Category: UNCATEGORIZED

With two months of 2019 still to go, Indian tech startups are already having their best year as a record amount of capital flows into the local ecosystem in a major rebound since the darkened funding environment in 2016.

The unlisted tech startups in India have raised $11.3 billion this year, a substantial jump from last year’s $10.5 billion fundraise, research firm Tracxn told TechCrunch.

This year’s fundraise, the largest sum for the local ecosystem in any year, further moves the nation’s burgeoning startup space on a path of steady growth. Since 2016, when tech startups accumulated just $4.3 billion — down from $7.9 billion the year before — flow of capital has increased significantly in the ecosystem. In 2017, Indian startups raised $10.4 billion, according to Tracxn.

Startups with consumer-facing offerings including financial services have attracted most of the capital this year — about $8.2 billion, Tracxn said. Following that is retail startups that have bagged about $2.3 billion and those that offer enterprise services with $1.5 billion. (There is some overlap of startups whose offerings fall under more than one category.)

Investors’ growing appetite for equity in India’s startups shows that the local ecosystem is maturing, said Dev Khare, a partner at VC fund Lightspeed Venture Partners . In an interview with TechCrunch, Khare noted that in 2014 and 2015, startups were largely focused on building e-commerce solutions and replicating ideas that worked in Western markets.

“But today, they are tackling a wide-range of categories and opportunities, and building some solutions that have not been attempted in any other market,” he said. He attributes much of this change to the arrival of telecom operator Reliance Jio and some government efforts such as introduction of GST taxation system for businesses and introduction of UPI payments infrastructure.

Jio, a three-year-old telecom operator run by India’s richest man, Mukesh Ambani, has disrupted the market with incredibly low-cost mobile data. The low-cost data meant that overnight tens of millions of Indians were able to come online for the first time.

This, alongside a cash crunch created by New Delhi in late 2016, led to a sudden explosion in demand for content and services including mobile wallets that created a massive opportunity for local startups to innovate, Khare said.

Financial services firm Paytm, which has raised more than $2 billion to date, has more than 200 million registered users in India, while Google Pay has amassed over 67 million active customers in less than two years of its existence.

Additionally, Khare said more people than ever in India today are willing to work at a startup. Citing Lightspeed’s internal research, he said four to five years ago, fewer than 20% of employees of a startup had ever worked for a startup before. Earlier this year, that figure had ballooned to more than 80%, he said.

There are some other promising signals as well: Of the top 150 Indian startups that raised capital in the first half of this year, 17.3% of them were either led or co-led by women, Indian news outlet The Morning Context reported on Wednesday, citing data from research firm Venture Intelligence. This is a massive jump from last year, when just 10% of startups counted women as their founder or co-founder.

A trend that appears to continue from the last several years is concentration of funds in a smaller number of startups. So far, tech startups in India have participated in 872 financing rounds, compared to 924 last year, and 1141 in 2017.

But that number, as well as total fundraise amount could change substantially by the end of the year as many more startups prep to close new financing rounds. Zomato, Swiggy, and Paytm alone are expected to close rounds worth as much as $3 billion in the coming months.

The third annual review of the EU-US Privacy Shield data transfer mechanism has once again been nodded through by Europe’s executive.

This despite the EU parliament calling last year for the mechanism to be suspended.

The European Commission also issued US counterparts with a compliance deadline last December — saying the US must appoint a permanent ombudsperson to handle EU citizens’ complaints, as required by the arrangement, and do so by February.

This summer the US senate finally confirmed Keith Krach — under secretary of state for economic growth, energy, and the environment — in the ombudsperson role.

The Privacy Shield arrangement was struck between EU and US negotiators back in 2016 — as a rushed replacement for the prior Safe Harbor data transfer pact which in fall 2015 was struck down by Europe’s top court following a legal challenge after NSA whistleblower Edward Snowden revealed US government agencies were liberally helping themselves to digital data from Internet companies.

At heart is a fundamental legal clash between EU privacy rights and US national security priorities.

The intent for the Privacy Shield framework is to paper over those cracks by devising enough checks and balances that the Commission can claim it offers adequate protection for EU citizens personal data when taken to the US for processing, despite the lack of a commensurate, comprehensive data protection region. But critics have argued from the start that the mechanism is flawed.

