Author: azeeadmin

Edtech giant Duolingo set an initial price range for its impending IPO today. The unicorn expects to price in its public debut at $85 to $95 per share, selling 3,700,000 in the deal.

Another 1,406,113 shares are being sold by existing shareholders, and 765,916 shares are being offered to underwriting banks as part of the transaction. All told, the company may see 5,872,029 shares trade hands in its IPO, worth some $557,842,755. Duolingo itself can raise as much as $424,262,020 in gross proceeds at its current range, provided that its underwriting banks exercise their option.

The IPO is a material fundraising event for the company. Before its public offering, the largest single hit of capital that Duolingo raised was a $45 million Series D from 2015.

Let’s dig into what Duolingo, which we profiled in much more detail here, is worth at its IPO price and peek at its preliminary second-quarter results. Our goal will be to understand its valuation in the context of its growth. From there, we’ll be able to draw some general conclusions about the larger edtech startup market.

What’s it worth?

After its IPO, Duolingo will have 35,892,152 shares outstanding, sans its underwriter’s option. At the lower and upper bounds of its simple IPO valuation, Duolingo is worth $3.1 billion to $3.4 billion.

As with every company going public, Duolingo’s IPO valuation rises if we include shares that have vested in RSU or options form, but have yet to be exercised. In the case of Duolingo, its share count rises to 43,776,271, per an initial TechCrunch analysis of the company’s RSU and options details provided in its S-1 filing. At that share count, Duolingo is worth $3.7 billion to $4.2 billion.

For every number provided, the company’s underwriter’s option adds modestly.

All valuations listed above are a premium over the company’s final private price set during its November 2020 Series H round of funding. That $35 million round valued the company at around $2.4 billion.

At first blush, then, the company’s IPO price range feels strong, regardless of whether we lean on simple or fully diluted share counts to come to a new price for the firm. But how do its new valuations stack against its recent revenue? Let’s find out.

I’ve fundraised a lot. Tactically, fundraising is a skill like any other. You get better the more you do it. But practicing gets you nowhere if you don’t have a strong foundation in understanding a fundraising round’s core components.

As a founder, you will understand less than investors when it comes to fundraising. For investors, negotiating with founders is their full-time job. For founders, fundraising is just a small part of building a business. Understanding the basics of venture financing can help founders raise on better terms.

We’ll cover:

• How financing works: SAFEs versus equity rounds,
• How much to raise
• How to arrive at your valuation

How financing works: SAFEs versus equity rounds

Venture financing takes place in rounds. The first stage is the pre-seed or seed round, then a Series A, then a Series B, then a Series C, and so on. You can continue to raise funding until the company is profitable, gets acquired or goes public.

We will focus here on seed-stage funding — your very first funding round.

SAFEs

Post-money SAFEs are the most common way to raise funding. These documents are used by Y Combinator, angel investors, and most early-stage funds. You should raise on post-money SAFEs using standard documents created by YC. Standard documents have consistent terms that have been drafted to be fair to both investors and founders.

By using the standard post-money SAFE, your negotiation can focus on the two terms that matter:

1. Principal: The amount you want to raise per investor.
2. Valuation cap: The value of your business.

Blue Origin is set to launch its fully reusable New Shepard spacecraft with humans on board for the first time on Tuesday, and it’s sending Amazon founder and billionaire Jeff Bezos up along with his brother and two record-setting astronauts. The launch live stream above is scheduled for 6:30 AM CDT (7:30 AM EDT/4:30 AM PDT), with the actual liftoff targeted for 8 AM CDT (9 AM EDT/6 AM PDT).

The full flight profile includes a takeoff from Blue Origin’s remote West Texas facility, followed by an ascent to a height of roughly 62 miles above the Earth’s surface. Those on board, including Bezos, his brother Mark, 82-year old Wally Funk and 18-year old Oliver Daemen will then experience between 3 and 4 minutes of weightlessness inside the New Shepard capsule, before it returns to Earth slowed by parachutes for a touchdown in the West Texas desert and then a recovery by Blue Origin staff.

This is not significantly different in terms of timing or sequence from the 15 prior New Shepard flights that Blue Origin has flown, but this is the first one with humans on board (including the world’s richest), so it’s obviously the one to watch.

