Year: 2019

As consumer tech companies come under fire for how they handle voice data from consumers, Facebook is announcing changes to how users can manage recordings and transcriptions that are stored on Facebook’s services.

At a press event announcing Facebook’s new line of Portal hardware, exec Andrew Bosworth told reporters that the company would be adding the ability for users to halt sending voice recordings to Facebooks servers. He reiterated that data from calls isn’t recorded or stored, but when users say “Hey Portal” and request something, sometimes that data may be analyzed by Facebook employees or contractors to hone the accuracy of the company’s tech.

“Even with the first generation of Portal you were able to review and delete those voice interactions at any time,” Facebook exec Andrew Bosworth told reporters. “We’re now adding the ability to disable storage of voice interactions altogether.”

In the past, Portal users were able to sort through and delete those voice interactions if they didn’t want them living on Facebook servers, but now users will have the option to disable the storage completely. It’s important to note that storage will still be enabled by default, and the onus is on users to disable this functionality if they care.

Facebook, Google and Apple have all come under fire for how they handle these snippets of voice recordings.

Last month, following press reports about how Siri recordings were being listened to by contractors, Apple announced that they had turned off Siri audio clip review by default and would ask users if they wanted to enable the setting. The company also noted that only Apple employees would handle user data. Facebook is following neither of Apple’s big moves here as contractors will still have access to this data and voice snippet collections will still be enabled by default.

Most of the venture capital firms covered in TechCrunch and other tech publications compete for a spot on the cap table of the hottest Bay Area, New York or Los Angeles companies of the moment. Few seek out companies in Indianapolis, Milwaukee or Tampa.

AOL co-founder and former chief executive officer Steve Case’s venture capital fund, Revolution, deploys capital to companies “outside of the hotbeds.” Revolution, the parent company of Revolution Ventures, the Rise of the Rest Seed Fund and Revolution Growth, has evangelized its approach to backing companies in emerging markets, helping promote entrepreneurialism in geographies often overlooked by Silicon Valley’s Patagonia vest-wearing venture capitalists.

“When we started doing this, it was heretical,” Revolution co-founder Tige Savage tells TechCrunch. “People who were investors thought, ‘Why would you do this? It’s not where the talent is. It’s a flawed strategy.’ Well, nobody says that anymore. Lots of firms are now talking about this pretty actively.”

Today, Washington, DC-based Revolution is announcing its latest fund. Revolution Ventures, its Series A and Series B-focused outfit, has raised a $215 million third fund, almost precisely the size of Revolution Ventures I and II, which each closed on $200 million. The firm’s portfolio includes Detroit’s direct-to-consumer plant startup Bloomscape, Chicago-based Paro, which provides a network of on-demand finance professionals, DC’s custom framing business Framebridge, Milwaukee-based monthly wine club Bright Cellars and New York insurtech company Policygenius.

Since Revolution launched in 2005, venture capital activity in underrepresented markets has grown significantly. Utah’s Salt Lake City and Provo have garnered a reputation for churning out great tech businesses, earning it the nickname Silicon Slopes . Austin and Denver have emerged as VC hubs, rapidly becoming formidable opponents to Silicon Valley’s upstarts.

VC firms like NEA, which invests in companies across industries and stages, has made a concerted effort to tap into the Atlanta startup ecosystem, another market that has seen considerable growth thanks to the corporations headquartered there and the network of universities producing top-notch engineers.

“We look at areas that have one legacy industry in the region, where some Fortune 500 companies have established career opportunities to retain talent, where there is a supportive angel and seed network to get folks going and where the costs to scale a company are more reasonable,” Clara Sieg, who was promoted to partner for Revolution Ventures’ third fund, tells TechCrunch. Sieg recently joined us on Equity, TechCrunch’s venture capital podcast, to explain the firm’s “rise of the rest” philosophy.

Competition for access to deals in the Bay Area, however, has priced many investors out of the most sought-after rounds. This has encouraged many VCs, who perhaps don’t have access to a seemingly endless pool of capital, to search elsewhere for potential “unicorns.”

“Historically there’s been a reluctance to get on an airplane for that $3 million to $5 million check, but once the company is seasoned and they are getting ready for that Series B or Series C, that’s worth getting on an airplane for,” Revolution Ventures managing partner David Golden tells TechCrunch. “We see more activity there from the traditional East Coast and West Coast firms.”

