Year: 2020

Against Gravity, the startup behind the social gaming platform Rec Room, has scored some new funding as it brings its once VR-centric platform to every major gaming platform out there.

The startup has closed a $20 million Series C led by Madrona Venture Group. Existing investors including First Round Capital, Index, Sequoia and DAG also participated in the round. They’ve raised just shy of $50 million to date.

The platform has been around for years serving as a social hub and gaming platform for virtual reality users. In recent years, the company has tried to scale its ambitions past being known as the “Roblox of VR” and scale its capabilities to meet its young user base. This year was big for the platform doing just that.

CEO Nick Fajt estimates that the company has tripled its total audience since this time last year as the company has made a concerted drive on new platforms. While a substantial portion of Rec Room’s audience still comes from its bread-and-butter VR audience, the platform’s base of console users has grown substantially in 2020 and by the end of next year, Fajt expects that mobile will have grown to be Rec Room’s most common point of entry. Meanwhile, mobile Android remains one of the last major gaming platform that Rec Room still doesn’t have a home on.

One of the company’s big aims heading into the new year is scaling their creation tools which allow players to build their own experiences inside the game. Over 1 million of the platform’s 10 million registered users have engaged with creator tools building 4 million distinct rooms on the platform. Next year, Fajt plans to scale up creator payments estimating that by the end of 2021 they’ll have paid out $1 million to their network.

Fajt says he wants creation tools on Rec Room to be more accessible to the general player base than other platforms including Roblox, aiming to keep tools simple for now and push everyday users to invest time in the creation platform.

Image via Rec Room

“Roblox has an incredible business, that’s certainly no secret,” Fajt tells TechCrunch. “We want breadth of expression over depth of expression; we want anyone who comes into to Rec Room to be able to build.”

Despite the slow maturation of the VR market, Fajt says the company doesn’t plan on moving away from its VR roots anytime soon. The company has just updated its popular battle royale mode Rec Royale for the new Quest 2 as well as on iOS.

Umba, a digital bank for emerging markets and aiming first at Africa, has secured a $2 million seed funding round from new investors including Lachy Groom, ex-Head of Issuing at Stripe; Ludlow Ventures; Frontline Ventures and Act Venture.

Currently operating in Kenya and Nigeria, Umba offers a digital financial service alternative to legacy African banks. Its mobile app gives customers a free checking account, free instant peer-to-peer money transfers, lending, deposits, BillPay and cashback. This is in contrast to the generally high-cost barriers found among traditional banking institutions in African countries.

Right now it’s available in Kenya and Nigeria, which have a combined population of over a quarter of a billion people.

Umba competes with Kudao, Carbon, Eversend and ‘Chip or cash’ methods.

Umba’s CEO, Tiernan Kennedy said: “From the outset we built our platform to serve multiple markets, currencies and payment infrastructures. This flexibility is an extremely important consideration as it’s much harder to upgrade your systems at a later date. For example, bank and debit card penetration is high in Nigeria, so Umba is deeply integrated into those payment methods, while across Kenya and East Africa mobile money is dominant so our platform is tightly integrated with those services, too.”

Ludlow Ventures Partner, Brett DeMarrais said: “Umba is the first investment we’ve made in the African market and it’s one we were excited to participate in. The team at Umba have an excellent service that drives down the cost of banking for their customers and democratizes access. The move away from physical branch infrastructure was already underway and it has accelerated this year. It’s clear the African market is maturing and that we’re entering a very interesting phase.”

The news comes shortly after Stripe’s $200M acquisition of Nigerian payment service startup Paystack as well as the acquisition of DPO Group for $288m and Sendwave for $500m, showing a booming ecosystem breaking records in venture rounds and acquisitions.

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast (now on Twitter!), where we unpack the numbers behind the headlines.

For the first time in donkey’s years, we didn’t have our full crew this week. Instead, we had just Natasha and Chris and myself — we had to survive without Danny while he took the week “off” to “relax.”

