Category: UNCATEGORIZED

“If it smells, that’s how they’re going to receive it.”

While that claim would likely make most D2C founders cringe, for founder Chris Alston, it’s part of the magic of his company, Mov. The upstart, based in Los Angeles, connects fans to the game-worn apparel of their favorite athletes through a sweepstakes-style model. And in the market of sports memorabilia, authenticity (even if it includes sweat, blood and tears) is everything.

“We send it as is,” he said. “We want to make it a really special experience for the fans.”

Mov, launched just a few weeks ago, is more than a rebranded eBay or NBA auction site. The company, founded by Alston, his brother Brandon and Jacqueline Pounder, uses a sweepstakes-style model to raise money for a game-worn item. With each sale, 70% of money raised goes toward a cause of the athlete’s choice. The remaining 30% goes to Mov employees and operations. Causes currently listed on the website include Milwaukee Freedom Fund, Girls and Boys Club of Portland and With Us Foundation.

“Athletes wear these game-worn items, and our platform gives them a way to donate and make an impact without any extra time on them and their busy schedules,” Alston said. All an athlete has to do is ship their item to a Los Angeles warehouse after the game, and Mov will get it into the winner’s hands.

Like any sweepstakes model, there’s no purchase necessary to enter. Everyone gets one free ticket to win an item, whether it’s CJ McCollum’s Li-Ning Yushuai 13 sneakers or Pat Connaughton’s Equality jersey. However, if a fan wants to buy more tickets to increase their chances, they can do so for $1 to $2 a ticket.

“Typically with game-worn gear, it’s whoever has the most money,” Alston said. “For us, we’re allowing anyone to enter to win for one ticket, and so we’re decreasing the barrier to entry.”

Alston grew up surrounded by philanthropy and sports. His grandparents took their own school board to court, and helped lead desegregation efforts in Virginia Schools. His brother is a professional basketball player and Alston himself played college football at Columbia University. Eventually Alston dropped out of Columbia to pursue tech entrepreneurship.

With that background, it would have made sense that Alston landed on creating a product that combines charitable causes with athletes. However, the first iteration of Mov looked far different than it does today. The product started as a video e-commerce platform, basically creating a video version of eBay. After Mov had difficulty scaling its marketplace, he thought of new ways to define his market. He landed on the network of athletes that he and his brother know well — and the fact that a not-so-tiny NBA rule change had recently passed.

In 2018, NBA players were allowed to start wearing any sneaker color of their choice. While it might be a small deal to some, the ability to wear different kinds of sneakers quickly turned into players repping charities or causes on their gear during games. Alston saw Mov as a way to take gear that athletes either throw out or give away and repurpose it for a good cause.

The success of Mov, from both a charity and revenue perspective, depends on how many fans sign up for its service and eventually pay for a chance to win an item. While the founder would not disclose total users just yet, he finds optimism in how much money an item is able to make through Mov. For example, Pat Connaughton’s Jersey made $2,164 on Mov versus $560 on the NBA auction site.

“During this crazy time, crazy year, we’re really trying to maximize how everyone can give back,” he said.

PayPal this week laid out its vision for the future of its digital wallet platform and its PayPal and Venmo apps. During its third-quarter earnings on Monday, the company said it plans to roll out substantial changes to its mobile apps over the next year to integrate a range of new features including enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto support, subscription management, buy now/pay later functionality, and all of Honey’s shopping tools.

While PayPal had spoken in the past about bringing Honey’s capabilities into PayPal, CEO Dan Schulman detailed the integrations PayPal has in store for the deal-finding platform it bought last year for $4 billion, as well as a time table for both this and the other app updates it has in store.

The Honey acquisition had brought 17 million monthly active users to PayPal. These users turned to Honey’s browser extension and mobile app to find the best savings on items they want to buy, track prices and more.

But today, the Honey experience still remains separate from PayPal itself. That’s something the company wants to change next year.

According to Schulman, the company’s apps will be updated to include Honey’s shopping tools like its Wish List feature that allows you to track items you want to buy, price monitoring tools that alert you to savings and price drops, plus its deals, coupons and rewards. These tools will become part of PayPal’s checkout solution itself.

That means the company will be able to track the customer from the initial deal-hunting phase where they’re indicating their interest in a certain product, target them with savings and offers, then guide them through its checkout experience all in one place.