As for Revolution’s competition, Golden says that tends to come from within the local ecosystem in a given city: “I think that’s likely to change in the years ahead thanks to the work that Revolution and Steve Case have done to shine a light on areas outside the hotbeds,” he adds.

Revolution began nearly 15 years ago as Steve Case’s balance sheet fund, in essence. Quickly realizing the untapped opportunity to reap big returns by investing in second and third-tier markets, co-founders Savage, Case and Donn Davis formalized the strategy. Ultimately, the team built three firms under the Revolution umbrella, allowing them to invest across all stages.

“We were not seated in Sand Hill Road so we knew we would have to get on airplanes,” Savage said. “Then we looked back and realized we drove the greatest returns in these off the beaten path geographies.”

The boom in popularity for podcasting has given a new voice to the world of spoken word content that had been largely left for dead with the decline of broadcast radio. Now riding the wave of that growth, a startup called Descript that’s building tools to make the art of creating podcasts — or any other content that involves working with audio — a little easier with audio transcription and editing tools, has a trio of news announcements: funding, an acquisition, and the launch of a new tool that brings some of the magic of natural language processing and AI to the medium by letting people create audio of their own voices based on text that they type.

Descript, the latest startup from Groupon founder Andrew Mason, created as a spinoff of his audio-guide business Detour (which got acquired by Bose last year), is today announcing $15 million in funding, a Series A for expanding the business (including hiring more  people) that’s coming from Andreessen Horowitz (it also funded the startup’s seed round in 2017) and Redpoint.

Along with that, the company has acquired a small Canadian startup, Lyrebird — which had, like Descript, also built audio editing tools. Together, the two are rolling out a new feature for Descript called Overdub: people will now be able to create “templates” of their voices that they can in turn use to create audio based on words that they type, part of a bigger production suite that will also let users edit multiple voices on multiple tracks. The audio can be standalone, or the audio track for a video.

(The video transcription works a little differently: when you add in words, or take them out, the video makes jumps to account for the changes in timing.)

Overdub is the latest addition to a product that lets users create instant transcriptions of audio text that can then be cut and potentially augmented with music other audio using drag-and-drop tools that take away the need for podcasters to learn sound engineering and editing software. The non-technical emphasis of the product has given Descript a following among podcasters and others that use transcription software as part of their audio production suites. The product is priced in a freemium format: no charge for up to four hours of voice content, and $10 per month after that.

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In the age of market-defining, election-winning fake news aided and abetted by technology, you’d be forgiven for wondering if Overdub might not be a highway to Deep Fake City, where you could use the technology to create any manner of “statements” by famous voices.

Mason tells me that the company has built a way to keep that from being able to happen.

The demo on the company’s home page is created with a special proprietary voice just for illustrative purposes, but to actually activate the editing and augmenting feature for a piece of their own audio, users have to first record a number of statements that repeated-back, based on text created on the fly and in real time. These audio clips are then used to shape your digital voice profile.

This means that you can’t, for example, feed audio of Donald Trump into the system to create a version of the President saying that he is awfully sorry for suggesting that building walls between the US and Mexico was a good idea, and that this would not, in fact, make America Great Again. (Too bad.)

But if you subscribe to the idea that tech advances in NLP and AI overall are something of a Pandora’s Box, the cat’s already out of the bag, and even if Descript doesn’t allow for it, someone else will likely hack this kind of technology for more nefarious ends. The answer, Mason says, is to keep talking about this and making sure people understand the potentials and pitfalls.

“People have already have created the ability to make deep fakes,” Mason said. “We should expect that not everybody is going to follow the same constrants that we have followed. But part of our role is to create awareness of the possibilities. Your voice is your identity, and you need to own that voice. It’s an issue of privacy, basically.”

The developments underscore the new opportunity that has opened up in tapping some of the developments in artificial intelligence to address what is a growing market. On one hand, it’s a big market: based just on ad revenues alone, podcasting is expected to bring in some $679 million this year, and $1 billion by 2021, according to the IAB — one reason why companies like Spotify and Apple are betting big on it as a complement to their music streaming businesses.

On the other, the area of production tools for podcasters is a very crowded market, with a number of startups and others putting out a lot of tools that all work quite well in identifying what people are saying and transcribing it accurately.