Even so around 5,000 companies are now signed up to use Privacy Shield to certify transfers of personal data. So there would be major disruption to businesses were it to go the way of its predecessor — as has looked likely in recent years, since Donald Trump took office as US president.

The Commission remains a staunch defender of Privacy Shield, warts and all, preferring to support data-sharing business as usual than offer a pro-active defence of EU citizens’ privacy rights.

To date it has offered little in the way of objection about how the US has implemented Privacy Shield in these annual reviews, despite some glaring flaws and failures (for example the disgraced political data firm, Cambridge Analytica, was a signatory of the framework, even after the data misuse scandal blew up).

The Commission did lay down one deadline late last year, regarding the ongoing lack of a permanent ombudsperson. So it can now check that box.

It also notes approvingly today that the final two vacancies on the US’ Privacy and Civil Liberties Oversight Board have been filled, meaning it’s fully-staffed for the first time since 2016.

Commenting in a statement, commissioner for justice, consumers and gender equality, Věra Jourová, added: “With around 5,000 participating companies, the Privacy Shield has become a success story. The annual review is an important health check for its functioning. We will continue the digital diplomacy dialogue with our U.S. counterparts to make the Shield stronger, including when it comes to oversight, enforcement and, in a longer-term, to increase convergence of our systems.”

Its press release characterizes US enforcement action related to the Privacy Shield as having “improved” — citing the Federal Trade Commission taking enforcement action in a grand total of seven cases.

It also says vaguely that “an increasing number” of EU individuals are making use of their rights under the Privacy Shield, claiming the relevant redress mechanisms are “functioning well”. (Critics have long suggested the opposite.)

The Commission is recommending further improvements too though, including that the US expand compliance checks such as concerning false claims of participation in the framework.

So presumably there’s a bunch of entirely fake compliance claims going unchecked, as well as actual compliance going under-checked…

“The Commission also expects the Federal Trade Commission to further step up its investigations into compliance with substantive requirements of the Privacy Shield and provide the Commission and the EU data protection authorities with information on ongoing investigations,” the EC adds.

All these annual Commission reviews are just fiddling around the edges, though. The real substantive test for Privacy Shield which will determine its long term survival is looming on the horizon — from a judgement expected from Europe’s top court next year.

In July a hearing took place on a key case that’s been dubbed Schrems II. This is a legal challenge which initially targeted Facebook’s use of another EU data transfer mechanism but has been broadened to include a series of legal questions over Privacy Shield — now with the Court of Justice of the European Union.

There is also a separate litigation directly targeting Privacy Shield that was brought by a French digital rights group which argues it’s incompatible with EU law on account of US government mass surveillance practices.

The Commission’s PR notes the pending litigation — writing that this “may also have an impact on the Privacy Shield”. “A hearing took place in July 2019 in case C-311/18 (Schrems II) and, once the Court’s judgement is issued, the Commission will assess its consequences for the Privacy Shield,” it adds.

So, tl;dr, today’s third annual review doesn’t mean Privacy Shield is out of the legal woods.

Thinking about sending a cold pitch? Curious how to connect with investors? Looking for fundraising tips for your first venture?

Startup funding experts including Forward Partners managing partner Nic Brisbourne, Target Global partner Malin Holmberg and DocSend co-founder and chief executive officer Russ Heddleston will sit down together and dish out all their best pieces of advice on the Extra Crunch Stage at TechCrunch Disrupt Berlin Dec. 11th and 12th.

Heddleston is making the trip out from San Francisco, where he operates a venture-backed business, DocSend, a platform that facilities secure document sharing analytics. Heddleston writes frequently for TechCrunch as a contributor. Recently, he penned this piece on the first mover advantage in startup fundraising and this one on the best times of year to seek venture capital.

Holmberg is joining us from London where she invests in high-growth tech companies across Europe out of Target Global, a fund with €700 million in assets under management. Holmberg previously focused on tech innovation at Tele2 in Stockholm and Vodafone in London. Before joining Tele2, she had stints at Marakon Associates, ATKearney and Morgan Stanley.

Finally, Nic Brisbourne, another London-based venture capital firm, will shed light on his career as an investor and more at our event in December. Brisbourne founded Forward Partners, a backer of Big Health, Zopa and more, in 2013 and invests in startups from the idea stage to the seed stage. Prior to launching Forward Partners, Brisbourne was a partner at Draper Esprit.

Make sure to stop by this session for realistic advice from venture capitalists and founders themselves.