The rumors of a CNN streaming service were true. The network has unveiled a CNN+ service that will offer a blend of live and on-demand shows that are “separate and distinct” from existing TV coverage. It will debut sometime in the first quarter of 2022. CNN hasn’t narrowed down the price, but lead executive Andrew Morse told Variety in an interview that there wouldn’t be an ad-supported tier at launch.

The centerpiece, as you’d expect, will be the live material. CNN+ plans to offer eight to 12 hours of in-depth topical coverage and “lifestyle” material every day, with both veterans and newcomers at the helm. You’ll also have chances to interact with anchors and experts in real-time discussions. This won’t be a digital replica of CNN’s usual news, then, but you may have reasons to tune in every day.

The on-demand catalog unsurprisingly taps into CNN’s existing collection, including shows like Anthony Bourdain: Parts Unknown and United Shades of America. There will be original shows and movies for the internet service, although CNN+ won’t reveal those until later in 2021.

Officially, Morse said CNN+ wouldn’t be bundled or otherwise tie into HBO Max despite the WarnerMedia connection. Variety sources, however, claimed there was a “strong probability” the service would be bundled with HBO Max and Discovery+ after WarnerMedia and Discovery finalize their merger.

Morse considered the CNN+ launch the largest the network has had since it started TV service in June 1980. It was also a chance to experiment with formats that blur distinctions between entertainment and news, the executive added.

The question, of course, is whether or not viewers will bite. CNN has had success with long-form content like the late Anthony Bourdain’s shows, but it’s not clear if people are ready to pay a monthly fee to see them. There’s also the matter of streaming service overload — you might not be thrilled to subscribe to yet another offering just to be sure you catch everything CNN has to offer.

Editor’s note: This post originally appeared on Engadget.

Uber has announced the first major expansion of its grocery delivery service in the US. The company is more than doubling the number of service areas this week to north of 400 cities and towns. It now serves several major markets through the Uber and Uber Eats apps, including San Francisco, New York City and Washington DC.

The rapid expansion was partly fueled by a partnership with Albertsons Companies and its 1,200 grocery stores across the country. Albertsons owns brands including Safeway, Jewel-Osco, Acme, Tom Thumb and Randalls. Uber also offers delivery from regional chains such as Southeastern Grocers and New York’s Red Apple Group. Uber Pass and Eats Pass subscribers don’t need to pay delivery fees on grocery orders over $30.

Grocery delivery became an important component of Uber’s business during the toughest parts of the COVID-19 pandemic, because the number of rides people were taking dropped significantly. The company is also dealing with a driver shortage that led to higher prices for rides. Uber bought several delivery startups over the last couple of years to fuel its growth in that sector, such as Cornershop, Postmates and Drizly.

Editor’s note: This post originally appeared on Engadget.

Velodyne Lidar CEO Anand Gopalan is leaving the lidar company at the end of July as the sensor supplier continues to struggle with internal drama.

Gopalan, who was previously CTO, is leaving the top leadership position after about a year and a half on the job.

Velodyne said Monday in a statement that a team of top executives that includes COO Jim Barnhart, CFO Drew Hamer, Chief People Officer Kathy McBeath and Chief Commercial Officer Sinclair Vass will run the company as a search for a new chief executive is conducted. The company didn’t disclose why Gopalan was leaving.

Gopalan’s resignation comes after months of internal drama and business setbacks for a company that has been considered the leading supplier of lidar, the light detection and ranging radar sensor that is considered a critical component to commercially deploy autonomous vehicles.

The resignation is the latest in a series of issues that have cropped up since Velodyne Lidar struck a deal to merge with special purpose acquisition company Graf Industrial Corp. At the time, it was reported that Velodyne’s founder David Hall, along with backers Ford, Chinese search engine Baidu, Hyundai Mobis and Nikon Corp. would keep an 80% stake in the combined company. Hall became executive chairman and Gopalan remained CEO position.

Hall and his wife Marta Thoma Hall clashed with the SPAC that acquired Velodyne. In February, David Hall was removed as chairman of the board and Marta Thoma Hall lost her chief marketing officer position following an investigation by the board of “inappropriate behavior.”

Meanwhile, Ford, which had held almost 13.1 million shares — a value of about $244 million — in Velodyne at the close of the third quarter of 2020, sold off its stake by the end of the year.

Velodyne sensors had been used by Ford in its autonomous vehicle testing. The intention was that those would be the go-to sensor for its autonomous vehicles once they were deployed commercially.

