Year: 2020

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.

This morning we’re looking at what venture capitalists got up to in the first quarter of the year and how they are really responding to the current global crisis.

It’s easy to find mixed signals on Twitter, with some VCs noting that they have slowed their investing cadence or tightened criteria as the markets shed value. Others claim to be as active as before. Founders are reporting new, higher standards that private capital deals now appear to require. TechCrunch compiled a number of reports from entrepreneurs which described an either slowed, more conservative or utterly frozen venture capital scene.

It seems very likely, then, that the United States’ venture capital results for Q1 will be somewhat weak. The full impact of the COVID-19 pandemic, however, may show up more acutely in Q2 2020. Why? Because venture data is famously — and annoyingly — laggy. Rounds are announced weeks or months after they are completed, and the timing of their announcements is impacted by news cycles.

So what we see in Q1 2020 venture data will contain deals that took place in the latter days of 2019; Q2 2020 data, in contrast, will feature mostly 2020 deals and will include a reporting period in which a lot of later Q1 deals would have been completed. This does not mean that there’s no use in looking at Q1 results — we’re looking for early signals, not complete answers in the data.

So let’s dig up what information we can on our own, mix in some data from other reports and see what the tea leaves are saying about Q1 venture results so far.

SpaceX has released a first version of its spacecraft user manual for Starship, the next-generation launch vehicle that it’s currently developing in Boca Chica, Texas. The manual isn’t quite as detailed as the ones that exist for SpaceX’s other, operational launch spacecraft, but it does provide a lot of insight into how SpaceX envisions Starship being used, including as a high-capacity cargo hauler, and what sounds like a relatively luxurious passenger space liner.

Starship will be able to carry up to three geosynchronous telecommunications satellites at once, or a full constellation of satellites in one go. It can even carry one or two large geosynchronous satellites and still have room left over for a full rideshare mission of small satellites at the same time. That’s a lot of added mission capability for a single flight vs. current options, which should help considerably with operational economics.

Another use that SpaceX proposes for Starship: transporting “in-space demonstration spacecraft” that remain attached and integrated with the Starship, to carry out experiments and missions and then return to Earth. This would effectively make Starship an in-space lab platform kind of like the International Space Station, but with its own delivery and return capabilities built-in.

SpaceX says that Starship will also be able to take on payloads attached to the sidewalls and nose of the spacecraft, and to its nose, in addition to on the payload adapter itself, similar to what was possible with the Space Shuttle perviously. Also like the Space Shuttle, SpaceX says that Starship should be able to accomplish missions like recovering satellites in orbit, allowing them to either be repaired on-orbit, returned to Earth, or moved to a different target orbit as needed. This is not something that’s currently possible using any other operational launch vehicles in use.

There’s also some information about proposed crew configurations for Starship for supporting passengers – SpaceX says it’ll be able to carry as many as 100 people from Earth, to both low Earth orbit and on to the Moon and Mars. Crew configuration of the vehicle will include “private cabins, large common areas, centralized storage, solar storm shelters and a viewing gallery,” the document says. SpaceX also calls out specifically the potential for point-to-point transportation use – in other words, flying from one spaceport on Earth to another in order to massively cut down on travel time by making the trip through the edge of space.

One final interesting detail: SpaceX says that it’s going to be launching from both Kennedy Space Center in Florida and Boca Chica, Texas – and that it’s also going to potentially land at both locations, which could help with increasing operational pace once there are actually a few of these built, proven and ready to fly.

SpaceX’s Starship SN3 is currently under development in Boca Chica, and has been moved to the launch pad in advance of static fire testing. The company is working on rapid iteration prototyping to get to a high-altitude flight testing vehicle later this year, and eventually hopes to develop both Starship and its Super Heavy booster rocket for fully reusable space flight use.

Even though this might seem to be the absolute worst time to try to round up funding for a restaurant-related startup, Allset is announcing that it’s raised an $8.25 million Series B.

It was not, to be clear, an easy process. CEO Stas Matviyenko (who founded the company with COO Anna Polishchuk) admitted that when he set out to fundraise, the goal was actually $12 million. And at one point, it looked like he might even raise more than that — but as he finalized the round in the week before widespread social distancing measures started to take effect around the United States (effectively ending dine-in options in some cities), he said, “A few investors just disappeared.”