Tickets to Disrupt Berlin are available here.

Starling Bank, the U.K.-based challenger bank founded by banking veteran Anne Boden, has raised an additional £30 million in funding.

In what was likely already agreed follow-on funding, perhaps contingent on milestones being met, previous backer Merian Chrysalis led the round with an investment of £20 million. JTC, another of Starling’s existing investors, also participated, adding a further £10 million.

Starling says the new funding will support increased investment in its consumer and SME bank accounts, as well as its B2B banking services. The capital will also be used to accelerate expansion into Europe.

Launched in May 2017, Starling has raised £263 million to date. In February this year it disclosed a £75 million funding round, and in the same month was awarded £100 million from the Capabilities and Innovation Fund, which was set up by Royal Bank of Scotland to fulfill European state aid conditions after a bailout during the financial crisis. Starling is using the CIF award to build out its SME account.

Meanwhile, the challenger bank says it is very close to reaching 1 million accounts opened. The number at time of publication was 930,000 accounts, with the 1 million mark expected within a few weeks.

That isn’t quite on par with competitors such as Monzo, Revolut or N26, all of which have several million opened accounts and have been growing significantly faster — even if that hyper growth isn’t without problems. However, Starling has always talked up its average bank deposits number as higher than other upstarts, evidence that consumers are using new banking offerings in different ways and not always as their primary salary account.

Cue statement from Boden: “This latest investment of £20 million from Merian Chrysalis will support Starling’s rapid growth and help us reach one million customers and £1 billion on deposit within weeks. It will also help us accelerate our global expansion, starting in Europe, so that even more people can benefit from the Starling app.”

Platform power is a helluva a drug. Do a search on Google’s Play store in Europe and you’ll find the company’s own Gboard app has an age rating of PEGI 3 — aka the pan-European game information labelling system which signifies content is suitable for all age groups.

PEGI 3 means it may still contain a little cartoon violence. Say, for example, an emoji fist or middle finger.

Now do a search on Play for the rival Fleksy keyboard app and you’ll find it has a PEGI 12 age rating. This label signifies the rated content can contain slightly more graphic fantasy violence and mild bad language.

The discrepancy in labelling suggests there’s a material difference between Gboard and Fleksy — in terms of the content you might encounter. Yet both are pretty similar keyboard apps — with features like predictive emoji and baked in GIFs. Gboard also lets you create custom emoji. While Fleksy puts mini apps at your fingertips.

A more major difference is that Gboard is made by Play Store owner and platform controller, Google. Whereas Fleksy is an indie keyboard that since 2017 has been developed by ThingThing, a startup based out of Spain.

Fleksy’s keyboard didn’t used to carry a 12+ age rating — this is a new development. Not based on its content changing but based on Google enforcing its Play Store policies differently.

The Fleksy app, which has been on the Play Store for around eight years at this point — and per Play Store install stats has had more than 5M downloads to date — was PEGI 3 rating until earlier this month. But then Google stepped in and forced the team to up the rating to 12. Which means the Play Store description for Fleksy in Europe now rates it PEGI 12 and specifies it contains “Mild Swearing”.

The Play store’s system for age ratings requires developers to fill in a content ratings form, responding to a series of questions about their app’s content, in order to obtain a suggested rating.

Fleksy’s team have done so over the years — and come up with the PEGI 3 rating without issue. But this month they found they were being issued the questionnaire multiple times and then that their latest app update was blocked without explanation — meaning they had to reach out to Play Developer Support to ask what was going wrong.

After some email back and forth with support staff they were told that the app contained age inappropriate emoji content. Here’s what Google wrote:

During review, we found that the content rating is not accurate for your app… Content ratings are used to inform consumers, especially parents, of potentially objectionable content that exists within an app.

For example, we found that your app contains content (e.g. emoji) that is not appropriate for all ages. Please refer to the attached screenshot.

In the attached screenshot Google’s staff fingered the middle finger emoji as the reason for blocking the update:

 

“We never thought a simple emoji is meant to be 12+,” ThingThing CEO Olivier Plante tells us.

With their update rejected the team was forced to raise the rating of Fleksy to PEGI 12 — just to get their update unblocked so they could push out a round of bug fixes for the app.

