Category: UNCATEGORIZED

Reinvent Technology Partners, a new special purpose acquisition company formed by famed investor and serial entrepreneur Reid Hoffman, Zynga founder Mark Pincus and veteran hedge fund manager Michael Thompson, filed Monday for a $600 million initial public offering.

The SPAC was formed by Hoffman, Pincus and Thompson, formerly of BHR Capital, with the intention of merging with a technology company. Thompson will be director, CEO and CFO. Hoffman and Pincus are co-lead directors. The company plans to list on the NYSE under the symbol RTP.U. Once, and if, the Reinvent Technology Partners raises the $600 million, the capital will move into a blind trust until its management team decides which company it wants to acquire.

SPACs are blank-check companies that are formed for the purpose of merging or acquiring other companies. SPACs have become an increasingly popular means in 2020 for venture-backed companies to go public without having to take the traditional IPO path. In the past several months, a number of venture-backed companies have merged with SPAC companies in lieu of a traditional IPO process, including online used car marketplace startup Shift Technologies, lidar companies Luminar and Velodyne Lidar and a handful of electric vehicle startups such as Canoo, Fisker Inc., Lordstown Motor and Nikola Motor.

In January, Axios reported that Pincus and Thompson, with Hoffman as an adviser, were raising up to $700 million for a new investment fund that planned to focus on publicly traded tech companies in need of strategic restructuring.

Monday’s filing fills in some of the details. The brain trust that is Hoffman, Pincus and Thompson appear to view this SPAC as another means to be a new kind of venture capital partner for a tech company set to go public.

Here’s the entire letter from Hoffman and Pincus, which was included in the filing:

We believe there is a need for a new, additional type of venture capital that helps companies at scale pursue innovation and step function growth long past their IPOs.

Throughout our careers as entrepreneurs, investors, and directors, we have been students of why some tech companies sustain as market leaders. Often people view these companies from the outside in
as perfect, uninterrupted growth stories that were almost pre-ordained. However, we realize that behind these mythical growth stories are many hard fought cycles of invention and reinvention. Invention is when a company builds a new product and achieves growth in an adjacent market, such as Amazon developing AWS. Reinvention is when a company has to adapt its core products and services to continue growing in an existing market, as Netflix did moving from DVDs to streaming.

For many public tech companies — especially mid-cap sized — these cycles can prove challenging to navigate while maintaining investor alignment. We went through our own invention and reinvention cycles while public at Zynga and LinkedIn, and it wasn’t easy.

We are excited to be a new kind of venture capital partner at the table for one of the many tech companies set to go public over the next few years and to help it maintain a growth mindset, be bold, and go for it in the face of pressure to deliver quarterly results.

We hope our experience, ideas, and insights can make a difference as we partner with a founder and CEO as they build a market-leading company that delivers products and services that matter in people’s lives.

TechCrunch is on the hunt to feature 10 early-stage mobility startups at our virtual TC Sessions: Mobility 2020 pitch night. The pitch-off event, originally set for May, will now be held October 5th – the evening before Mobility 2020. 

The top five companies from pitch night will take the stage at the main event with industry heavy hitters like  Boris Sofman of Waymo and Nancy Sun of Ike to Trucks VC’s Reilly Brennan. Now we are shining a light on game changing startups – hardware and software breaking the mobility mold. From battery advancements to mapping, fuel processing to micromobility, TechCrunch wants the next generation of mobility’s brightest on stage. The process is simple:

Apply. TechCrunch editorial will review every application and demo video submitted. Companies will be reviewed based on innovation, scope of impact, uniqueness of product idea and potential for exit – IPO or acquisition. Selected companies will get to pitch on stage, receive two complimentary event tickets, an hour training with the Startup Battlefield Editor and a spot in CrunchMatch: TC’s meeting matching program.

Pitch Part I. The top ten startups from around the world will be selected to pitch live to the TC audience on the virtual stage. After a private pitch coaching session, founders will have one minute to pitch, followed by a Q&A with our expert panel of investor and industry expert judges.

Pitch Part II. The top five companies from pitch night will get a prime slot to pitch and demo their product on the main stage at Mobility 2020 in front of thousands of TC viewers – press, industry leaders and VCs.

The deadline to apply is September 15th. Selections will occur on a rolling basis so get your application in ASAP!

Netflix tests a free promotional offering, Amazon’s drone delivery gets trial flight approval from the FAA and Neuralink shows off its human-brain tech. This is your Daily Crunch for August 31, 2020.

The big story: Netflix sets some content free

Netflix has taken some of its best-known Originals out from behind the paywall.