Still, Matviyenko said he feels “lucky” to have closed out the round at all. And he pointed to signs that consumers and restaurants are still turning to Allset during the COVID-19 pandemic.

The company started out with a focus on delivering a quick dining experience in restaurants, allowing diners to make a reservation, order ahead and then pay directly through the Allset app. Over time, Matviyenko said, the app also began to offer personalized, healthy recommendations at each restaurant.

At the same time, Allset has added takeout options — and most recently, a feature that allows restaurants to offer contactless takeout, akin to the contactless option offered by many restaurant delivery apps. In fact, Allset is waiving its 12 percent commission fee for restaurants offering this option. (It’s also been promoting usage by offering a daily $4 discount for takeout orders.)

Image Credits: Allset

And while Matviyenko said that orders dropped by around 60 percent as social distancing measures went into place, they’ve apparently they’ve bounced back (by 10 percent as Allset signed up new partners — usually in more residential neighborhoods, away from the office-heavy areas where the companies had previously focused. Matviyenko said the startup has added more than 200 new restaurants in the past couple weeks.

He also emphasized the distinction between AllSet and the various delivery apps. He didn’t rule out adding a delivery option to Allset in the future, but since delivery requires such an investment in logistics, he’d likely to do it by partnering with a company already working in this area. Conversely, he suggested that for most delivery apps, takeout is usually an afterthought (assuming they support it at all), while Allset is trying to offer “the best [takeout] experience” possible.

The new round brings Allset’s total funding to $16.6 million. It was led by led by EBRD (the European Bank for Reconstruction and Development), with participation from Andreessen Horowitz, Greycroft, SMRK VC Fund and Inovo Venture Partners.

“The Allset team is building a great product and their effective execution yields strong unit economics with sustainable growth,” said EBRD’s Maria Barsuk in a statement. “We’re excited to partner with them in their next phase, as well as proud to support their efforts in serving local businesses and customers during this unprecedented time for the restaurant industry.”

GM today announced manufacturing details around building much-needed medical face masks. According to the company’s press release, it took the company less than seven days to go from nothing to producing the first production-made mask. The automotive giant said today in a released statement it expects to deliver 20,000 masks on April 8 and soon after, able to produce 50,000 masks a day once the production line is at full capacity.

These face masks are a vital piece of personal protective equipment (PPE) used by front-line healthcare staff to protect themselves against the virus-causing droplets that are spread by patients through coughing and sneezing in clinical settings.

GM turned to global partners to create this manufacturing line within a week. The company sourced material from GM’s existing supply chain and acquired manufacturing equipment from JR Automation in Holland, Michigan, and Esys Automation in Auburn Hills, Michigan. As the company’s press release says, GM even created an ISO Class 8-equivalent cleanroom in GM’s Warren manufacturing plant. GM and the UAW will seek two dozen volunteers to staff this new assembly line.

“The first people we called were those who work with fabric vehicle components,” said Karsten Garbe, GM plant director, Global Pre-Production Operations. “In a few days, the company’s seat belt and interior trim experts became experts in manufacturing face masks.”

While this team was creating a face mask assembly line, others within GM were working towards creating ventilators. Last Friday, March 27, President Donald Trump signed a presidential directive ordering GM to produce ventilators and to prioritize federal contracts. This came hours after the automaker announced plans to manufacture the critical medical equipment needed for patients suffering from COVID-19, the disease caused by the coronavirus.

Other automakers joined the fight, as well. Ford and GE Healthcare licensed a ventilator design from Airon Corp and plan to produce as many as 50,000 of them at a Michigan factory by July as part of a broader effort to provide a critical medical device used to treat people with COVID-19. Under this partnership, Ford said it expects to produce 1,500 Airon ventilators by the end of April, 12,00 by the end of May, and 50,000 by July.