That’s not the end of the saga, though. Google’s Play Store team is still not happy with the regional age rating for Fleksy — and wants to push the rating even higher — claiming, in a subsequent email, that “your app contains mature content (e.g. emoji) and should have higher rating”.

Now, to be crystal clear, Google’s own Gboard app also contains the middle finger emoji. We are 100% sure of this because we double-checked…

This is not surprising. Pretty much any smartphone keyboard — native or add-on — would contain this symbol because it’s a totally standard emoji.

But when Plante pointed out to Google that the middle finger emoji can be found in both Fleksy’s and Gboard’s keyboards — and asked them to drop Fleksy’s rating back to PEGI 3 like Gboard — the Play team did not respond.

A PEGI 16 rating means the depiction of violence (or sexual activity) “reaches a stage that looks the same as would be expected in real life”, per official guidance on the labels, while the use of bad language can be “more extreme”, and content may include the use of tobacco, alcohol or illegal drugs.

And remember Google is objecting to “mature” emoji. So perhaps its app reviewers have been clutching at their pearls after finding other standard emojis which depict stuff like glasses of beer, martinis and wine…

Over on the US Play Store, meanwhile, the Fleksy app is rated “teen”.

While Gboard is — yup, you guessed it! — ‘E for Everyone’…

 

Plante says the double standard Google is imposing on its own app vs third party keyboards is infuriating, and he accuses the platform giant of anti-competitive behavior.

“We’re all-in for competition, it’s healthy… but incumbent players like Google playing it unfair, making their keyboard 3+ with identical emojis, is another showcase of abuse of power,” he tells TechCrunch.

A quick search of the Play Store for other third party keyboard apps unearths a mixture of ratings — most rated PEGI 3 (such as Microsoft-owned SwiftKey and Grammarly Keyboard); some PEGI 12 (such as Facemoji Emoji Keyboard which, per Play Store’s summary contains “violence”).

Only one that we could find among the top listed keyboard apps has a PEGI 16 rating.

This is an app called Classic Big Keyboard — whose listing specifies it contains “Strong Language” (and what keyboard might not, frankly!?). Though, judging by the Play store screenshots, it appears to be a fairly bog standard keyboard that simply offers adjustable key sizes. As well as, yes, standard emoji.

“It came as a surprise,” says Plante describing how the trouble with Play started. “At first, in the past weeks, we started to fill in the rating reviews and I got constant emails the rating form needed to be filled with no details as why we needed to revise it so often (6 times) and then this last week we got rejected for the same reason. This emoji was in our product since day 1 of its existence.”

Asked whether he can think of any trigger for Fleksy to come under scrutiny by Play store reviewers now, he says: “We don’t know why but for sure we’re progressing nicely in the penetration of our keyboard. We’re growing fast for sure but unsure this is the reason.”

“I suspect someone is doubling down on competitive keyboards over there as they lost quite some grip of their search business via the alternative browsers in Europe…. Perhaps there is a correlation?” he adds, referring to the European Commission’s antitrust decision against Google Android last year — when the tech giant was hit with a $5BN fine for various breaches of EU competition law. A fine which it’s appealing.

“I’ll continue to fight for a fair market and am glad that Europe is leading the way in this,” adds Plante.

Following the EU antitrust ruling against Android, which Google is legally compelled to comply with during any appeals process, it now displays choice screens to Android users in Europe — offering alternative search engines and browsers for download, alongside Google’s own dominate search  and browser (Chrome) apps.

However the company still retains plenty of levers it can pull and push to influence the presentation of content within its dominant Play Store — influencing how rival apps are perceived by Android users and so whether or not they choose to download them.

So requiring that a keyboard app rival gets badged with a much higher age rating than Google’s own keyboard app isn’t a good look to say the least.

We reached out to Google for an explanation about the discrepancy in age ratings between Fleksy and Gboard and will update this report with any further response. At first glance a spokesman agreed with us that the situation looks odd.

Law enforcement tech outfitter Axon has announced that it will include automated license plate recognition in its next generation of dash cams. But its independent ethics board has simultaneously released a report warning of the dire consequences should this technology be deployed irresponsibly.

Axon makes body and dash cams for law enforcement, the platform on which that footage is stored (Evidence.com), and some of the weapons officers use (Taser, the name by which the company was originally known). Fleet 3 is the new model of dash cam, and by recognizing plate numbers will come with the ability to, for example, run requested plates without an officer having to type them in while driving.