PayPal will also provide “anonymous demand data” to merchants based on consumer engagement with Honey’s tools to help them drive sales, the company said.

What’s more, PayPal put timeline on the Honey integrations and the other updates it plans to roll out over the course of the next year.

Bill Pay will start to roll out this month, PayPal said, with a large redesign of the digital wallet experience expected for the first half of 2021. Much of the new functionality will be arriving in the second quarter and the second half of the year, with a goal of having the majority of the changes rolled out by the end of next year.

This also includes PayPal’s plans for cryptocurrencies, announced at the end of October. The company aims to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first, initially in the U.S.

Speaking to investors during the earnings call, Schulman also noted when PayPal plans to bring crypto to more users and geographies. He said the ability to buy, sell and hold cryptocurrencies will first arrive in the U.S., then will roll out to international markets and the Venmo app in the first half of next year. (Currently, PayPal is offering U.S. users to join a waitlist for the new crypto features in-app).

This change will allow PayPal’s users to shop using cryptocurrencies across the company’s 28 million merchants without requiring additional integrations on merchants’ part. The company explained this is due to how it will handle the settlement process, where users will be able to instantaneously transfer crypto into fiat currency at a set rate when checking out with PayPal merchants.

PayPal also recently joined the “buy now, pay later” race with its new “Pay in 4” installment program that lets consumers split purchases into 4 payments. This debuted in France ahead of its late August U.S. launch and has since rolled out to the U.K. This too, will become more integrated into the company’s apps in the months ahead.

Venmo — which the company expects to reach $900 million in revenues next year — will see the expansion of business profiles, and will gain crypto capabilities, more basic financial tools and shopping tools, as well as a revamp of the “Pay with Venmo” checkout experience.

Schulman referred to the company’s plans to overhaul its Venmo and PayPal apps as a “fundamental transformation,” due to how much new functionality they will include as the changes roll out over the next year as well as the new user experience — basically, a redesign — that will allow people to move easily from one experience to the next instead of having to change apps or use a desktop browser, for example.

PayPal’s earnings hadn’t excited Wall St. investors this week, sending the stock down on its lack of 2021 guidance. But the year ahead for PayPal’s digital wallet apps looks to be an interesting one.

 

Do you find expression “the sky’s the limit” well, limiting? Join a global community of brilliant visionaries, makers and investors on December 16-17 for TC Sessions: Space 2020, an online conference dedicated to moving beyond the confines of this world through innovative tech and to creating stellar startup opportunities.

Speaking of a stellar opportunity, this one lets you navigate your startup into the orbit of the space industry’s leading experts and decisions makers. We’re talking folks from NASA, the U.S. military and VCs determined to finance pioneering space startups. Get an Early-Stage Startup Exhibitor Package to showcase your tech and talent — and impress the people who can change your startup’s trajectory. Note: Only eight spots left, and early-bird pricing ends November 13 at 11:59 p.m. (PT).

The $360 exhibitor pass includes a digital exhibition space, the ability to gather leads who visit your exhibit space and three tickets to the conference for your coworkers. In a classic, “but wait, there’s more” moment, all exhibitors will be able to pitch to conference attendees from around the world. We’re talking founders, engineers, investors, tech journalists, potential customers and collaborators from the public sector and private sectors — not to mention people who hold the purse strings at NASA and the military.

Super Bonus: Exhibitors also get to hear from with the following organizations to discuss how to access grant money.

TechCrunch events always feature top-level industry speakers, and you can expect nothing less at TC Sessions: Space. Here’s a sample from the event agenda — and we’ll add a few surprises in the coming weeks.

From Space Rock Returns to Financial Returns: An investor panel — with Chris Boshuizen (Data Collective DCVC), Mike Collett (Promus Ventures) and Tess Hatch (Bessemer Venture Partners). Some investors spend a lot of their time looking to the stars for the next venture capital opportunity. It’s a market unlike any other, but does that change the math on equity-based investment?

How to Get the Air Force to Buy Your Stuff — We’ll talk with Will Roper, U.S.A.F. Assistant Secretary for Acquisition, Technology & Logistics, about the best ways to understand what the Air Force needs and how to sell it to them.

Public-private Partnerships in the Domain of Space Defense — General Jay Raymond, the head of the U.S. Space Force, talks about what it takes to secure an entirely new war-fighting domain, and how the newest branch of the U.S. military will be looking to private industry to make it happen.

