Year: 2020

A new fintech startup called EarlyBird wants to help families invest in their children’s financial futures. Through the EarlyBird mobile app, parents in just a few minutes can create a custodial account, also known as a UGMA (Uniform Gifts to Minors Act) account. These accounts typically allow a parent, aka the “custodian,” to invest in stocks, bonds, mutual funds, and other securities on behalf of the minor child. When the child comes of legal adult age, the investments become theirs.

Through the app, parents can set up an account for their child, then invite other family members and close friends to contribute.

The idea is not so different, in spirit at least, from something like HoneyFund, where newlyweds ask loved ones for cash donations instead of physical gifts. Similarly, EarlyBird offers an alternative to giving a child toys and more “stuff,” by inviting family and friends to donate money. Except in EarlyBird’s case, it’s not asking for straight cash donations — this is not some glorified crowdfunding platform, after all — it’s enabling investments.

Specifically, EarlyBird aims to make it easier and less confusing for parents to establish custodial accounts. It’s not the first fintech to do so — Stash and Acorns, for example, also offer this.

EarlyBird, however, aims to combine the investment account itself with a platform that allows for social features and a gifting experience. The idea is to make the act of donating to the account feel more like a real gift — unlike the gift of a check or some cash tucked into a greeting card.

With the EarlyBird app, the giver can record a short video “memory” alongside their donation to the investment account. This makes for a more social and personal experience as the child can later look back on these videos. In addition, other family members and friends may also see the videos and be prompted to donate to the child’s investment account, too.

The idea for EarlyBird comes from former AgilityIO COO Jordan Wexler, now EarlyBird CEO, and early Yello.co employee and VP Caleb Frankel, now EarlyBird COO.

Wexler explains that he began thinking about investments as an alternative to physical gifts when a new baby arrived in his own extended family.

“This all started with a problem I experienced years ago when my beautiful baby niece was born. I found myself head over heels and spending hundreds and hundreds of dollars on just the most ridiculous stuff — pretty much just junk gifts,” he says.

A few years ago, he got the idea to start investing his cash into an index fund on the child’s behalf.

“I wanted to have a larger impact in her life and something that she could really use when she grew up,” Wexler says.

His father had once done the same for him, in fact. When he was 12 years old, his dad gave him some money in a TD Ameritrade account which he withdrew later in life to help fund his first startup — SucceedOverseas in Qingdao, China — a strategic consulting firm that aided companies with employee relocation. (It was acquired in 2015 by Chiway Education Group.) 

Wexler met EarlyBird co-founder Caleb Frankel in Qingdao and reconnected with him again when he returned the U.S. Last year, they teamed up on EarlyBird, with the goal of simplifying the process for parents who want to launch custodial investment accounts for their kids.

Custodial accounts, to be fair, are perhaps not a well-known investment vehicle to those who aren’t parents — or even to those who are, in some cases. That’s because their alternative, the 529 plan, has generally been more popular because of its tax advantages.  

While both accounts allow families to invest on behalf of minor children, investments in 529 plans grow tax-free. Any withdrawals made for educational expenses — like tuition, room and board, books, and more — are also not taxed. That’s a big perk.

UGMA accounts, meanwhile, are taxed at certain levels. The first $1,100 of unearned annual income is tax-free, but the next $1,100 is taxed at the child’s tax rate. Unearned income above $2,200 is then taxed at the rates for trusts and estates, which can be higher than the child’s tax rate.

Donations to UGMA accounts don’t receive an income tax reduction, but they aren’t taxed themselves up to $15K for an individual or $30K for a married couple.

Because most families are investing with college expenses and tax advantages in mind, 529 plans have been better known. But Wexler says things are changing.

“A lot of parents actually have no idea what education and college will look like in 15 years and want something a little bit more flexible,” he explains.

Plus, UGMA accounts can be used for college, if need be. But if college, say, becomes free in the U.S. one day (!!!), the UGMA account’s investments can be used for anything else. That flexibility is why the account is more attractive to some parents these days — and why other fintechs, like Acorns, are entering this market.

However, EarlyBird will expand into 529 plans within a year, it says. It just didn’t start there.