Veoneer had even announced in 2019 that it was leveraging Velodyne’s technology for a contract to supply the sensor to Ford (and by extension its autonomous vehicle technology supplier Argo AI). But Veoneer reported in February that it had lost its contract.

Argo, which had acquired lidar company Princeton Lightwave, unveiled in May details on a long-range lidar sensor that it claims has the ability to see 400 meters away with high-resolution photorealistic quality and the ability to detect dark and distant objects with low reflectivity. With so much progress internally, Argo and Ford staked their future plans on its own lidar.

In a May letter, David Hall blamed the SPAC, specifically the SPAC-appointed members of the combined company’s board, for its poor financial performance and called for the resignation of Gopalan and two board members.

As part of Velodyne’s announcement on Gopalan’s resignation, the company restated its business outlook for 2021 revenue, noting that its guidance of between $77 million and $94 million remains unchanged. Velodyne will report second quarter financial results August 5.

You’ve just sat down to dinner, and your wearable device reminds you to get up and get in your steps for the day. Maybe the app has a point, but odds are, you’ll push the notification to the side. The founders of Sweetch, an Israeli company creating its own AI-driven behavior change app, are betting that if you got that notification in a different way, you’ll be more likely to take its advice. 

Yossi Bahagon, the founder of Sweetch, describes the company’s approach to digital reminders as a mixture of artificial intelligence and emotional intelligence. The app will use AI to analyse “lifeprint” data picked up through a smartphone. Then it delivers messages to when you might be more likely to respond to them and in a “tone of voice” that encourages compliance. 

For instance if you have meetings on Mondays between 12 and 3, but still want to get in some exercise, Sweetch won’t suggest getting a workout in during those times, or shame you for sitting through a meeting rather than getting a run in. 

“It’s about ongoing hyper-personalized engagement that increases the likelihood of the patient doing what he or she needs to do,” says Bahagon. 

On Monday, Sweetch announced a $20 million Series A round led by Entreé Capital. Other investors include Noaber, Kortex Ventures, Insurtech VC, Fin TLV Ventures, and existing investors Philips, OurCrowd, and Qure Ventures. 

Bahagon is a family physician by training, but he’s spent the majority of his career in the digital health arena. In 2008 Bagahon founded the digital health division of Clalit Health Services, a non-profit insurance and medical services provider that currently insures 60 percent of the Israeli population. His previous company, Luminox Health, was acquired by Israeli investor platform OurCrowd in 2016, and Bahagon stayed on to manage the fund’s digital health arm. 

Sweetch, which was founded in 2013, is yet another digital health venture for Bahagon –  this time aimed at increased patient compliance. The app has already generated some interest, and was one of five apps selected from over 400 to participate in the Bayer G4A program, something like an accelerator developed by the pharmaceutical giant. 

So far, Sweetch CEO Yoni Nevo says the app has “tens of thousands of users,” (the company would not provide a specific number).

It’s currently being used in patients with cardiovascular diseases, diabetes, obesity, hypertension, rheumatoid arthritis, inflammatory bowel disease, and, in a bit of a departure from the rest: breast cancer treatment. 

Sweetch isn’t designed for users to download at will on the app store (you can download it, but won’t get far without an access code); their go-to market strategy is instead to partner with healthcare organizations, pharma companies, payers or providers. Then providers might prescribe Sweetch alongside the actual treatment to encourage them to stick with it.

There is evidence that people don’t always follow doctors’ orders – particularly when it comes to chronic conditions. One 2017 report from the CDC notes that one in five prescriptions written in the United States are never filled, and up to 50 percent of medicines were taken incorrectly (at the wrong time, wrong dose, etc). 

Improving patient compliance, though, is a more complicated problem. The CDC report outlined a few solutions – some of which have more to do with the healthcare system than they do with health tech. Those include lowering economic barriers to medication, increasing team-based healthcare (your pharmacist and doctor coordinating prescription refills, for instance), and increasing access to healthcare in the first place. 

The report does highlight an avenue for health information technology to help address the non-compliance problem (it specifically mentions e-prescribing software). 

Tech, like Sweetch, can only address the non-compliance problem in medicine if it doesn’t have a non-compliance problem of its own. To that end, Bahagon says the app has a record of user retention. “Even after 24 months, we still see around 45% of the patients that started using the system continue to use it,” he says.  