Is your startup ready for this stellar opportunity? Secure your Early-Stage Startup Exhibitor Package before the countdown to savings ends and prices go up on November 13 at 11:59 p.m. (PT).

Is your company interested in sponsoring TC Sessions: Space 2020? Click here to talk with us about available opportunities.

Online education tools continue to see a surge of interest boosted by major changes in work and learning practices in the midst of a global health pandemic. And today, one of the early pioneers of the medium is announcing some funding as it tips into profitability on the back of a pivot to enterprise services, targeting businesses and governments who are looking to upskill workers to give them tech expertise more relevant to modern demands.

Udacity, which provides online courses and popularized the concept of “nanodegrees” in tech-related subjects like artificial intelligence, programming, autonomous driving and cloud computing, has secured $75 million in the form of a debt facility. The funding will be used to continue investing in its platform to target more business customers.

Udacity said that part of the business is growing fast, with Q3 bookings up by 120% year-over-year and average run rates up 260% in H1 2020.

Udacity said that customers in the segment include “five of the world’s top seven aerospace companies, three of the Big Four professional services firms, the world’s leading pharmaceutical company, Egypt’s Information Technology Industry Development Agency, and three of the four branches of the United States Department of Defense”, which work with Udacity to build tailor-made courses for their specific needs, as well as use off-the-shelf content from its catalogue.

Udacity also works with companies to build programs as part of their CSR remits, and with tech companies like Microsoft to build programs to get more developers using their tools.

“We’re seeing tremendous demand on the enterprise and government side,” said Gabe Dalporto, Udacity’s CEO who joined the company in 2019. “But to date it’s mostly been inbound, with enterprises, Fortune 500 companies and government organizations coming in and wanting to work with us. Now it’s time to build out a sales team to go after them.”

The news today is a welcome turn of events for a company that has been in the spotlight over the years for less rosy reasons, partly because it found it challenging to land on a profitable business model.

Founded nearly a decade ago by three robotics specialists including Sebastian Thrun, the Stanford professor who at the time was instrumental in building and running Google’s self-driving car and larger moonshot programs, Udacity initially saw an opportunity to partner with colleges and universities to build online tech courses (Thrun’s academic standing, and the vogue for MOOCs, were possibly two fillips for that strategy).

After that proved to be too challenging and costly, Udacity pivoted to positioning itself as a vocational learning provider targeting adults, specifically those who didn’t have the hours or money to embark on full-time courses but wanted to learn tech skills that could help them land better jobs.

That resulted in some substantial user growth, but still no profit. Eventually, the company faced multiple rounds of layoffs as it restructured and gravitated closer to its current form.

Currently, the company still provides direct-to-consumer (direct-to-learner?) courses, but it won’t be long, Dalporto said, before enterprise and government customers account for about 80% of the company’s business.

Previously, Udacity had raised nearly $170 million from a pretty illustrious group of investors that include Andreessen Horowitz, Ballie Gifford, CRV, Emerson Collective and more. This latest tranche is coming in the form of a debt facility from a single company, Hercules Capital.

Dalporto said the decision to take the debt route came after initially getting a number of term sheets for an equity round.

“We had multiple term sheets on the equity side, but then we received an unsolicited debt term sheet unsolicited,” he said. That led to the company modelling out the cost of capital and dilution, he said, and “it turned out it was the better option.” For now, he added, equity was “off the table” but it may consider revisiting the idea en route to a public listing. “For the foreseeable future, we are cash flow positive so there is no compelling reason right now, but we might do something closer to an IPO.”

Being a debt facility, this funding does not mean a revisiting of Udacity’s valuation. The company was last capitalized five years ago at $1 billion, but Dalporto would not comment on how that had changed in the (uncompleted) equity term sheets it had received.

Education is in session

The interest Udacity is seeing — both from investors and as a company — is part of the bigger spotlight that online education companies have had in the last year. In K-12 and university education, the focus has been on building better technology and content to help students stay engaged and continue learning even when they cannot be in their normal physical classrooms as schools, districts, governments and public health officials implement social distancing to slow the spread of COVID-19.