Another differentiator between EarlyBird and Acorns or Stash’s custodian plans is how EarlyBird incorporates financial literacy into its product.

From birth to 5 years old, the parent manages the child’s account entirely. But when the child is age 6 to 13, parents can show the app to the child in a special “view only” mode where the child can learn about their investments and watch them grow. At 13 to 18, the child can download the app and, alongside their parents, can begin to interact with it. At age 18 (or 21 in some states), the child takes full custody of the account.

EarlyBird also simplifies the act of investing by offering a range of portfolios from conservative to aggressive. On the conservative side, the portfolio is 100% ETF bond-based while the aggressive portfolio is 100% ETF equity-based. Like Acorns, it offers a fixed portfolio model, but it also offers customized portfolios so you can match your investing to your values — like investing in socially responsible businesses. Users can also automate their investments — small or large — on a recurring basis, if they choose.

The portfolios were designed and built with a team of expert financial advisors led by EarlyBird advisor Evan List, a 12-year VP at Bernstein Private Wealth Management. The company says the portfolios are integrated with a rebalancing engine on the backend that ensures that each equity position stays within a 10% drift of the target allocation that EarlyBird has set within the selected portfolio. It also reviews all portfolios quarterly and rebalances them, if necessary, similar to other robo-investors.

The startup’s investment accounts are currently held with its partner Apex Clearing Corporation, a third-party SEC registered broker-dealer and member of FINRA and Securities Investor Protection Corporation (SIPC). This arrangement protects the investments up to $500,000 total. In time, EarlyBird aims to transition to a broker-dealer itself.

Currently, EarlyBird generates revenue by way of its $3 per month management fee (and $1 per month for each additional child.)

Over time, it will make money much as many fintechs do. It plans to leverage the trades and transactions with Apex Clearing. And as it transitions to a broker-dealer (when a sizable user base and assets under management are achieved), it may pursue a fully-paid lending program, similar to other brokerages.

These programs aren’t live at this time, to be clear, as the startup is only weeks old.

EarlyBird is backed by $2.4 million in funding, led by Network Ventures, in a round closed in November 2020. Other investors include Chingona Ventures, Bridge Investments, Kairos Angels, Takoma Ventures, Subconscious Ventures and various angels.

The app is a free download on iOS.

 

Amazon is planning to extend its computer science program Future Engineer to India, demonstrating its growing interest in the education space in the world’s second largest internet market.

In a job recruitment post, the company said that initial research for Amazon Future Engineer, through which it aims to bring computer science education to underserved and underrepresented children and young adults, in India is “currently underway” and the chosen candidate would be tasked with working with local nonprofits and government officials.

The company said in the post that it plans to launch the program in India in 2021. The childhood-to-career program is currently operational in the United States, where the company serves more than 5,000 schools and 550,000 students with computer science coursework, it said in a press release earlier this week.

“Amazon India has a specific focus on equipping children and young adults from underserved and underprivileged communities to build better futures for themselves,” the company said in the description. The company did not immediately respond to a request for comment.

The American e-commerce giant, which has invested more than $6.5 billion in India so far, has been exploring the education space in the country for a few years. Last year, it launched JEE Ready, an app aimed at helping students who are preparing for entry into India’s prestigious technology institutes. JEE Ready, which has since been rebranded as Amazon Academy, offers free online classes and analyzes students’ performance in mock tests.

Amazon isn’t the only American firm that is paying attention to India’s growing education market, where more than 260 million children go to school and much of the population sees education as a key to economic progress and a better life.

Earlier this year, Facebook partnered with the Central Board of Secondary Education (CBSE), a government body that oversees education in private and public schools in India, to launch a certified curriculum on digital safety and online well-being, and augmented reality for students and educators.

Facebook this year also invested in Unacademy, a Bangalore-based startup that offers online learning classes. Google, which invested in Indian edtech startup Cuemath this year, has also partnered with CBSE to train more than 1 million teachers in India and offer a range of free tools such as G Suite for Education, Google Classroom and YouTube to help digitize the education experience in the nation.