On the front of transcription and the area where Descript is working, rivals include the likes of Trint, Wreally and Otter, among many others. Decript itself doesn’t even create its basic NLP software; it uses Google’s, since basic NLP is now an area that has essentially become “commoditized,” said Mason in an interview.

That makes creating new features, tapping into AI and other advances, all the more essential, as we look to see if one tool emerges as a clear leader in this particular area of SaaS.

“In live multiuser collaboration, there is still no other tool out there that has done what we have done with large uncompressed audio files. That is no small feat, and it has taken time to get it right,” said Mason. “I have seen this transition manifest from documents to spreadsheets to product design. No one would have thought of something like product design to be huge space but just by taking these tools for collaboration and successfully porting them to the cloud, companies like Figma have emerged. And that’s how we got involved here.”

When you hear the name Acronis, chances are you’re thinking about products like its disk cloning tool True Image or maybe its backup services. The company, though, wants you to think about cyber protection and all of its products (and their marketing) are now focused on this direction. To expand on this vision, the company has now raised $147 million from Goldman Sachs at a valuation over $1 billion.

The company says it will use the funding to expand its engineering teams in Singapore, Bulgaria and Arizona, as well as to build new data centers and acquire other companies to fast-track its product development. The company also plans to invest in its business growth, specifically in North America, through its recently launched partner (and former Acronis business) Arconis SCS, which focuses on selling to the U.S. public sector.

“We are excited about Goldman Sachs‘ investment,” said Serguei Beloussov, founder and CEO of Acronis . “In 2018, Acronis achieved 20% business growth, and in 2019 it is on track for over 30% growth with the Acronis Cyber Cloud business growing by over 100%. Recently we announced the Acronis Cyber Platform, enabling third-parties to customize, extend, and integrate our cyber protection solutions to the needs of their customers and partners. The investment round led by Goldman Sachs will help us to fast-track the product development through acquisitions of companies and additional resources, and accelerate the growth.”

While you may not necessarily think of Acronis as a cybersecurity company, it has made quite a few strides in this direction and the Switzerland- and Singapore-based company’s products are currently in use by 80 percent of the Fortune 1000. With this new war chest of $147 million, chances are we’ll see Acronis pick up quite a few smaller companies in the near future as it looks to expand its product portfolio and strengthen its brand.

Cyber security solutions provider Acronis announced today that it has raised $147 million in funding led by Goldman Sachs, bringing it to unicorn status. The company did not disclose its valuation, but founder and CEO Serguei Beloussov told TechCrunch that it is between $1 billion and $2 billion.

Founded in Singapore as a data backup and recovery company in 2003 and now headquartered in Switzerland, Acronis currently has more than 1,400 employees in 18 countries. Its cyber protection technology is used by 5 million consumers and 500,000 businesses.

Beloussov says this is the first time the company has raised capital. In 2004, Acronis sold part of its business to an outside firm in a secondary transaction for $11 million. Since then it has been profitable, but it is now aiming for very rapid growth, targeting $1 billion in revenue by 2022. The company wants to take advantage of increasing demand for cybersecurity solutions by expanding its research and development teams and making several acquisitions in the cybersecurity space.

In a statement, Holger Staude, the vice president of Goldman Sachs Growth, said “We are excited to invest in Acronis at this stage of rapid growth. The traditional backup and data protection market is being disrupted by Acronis Cyber Protection, an innovative solution delivered efficiently through a vast channel of service providers.”

Acronis’ products include Cyber Protection to safeguard data, a platform that allows third-party developers to integrate Acronis’ technology into their own applications and Cyber Cloud, which enables enterprise IT to deliver Acronis’ cyber protection services to end customers. It plans to grow its product roster by acquiring companies that protect applications it doesn’t already support. Beloussov says that the company will also add long-term protection for applications and data and integrate more data destinations.

“We are growing because we have completely changed the company strategy from being a data protection company to a cyber protection company, from data protection applications to being a cyber protection platform, and being a data protection provider to building a cyber protection infrastructure,” says Beloussov, adding that demand is being driven by three trends.

The first is the increasing adoption of edge computing and end point computing, which means more devices outside of data centers need to be protected. The second is the increasing sophistication of cyber crime. Companies need to protect themselves against attacks, but also be prepared to perform recovery and forensics when they happen. The third is the cost of protecting large amounts of data, meaning providers who are able to offer the lowest pricing gain an advantage.