The idea of including some kind of image recognition in these products has naturally occurred to them, and indeed there are many situations where law enforcement where such a thing would be useful; Automated icense plate recognition, or ALPR, is no exception. But the ethical issues involved in this and other forms of image analysis (identifying warrant targets based on body cam footage for instance) are many and serious.

In an effort to earnestly engage with these issues and also to not appear evil and arbitrary (as otherwise it might), Axon last year set up an independent advisory board that would be told of Axon’s plans and ideas and weigh in on them in official reports. Today they issued their second, on the usage of ALPR.

Although I’ll summarize a few of its main findings below, the report actually makes for very interesting reading. The team begins by admitting that there is very little information on how police actually use ALPR data, which makes it difficult to say whether it’s a net positive or negative, or whether this or that benefit or risk is currently in play.

That said, the very fact that ALPR use is largely undocumented is evidence in itself of negligence on the part of authorities to understand and limit the potential uses of this technology.

“The unregulated use of ALPRs has exposed millions of people subject to surveillance by law enforcement, and the danger to our basic civil rights is only increasing as the technology is becoming more common,” said Barry Friedman, NYU law professor and member of the ethics board, in a press release. “It is incumbent on companies like Axon to ensure that ALPRs serve the communities who are subject to ALPR usage. This includes guardrails to ensure their use does not compromise civil liberties or worsen existing racial and socioeconomic disparities in the criminal justice system.”

You can see that the ethics board does not pull its punches. It makes a number of recommendations to Axon, and it should come as no surprise that transparency is at the head of them.

Law enforcement agencies should not acquire or use ALPRs without going through an open, transparent, democratic process, with adequate opportunity for genuinely representative public analysis, input, and objection.

Agencies should not deploy ALPRs without a clear use policy. That policy should be made public and should, at a minimum, address the concerns raised in this report.

Vendors, including Axon, should design ALPRs to facilitate transparency about their use, including by incorporating easy ways for agencies to share aggregate and de-identified data. Each agency then should share this data with the community it serves.

And let’s improve security too, please.

Interestingly the board also makes a suggestion on the part of conscientious objectors to the current draconian scheme of immigration enforcement: “Vendors, including Axon, must provide the option to turn off immigration-related alerts from the National Crime Information Center so that jurisdictions that choose not to participate in federal immigration enforcement can do so.”

There’s an aspect of state’s rights and plenty of other things wrapped up in that, but it’s a serious consideration these days. A system like this shouldn’t be a cat’s paw for the feds.

Axon, for its part, isn’t making any particularly specific promises, partly because the board’s recommendations reach beyond what it is capable of promising. But it did agree that the data collected by its systems will never be sold for commercial purposes. “We believe the data is owned by public safety agencies and the communities they serve, and should not be resold,” said Axon founder and CEO Rick Smith in the same press release.

I asked for Axon’s perspective on the numerous other suggestions made in the report. A company representative said that Axon appreciates the board’s “thoughtful guidance” and agrees with “their overall approach.” More specifically, the statement continued:

In the interest of transparency, both with our law enforcement customers and the communities they serve, we have announced this initiative approximately a year ahead of initial deployments of Axon Fleet 3. This time period will give us the opportunity to define best practices and a model framework for implementation through conversations with leading public safety and civil liberties groups and the Ethics Board. Prior to releasing the product, we will issue a specific and detailed outline of how we are implementing relevant safeguards including items such as data retention and ownership, and creating an ethical framework to help prevent misuse of the technology.

It’s good that this technology is being deployed amidst a discussion of these issues, but the ethics board isn’t The Board, and Axon (let alone its subordinate ethics team) can’t dictate public policy.

This technology is coming, and if the communities most impacted by it and things like it want to protect themselves, or if others want to ensure they are protected, the issues in the report should be carefully considered and brought up as a matter of policy with local governments. That’s where the recommended changes can really start to take root.

Axon Ethics Report 2 v2 by TechCrunch on Scribd

Fabric, the startup that wants to make automated logistics available to retailers of all sizes, announced today it has raised $110 million in Series B funding. The round was led by Corner Ventures, with participation from Aleph, Canada Pension Plan Investment Board (CPPIB), Innovation Endeavors, La Maison, Playground Ventures and Temasek.