As companies get to grips with a wider (and, lately, more enforced) model of remote working, a startup that provides a platform to help track and manage all the devices that are accessing networked services — an essential component of cybersecurity policy — has raised a large round of growth funding. Axonius, a New York-based company that provides a way for organizations to manage and track the range of computing-based assets that are connecting to their networks — and then plug in that data to 100 different cybersecurity tools to analyse it — has picked up a Series C of $58 million, money it will use to continue investing in its technology (its R&D offices are in Tel Aviv, Israel) and expanding its business overall.

The round is being led by prolific enterprise investor Lightspeed Venture Partners, with previous backers OpenView, Bessemer Venture Partners, YL Ventures, Vertex, and WTI also participating in the round.

Dean Sysman, CEO and Co-Founder at Axonius, said in an interview that the company is not disclosing its valuation, but for some context, the company has now raised $95 million, and PitchBook noted that in its last round, $20 million in August 2019, it had a post-money valuation of $110 million.

The company has had a huge boost in business in the last year, however — not a surprise for a company that helps enable secure remote working, at a time when many businesses have gone remote in an effort to follow government policies encouraging social distancing to slow the spread of the coronavirus pandemic. As of this month, Axonius has seen customer growth increase 910% compared to a year ago.

Sysman said that this round had been in progress for some time ahead of the announcement being made, but the final stages of closing it were all done remotely last week, which has become something of a new normal in venture deals at the moment.

“We’ve all been staying at home for the last few weeks,” he said in an interview. “The crisis is not helping with deals. It’s making everything more complex for sure. But specifically for us there wasn’t a major difference in the process.”

Sysman said that he first thought of the idea for Axonius when at a previous organization — his experience includes several years with the Israeli Defense Force, as well as time at a startup called Integrity Project, acquired by Mellanox — where he realised the business itself, and all of its customers, never actually knew how many devices accessed their network, which is a crucial first step in being able to secure that network.

“Every CIO I met I would ask, do you know how many devices you have on your network? And the answer was either ‘I don’t know,’ or big range, which is just another way of saying, ‘I don’t know,'” Sysman said. “It’s not because they’re not doing their jobs but because it’s just a tough problem.” Part of the reason is because IP addresses are not precise enough, and de-duplicating and correlating numbers is gargantuan especially in the current climate of people using not just a multitude of work-provided devices, but a number of their own.

That was what prompted Sysman and his cofounders Ofri Shur and Avidor Bartov to build the algorithms that formed the basis of what Axonius is today. It’s not based on behavioural data as some cybersecurity systems are, but something that Sysman describes as “a deterministic algorithm that knows builds a unique set of identifiers that can be based on anything, including timestamp, or cloud information. We try to use every piece of data we can.”

The resulting information becomes a very valuable asset in itself that can then be used across a number of other pieces of security software to search for inconsistencies in use (the behavioural aspect) or other indicators of malicious activity — specifically following the company’s motto, “Know Your Assets, Identify Gaps, and Automate Security Policy Enforcement” — even as data itself may seem a little pedestrian on its own.

“We like to call ourselves the Toyota Camry of cybersecurity,” Sysman said. “It’s nothing exotic in a world of cutting-edge AI and advanced tech. However it’s a fundamental thing that people are struggling with, and it is what everyone needs. Just like the Camry.”

It’s a formula that has definitely seen a lot of traction with customers — which include companies like Schneider Electric, the New York Times, and Landmark Medical, among others — as well as investors.

“Any enterprise CISO’s top priority, with unwavering consistency, is asset discovery and management. You can’t protect a device if you don’t know it exists.” said Arsham Menarzadeh, general partner at Lightspeed Venture Partners, in a statement. “Axonius integrates into any security and management product to show customers their full asset landscape and automate policy enforcement. Their integrated approach and remediation capabilities position them to become the operating system and single source of truth for security and IT teams. We’re excited to play a part in helping them scale.”

In December 2019, Extra Crunch spoke to a group of investors leading the charge in health tech to discuss where they saw the most opportunity in the space leading into 2020.

At the time, respondents highlighted startups in digital therapeutics, telehealth and mental health that were improving medical practitioner efficiency or streamlining the distribution of care, amongst a variety of other digital health markets that were garnering the most attention.

