volume figures (fledgling companies don’t raise all that much money), but reported deal volumes will undershoot reality for up to two years.

Regardless, between 2012 and 2017, reported venture dollar volume grew by approximately 124 percent.

2018: Off to a strong start on the investment side

Although it’s not pictured in the chart, so far in 2018 there have been more than 20 reported venture funding rounds in Canada for cloud companies in the categories we searched above. Here are some of the highlights so far:

• RFP management provider Loopio closed a CA$11 million Series A round led by OpenView, which Crunchbase News covered as it happened.
• Igloo Software, maker of a web-based suite of collaboration and productivity tools, closed $47 million in a Series C round led by Frontier Capital.
• Bench, a Vancouver-based bookkeeping service provider, raised $23 million in its Series B round, which was led by iNovia Capital.
• Uberflip, which develops and provides a content personalization service platform, raised $7.4 million in a Series A round led by Updata Partners.
• PointClickCare, a web-based SaaS platform for long-term care providers, raised CA$186 million in a late-stage venture round led by Dragoneer Investment Group.

With help of the PointClickCare round, Canada’s enterprise-focused cloud service startups may be on track to raise more capital in 2018 than they did in the prior year.

Where do Canada’s cloud companies reside?

As for where the hot spots are for Canadian cloud companies, you shouldn’t be surprised that they’re based in the country’s major population centers. Below is a chart showing the distribution of headquarters for our list of cloud companies founded in the past decade.

This being said, it may make sense for Salesforce and other investors interested in Canadian cloud companies to start looking outside these major metro areas. The proportion of cloud companies founded elsewhere in Canada is on the rise. In our data set, around one-fifth of the cloud companies founded in 2008 were located outside the five major metro areas cited above. For companies founded in 2015 and 2017, half are headquartered in other Canadian metro areas.

It goes without saying that there are seemingly endless market niches in the enterprise cloud services market, and as such we just barely scratched the surface here. There are countless data points and anecdotes we didn’t cover here, like this fun fact: Slack, the seemingly ubiquitous workplace chat platform, was originally founded in Vancouver. (It’s since relocated HQ to San Francisco.) Another: Shopify, which is based in Ottawa, went public in May 2015 and raised nearly $131 million in the offering, making it one of Canada’s biggest-ever tech IPOs.

In its statement, Salesforce cited IDC research findings, which say that Canada’s public cloud software market will grow six times faster than on-premise deployments, reaching CA$4.1 billion by 2019. No doubt, there will be stiff competition among investors for an increasing number of Canadian companies seeking capital in years to come.