But that’s not the only classroom where online education is getting called on. In the world of business, organizations that have also gone remote because of the pandemic are facing a matrix of challenges. How can they keep employees productive and feeling like part of a team when they no longer work next to each other? How do they make sure their workforces have the skills they need to work in the new environment? How do they make sure their own businesses are equipped with the right technology, and the expertise of people to run it, for this latest and future iterations of “work”? And how can governments make sure their economies don’t fall off a cliff as a result of the pandemic?

Online education has been seen as something of a panacea for all of these questions, and that has spelled a lot of opportunity for tech companies building online learning tools and other infrastructure — with others including the likes of Coursera, LinkedIn, Pluralsight, Treehouse and Springboard in the area of tech-related courses and learning platforms for workers.

As with other market segments like e-commerce, this isn’t about a trend emerging out of the blue, but about it accelerating much faster than people projected it would.

“Given Udacity’s growth, focus on sustainable business practices, and expanding reach across multiple industries, we are excited to provide this investment. We look forward to working with the company to help them sustain their impressive global growth, and continued innovation in upskilling and reskilling,” said Steve Kuo, Senior MD and Technology Group Head at Hercules Capital, in a statement.

In the areas of enterprise and government, Dalporto described a number of scenarios where Udacity is already active, which are natural progressions of the kind of vocational learning it was already offering.

They include, for example, the energy company Shell retraining structural and geological engineers “who had good math skills but no machine learning expertise” to be able to work in data science, needed as the company builds more automation into its operation and moves into new kinds of energy technology.

And he said that Egypt and other nations — looking to the success that India has had — have been providing technology expertise training to residents to help them find jobs in the “outsourcing economy.” He said that the program in Egypt has seen an 80% graduation rate and 70% “positive outcomes” (resulting in jobs).

“If you take just AI and machine learning, demand for these skills is growing at a rate of 70% year-over-year, but there is a shortage of talent to fill those roles,” Dalporto said.

Udacity is for now not looking at any acquisitions, he added, for another 6-12 months. “We have so much demand and work to do internally that there is no compelling reason to do that. At some point we will look at that but it needs to be linked to our strategy.”

Fintech has been a key startup story in recent quarters, with leading players in the genre raising titanic rounds at eye-popping valuations. Consider companies like Robinhood, and its epic capital run this year on the back of huge revenue growth, or Chime, which also raised huge sums while riding a tailwind provided by the savings and investing boom.

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As you can imagine, all those mega-deals have added up. According to data collated by CB Insights on the fintech space in the third quarter, 60% of all capital raised by financial technology startups came from just 25 rounds worth $100 million or more. Adding to the trend of venture getting bigger — and later as unicorns age without graduating to the public markets — the same report noted that fintech investment from $100 million rounds grew 24% compared to Q2, while investment in the space from smaller deals fell 16% over the same timeframe.

Overall fintech deal volume dipped 24% compared to Q3 2019, totaling 451 global deals. But dollars invested into fintech startups edged up once again to $10.631 billion, the largest result thus far in 2020 and the second-best single-quarter tally since mid-2018.

Oddly, it was the bottom, as well as the top of the market that did best. As we’ve seen, late-stage money flowed. But, notably, the number of the smaller venture rounds, those marked seed or angel, grew by 20% compared to Q2 2020.

Perhaps the next crop of unicorns is being founded?

Inside the CB Insights data are a few trends worth digging into, including what’s going on with venture investment into payments-focused startups, how the IPO market may be impacting insurtech investment, and how both wealth management startups like Robinhood and banking startups like Chime are faring as cohorts.

The data is fascinating, so let’s get into the state of fintech investing today.

Big trends, bigger dollars

We’re focused on four mega-trends today, but I wanted to start point out that African fintech startups saw what appears to be their all-time record in deal count at 14. That was up from 11 in Q2 2020, and nine in Q1. I’m working to pay more attention to the African tech scene, and those numbers stood out.

As fintech deal count falls in the largest VC markets — North America, Europe, Asia — it is rising in Africa and Latin America, something to keep an eye on.

Now, into our four mega-trends.

Payments

Payments startups like Stripe and Finix get their share of headlines, but they make up only a fraction of the total volume of venture capital investment that their sector absorbs.

Per CB Insights, venture investment into payments startups ticked higher in Q3 2020, rising to $3.959 billion from $2.379 billion in Q2 2020, and $2.927 billion in Q3 2019.