User retention is a good sign for any app developer. But in the health space, it’s more complicated. Some studies suggest that consumer ratings are poor markers of how well these apps work to improve outcomes (you might like an app and use it, but it doesn’t make you any healthier). 

In that regard, Sweetch does have a trial under its belt, conducted at two sites in the Johns Hopkins Clinical Research Network. 

The app was tested on 55 adults with prediabetes over the course of three months. Forty-seven of the participants finished the trial, and on average, they increased their physical activity by an average of 2.8 MET-hours (they may have actually exercised for shorter periods, but their intensity was the equivalent of 2.8 hours of work), and lost about 1.6 kilograms. 

The users also lowered their A1c levels, a key measure of average blood sugar. Prediabetic adults usually have an A1c between 5.7 and 6.5 percent, and those in this trial reduced their A1c levels by about .1 percent (the study refers to that reduction as “clinically meaningful.”) 

This study didn’t specifically compare Sweetch to any other prediabetes interventions. However, a study on that is upcoming. In a December 2020 interview, Bahagon noted that Sweetch had received a grant from the National Institutes of Health to continue testing Sweetch against other “gold standard” interventions for diabetes. 

Nevo and Bahagon didn’t provide concrete updates on the project, but noted that “in a month or so” the company may announce updates on the NIH funding and upcoming randomized controlled trials. 

In the meantime, the company plans to use the Series A funding to expand into markets in the US and Brazil, grow the user base, and enhance the platform to provide specific and tailored recommendations for even more conditions. 

Microsoft has secured a court order to take down several malicious “homoglyph” domains that were used to impersonate Office 365 customers and commit fraud. 

The technology giant filed a case earlier this month after it uncovered cybercriminal activity targeting its customers. After receiving a customer complaint about a business email compromise attack, a Microsoft investigation found that the unnamed criminal group responsible created 17 additional malicious domains, which were then used together with stolen customer credentials to unlawfully access and monitor Office 365 accounts in an attempt to defraud the customers’ contacts.

Microsoft confirmed in a blog post published Monday that a judge in the Eastern District of Virginia issued a court order requiring domain registrars to disable service on the malicious domains, which include “thegiaint.com” and “nationalsafetyconsuiting.com,” which were used to impersonate its customers.

These so-called “homoglyph” domains exploit the similarities of some letters to create deceptive domains that appear legitimate. For example, using an uppercase “I” and a lowercase “l” (e.g. MICROSOFT.COM vs. MlCROSOFT.COM). 

“These were together with stolen customer credentials to unlawfully access customer accounts, monitor customer email traffic, gather intelligence on pending financial transactions, and criminally impersonate [Office 365] customers, all in an attempt to deceive their victims into transferring funds to the cybercriminals,” Microsoft said in its complaint, adding that the cybercriminals “have caused and continue to cause irreparable injury to Microsoft, its customers, and the public.”

In one instance, for example, the criminals identified a legitimate email from the compromised account of an Office 365 customer referencing payment issues. Capitalizing on this information, the criminals sent an email from a homoglyph domain using the same sender name and nearly identical domain. They also used the same subject line and format of an email from the earlier, legitimate conversation, but falsely claimed a hold had been placed on the account by the chief financial officer and that payment needed to be received as soon as possible.

The cybercriminals then attempted to solicit a fraudulent wire transfer by sending new wire transfer information appearing to be legitimate, including using the logo of the company they were impersonating.

Microsoft notes that while these criminals will typically move their malicious infrastructure outside the Microsoft ecosystem once detected, the order — granted on Friday — eliminates defendants’ ability to move these domains to other providers. 

“The action will further allow us to diminish the criminals’ capabilities and, more importantly, obtain additional evidence to undertake further disruptions inside and outside court,” said Amy Hogan-Burney, general manager of Microsoft’s Digital Crime Unit.

The tech giant hasn’t yet disclosed the identities of the cybercriminals responsible for the BEC attacks, but said that “based on the techniques deployed, the criminals appear to be financially motivated, and we believe they are part of an extensive network that appears to be based out of West Africa.” The targets of the operation were predominantly small businesses operating in North America across several industries, according to Microsoft.