But our depleted ranks did not mean that news was waiting for us to reassemble. Indeed, there was a mass of stuff to get through:

• Atlanta-based Presso raised $1.6 million for its in-unit dry cleaning tech, which we thought was neat.
• OpenSensors raised $4 million for its air-monitoring tech after a history of bootstrapping.
• Lantern, which helps folks plan for their death, is having a big year. It raised $1.4 million.
• Public raised $65 million, the same week that Robinhood came under fire by the Massachusetts securities group, and the SEC. Robinhood will pay $65 million to settle the SEC’s charges without admitting wrongdoing.
• And then in the world of product, we chatted about Substack’s new Reader service, which we seem like. (We also chatted about this Taylor Lorenz piece.)
• It was also prime season to chat a little about what’s new in the bitcoin world, and take a peek at the stock market’s recent over-success. Roblox, see you in 2021.

And for everyone who made it to the end, here are the pieces from Axios and The Information that we mentioned.

Before we say goodbye, our very own Natasha is taking on Startups Weekly, a long-time TechCrunch Newsletter. Subscribe to it for her debut issue, and while you’re at it, check out Alex’s The Exchange which goes out the same day and means the Equity conversation can continue well into your weekends.

Coinbase, perhaps the best-known American crypto company, announced today that it has filed confidentially to go public. The company’s debut was expected, having been reported earlier in the year.

As the well-funded unicorn has filed confidentially, its debut looks to be an early-2021 affair. What sort of flotation the company will pursue is not clear at this stage. Coinbase’s announcement is anodyne, as releases of this sort tend to be. The text of the short blog post does not mention whether Coinbase will pursue a traditional IPO or direct listing, but Slack’s similar message from early 2019 was similarly devoid of information; Slack went public via a direct listing last year before agreeing recently to sell to Salesforce.

Coinbase raised extensive known capital while private, including a $300 million Series E in October of 2018. Its August, 2017 Series D was worth a hair over $100 million, according to Crunchbase data. Tiger Global, Andreessen Horowitz, DFJ Growth and IVP are among the investors that led rounds into the crypto-focused fintech company.

It is not clear how large Coinbase’s revenues have grown, or how profitable or not its operations have proven in recent years. While there has been some reporting about its historical growth, how the company has fared more recently is opaque. Therefore, how well Coinbase’s impending public valuation will compare to its $8 billion private valuation is hard to guess.

The company is going public amidst a surge of interest in cryptocurrencies, the prices of many having risen in recent months. TechCrunch explored the trend earlier today.

Coinbase has also been in a number of controversial spots in 2020, including the loss of dozens of employees after its CEO declared that the company would not participate in any political matters that were not, in his view, directly tied to the company’s mission. The ensuing dialogue about the company’s decision was loud.

Regardless, with Roblox and Affirm now taking an early-2021 tack for their own IPOs, we can add Coinbase to the list of companies we expect to float in January.

As consumers, most of us don’t mind providing companies like Google, Facebook and Twitter with our personal data, as long as we get access to the services and solutions we want to use. However, many people don’t realize that these companies function as data-collecting surveillance organizations, integrating data collection into their business models in clandestine ways.

Unbeknownst to users, many companies allow third parties to place embed codes on their websites, capturing user behavior to either harvest or sell to other parties. This practice of “adjunct surveillance,” as Zoho Chief Evangelist Raju Vegesna describes it, has become common practice given a lack of resistance from users, investors and other business leaders.

To anyone paying attention, it has become painfully evident that the surveillance pendulum has swung too far. Companies are collecting and sharing user data with impunity. In fact, adjunct surveillance has become so egregious that a wave of data privacy laws has sprung up in recent years: the EU’s GDPR, California’s CCPA, New York’s SHIELD Act and Brazil’s LGPD, among others.

Due to increased government regulation and public awareness, business leaders are starting to see the writing on the wall. However, it’s not enough to rely on lawmakers and regulators’ activity. It is also not enough to be legally compliant, burying the notices in legalese or fine print. Such Machiavellian maneuvers may technically be legal, but they’re certainly not moral.

It’s time for tech leaders to take a stand by formally, and visibly, taking a privacy pledge.