Aside from an anomalous final quarter in 2019, investment into payments-focused startups has been on a steady incline for some time. Why? PayPal earnings offer a partial explanation. As we reported yesterday after the consumer payments giant reported its Q3 performance:

The Shanghai Stock Exchange announced postponing Ant Group’s colossal initial public offering, a day after regulators weighed a slew of new fintech rules and summoned Jack Ma and other top executives to a closed-door meeting.

The rare talk between the financial regulators and Ant, which revealed “major changes in the fintech regulatory environment,” may disqualify the firm from listing on November 5, the bourse said in a statement on the evening of November 3.

It’s unclear what those “changes” are, though the bourse has ordered Ant to disclose them. It’s worth noting that in late October, Ma gave a provoking speech criticizing China’s financial regulation. The conference was attended by China’s senior leaders and later on stirred widespread controversy.

Ant has over the years tried to be in the good graces of the authorities. When it rebranded from Ant Financial to Ant Technology this year, the gesture was seen as an attempt to shed the firm’s image as an intimidating financial giant and stress the one of a benevolent technology provider. The campaign began a few years ago, prompting the firm to devise awkward coinages like “techfin” (as opposed to “fintech”) and declare it wasn’t competing with traditional financial institutions, many of which were state-led.

The promises weren’t merely a show. Ant has slowly grown into an online marketplace matching hundreds of millions of customers with financial products offered by traditional players. It’s also brought on heavyweight state actors like the National Social Security Fund and China International Capital Corporation as shareholders, which are slated for handsome returns from their investments.

But the amount of reassurance did not seem enough. China’s financial authorities released a new wave of proposals on Monday to rein in the fintech sector, days before Ant was scheduled to raise $34.5 billion in the world’s largest initial public offering. The draft, though not explicitly aimed at Ant, coincided with the financial regulators’ meeting with Ant executives.

“Views regarding the health and stability of the financial sector were exchanged,” an Ant spokesperson told TechCrunch earlier in a statement. “Ant Group is committed to implementing the meeting opinions in depth and continuing our course based on the principles of: stable innovation; embrace of regulation; service to the real economy; and win-win cooperation.”

The message was clear: Ant strives to abide by Beijing’s wishes.

“We will continue to improve our capabilities to provide inclusive services and promote economic development to improve the lives of ordinary citizens,” the firm added.

The proposal was just the latest move in China’s ongoing effort to bring stability to its flourishing fintech sector. The draft rules include a ban on interprovincial online loans unless otherwise approved by authorities; a maximum online loan amount of 300,000 yuan ($45,000) for each individual; and a 1 billion yuan registered capital threshold for online microloan lenders.

At issue is Ant’s ballooning lending business, which contributed 41.9 billion yuan or 34.7% to its annual revenue, according to the firm’s IPO prospectus. In the year ended June, Ant had worked with about 100 banks, doling out 1.7 trillion yuan ($250 billion) of consumer loans and 400 billion yuan ($58 billion) of small business loans.

Over the years, China’s financial regulators have dropped numerous other policies limiting the expansion and profitability of fintech players. For instance, Ant’s payments service Alipay and its rivals could no longer generate lucrative interest returns from customer reserve funds starting last year.

Ant has not responded to a request for comment on the IPO halt.

ZenGo, a mobile app to manage your cryptocurrencies, is about to launch a Visa debit card in the U.S. This isn’t the first crypto-powered debit card — Coinbase announced a U.S. expansion for its debit card just last week. But ZenGo is a non-custodial wallet, which means that you’re in control of your crypto assets.

When you leave your crypto assets on an exchange, somebody could log in to your account and send your assets to other wallets. Sure, there are some security features, such as email validation and two-factor authentication. But you’re essentially relying on the security team of your favorite exchange.

ZenGo and other non-custodial wallets put you in charge of security. You’re acting as your own crypto bank. It makes it more complicated to create a debit card as ZenGo can’t send and convert cryptocurrencies for you.

ZenGo is joining Visa’s Fintech Fast Track program with the intention to release its payment card in early 2021. While the card will initially launch in the U.S. only, the startup already plans to release it in other countries.

As ZenGo has no idea what cryptocurrencies you own, you’ll have to convert your crypto to USD first. In the mobile app, you’ll be able to convert some funds to fiat (such as USD) and deposit that amount on your card. If you plan to use your card regularly, you’ll be able to convert a fixed amount every week.