This isn’t the first time Microsoft secured a court order to step up its fight against cybercriminals and similar attacks, which research shows affected 71% of businesses in 2021. Last year, a court granted the tech giant’s request to seize and take control of malicious web domains used in a large-scale cyberattack targeting victims in 62 countries with spoofed COVID-19 emails. 

If you spent any time this year desperately trying to figure out what the heck NFTs are, you probably have Dapper Labs CEO Roham Gharegozlou to thank for that.

His startup’s crypto trading card marketplace NBA Top Shot went viral earlier this year with users dropping hundreds of millions of dollars on digital NBA collectibles. At the end of last year, the Top Shot platform was averaging around $20K-30K in digital collectibles sales volume per day. By late February, the platform hit an all-time-high, moving more than $45 million in trading volume, according to analytics site Cryptoslam, as a wave of crypto newbies descended on the platform.

Within months, Gharegozlou’s company went from a niche crypto gaming startup largely known to industry insiders to locking in a hulking reported $7.5 billion valuation as venture capitalists chased the opportunity to get a piece of it.

Top Shot’s sudden popularity triggered a massive moment for NFTs, with billions of dollars moving through an asset class that few had heard of months prior. We’re thrilled to have Gharegozlou joining us at Disrupt this September 21-23, to discuss the future of NFTs, crypto gaming and the decentralized internet.

NBA Top Shot was an industry anomaly, but it wasn’t even Dapper’s first industry-shaking hit. In 2017, CryptoKitties — another trading game where users could swap digital cats — caught on among early adopters and brought the nascent Ethereum network to a crawl, inspiring the developers of the popular blockchain to make a number of key changes over time. Gharegozlou has his own vision for the future of the crypto web; Dapper’s big bet of late is on the proprietary Flow blockchain that underpins Top Shot. The company is gunning to bring more gaming platforms onboard to take advantage of the faster, more energy-efficient blockchain network, and investors are betting hundreds of millions of dollars on their ability to capture the market.

With the larger NFT market’s sales volume sliding significantly in recent months, can it make a comeback? Will developers move away from the popular Ethereum blockchain to embrace Dapper’s more centralized network? Could NFTs reshape the entire online economy? We’re excited to dig into some of these questions with Gharegozlou onstage at Disrupt — it’s a session you won’t want to miss.

Join him and more than 10,000 of the startup world’s most influential people at Disrupt 2021 online this September 21-23. Get your pass to attend now for less than $99 for a limited time!

Zoom, a well-known video conferencing company, will buy Five9, a company that sells software allowing users to reach customers across platforms, and record notes on their interactions. As TechCrunch noted this morning, the deal is merely “Zoom’s latest attempt to expand its offerings,” having “added several office collaboration products, a cloud phone system, and an all-in-one home communications appliance” to its larger software stack in recent quarters. Both companies are publicly traded.

But the Five9 deal is in a different league than its previous purchases. Indeed, the $14.7 billion transaction represents a material percentage of Zoom’s own value. That tells us that the company is not simply making a purchase in Five9, but is instead making a large bet that the combination of its business and that of the smaller company will prove rather accretive.

Zoom is worth $101.8 billion as of the time of writing, with the company’s shares slipping just over 4% today; the stock market is largely off this morning, making Zoom’s share price movements less indicative of investor reaction to the deal that we might think. Still, it doesn’t appear that the street is excessively thrilled by news of Zoom’s purchase.

That perspective may be reasonable, given that the Five9 transaction is worth nearly 15% of Zoom’s total market cap; the company is betting a little less than a sixth of its value on a single wager.

Not that Five9 doesn’t bring a lot to the table. In its most recent quarter, Five9 posted $138 million in total revenue, growth of 45% on a year-over-year basis.

Still, as Zoom reported in an investor deck concerning the transaction, the smaller company’s growth rate pales compared to its own:

Image Credits: Zoom investor deck

This is where the deal gets interesting. Note that Five9’s revenue growth rate is a fraction of Zoom’s. The larger company, then, is buying a piece of revenue that is growing slower than its core business. That’s a bit of a flip from many transactions that we see, in which the smaller company being acquired is growing faster than the acquiring entity’s own operations.

Why would Zoom buy slower growth for so very much money? One thing to consider is that Five9’s most recent quarterly growth rate is quicker than the growth rate that it posted over the last 12 months. That implies that Five9 has room to accelerate growth compared to its historical pace, bringing its total pace of top-line expansion closer to what Zoom itself manages.