Don’t let advertising companies track your users without their knowledge

Even if your business depends upon selling user data to third-party advertisers, it is vital that you inform your users about what you’re doing with their data. In some cases, it very well may be legal to withhold such information from users; however, that doesn’t make it right.

Since its inception in 1996, ManageEngine — then doing business as Zoho — has refused to allow any third-party advertisements on any of its websites or products. In an effort to block all adjunct surveillance, they don’t allow the embedding of any third-party tracking codes anywhere on their sites. Although social media share buttons may seem innocuous, they should be removed as well, as the buttons can essentially function as Trojan horses.

Inform your customers about any third-party integrations that may track their data

If your enterprise is financially reliant on such activity, it needs to be transparent about it. Take Google as an example: Many of us don’t have a problem using Gmail because we value the service enough to provide the search behemoth with our data. However, when Google leverages our user data to enter into partnerships with credit card and healthcare companies on the sly, that is a different story entirely.

Google partnered with Ascension hospitals back in 2018 on “Project Nightingale,” a data-sharing initiative that was not revealed to Ascension patients. Although subsequent investigations found that Google had not technically violated HIPAA, or any other laws for that matter, it is likely that the public wouldn’t even know about this initiative had it not been for this scoop. Also, it’s highly unlikely that this type of surreptitious health data partnership is an anomaly.

As another example, Google also secretly partnered with Mastercard in an effort to compete with Amazon and capture consumer retail spending data. After an exposé revealed the clandestine partnership, both companies claimed that they didn’t have any personally identifiable information for any customers. According to Google, they utilized double-blind encryption technology that protected all user data, which had been aggregated and anonymized. Despite this frequently made argument that all the users’ personal data had been “de-identified,” at no point were Mastercard or Google users made privy of the deal. In all likelihood, this Mastercard partnership is not a one-off for Google. Through an AdWords blog, Google claims to have access to 70% of all credit and debit card users’ activity.

The moral of the story? Don’t be like Google.

Use encryption tools to protect customer data transmitted over public networks

If your business sends user data over public networks, ensure all server connections use encryption with strong ciphers. Follow the hypertext transfer protocol secure (HTTPS) and the transport layer security (TLS) protocols to ensure there is always a secure connection between web browsers, your corporate server and all third-party servers. Not only does the TLS protocol allow both parties to be authenticated, but it also encrypts the data, ensuring that no third parties can eavesdrop or otherwise interfere with the data transfer process.

Consider investing in internal data centers

If economically feasible, companies should store customer data in self-owned data centers, or own the servers inside these data centers. By not relying on third-party data centers and public cloud offerings, not only will you bolster your data privacy initiatives, but you’ll also likely save money over time. Additionally, your company will benefit as more and more users begin to value companies that go out of their way to protect user data.

As a private company, ManageEngine has never been beholden to external shareholders, which has allowed executives to look at things through a philosophical lens as opposed to a financial lens. From the outset, they’ve always placed a premium on user privacy, which is why the current surveillance landscape has garnered such ire within their organization. To be sure, they’ve left some money on the table by taking such a hard line on privacy.

However, as Vegesna frequently asks, “What’s the point of being financially profitable if your business is morally bankrupt?”

For the past few years, some of the biggest stories on TechCrunch have come from you.

We’ve revealed internal employee battles at some of the world’s biggest tech companies, reported on unexpected layoffs during the pandemic, uncovered safety violations, how Facebook paid teens to snoop on their private data, revealed a major hack that a company tried to cover up, and exposed workplace discrimination, secretive startups and government wrongdoing.

We have been able to report on these important issues in large part because sources have reached out with information that companies and governments don’t want to come to light.

Now we’re making it easier and more secure for you to contact TechCrunch reporters and editors.

Today, we are launching our own SecureDrop, a tip submission system that allows you to securely and anonymously reach out with information, files and documents for us to investigate.

This is what TechCrunch’s SecureDrop looks like. (Image: TechCrunch)

SecureDrop is a system designed to allow us to communicate with you while protecting your identity from virtually all kinds of tracking. It works in part thanks to the Tor anonymity network, which bounces and encrypts your internet traffic through several servers on its way to its destination in order to make tracking almost impossible. Accessing Tor — and our SecureDrop — requires use of the free-to-use Tor Browser. That means we won’t know who you are, unless you tell us.