Microsoft has also collaborated with several Indian government and industry bodies including National Skill Development Corporation, and Nasscom to help more than 1 million people upskill themselves.

RentPath, owner of property listing sites including Rent.com and Apartment Guide, said today it has cancelled its agreement to be acquired by CoStar Group after the Federal Trade Commission sued to block the sale.

CoStar, a commercial real estate data and analytics provider that also operates listing sites like Apartments.com and ApartmentFinder.com, agreed in February to buy RentPath for $588 million. The all-cash deal came after RentPath said it would file for chapter 11 bankruptcy protection. RentPath had already hired financial advisors to restructure more than $650 million in debt, reported the Wall Street Journal.

But earlier this month, the Federal Trade Commission authorized an antitrust lawsuit in federal court to block the acquisition. Daniel Francis, deputy director of the FTC’s Bureau of Competition, said in a statement that “the acquisition will eliminate price and quality competition that benefits both renters and property managers,” because CoStar and RentPath’s rivalry kept advertising rates on their platform, which include some of the most popular listing sites, low.

In its announcement today, RentPath said its chapter 11 plan remains backed by lenders, including alternative asset management firms with “strong track records of successfully investing in businesses under similar circumstances.”

The FTC’s lawsuit and RentPath’s decision to back out of the acquisition agreement comes as more countries around the world are cracking down on tech consolidation. While the United States has trailed behind other governments in terms of antitrust actions, that is gradually changing, with Amazon, Google and Facebook coming under more legislative scrutiny, and the recent lawsuit filed by 46 states against Facebook alleging that it bought competitors “illegally” to increase its market power.

The fate of the RentPath/CoStar deal may foreshadow more antitrust scrutiny for proptech companies in the United States, too. CoStar built out its business over the past decade through acquisitions and has other deals currently in the works, including listings site HomeSnap, which passed FTC review last month, and a reported bid for property analytics company CoreLogic. CoStar and RentPath competitor Zillow is also known for building its business through a series of acquisitions, including Trulia for $3.5 billion in 2014.

 

The New York Department of Financial Services (NYDFS) has approved Tokyo-based GMO Internet to launch GYEN, the first stablecoin pegged to the Japanese yen.

GMO Internet, an internet conglomerate that offers a large array of services, including domain hosting, online advertising and what it claims is the world’s largest foreign exchange trading platform, will set up GMO-Z.com Trust Company (GMO Trust) to issue GYEN and ZUSD, a USD-pegged stablecoin. Both will start selling outside of Japan next month.

In a press announcement, GMO Trust said it had also made strategic partnerships with global digital asset exchanges to ensure the liquidity of the virtual currencies. Began developing GYEN in 2018.

GMO Trust joins about two dozen other companies that have received virtual currency licenses, also called BitLicenses, from the NYSDFS. BitLicenses, which went into effect in June 2015, are required to engage in virtual currency business activities in New York. Other companies based in Asia that hold BitLicenses include Japan’s bitflyer, a Bitcoin exchange, and Hong Kong-based digital wallet Xapo.

Apple faces a major setback in one of its legal fights, VMware sues a former executive and Google tests a new short-form video feature. This is your Daily Crunch for December 29, 2020.

The big story: Judge dismisses Apple copyright claims against Corellium

Apple filed a lawsuit last year against Corellium, a company that allows security researchers to create virtualized iOS devices in the browser in order to discover potential security flaws.

Apple argued that Corellium’s product both infringes its copyright and, by circumventing built-in authentications and security checks, violates the Digital Millennium Copyright Act. Today, Judge Rodney Smith dismissed Apple’s copyright claims and wrote that “Corellium has met its burden of establishing fair use.”

Smith did not rule on Apple’s DMCA claims, so this legal battle isn’t over.

The tech giants

VMware files suit against former exec for moving to rival company — The company is claiming that former COO Rajiv Ramaswami had inside knowledge of the key plans at VMware and that he should have told the company that he was interviewing for a job at a rival organization.

Google pilots a search feature that aggregates short-form videos from TikTok and Instagram — This could help Google retain users in search of social video entertainment.