The company has already been testing out making select titles free in certain markets, and today it expanded that test across the globe, with a library of Netflix content, including “Stranger Things,” “Bird Box,” “When They See Us” and “Our Planet” now available free to non-subscribers (only the first episode, in the case of series). A skippable 30-second ad for Netflix plays before you watch.

“We’re looking at different marketing promotions to attract new members and give them a great Netflix experience,” the company said in a statement.

The tech giants

Amazon’s Prime Air drone delivery fleet gains FAA approval for trial commercial flights — While this doesn’t mean that Amazon can immediately start operating a consumer drone delivery service, it does represent a significant step toward that goal.

Apple will now allow developers stuck in App Store jail to push bug fixes to their apps — Developers currently in standoffs with Apple’s app review team still won’t be able to submit updates with new features or content updates, however.

Google launches Google Kids Space, a ‘kids mode’ feature for Android, initially on Lenovo tablets — The feature will launch first on the Lenovo Smart Tab M10 HD Gen 2, but Google aims to bring Kids Space to more devices in time.

Startups, funding and venture capital

Elon Musk demonstrates Neuralink’s tech live using pigs with surgically implanted brain-monitoring devices — The company’s technology is meant to serve as a new kind of interface between the human brain and computing devices.

There’s a growing movement where startup founders look to exit to community — This is a collaborative working project led by the University of Colorado Boulder’s Media Enterprise Design Lab and Zebras Unite, exploring ways to help startups transition from investor-owned to community ownership.

On the matter of who was really behind @VCBrags — This is really the only post you need on the weekend’s Twitter kerfuffle.

Advice and analysis from Extra Crunch

In a post-NDA world, does transparency help founders identify conflicts of interest? — Today, everyone is a fintech investor and no one signs NDAs, which puts founders in a difficult position.

What pandemic? Inside Boston’s scorching VC summer — Boston-area startups raised more private capital during summer 2020 than they did in summer 2019.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

Original Content podcast: Netflix’s ‘High Score’ is a selective tour through video game history — For older gamers, the series provides some pleasant jolts of nostalgia.

Some of the brightest minds in Europe are joining us at Disrupt — A roundup of all the speakers we’ve got lined up in sessions specially timed for European attendees.

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

PayPal today introduced a new installment credit option for PayPal users called “Pay in 4.” The name itself explains what the service offers — basically, it’s the ability for customers to pay for purchases, interest-free, over four separate payments. The service is an expansion on PayPal’s existing lineup of suite of Pay Later solutions, which also includes PayPal Credit’s revolving credit line and its Easy Payments.

With Pay in 4, customers can choose to pay for purchases between $30 and $600 over a six-week period. Because it’s included with the merchant’s existing PayPal pricing, they won’t have to pay more fees to offer the option to their customers — as they do with several competitive “buy now, pay later” services.

For customers, the short-term payment option allows U.S. customers to pay for a purchase over time, without fees or interest. After their initial payment, the remaining 3 payments are automated. The feature will also appear in the customer’s PayPal wallet, where the payments can be managed.

Pay in 4 builds on PayPal’s tests with Easy Payments. The company says it learned that, at some price points, customers preferred the option to pay over a 6-week period.

The service clearly is meant to compete with rival fintech services like Klarna, AfterPay, Affirm and others which may or may not charge fees or interest up front, but do often tack on late fees when consumers can’t pay. Klarna, for example, even offers a direct competitor with its program offering 4-interest free payments charged to your card every 2 weeks.

Because PayPal is tied to a customer’s payment card or bank account, it reduces the chance of a forgotten payment. But if the customer can’t pay, there will be fees involved. These will vary by state as each state has its own late fee structure which PayPal will abide by, the company says.

“In today’s challenging retail and economic environment, merchants are looking for trusted ways to help drive average order values and conversion, without taking on additional costs. At the same time, consumers are looking for more flexible and responsible ways to pay, especially online,” said Doug Bland, SVP, Global Credit at PayPal, in a statement about the launch. “With Pay in 4, we’re building on our history as the originator in the buy now, pay later space, coupled with PayPal’s trust and ubiquity, to enable a responsible and flexible way for consumers to shop while providing merchants with a tool that helps drive sales, loyalty and customer choice,” he added.

Another busy week in cybersecurity.

In case you missed it: A widely used messaging app used by over a million protesters has several major security flaws; a little-known loophole has let the DMV sell driver’s licenses and Social Security records to private investigators; and the U.S. government is suing to reclaim over $2.5 million in cryptocurrency stolen by North Korean hackers from two major exchanges.