We know what sources risk in revealing information that the powerful want to keep secret.

Rest assured, our SecureDrop is physically controlled by TechCrunch, and anything you submit to SecureDrop is encrypted and can only be viewed by TechCrunch editors. And the software itself, maintained by the non-profit Freedom of the Press Foundation, goes through regular security audits and will be kept up-to-date with the most latest fixes.

You can access instructions on how to use our SecureDrop by going to: techcrunch.com/securedrop

We’re looking forward to hearing from you.

Whatnot, a company I first wrote about back in February, has spent the months since growing rapidly — both in terms of feature set and userbase. This morning the company is announcing it has raised a $4M seed round.

Originally focused on being a platform for safely reselling FunkoPop! vinyl figurines, Whatnot has since expanded into other types of collectables, including Pokémon cards, sports cards, and FiGPiNs.

The company has also expanded beyond simple buying/selling mechanics, embracing a trend that was already proving popular before the pandemic struck and has only grown since: livestreamed video sales and auctions.

If you’ve never fallen down the rabbit hole that is collecting, perhaps you haven’t seen this kind of sale — but once you’ve tuned in, it’s hard to stop. Popular amongst groups like Disney pin traders, live video auctions are… well, they’re exactly what they sound like. The host fires up a live stream, a notification going out to their fanbase of fellow collectors that it’s time for a sale. Their phone camera pointed at the item up for grabs (often spinning in place on a turntable to give a full view of its condition), the host’s job is part auctioneer, part hype-man. They’ve got to know the ins and outs of the item in question, interact with folks in chat, and generally just keep the energy high so that viewers stick around.

A lot of these auctions happen on platforms like Instagram, which… aren’t really built for this. Selling an item there means manually connecting with buyers after the fact, figuring out payments, and hoping no one backs out. Whatnot wants to specialize in it, and has spent the last few months building out livestreaming tools accordingly; streams are handled directly through their mobile app, as is all the payment and processing on the seller’s end. I popped into a few random streams last night, and they each had dozens to hundreds of people watching and bidding on items like Mumm-Ra Funko Pops, with users trying to guess what might show up in the stream next.

Image Credits: Whatnot

Another increasingly popular live streaming concept for Whatnot is that of the “card break”. Users pool their money to buy an entire box of trading card packs — often boxes that are no longer being produced, and can cost thousands of dollars to obtain. Each user gets a number, each number tied to a pack (or packs) within the box. Each pack is opened on the livestream, its contents sent to the (hopefully?) lucky owner tied to that pack’s number.

Whatnot co-founder Logan Head calls the company’s growth in recent months “explosive”, telling me that additions like livestreaming have helped them grow “at least 100% month-over-month” as of late. The Whatnot team has grown as well. It’s currently sitting at 12 employees, and is actively looking for more engineers — thus the need to raise. The company tells me that this $4M seed round was backed by Scribble Ventures, Operator Partners, Wonder Ventures, Y Combinator, and a number of angel investors.

Relativity Space CEO Tim Ellis, Astra CEO Chris Kemp, and VOX Space (Virgin Orbit’s national security-focused subsidiary) President Mandy Vaughn all joined us at TC Sessions: Space to jointly discuss their varied approaches to the small spacecraft launch market. Each has a very different type of space launch system, but each is targeting roughly the same group of customers.

There are plenty of those customers to go around, they all agree, but they each have very different takes on what the best way to serve this growing need in the space industry. Check out the full panel above to learn more about that in detail.

NASA’s head of human spaceflight Kathy Lueders joined us on stage at TechCrunch Sessions: Space, where she spoke to scientist and Netflix host Emily Calandrelli about her work at the agency – including NASA’s progress on the Artemis program and the return of American astronauts to the surface of the Moon.