Compared to other crypto-powered cards, there’s an additional conversion step. “The issue if you do it automatically like Coinbase is that you can’t pick which crypto you want to use for spending. They decide for you or they force you to make a choice once for all your transactions,” ZenGo co-founder and CEO Ouriel Ohayon told me.

Additionally, anything that remains in your ZenGo wallet can’t be used with your card. Even if your card is compromised, your crypto assets remain safe.

ZenGo already lets you acquire cryptocurrencies in the app through partnerships with MoonPay and Coinmama. Thanks to the debit card, the startup will have both on-ramps and off-ramps with support for fiat-to-crypto and crypto-to-fiat conversions.

It’s too soon to know who will win the U.S. election tomorrow. Tomorrow may even be too soon to know who wins the election. But it’s always a good time to talk with investors about how they’re thinking about the future, and some can’t help but ponder the possibilities if Joe Biden wins the race.

Among these are venture capitalists who are focused on climate change and who are excited by the prospect of a president who sees climate change as an existential threat, especially after the work of the Trump administration, which has officially reversed, rolled back, or revoked 70 environmental rules and regulations over the last four years.

Seth Bannon, whose seed-stage venture firm Fifty Years, is focused on impact investing is among those willing to ponder a President Biden and how his administration could most effectively boost climate tech while simultaneously dealing with COVID-19 and the economy. We had a quick chat about it earlier today.

TC: Joe Biden has a detailed climate plan. What do you think of it?

SB: The overarching way the Biden campaign has said his administration would approach climate change is pretty fantastic. It would invest heavily in R&D so we have great technological climate solutions, then use the scale of government to get technologies into the world. It wants to invest $400 billion in better, cheaper batteries for electrification, $300 billion for cleaner power plants — it’s a very exciting way of going about it. It’s a modern economic job creation plan and as a Silicon Valley builder, it’s exactly what you’d want to see. It’s not simply about passing more regulations, saying you can’t do this or that.  It’s predominately about building solutions that will get us out of this mess.

TC: If you were to talk directly with his team, what are some pieces of advice you might offer, based on the plan and what you see in your day-to-day work?

SB: It calls for the creation of an ARPA-C, a new federal agency for low-carbon energy technologies that would be modeled after two agencies that exist: DARPA, the Defense Advanced Research Projects Agency, and ARPA-E, for Advanced Research Projects Agency-Energy.

I would advise that they give that budget 10x DARPA’s budget, because the scale of this threat is 10x the threat we face from any foreign adversary.

I’d also model the way it works with startups after the way that both the National Science Foundation does it and the National Institutes of Health, where companies can apply for small grants — say $125,000 to $250,000 — and if they meet milestones and show the government data, maybe they’re given $1.5 million more. It would be a fantastic accelerant in the space and would make a huge amount of money available to companies investing in pure R&D to figure out carbon capture and using biology to decarbonize industries, using biology to move us away from animal agriculture — all these unsolved technological problems, and government money can be catalyst for getting these things off the ground.

Even more impactful would be if the government said to XYZ startup, ‘Here’s $250,000, and if you meet milestones, we’ll give you $3 million, and if you meet more milestones, we’ll buy your tech.’ Risk is technical, but there’s market risk, too. If the government says, ‘We’ll be your first customer,’ it could go a long way in getting the private market more interested.

TC: If Biden were to be elected, he’d obviously have to prioritize controlling this pandemic and getting Americans back to work. Practically speaking, what would he have time left to tackle and in what order?

SB: It should be an all-of-the-above approach. The exciting thing about climate tech is that there are a lot of different approaches to decarbonizing many industries and removing what’s in the environment. We have [in our portfolio] companies that decarbonizing food, fashion, data storage, transportation, chemicals, mining. Each component of the global economy only contributes 5% to 10% max [to greenhouse gas emissions], so we have to focus on decarbonizing a whole bunch of industries. If I had to choose a few to start, I’d say food, transportation, and energy.

TC: And if Trump gets re-elected? 

SB: If Trump gets reelected, there’s no movement on climate tech, which is unfortunate. If you look at European countries, even conservative factions are starting to realize that investing in climate tech helps you to be more competitive. Even if you don’t believe in it, a lot of sustainability companies are building better products, more cheaply, period. But this administration just doesn’t see it that way and if he gets re-elected, a lot of the regulations we have on the books will continue to get torn away.