But this week we are focusing on how a Tesla employee foiled a ransomware attack, and, ahead of Palantir’s debut on the stock market, how much of a risk factor is the company’s public image?

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THE BIG PICTURE

Russian charged with attempted Tesla ransomware attack

$1 million. That’s how much a Tesla employee would have netted if they accepted a bribe from a Russian operative to install malware on Tesla’s Gigafactory network in Nevada. Instead, the employee told the FBI and the Russian was arrested.

The Justice Department charged the 27-year-old Russian, Egor Igorevich, weeks later as he tried to flee the United States. According to the indictment, his plan was to ask the employee to deliberately deploy ransomware on the Gigafactory’s network, grinding the network to a halt for a ransom of several million dollars. The would-be insider threat is likely the first of its kind, one ransomware expert told Wired, as financially driven hackers continue to up their game.

Tesla founder Elon Musk tweeted earlier this week confirming that Tesla was the target of the failed attack.

The attack, if carried out, could have been devastating. The indictment said that the malware was designed to extract data from the network before locking its files. This data-stealing ransomware is an increasing trend. These hacker groups not only encrypt a victim’s files but also exfiltrate the data to their servers. The hackers typically threaten to publish the victim’s files if the ransom isn’t paid.

With Dorian, co-founder and CEO Julia Palatovska said she’s hoping to empower fiction writers and other storytellers to create their own games.

The startup is announcing that it has raised $3.15 million in seed funding led by March Capital Partners, with participation from VGames, Konvoy Ventures, London Venture Partners, Michael Chow (co-creator of the Twitch series “Artificial”), Andover Ventures and talent management company Night Media.

Palatskova previously worked in gaming as the head of business development at G5 Entertainment, and she said she’d also become entranced by narrative games and interactive fiction. And while there are existing interactive fiction platforms, she saw “an opportunity that I felt was missing,” particularly in the fact that those platforms are “entirely single player, with no opportunity to play and collaborate with other people.”

So she gave me a quick tour of the Dorian platform, showing me how, without coding, a writer can essentially design characters and backgrounds by choosing from a variety of visual assets (and they’ll eventually be able to upload assets of their own), while using a flowchart-style interface to allow the writer to connect different scenes in the story and create player choices. And as Palatskova noted, you can also collaborate on a story in real time with other writers.

“In terms of writer productivity, I would say there is almost no difference between creating interactive fiction on our engine and just writing fiction,” she said.

From what I could see, the resulting games look similar to what you’d find on platforms like Pocket Gems’ Episode, where there aren’t a lot of technical bells and whistles, so the story, dialogue and character choices move to the forefront.

When I brought up the open source game creation software Twine, Palatskova said Twine is “just a tool.”

“We want to be more like Roblox, both the tools and the distribution,” she said.

In other words, writers use Dorian to create interactive stories, but they also publish those stories using the Dorian app. (The writer still owns the resulting intellectual property.) Palatskova noted that Dorian also provides detailed analytics on how readers are responding, which is helpful not just for creating stories, but also for monetizing via premium story choices.

In fact, Dorian says that in early tests involving around 50,000 players, writers were able to improve monetization by 70% after only one or two iterations. And Palatskova noted that with Dorian’s games — unlike an interactive film such as “Black Mirror: Bandersnatch” —”It’s fast and easy to test multiple branches.”

Dorian is currently invite-only, but the plan is to launch more broadly later this year. Palatskova is recruiting writers with and without gaming experience, but she also expects plenty of successful contributions to come from complete novices. She wants Dorian to be “a completely open platform, like Roblox or Twitch for writers.”

“Dorian’s success in creating an interactive platform that values storytelling while prioritizing monetization for its writers is a game-changer,” said March Capital’s Gregory Milken in a statement. “Julia and her team are creating a community that is primed to capture the attention of today’s influential but underrepresented audiences of diverse content creators.”

Filled with innovation labs, co-working spaces and students, Boston has a ton of entrepreneurial characteristics baked into its DNA.

However, when the coronavirus swept through the country, the area’s startup scene was stress-tested as badly as other entrepreneurial hubs. Could Boston’s startups still thrive without the city’s robust in-person ecosystems? 

Last month, we answered this question broadly: Boston-area startups raised $3.7 billion in Q2, according to CB insights, a figure we hailed as “record venture capital investment in the period.” 

But while high-level, quarterly data is useful directionally, it can gloss over illustrative dips and peaks. In 2020, things changed fast.