The 2024 target for NASA’s first Artemis Moon landing has been oft-repeated by the agency, and by current NASA administrator Jim Bridenstine, who has confirmed that his tenure is ending in January once the Biden administration takes over the U.S. Presidency. But it’s also a timeline that has raised many an eyebrow among outside observers, and seems particularly challenging given setbacks resulting from stay-at-home orders and remote work measures implemented by NASA in response to the COVID-19 pandemic.

“When we had Commercial Crew, my goal was 2017,” Lueders said. “We did not fly in 2017, even though we were working super, super hard to get to 2017. Having that 2017 goal didn’t mean that I made stupid decisions just to get to 2017 – I still carefully went through and made the decisions. And then we ended up flying in 2020 – in fact we ended up flying [the mission] in 2019, which originally would have been our 2017 goal. People get are very fixated on 2024, because it is an important goal for us. But I also know that we’ll work through this carefully, and we will inform people of our progress along the way, just like we’ve done it every single other program out there. And we will fly when we’re ready to fly with the mission capability that we need to fly in a safe and effective manner.”

Lueders also addressed a question about diversity, and racial diversity in the agency, and it’s importance to the agency. Lueders is the first woman to ever occupy the role of the Associate Administrator of the Human Exploration and Operations Mission Directorate, who leads all human spaceflight activities across the agency.

“I want people to see themselves in what we’re doing, because the point of this is it’s not about NASA doing this anymore,” she said. “This is about you doing it, and about you being able to do it. I think one of the most striking things that I got was a letter from a nine-year-old girl in India right after I got announced. And she said, ‘Because you have your job, I think I can be NASA Administrator someday.’ And you saw the diversity in that Artemis crew, and we want people to see themselves out there.”

Lueders also talked about the diversity present in NASA Artemis astronaut class, which it just announced, and about the potential for who from that pool will be selected to actually crew the first lunar landing for Artemis.

“One of my favorite things is, I’m still not sure it can’t be two women,” she said. “We need to pick the right people.”

On-orbit servicing startup Orbit Fab, which bills itself as the company focused on creating ‘gas stations in space,’ has added an additional investor to its seed funding round. The add-on investment comes from Munich Re Ventures (the corporate VC arm of Munich Re Group, one of the largest insurance companies in the world). Munich Re is a key provider of insurance for satellite operators in particular, offering policies that cover pre-launch, launch, and on-orbit operations.

Orbit Fab, which was a finalist in our TechCrunch Disrupt Battlefield in 2019, has designed a system that consists of what are essentially in-space tugs that can guide spacecraft on-orbit to refuelling depots, to which they connect with the company’s custom fueling interface. It’s designed to be relatively easy to incorporate into new satellite designs, providing a way to easily refuel in space without requiring any special robotic systems for capture and docking.

The goal of the startup is to help create a more sustainable orbital commercial operating environment, extending the life of spacecraft, reducing debris and saving companies money. Bringing on Munich Re Ventures should provide it with significant advantages in terms of being able to build more sustainable, long-lived operational spacecraft into launch and operation risk models for satellite operators.

“When we look at standing up a propellant supply chain, so much of it is the financial model,” Orbit Fab co-founder and CEO Daniel Faber told me in an interview. How do we use this to move our customers’ risk, to make sure that we’re moving capital expenditure to operational expenditure, and yet not introducing additional risk? [Munich Re] is all over it in terms of financial products and insurance and risk assessment, so that’s a great partnership.”

Faber went on to explain that Munich Re Ventures Timur Davis began to show up at more and more space conferences, and Faber began to chat with him at these events. It turned out that the venture firm was putting together an investment this around in-space servicing and infrastructure, and Orbit Fab eventually became the first investment on the back of that new thesis.

The new investment brings Orbit Fab’s total seed raise to $6 million, including between $2 to $3 million in government funding on top of VC funds. The company has also now conceived and researched a “Self-Driving Satellite” kit for docking that it has received National Science Foundation funding to do preliminary requirements development, and it’s now at the point where it can begin designing and building that out. 2021 looks to be a big year for many new companies in the space industry, and Orbit Fab with its new approach to sustainable, scalable satellites operations is definitely among them.