Startups, funding and venture capital

23andMe raises $82.5M in new funding — The company’s work this year around COVID-19 has, perhaps, put the value of its platform in a new light.

CommonGround raises $19M to rethink online communication — The goal is to build online collaboration software that more fully captures the nuances of in-person communication.

Seattle-based Madrona raises $320M for its eighth fund — That’s up slightly from the firm’s past two funds, which were both $300 million vehicles.

Advice and analysis from Extra Crunch

As launch market matures, space opportunities on the ground take off — If you thought the launch boom was big, just wait for to see what happens when it combines with the private satellite boom.

Streaming services face their real test in 2021 — While media/telecom executives and Wall Street investors have been willing to make big investments for a streaming-centric future, they’ll expect to see actual profits soon.

What’s behind this year’s boom in climate tech SPACs? — There’s no denying that 2020 has been the year of the special purpose acquisition company.

(Extra Crunch is our membership program, which aims to democratize information about startups. You can sign up here for a holiday deal good through January 3. Read more about the deal here.)

Everything else

From the US to China, Korea, India and Europe, antitrust action against tech is gaining serious momentum — Antitrust is now a headline issue for the tech industry across the world.

Attending CES 2021? TechCrunch wants to meet your startup — Virtually, of course.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Podcast homepages weren’t something I gave any thought to until I launched my own standalone show. And honestly, even then I probably didn’t give enough thought to the subject. For that reason, many or most of my shows have Tumblr pages – which is, at best, a bit of a mixed blessing in 2020.

The biggest reason many podcasters give little consideration to the subject is the fact that most people are platform-dependent when it comes to listening. People who consume a lot of podcasts generally do so through a single platform/app, be it Apple Podcasts, Spotify, Google, Stitcher, Castbox, etc. But when it comes to actually promoting your show on social media, you’re best served by sharing a link that’s platform agnostic.

I’ve been playing around with Podpage a bit today. The new offering was created by Brenden Mulligan, cofounder of app developer toolbox LaunchKit, which sold its tools to Google way back in 2016. The offering has been around for a while now, but Mulligan has offered some updates and recently listed it on ProductHunt.

I’m digging it so far. It’s basically plug-and-play to get up and running, though you can customize a fair bit beyond that. For reference, a simple page I made this morning for my podcast, RiYL:

After a couple of hours, I’m pretty seriously considering dropping the long-standing Tumblr in favor of the service. My page is pretty simple so far, and honestly, that’s by design. Or, rather, partially by design and partially due to the fact that I haven’t been very good about updating episode art, which has kind of limited my options here (perhaps I’ll go through the 400+ episodes on some future rainy day).

You start by entering your podcast name, and the service goes to work, scraping the relevant information and building it into a page. From there, you can add a Patreon (or other method for monetization) and all related social media. One of the nice things about having a purpose-built service like this is how it pulls together all of the relevant information into a single spot. The sidebar features a breakdown of the different podcatchers where you can listen to the show, coupled with a signup form to get show updates.

On the bottom are a selection of reviews from different podcasting services. Up top is a link to the services where you can leave that feedback. There’s also a subscription link and contact form, which is a handy way of allowing people to email you without giving out personal information. Notes submitted to the form will be sent to your associated email.

The basic experience is free and there are currently two upgrade options. At $5 a month, you can host it on your own website and for $12, there are a bunch more customization options, along with a more fully-featured website, including blog functionality and the ability to add transcripts.

Back in August of last year Apple filed a lawsuit against the virtualization software company Corellium, arguing that the product infringed its copyright and later adding claims that Corellium’s product violates the DMCA.

While the DMCA claims will still need to be settled in court, a judge in Florida has tossed out Apple’s copyright claims.

So what is Corellium? To over simplify it, Corellium allows security researchers to spin up a virtualized ARM device (including iOS devices) in a browser and take a deep look under the hood to discover potential security bugs. As I wrote last year:

Corellium could allow, for example, a security researcher to quickly fire up a simulated iPhone and hunt for potential bugs. If one is discovered, they can quickly load up prior versions of iOS to see how long this bug has been around. If a bug “bricks” the virtual iOS device and renders it unusable, it’s a matter of just booting up a new one rather than obtaining a whole new phone. Virtualized devices can be paused, giving researchers a detailed look at its precise state at any given moment.