Beloussov says Acronis differentiates from other data backup and security companies, like Veeam or Carbonite, by providing a comprehensive solution that addresses what Acronis refers to as the “Five Sectors of Cyber Protection”: safety, accessibility, privacy, authenticity and security of data. By being able to rely on one provider for more of their cybersecurity needs, companies can save money. Acronis also has a flexible business model, allowing customers to combine its products in a way that saves on costs, Beloussov adds.

“We have very aggressive plans and hope to provide cyber protection for as many workloads, customers and people as possible,” Beloussov says.

Apple’s iPhones numbers may have suffered in recent years, but when it comes to smartwatches, the company remains utterly dominant. Recent figures from Counterpoint put Apple Watch growth at 48% year over year for the first quarter, commanding more than a third of the total global smartwatch market. Samsung’s myriad different models, meanwhile, put the company in a distant second with 11%.

All of that is to say that Apple’s clearly doing something right here, and competitors like Fitbit and Fossil (the latter of which has been working closely with Google) have plenty of catching up to do on the smartwatch front. Given the company’s sizable head start, it probably comes as no surprise that the latest version of the watch is more interested in refining the device, rather than reinventing the wheel.

Announced alongside a repositioned line of iPhones, the Apple Watch Series 5 doesn’t include any hardware additions quite as flashy as the LTE functionality and ECG (electrocardiogram) monitor it introduced with previous updates. There’s an always-on display and a built-in compass — as far as smartwatch features go, neither is the sort of thing that’s likely to win over longtime holdouts. But taken as a whole, the new features go a ways toward maintaining the device’s spot at the top of the smartwatch heap.

Visually, Watch remains largely unchanged from previous generations, aside from the increased display size that arrived on the Series 4. The addition of the always-on display, however, addresses a longstanding issue with the device. When not in use, the Watch has traditionally been a blank screen. It seems like a massive oversight, but it’s also an understandable one. Battery life has always been a big concern with products this size, and keeping a screen on at all times is a surefire way to make sure you’ll run out of juice before the end of the day.

While improved battery life would almost certainly be a welcomed feature in future updates, Apple’s made a bit of a compromise, offering an always-on watch that lasts the same stated 18 hours as its predecessors. I found I was, indeed, able to get through a day no problem with standard use. My own usage had the product lasting closer to 20 hours without the need to recharge, but even so, the device needs to get charged once a day, regardless — otherwise you’ll almost certainly be out of juice the following day.

The long-awaited addition of sleep tracking failed to materialize for this model — one of the few places where Apple continues to lag the competition. Of course, adding such a feature would require a much more robust battery than one capable of getting 18 hours on a charge.

Apple’s employed some clever fixes to ensure that the new feature won’t totally sap battery life. Each of the faces gets a low-power, always-on version. In the case of the Meridian face that I’ve been using (new for WatchOS 6), it’s white text on a black background. Hold the watch up to your face, however, and the colors invert. The active version is easier to see, and the always-on version uses less power.

The low-temperature poly-silicon and oxide display (LTPO), meanwhile, adjusts the refresh rate based on usage. It’s a broad spectrum: 60Hz at the high end and as little as 1Hz on the low. The ambient light sensor also automatically adjusts the brightness to help conserve power. Covering the watch with your hand will jumpstart the low-power mode.

While complications and other features are still on display, they’re simplified, removing any power-hungry features. That means the second hand disappears on the standard watch face, and when the watch is in workout mode, the milliseconds will disappear until you bring the watch back up to your face.

The ambient light sensor also works to dim the display in those situations when a bright always-on screen are a genuine nuisance, like watching a movie in a theater. Though while it’s fairly dark, you’re probably better off switching the watching into Theater mode, which turns the screen off altogether until you press the crown.

The other big update on the hardware side is the addition of a built-in compass. Like LTE and the speaker before it, the feature represents another case of bringing more smartphone features over to the watch. At present, there are only a handful of Watch applications that utilize the new feature, the most prominent being Apple’s own Maps. The addition of the compass makes it much easier to navigate directly from the wearable itself.

It’s a handy offering on that front. If you don’t mind the smaller screen size, it’s great being able to find your way around a new area without pulling out your phone.There’s also Apple’s own Compass app, which could prove handy when going for a hike, and also includes a new elevation reading taken from a combination of Wi-Fi, GPS, map data and barometric pressure to determine your positioning relative to sea level.