TC: You worked briefly in politics, as an operations director for Connecticut Governor Ned Lamont and an organizer for Obama presidential campaign. How are you feeling about tomorrow?

SB: As we sail into things, I feel pretty good. It’s not over until it’s over, but I feel pretty optimistic about where we are. I think the country is ready to heal.

In an election eve preview of what to expect in the coming days, President Trump pushed the limits on Twitter’s election-specific policies Monday night.

In a tweet, Trump railed against the Supreme Court’s decision to allow Pennsylvania officials to count ballots postmarked by Election Day. The Republican party has waged a brazen legal onslaught against voting rights throughout key states in recent weeks, a cynical effort designed to better the sitting president’s reelection chances.

Twitter pushed back on the president’s false claim about Pennsylvania mail-in ballots, hiding it behind a misinformation warning that calls the tweet “disputed.” Twitter also disabled non-quote retweets, likes and replies for the hidden tweet, which remains viewable but restricted.

“The Supreme Court decision on voting in Pennsylvania is a VERY dangerous one,” Trump tweeted. “It will allow rampant and unchecked cheating and will undermine our entire systems of laws. It will also induce violence in the streets. Something must be done!”

Facebook did not remove the reposted message, but did add a label emphasizing the trustworthiness of voting systems. Three hours after it was published, Trump’s Facebook post had collected 63,000 likes and 13,000 comments.

It seems like SoftBank and the Mubadala Corp. aren’t finished taking big swings at the commercial real estate business in the U.S. Even after the collapse of WeWork, the investors are doubling down on a similar business model as part of a syndicate investing $700 million into REEF Technology.

REEF began its life as Miami-based ParkJockey, providing hardware, software and management services for parking lots. It has since expanded its vision while remaining true to its basic business model. While it still manages parking lots, it now it adds infrastructure for cloud kitchens, healthcare clinics, logistics and last-mile delivery, and even old school brick and mortar retail and experiential consumer spaces on top of those now-empty parking structures and spaces.

Like WeWork, REEF leases most of the real estate it operates and upgrades it before leasing it to other occupants (or using the spaces itself). Unlike WeWork, the business actually has a fair shot at working out — especially given business trends that have accelerated in response to the health and safety measures implemented to stop the spread of the COVID-19 pandemic.

In part that’s because REEF does operate its own businesses on the premises and works with startups to provide actual goods and services that are location dependent for their success and revenue generating.

The money will be used to scale from its roughly 4,800 locations to 10,000 new locations around the country and to transform the parking lots into “neighborhood hubs,” according to Ari Ojalvo, the company’s co-founder and chief executive.

SoftBank and Mubadala are joining private equity and financial investment giants Oaktree, UBS Asset Management and the European venture capital firm Target Global in providing the cash for the massive equity financing. Meanwhile, REEF Technology and Oaktree are collaborating on a $300 million real estate investment vehicle, the Neighborhood Property Group, as Bloomberg reported on Monday.

In all, REEF, which could reasonably be described as a WeWork for the neighborhood store, has $1 billion in capital coming to build out what it calls a proximity-as-a-service platform.

Since taking a minority investment from SoftBank back in 2018 (an investment which reportedly valued the company at $1 billion) and transforming from ParkJockey into REEF Technology, the company added a booming cloud kitchen business to support the increase in virtual restaurant chains.

In addition, it added a number of service providers as partners, including last-mile delivery startup Bond (and the logistics giant, DHL); the national primary healthcare services clinic operator and technology developer, Carbon Health; the electric vehicle charging and maintenance provider, Get Charged; and — at its operations in London — the new vertical farm developer, Crate to Plate (Ojalvo said it was in talks with the established vertical farming companies in the U.S. on potential partnerships).

Next year, the company plans to launch the first of its experiential, open-air entertainment venues at a space it operates in Austin, according to Ojalvo.

And further down the road, the company sees an opportunity to serve as a hub for the kinds of data-processing centers and telecommunications gateways that will power the smart city of the 21st century, Ojalvo said.

“We have inbound interest from companies that do edge computing and companies getting ready with 5G,” he said. “Data and infrastructure is a big part of our neighborhood hub. It’s like electricity. Without electricity and connectivity, we don’t have the world we want to see.” 