Writes Judge Rodney Smith in a docket filed this morning as first spotted by the Washington Post:

Having reviewed the evidence, the Court does not find a lack of good faith and fair dealing. Further, weighing all the necessary factors, the Court finds that Corellium has met its burden of establishing fair use. Thus, its use of iOS in connection with the Corellium Product is permissible. On these grounds, Corellium’s Motion for Summary Judgment is granted on Apple’s copyright claim.

Smith cites Corellium’s ability to do things like “(1) see and halt running processes; (2) modify the kernel; (3) use CoreTrace, a tool to view system calls; (4) use an app browser and a file browser; and (5) take live snapshots” as proof that the product is “not merely a repackaged version of iOS” and should be considered fair use.

Smith also notes repeatedly that this legal action comes after Apple considered acquiring Corellium.

Between January 2018 and the summer of 2018, the parties engaged in discussions regarding Apple’s potential acquisition of Corellium. During this time, the parties met in-person and telephonically. Corellium explained to Apple the technology behind the Corellium Product and how it works, and discussed Corellium’s business and intention to commercialize the Corellium Product.

And:

If Apple had acquired the Corellium Product, the product would have been used internally for testing and validation (that is, for verifying any system weaknesses and functioning of devices).

While this decision swipes away the copyright claims (potential appeals aside), there was no such swift judgement on the DMCA claims. Apple argues that Corellium is working around built-in authentications and security checks, whereas Corellium argues that such things are implemented at a hardware level and the firmware they’re dealing with (the iOS IPSW files) are “left unencrypted, unprotected, unlocked, and out in the open for the public to access, copy, edit, distribute, perform, and display.”

There’s no denying that 2020 has been the year of the special purpose acquisition company.

Since the beginning of the year, 219 SPACs have raised $73 billion, according to widely reported market research from Goldman Sachs. That’s a 462% jump from 2019 and more than traditional public offerings raised by about $6 billion. By some counts, roughly one quarter of the SPACs that have been announced will target climate-related businesses.

Already, of the 78 deals that have either completed or announced a merger since 2018, just over one-third have been climate-related, as tallied by Climate Tech VC. And these SPACs have outperformed the broader technology market, with the 10 climate tech companies that have completed mergers averaging a 131% return on investment versus the 50% return of the total SPAC market (assuming average offering prices of $10 per share).

Clearly this has been a banner year for companies that are tackling the climate crisis across a number of verticals, but can it last?

There are a few reasons to think that it can — led chiefly by the demand for these kinds of public offerings from institutional investors, including the pension funds, mutual funds and asset managers handling trillions of investment dollars.

“[The] current wave [of SPACs] is because over the past 24 months the institutional investor universe has come fully into believing that climate solutions are going to be a major growth area in the 2020s and beyond, but they weren’t seeing options available to them for investing into,” wrote longtime clean technology investor, Rob Day, in a DM.

“The available publicly traded ‘green’ companies were already getting really bought up, and the private equity options were underwhelming as well (smallish in the case of VC, low returns in the case of large-format projects). Throw in a Robinhood market of retail investors with a lot of enthusiasm for EVs and such, and you have a nice recipe for this to happen.”

It’s that time of year again. Of course, this year is going to be different (to be honest, even looking at that lead image makes me uneasy). For the first time ever, CES is going all-virtual – but as usual, TechCrunch will be around to (virtually) cover it. The new format offers some unique challenges and opportunities, and we’re (virtually) here for it.

This year, we’re taking a different approach to help sort the signal from the noise. For past events, we’ve issued a similar form to find unique and interesting companies for our stage. While we don’t have stage (or booth or physical presence of any sort) this year, we’re still looking to talk to as many great companies as possible.

Getting noticed at a show the size and scope of CES is difficult even in normal years – and that difficultly is likely to only be compounded for many smaller startups in this new all-digital format. We’re looking to get out in front the mid-January scrum. If you’re showing off something cool or have some noteworthy news at this year’s event, fill out the form below and we’ll do the rest.