Given that the product isn’t actually available yet, the number of third-party apps that take advantage of the feature is still pretty limited. That said, the much-loved star map app Night Sky offers a pretty compelling use for the compass, as you swing your arm around to get a better notion of your own place of the massive, ever-expanding cosmos.

The last big addition is Emergency SOS. Of course, it’s not always possible to test out every new feature on a device for obvious reasons. We’re going to have to take Apple’s word for it on this one. The feature, which is only supported on the cellular version of the Series 5, brings the ability to call local emergency services when traveling abroad — even when there’s not a phone nearby. The feature also works with the fall-detection feature announced the last time around, sending an emergency SOS if the wearer takes a spill.

The new watch will also feature a number of software additions new for WatchOS 6, including Cycle Tracking, which makes it possible to log menstrual health, symptoms, period and fertility windows. There’s also the Noise app, which utilizes the Watch’s built-in microphone to track when noise levels get beyond 90 decibels — at which point they can begin to cause hearing loss.

The Series 5 starts at $399 for the standard version and $499 for cellular. Prices go up from there, including the lovely new titanium version, which will ruin you $799. The ceramic is arguably the best looking of the bunch, but $1,299 disqualifies that model for the vast majority of us. No one ever said good looks came cheap. There are countless other combinations beyond that, which will be available for mix and match at Apple’s retail locations. Everyone you know may be wearing an Apple Watch, but it’s still possible to make yours stand out a bit.

In keeping with the addition of a low-cost iPhone 11, the company’s keeping the Series 3 around at $199, offering a much more accessible price point for first-time buyers. For those who already own the device, there’s probably not enough here to warrant an upgrade from last year’s model, but some welcome new features like the always-on help keep the line fresh.

Normative, a startup that lets companies automate their carbon reporting — and in turn help them decrease their environmental footprint — has picked up $2.1 million in seed funding.

Backing the Stockholm-based company is ByFounders, with participation from Soundcloud co-founder Eric Wahlforss, Luminar Ventures, and Wave Ventures.

The modest injection of capital will be used by Normative to “accelerate growth” and expand to key markets in the EU and the U.S.

Billed as wanting to become the “Quickbook of carbon reporting,” Normative is a SaaS that plugs into various data — both a company’s internal systems and external databases on the environmental impact of good and services. It then automatically calculates carbon usage and emissions for reporting purposes, which is traditionally a time consuming and costly process. Existing clients include Summa Equity, Bonava and Ikano.

“It is widely recognized that corporate activities are by far the largest contributor to climate change,” Normative co-founder and CEO Kristian Rönn tells TechCrunch. “To use my own country as a case study, H&M, Ericsson and Electrolux reportedly have larger CO2 emissions than the entire population of Sweden put together. This highlights the reality that in order to mitigate climate change, large companies need to mitigate their emissions”.

However, Rönn says that the first step to mitigating climate change is for companies to measure their climate impact, but only around 5,000 companies of an estimated 200 million companies are thought to measure sustainability at all. To make matters worse, even when carbon emissions are measured, companies typically only include emissions that are easy to track, such as electricity and car fuel consumption, which is estimated to be less than 10% of total company emissions. Missing in much of the data is supply chain emissions, transport, travel, and the production of goods and services.

Which, of course, is where Normative steps in.

“Normative helps large companies to go from mapping 10% of their CO2 to mapping 100% of their emissions for every product, service and activity, by reading data directly from their existing business systems e.g. SAP, Oracle, Microsoft, Visma etc.,” explains Rönn. “Moreover, sustainability reporting has been completely inaccessible for the small enterprise segment (who would afford to pay $50k-200k per year?), but Normative makes the whole process 10x times cheaper”.

The timing looks good, too. With movements like Extinction Rebellion and a regulatory, shareholder and consumer push for companies to improve their environmental footprint, carbon reporting is becoming more mandatory. In Europe this includes an EU directive stipulating that all large public companies with more than 500 employees must “disclose certain information on the way they operate and manage social and environmental challenges”. Rönn says similar laws are underway also in the U.S.

Adds the Normative co-founder: “Sustainability reporting is a pain and a huge cost in time and money. However, more and more stakeholders — everything from investors to consumers as well as the legislative sector — demands transparency about companies’ unpaid externalities. Recently many large investors have signed the UN PRI, saying that they will look at sustainability data and comprehensive reporting when they invest”.