In the months since, the COVID-19 crisis has debilitated national healthcare systems and the global economy. Weaknesses in healthcare systems have become clearer than ever, while startups and capital providers have struggled to operate while wide swaths of the market effectively shut down.

Given significant volatility and the rapid changes seen in the worlds of healthcare, venture and startups broadly, we wanted to understand which inefficiencies might have been brought to light, what new opportunities might exist for founders looking to reduce friction in healthcare systems, how digital health startups have been impacted and how health tech investing as a whole has changed.

We asked several of the VCs who participated in our last digital health survey to update us on how COVID-19 is impacting digital health startups and broader healthcare systems around the world:

• Annie Case, Kleiner Perkins
• Kristin Baker Spohn, CRV
• Deena Shakir, Lux Capital
• Jennifer Hartt, Ben Franklin Technology Partners
• John Prendergass, Ben Franklin Technology Partners
• Bill Liao, SOSV

Annie Case, Kleiner Perkins

Our current unprecedented global crisis has put a spotlight on digital health. In the last few weeks alone, we have seen what feels like a decade’s worth of societal and regulatory changes that require digital health companies to step up and embrace new challenges and opportunities.

Let’s be real: Now isn’t the ideal time to launch a health tracker. For a majority of us, expectations have dramatically plummeted for step counts, workout minutes and other gamified metrics. But hardware launches will, for the most part, go on.

Fitbit eschewed its normal press event this time out — for increasingly good reason — instead opting to launch the Charge 4 by way of press release. The line is modest, in a wearable category that’s begun to be dominated by smartwatches, but it’s a cornerstone product that continues to do well for the soon-to-be Google-owned hardware company.

The biggest news here is built-in GPS — a big addition for the category — and Spotify control. The Spotify bit uses “Connect & Control,” requiring a premium account to play back music from playlists.

Better news for those stuck at home are a number of yoga and other workouts directly accessible through a Fitbit Premium account. That’s available as a 90-day trial for new users. Other news: on-board software updates include Active Zone Minutes, which provides more detailed workout requirements informed by the WHO and AMA, along with improved sleep measurements.

Lifestyle photo of Fitbit Charge 4

GPS is a nice addition, but nothing particularly groundbreaking here. At the very least, the update will pump a little fresh blood into what’s become a flagging category, as smartwatches (Fitbit’s included) have begun to increasingly suck the air out of the room for other wearables.

The Charge 4 will hit stores “in markets where they are still open” on April 13. It runs $150, or $170 for a special addition that includes some upgraded bands.

Even as the pandemic forces Niantic to shift the way its outdoor-friendly titles are played, the gaming company is charging ahead with its efforts to build out an augmented reality platform which allows users to interact with the real world.

Today, the studio behind Pokémon Go announced that it has acquired 6D.ai, a promising SF-based augmented reality startup focused on building software that allowed smartphone cameras to rapidly detect the 3D layouts of spaces around them.

The companies didn’t share terms of the deal.

Niantic’s bread-and-butter is mobile games, specifically Pokémon Go, but the company has raised nearly a half-billion dollars to do something more, building out a developer platform for augmented reality meant to rival what has been created by Facebook and Apple. Acquiring 6D.ai is an interesting step further there.

Niantic is a consumer games company and 6D.ai was primarily working with enterprise clients. While Niantic will be shutting down 6D.ai’s existing developer tools over the next month, a spokesperson tells TechCrunch that the tech will soon be integrated with the company’s Niantic Real World Platform to help developers “build AR experiences for all types of consumer and business applications, including enterprise.”

We profiled 6D.ai back in 2018 when they were fresh out of Oxford University’s Active Vision Lab. CEO Matt Miesnieks told us at the time how he hoped his startup could one day crowdsource 3D models of cities.

“One of the big things holding back engaging AR is for content to feel like it’s actually physically part of the world,” Miesnieks told TechCrunch. “To really make that effect possible, you need to have a 3D model of at least your room, if not the whole world.”

Both Apple and Facebook have made considerable investments in their augmented reality platforms, hoping to bring developers aboard and mount an early lead. Even cursory adoption of the technology has been slower than many in the tech industry have expected, and has, if anything, further isolated Apple and Facebook’s early advantages.