The bulk of the company’s revenue is coming from its parking business, but Ojalvo expects that to change as the its cloud kitchen business continues to grow. “Neighborhood Kitchens will be a significant part of non-parking revenue,” said Ojalvo.

REEF already operates more than 100 Neighborhood Kitchens across more than 20 markets in North America, and that number will only grow as the company expands its regional footprint. It’s hosting virtual kitchens from celebrity chefs like David Chang’s Fuku, and, according to the company, offering lifelines to beloved local restaurateurs like the chain Jack’s Wife Freda in New York or Michelle Bernstein’s kitchens in Miami.

These restaurants are, in some cases, taking advantage of the employees that REEF Technology has operating its network of kitchens. It’s another difference between WeWork and REEF. The company not only provides the space, in many instances it’s providing the labor that’s allowing businesses to scale.

The company already employs over a thousand kitchen workers prepping food at its restaurants. And REEF acquired a company earlier in May to consolidate its back-end service for on-demand deliveries.

That same strategy will likely apply to other aspects of the company’s services, as well.

“We’re building a platform of proximity,” says Ojalvo. “That proximity is driven through an install base that’s in parking lots or parking garages… [and] that enables all sorts of companies to use its proximity as a platform. To basically build their marketplaces.”

As REEF raises money for expansion, it’s tapping into a new theory of urban development embraced by mayors from Amsterdam to Tempe, Ariz. calling for a 15-minute city (one where the amenities needed for a comfortable urban existence are no more than 15 minutes away).

It’s a worthwhile goal, but while mayors seem to place the emphasis on the availability of accessible amenities, REEF’s leadership acknowledges that only a few of its parking lots and garages will be multi-use and accessible to neighborhood residents. According to a spokesman, only several hundred of the company’s planned 10,000 businesses will have the kind of multi-use mall environment that encourages neighborhood access. Instead, its business seems to be based on the notion that most delivery services should be no more than 15 minutes away.

It’s a different project, but it also has a number of supporters. One could argue that cloud kitchen providers like Zuul, Kitchen United, and Travis Kalanick’s Cloud Kitchens all ascribe to the same belief. Kalanick, the Uber co-founder and former CEO whose company received billions from SoftBank, has been snapping up properties in the US and Asia under an investment vehicle called City Storage Systems, which also uses parking lots and abandoned malls as fulfillment centers.

Big retailers also have taken notice of the new revenue stream and one of America’s largest, Kroger, is even running a ghost kitchen experiment in the Midwest.

If that’s not enough, there are plenty of under-utilized assets that are already on the market thanks to the economic downturn wrought by the COVID-19 pandemic and the government’s efforts to contain it.

“I guess a lot depends on how you think delivery players work out in the coming years versus say drive through or curbside pickup which seems to be where large national players are focused (Starbucks, McDonalds, Dominos, etc),” wrote on venture investor in an email. “But how do delivery players use these spaces versus say lots of low cost retail spaces that can be used to staging or package returns. Maybe there is a play to add modular or prefab units to the existing parking spaces on provide flex for scaling, but it’s not clear that anyone is growing at a frantic pace… I’m just not sure how to see converted parking versus other… commercial spaces for retail or office that are all searching for new applications.”

The COVID-19 outbreak that has changed so much of modern life in America so quickly in the span of a single year didn’t create the urge to transform the urban environment, but it did much to accelerate it.

As REEF acknowledges, cities are the future.

Roughly two-thirds of the world’s population will live in cities by 2050, and the world’s largest cities are cracking under the pressures of economic, civil, and environmental transformations that they have not been able to address effectively.

Mobility and, by extension, places to store and maintain those mobile technologies are part of the problem. Roughly half of the average modern American city, as REEF notes, is devoted to parking, while parks occupy only 10% of urban spaces. REEF’s language is centered on changing a world of parking lots into a space of paradises, but that language belies a reality that makes its money (at least for now) off of isolating individuals into personal spaces where their commercial needs are met by delivery — not by community interaction.

Still, the fact remains that something needs to change.

“Traditional developers and local policies have been slow to adopt new technologies and operating models,” said Stonly Baptiste, an investor in the transformation of urban environments through the fund, Urban.Us (which is not a backer of REEF). “But the demand is growing for a better ‘city product’, the need to make cities better for the environment and our lives has never been greater, and the dream to build the city of the future never dies. Not that dream is subsidized by VC.”