Only about 10% of India’s 1.3 billion people know English. Yet, that is the only language Amazon’s digital assistant Alexa understands in the nation. That changes today.

At a press conference in New Delhi on Wednesday, the e-commerce giant said Alexa now supports Hindi, a language spoken by roughly half a billion people in India. Bringing support for Hindi to Alexa has been more than a year in making, company executives said, noting the unique contextual, cultural, and content-related challenges that Hindi implementation posed.

Users can now ask Alexa their commands in Hindi, and the digital assistant would be able to respond in the same language. The feature is now live in the country from the app settings. In the months to come, Amazon plans to add multilingual households support, allowing members in the family to interact with Alexa in the language they prefer.

Support for local languages has proven immensely beneficial to customers in the past, Manish Tiwari, head of devices category business for Amazon India, said at the event. Amazon last year introduced support for Hindi language on its apps and website. Since then, it has seen Hindi usage grow on the site by six times, he said.

“The adoption of Alxa in India has been phenomenal,” said Rohit Prasad, VP and Head Scientist, Alexa AI Amazon. Alexa has supported some Hinglish words, combination of English and Hindi, but the company wanted to bring full-fledged support. “A lot of how people in India engage with their smartphones and internet services is different from those of the people in the United States. For instance, in India, people often use the name of an actor instead of singer or band when looking for particular songs,” he added.

The announcement comes months after Amazon added a Hindi voice model to its Alexa Skills Kit, enabling developers to update their skills in India to support the more popular local language. Google smart speakers gained support for Hindi language late last year.

Amazon says it offers it offers over its Alexa customers in India over 30,000 skills across various categories including cricket, education, and Bollywood. The company’s voice assistant is available to users through its smart speakers — Echo Dot, Echo Plus and more — and over three-dozen devices from other manufacturers including Sony, iBall, and LG, the company said.

Hindi should also help Amazon’s smart speakers maintain their lead over Google’s in India. Amazon commanded the local smart speakers market with a 59% market share in 2018, according to research firm IDC. (Google launched its smart speakers in India months after Amazon did its. IDC has not updated its findings since March this year.)

More to follow…

Festicket, the U.K.-headquartered festival booking platform, is launching a new feature that allows users to pay for festival tickets as a group.

Described as removing the the pain of being the lead booker, “Pay with Friends” lets a single user reserve tickets for a whole group while only having to pay for part of the payment up-front. The other members of the group then have 48 hours to pay their individual part, whereby the booking is confirmed.

Notably, however, if this doesn’t happen there is a small non-refundable deposit charged to the lead booker to reserve the booking.

The idea is to avoid a situation that doubtless many of us have found ourselves in when trying to organise a group event or vacation, including attending a festival. This typically sees one person drawing the short straw and having to organise, book and pay for the trip. The new Festicket feature goes someway to mitigating this.

“Pay with Friends aims to reduce pressure on the lead booker by sharing the payment immediately with the rest of the group through a simple, fast and easy-to-use solution,” says Festicket.

The new feature was born out of the popularity of group bookings on Festicket, with around 60% of festival-goers attending as a group of more than three, and 20% more than six, according to a survey carried out by the company.

The macro trend is that festivals have become a popular alternative to group holidays with international festival travel increasing by 400% over the past 5 years, says Festicket.

Adds Jonathan Younes, CPO and co-founder of Festicket, in a statement: “It’s great to be able to offer our fans the option to Pay with Friends finally. We’ve created a fair solution that guarantees fans won’t be left out of pocket just because they’re the organised one out of their friends! We’ll continue to add features like this to the Festicket product to make sure all our customers have the best possible booking experience”.

If you haven’t heard much about litigation finance, that may change soon. The practice dates back decades, though it’s been picking up momentum since 2006, when Credit Suisse Securities founded a litigation risk strategies unit that it later spun off.

What is litigation finance? In a nutshell, the idea is to fund plaintiffs and law firms in cases where it looks like there will be a winning ruling. When everything goes the right way, the capital that helps fund the lawsuits is returned — and then some — in return for the risk taken. Litigation finance firms — and there’s a growing number of them — basically want to estimate as accurately as possible the risk involved so they can bet on the right horses.