So, for this month’s Boston-focused column, we looked at the city’s venture capital data on a month-by-month basis to answer the question, “How did the pandemic impact deal-making in the city?” 

New Pitchbook data show that Boston-area startups saw a venture capital dip after March through April, two early pandemic months here in the United States. However, May and the following months more than made up for the decline. In fact, Boston-area startups raised more private capital during summer 2020 than they did in summer 2019, suggesting that the pandemic and its ensuing technological and economic changes have not hurt the area startups in aggregate, but instead provided a net boon.

Inside Boston’s turbulent venture capital summer

Let’s start with a look at the data in chart form. We asked Pitchbook for a look at Boston’s venture results on a monthly basis since 2019.

Looking at private capital data for Boston-based companies, we see that December was a very strong month compared to the rest of Q4 2019, but that it was also easily bested by January. February and March were more quiet, leading us into the pandemic era. But surprisingly, April wasn’t a complete mess with more than $1 billion in funds invested. May posted a sharp improvement in dollar terms, and June was best of all months in the year so far.

Apple’s App Store policies have gotten quite a bit more attention in the past few months, and while it seems likely that Apple’s team will fight tooth and nail to avoid dismantling any of the core pillars of their Store economy, the company did announce a small policy change today that will hopefully keep users from getting caught in any crossfire.

In a short announcement today posted to their site, Apple shared that they have updated the App Store’s review policy guidelines to allow developers to continue to push big fixes even if they’re currently in a standoff with the app review team. As Apple seems to get even more aggressive in forcing developers to integrate in-app purchase frameworks into their apps, this change sets Apple up to avoid upsetting users.

The text of the announcement reads that, “bug fixes will no longer be delayed over guideline violations except for those related to legal issues.” Developers won’t be able to submit updates with new features or content updates, the focus of this rule change is firmly on the security/usability front.

This change was previously announced in June.

This change is unlikely to satiate critics hoping for more sweeping changes. In many ways this change helps Apple avoid being painted as the villain in new developer skirmishes. The stars were aligning for Apple to shoot itself in the foot by not allowing a developer to fix any vulnerabilities in their app while they were in standoff with the company.

Apple’s App Store policies have gotten quite a bit more attention in the past few months, and while it seems likely that Apple’s team will fight tooth and nail to avoid dismantling any of the core pillars of their Store economy, the company did announce a small policy change today that will hopefully keep users from getting caught in any crossfire.

In a short announcement today posted to their site, Apple shared that they have updated the App Store’s review policy guidelines to allow developers to continue to push big fixes even if they’re currently in a standoff with the app review team. As Apple seems to get even more aggressive in forcing developers to integrate in-app purchase frameworks into their apps, this change sets Apple up to avoid upsetting users.

The text of the announcement reads that, “bug fixes will no longer be delayed over guideline violations except for those related to legal issues.” Developers won’t be able to submit updates with new features or content updates, the focus of this rule change is firmly on the security/usability front.

This change was previously announced in June.

This change is unlikely to satiate critics hoping for more sweeping changes. In many ways this change helps Apple avoid being painted as the villain in new developer skirmishes. The stars were aligning for Apple to shoot itself in the foot by not allowing a developer to fix any vulnerabilities in their app while they were in standoff with the company.

Once upon a time, fintech founders could pitch 10 investors before closing a round in a relatively hushed way. Entrepreneurs could even ask VCs to sign nondisclosure agreements (NDAs) to keep their information confidential. Today, everyone is a fintech investor and no one signs NDAs.

This changed dynamic puts founders in a difficult position.

Nabeel Alamgir, CEO and founder of Lunchbox, struggled to raise his first institutional check for his restaurant tech startup. After searching for more than a year, Alamgir found an investor who understood his vision. Better yet, the investor had connections to restaurants in New York City that Alamgir wanted to land. So, Alamgir shared everything about Lunchbox, from the financials, to the product integration road map and go-to-market strategy.

After a month of due diligence, the investor ghosted Alamgir. Four months later, that same investor’s portfolio company launched a product mimicking Lunchbox.

“I did not do due diligence on them as they were doing on me,” he said. “And I forgot all my rules. Most rules go out the window as cash is running out.”

Alamgir’s experience is a classic case of back-channeling, a sometimes unfortunate yet uncommon occurrence for founders in Silicon Valley. It’s not a secret that investors share intel with each other as a competitive advantage; but as venture capital grows as an asset class and more investors break into the industry, the way information disseminates will become even more elusive and broad.

Alamgir advises early-stage founders who are looking to raise their first check to “contain excitement.”