Niantic does host AR’s most popular consumer success story with Pokémon Go, a title which Niantic is still reportedly raking in cash from. Analytics firm SensorTower estimated that the 2016 title had its best year ever in 2019, pulling in some $900 million in revenue. The breakout success of “Go” has not been mirrored as dramatically in the early reception of the studio’s major launch of 2019, Harry Potter: Wizards Unite.

The ultimate question for Niantic is whether it’s in their best interest to aggressively compete on the tech platform side with acquisitions like these when the timeline of returns is so uncertain and their competitors can likely afford much longer bouts of uncertainty.

Following the acquisition, 6D.ai co-founder Victor Prisacariu will be joining Niantic’s London office with Miesnieks opting for an advisory role going forward. The startup had not fully disclosed its funding. Its seed round was led by Niko Bonatsos at General Catalyst and the startup also received funding from Oxford. Angel investors in 6D included Amitt Mahajan, Jacob Mullins and Greg Castle, among others.

SpaceX is readying for its first flight with astronauts on board – Demo-2, which is technically the last demonstration mission that is required before the Crew Dragon capsule is officially certified to start flying regular missions. Demo-2’s mission scope has been adjusted somewhat so that astronauts Bob Behnken and Doug Hurley will be actually doing some shift work on the International Space Station, but Crew-1 is the official first operational mission of the SpaceX human-rated spacecraft, and now we know a few more details about who that will carry.

The Japan Aerospace Exploration Agency (JAXA) has announced that JAXA astronaut Noguchi Soichi will be on the first Crew Dragon mission once it officially is declared operational, and the agency said on Tuesday that Noguchi has begun training for his trip to the ISS. Noguchi has been to the ISS twice previously on other missions, including between 2009 and 2010 on via a Russian Soyuz launch, and during 2005 when he actually flew aboard the Space Shuttle Discovery in order to help assemble part of the station.

SpaceX and NASA are currently readying for Demo-1, which as mentioned will be crewed by two NASA astronauts. That should take place sometime in mid to late May if the schedule holds to current timing plans. Once that’s complete, Crew-1, which is intended to have a complement of three people on board, should begin sometime in the later half of 2020.

Today, DataStax, the commercial company behind the open source Apache Cassandra project, announced an open source Kubernetes operator developed by the company to run a cloud native version of the database.

When Sam Ramji, chief strategy officer at DataStax, came over from Google last year, the first thing he did was take the pulse of customers, partners and community members around Kubernetes and Cassandra, and they found there was surprisingly limited support.

While some companies had built Kubernetes support themselves, DataStax lacked one to call its own. Given that Kubernetes was born inside Google, and the company has widely embraced the notion of containerization in general, Ramji wanted there to be an operator specifically designed by the company to give customers a general starting point with Kubernetes.

“What’s special about the Kube operator that we’re offering to the community as an opinion — one of many — is that we have done the work to generalize the operator to Cassandra wherever it might be implemented,” Ramji told TechCrunch.

Ramji says that most companies that have created their own Kubernetes operators tend to specialize for their own particular requirements, which is fine, but as the company built on top of Cassandra, they wanted to come up with a general version that could appeal broader range of use cases.

In Kubernetes, the operator is how the DevOps team packages, manages and deploys an application, giving it the instructions it needs to run correctly. DataStax has created this operator specifically to run Cassandra with a broad set of assumptions.

Cassandra is a powerful database because it stays running when many others fall down. As such it is used by companies as varied as Apple, eBay and Netflix to run their key services. This new Kubernetes implementation will enable anyone who wishes to run Cassandra as a containerized application, helping push it into a modern development realm.

The company also announced a free help service for engineers trying to cope with increased usage on their databases due to COVID-19. They are calling the program, “Keep calm and Cassandra on.” The engineers charged with keeping systems like Cassandra running are called Site Reliability Engineers or SREs.

“The new service is completely free SRE-to-SRE support calls. So our SREs are taking calls from Apache Cassandra users anywhere in the world, no matter what version they’re using if they’re trying to figure out how to keep it up to stand up to the increased demand,” Ramji explained.

DataStax was founded in 2010 and has raised over $190 million, according to PitchBook data.