Interestingly, one of the newest entrants onto the scene wasn’t founded by career attorneys or spun out of a hedge fund or private equity group. Instead it’s a young, 11-person company called Legalist that’s run by a 23-year-old Harvard dropout named Eva Shang, who cofounded the company with her college classmate Christian Haigh (who graduated).

As interestingly, the pair, who say they honed the idea as part of a Y Combinator batch in 2016, just secured $100 million to put to work. That’s roughly ten times the $10.2 million they raised for a first fund that tested out their ability to find and finance civil lawsuits that pay.

We talked with Shang late last week to learn more about new fund, which was raised from non-profit endowments, family offices, and institutional investors (including an insurance company) and that’s styled like a private-equity fund with a traditional management fee and carry structure.

TC: First, how do you find these plaintiffs that you’re backing? Do you reach out to them?

ES: We don’t reach out to them. Attorneys bring us cases. They’re the repeat players in litigation funding industry; they’re seeing a lot of cases.

TC: And who are they telling you about? Who fits your criteria?

ES: The plaintiffs who we work with are involved in smaller cases, meaning they require less than a million dollars in funding. It’s a lot of money to pay a lawyer, but in the world of litigation, it’s akin to seed-stage investing. Once [we’ve found candidates], then the algorithms [do the] diligence.

TC: What kind of information or patterns are they seeking out?

ES: We scrape state and federal court records and look for indicators, like whether a court is favorable to plaintiffs, if particular case types tend to win, who the judge is. We also check for points at which the case could be dismissed. We’re focused exclusively on commercial cases, so often breach-of-contract [disputes] where it’s a David and Goliath situation and the smaller company is typically underfunded. When there’s litigation, we help pay for attorneys’ fees and if it’s successful, we recover and if not, we don’t.

TC: How many cases have you backed so far, and how many have you won?

ES: We’ve funded 38 cases, half of them have been resolved, and of those, we’ve had above an 80 percent success rate.

TC: And that has translated into what kind of return for your investors?

ES: We can’t talk about fund returns, but we scaled up our funds 10x [based on that performance].

TC: That’s a lot of cases to churn through. When do you step into the process in the lifespan of a lawsuit?

ES: The cases we’re [involved with] are more advanced and are showing success indicators, so we have a shorter time frame. We also fund smaller cases than most other litigation funders. Because of our approach, where we’re using tech to speed due diligence, we can do that.

TC: You can’t discuss returns but can you tell me what your investors expect to see back? We aren’t talking venture-like returns, presumably.

ES: Not venture-type returns but high-yield returns.

TC: There is movement in a small but growing number of states that want more transparency into third-party litigation funding agreements. It aims mostly to protect consumers, but it sounds like some outfits that fund commercial litigation aren’t so thrilled about it, either. What are you thoughts?

ES: We actually don’t mind disclosure regulation so much. As long as litigation funding is becoming more widely accepted, that’s a good thing and the rules shouldn’t impact us so much. I also think in the long run that it’s inevitable and won’t be a huge problem.

TC: Do you syndicate deals? Do you go it alone?

ES: It’s not like in VC. When we invest in a case, we’re [aren’t teaming up with other sources of funding].

TC: Who owns equity in Legalist? You went through Y Combinator. You raised a little venture funding. But you also now have this fund. 

ES: Y Combinator owns 7 percent of the company [because Legalist went through its accelerator program, intending to become a legal analytics company]. [Other stakeholders] include VY Capital and Refactor Capital .

TC: How will they eventually liquidate their stakes? Does a company like Legalist go public?

ES: There are two publicly traded litigation private finance companies. We’re a tech company; there are exit opportunities.

TC: How long will it take you to invest this $100 million?

ES: Our time horizon is five years and we expect to fund between 100 and 200 cases.

TC: What have you learned in those cases where your investment has gone to zero?

ES: That there’s idiosyncratic risk in the court system that can’t be anticipated. If a jury likes you, they’ll find a way to drape the law over you so you win, and if they don’t, you won’t. We see that. There’s also luck involved, as well as having a meritorious case. That’s why we want to diversify across a larger number of cases.

TC: You dropped out of Harvard because you were accepted into Y Combinator. Around the same time, you also received a Thiel Fellowship, wherein recipients are provided with a $100,000 grant to work on something for a couple of years. What do your parents think of all this?

ES: They really don’t understand it, but they can see that I like what I’m doing. My mom does keep asking me when I’m going back to school. She’s like, “I thought the Thiel fellowship was over after two years!”