This brings the total funding raised so far by Fabric (formerly called CommonSense Robotics) to $136 million. Its last round was a $20 million Series A announced in February 2018. Fabric also said today that it is launching a platform model that will allow its clients to build micro-fulfillment centers on their own property that use the startup’s AI and robotics-based technology.

Fabric was founded in Tel Aviv in 2015 and is now headquartered in New York. Its Series B will be used for its U.S. expansion, where it currently has 14 sites under contract, including three micro-fulfillment centers that are currently being built in New York City. One of those is scheduled to open by the first quarter of next year and will be available to retailers who want to make on-demand fulfillment, including one-hour deliveries, available to their customers.

Last October, Fabric opened its first micro-fulfillment center in Tel Aviv, giving an inside look into how the company’s system works. Robots move around the warehouse, picking up inventory so human workers can stay at a scanning station. Fabric says the 6,000 square feet station now processes up to 600 orders a day, including one-hour deliveries.

Steve Hornyak, chief commercial officer at Fabric, told TechCrunch that it plans to expand its platform model into at least one other U.S. city next year and currently has deals with several U.S. retailers that will be announced in the coming months.

Fabric’s logistics platform can be used by retailers of any size, but “for SMBs, our service model is particularly revolutionary as it has been built to allow for multiple tenants leveraging the same platform. It enables retailers that don’t have the resources or infrastructure to build an entirely new fulfillment operation themselves to access a world-class logistics solution that enables profitable on-demand fulfillment,” he said.

Of course, retailers and logistics providers in the U.S. have to deal with the specter of Amazon, which Hornyak said Fabric views “as the force that’s fundamentally driving the market, transforming retail as we know it at a dizzying pace and pushing all other players to adapt in a rapidly evolving space.”

“When Amazon announces it’s providing free same-day deliveries of $1 items, that becomes the consumer expectation—and the faster the delivery, the more complicated and expensive it is,” he added. “Our aim is to enable all other retailers to stay relevant and competitive in this world that Amazon has created, providing the operational, strategic and financial infrastructure they need to meet consumer expectations profitably, sustainably, and at scale in an on-demand world.”

As part of its expansion plans, Fabric plans to grow its commercial, operations and tech support teams in the U.S., as well as its engineering team in Tel Aviv.

In a press statement, Corner Ventures managing partner John Cadeddu said “Fabric is the micro-fulfillment market leader with a production-proven platform that drives tremendous value for its retail partners and consumers alike. We are delighted to be partnering with the Fabric team in their incredible vision to reinvent how goods are fulfilled and delivered in this on-demand world, ultimately empowering retailers to provide faster deliveries at lower costs and at scale.”

On 11-12 December, thousands of savvy startuppers will flock to Germany for Disrupt Berlin 2019. Disrupt events, the premiere technology conferences hosted by TechCrunch, are known the world over as the place to launch, network, invest in and collaborate with the international early-stage startup community.

Disrupt offers plenty of startup action — world-class speakers, Startup Battlefield, hundreds of exhibitors, workshops, a hackathon and more. And it turns out that early-stage startup founders have lots of different reasons for loving Disrupt. Let us count the ways.

Education and collaboration

Tech evolves so quickly, amirite? When a startup has a new or complex concept, Disrupt is a great place to educate your community. Or to learn about new advances.

Case in point: Vlad Larin, the co-founder of Zeroqode, went to Disrupt Berlin to evangelize the startup’s no-code technology.

“We wanted to help people understand the technology and to spread the word that no-code development is real and it’s happening today. Exhibiting in Startup Alley at Disrupt Berlin was the perfect place for us to start those conversations.”

Larin also viewed Disrupt as an opportunity to meet like-minded people and to build collaborative relationships with other startups.

“We met all kinds of people looking for new ideas, collaboration and inspiration — people who want to learn and exchange ideas about the latest products and industry trends.”

Meet other founders

Disrupt provides plenty of opportunity to meet and learn from other founders. Case in point: Caleb John, the co-founder of Cedar Robotics, went to Disrupt San Francisco to meet other early-stage startup founders, something he’d never experienced. The chance to meet seasoned entrepreneurs from a range of industries, to build relationships and to learn from them was a major draw.

“Just talking about my business with other founders who understand what it takes to build a startup was incredibly valuable. They can look at your roadmap from a non-technical viewpoint, help you avoid pitfalls and make sure you’re running things smoothly in terms of your business practices.”

John built connections with R&D startups and potential investors — collaborative relationships he says may pay off down the road.

“Building relationships with those firms was very helpful, and I say going to TechCrunch Disrupt is a no-brainer. It’s something every startup founder should experience.”

Find funding

Cash is the lifeblood of any early stage startup and Disrupt is ripe with investors eager to fatten their investment portfolios. Case in point: David Hall, co-founder and president of Park and Diamond, went to Disrupt hoping to raise a round of funding.

“Investors from all over the world come to Disrupt. The chance to have those discussions and to potentially form relationships was invaluable.”

Hall credits his Disrupt experience with improving the startup’s overall growth.

“The exposure we received at TechCrunch Disrupt completely changed our trajectory and made it easier to raise funds and jump to the next stage.”

The funding they received as a result of connections cultivated at Disrupt allowed them to relocate from Virginia to New York and to make the company’s first key hires.

“TechCrunch draws that entrepreneurial community, and you never know when you’ll bump into the right person. Disrupt offers so many opportunities — you’d be foolish not to go.”

Disrupt Berlin 2019 takes place on 11-12 December. Whatever your reasons, don’t miss the opportunities awaiting you at Disrupt. Buy your super early bird passes here and save up to €600. We’ll see you in Berlin!

Is your company interested in sponsoring or exhibiting at Disrupt Berlin 2019? Contact our sponsorship sales team by filling out this form.

Amazon Counter’s, the online retailer’s in-store pickup option that launched this summer at 100 Rite Aid locations in the U.S., is now expanding. The company announced today the service will reach thousands more locations with the additions of new partners GNC, Health Mart, and Stage Stores.

GNC is the well-known health and nutrition chain. Health Mart operates a network of independently owned and operated pharmacies. Stage Stores, meanwhile, operates Gordmans off-price stores, Bealls, Goody’s, Palais Royal, Peebles, and Stage department stores.

Amazon Counter is part of the growing Amazon Hub network, which offers pickup locations for Amazon deliveries as well as thousands of pickup Lockers across the U.S. The system appeals to those who don’t find home delivery convenient — perhaps because they work in an office or don’t have anywhere safe to receive packages.

Amazon today offers a range of alternatives to leaving packages on the doorstep, including Amazon Counter and Amazon Lockers, Key by Amazon for keyless entry into homes and vehicles, and Amazon Day delivery dates.

With Counter, Amazon’s system is designed to be minimally disruptive to the brick-and-mortar’s day-to-day operations. Customers simply show a barcode to the store employee to receive their package.

It may seem surprising that the very retailers Amazon has been putting out of business with its online superstore would agree to partner up like this. But as it turns out, Amazon can drive traffic offline, too.

Department store chain Kohl’s, for example, recently expanded its Amazon partnership on returns to all its 1,150 U.S. locations after its initial trials drove significant revenue increases. Struggling Stein Mart also recently embraced the enemy with plans to install Amazon Lockers in some 200 stores, hoping for the same result.

The new set of Amazon Counter partners, could similarly benefit.

“The response we’ve heard from our customers and partners after the launch of Counter earlier this year has been tremendous,” said Patrick Supanc, Worldwide Director of Amazon Hub, in a statement. “This new network of pickup points gives customers a pickup experience that is fast, flexible and convenient, and partners are thrilled with the strong engagement and additional foot traffic Counter is driving for their stores.”

Though not mentioned by Amazon, it’s worth pointing out that some of its Counter partnerships are with brick-and-mortar pharmacies. After Amazon’s acquisition of online pharmacy PillPack and the launch of its healthcare JV with Berkshire Hathaway and JP Morgan, some expect Amazon will move deeper into the world of pharmaceuticals in the future. A line of retail pharmacy partners couldn’t hurt.

 

 

Limited partners or  LPs  — the pension funds, the university endowments, the family offices that largely provide venture firms with their spending money — are receiving a lot of attention from venture capitalists, most of it unwanted. VCs have begun knocking down their doors with requests for fresh capital commitments so they’ll have money to invest if the market cools down.

The problem is, many of these LPs are already “over-allocated.” LPs traditionally invest in many asset classes, such as public equities, and they allocate a small percentage of their portfolio to venture capital. Suddenly, they’re finding they’ve forked over more than they’d intended to VCs.

There are several reasons for this situation. First, VCs are returning to them ever faster for more capital  — sometimes in less than two years’ time  — because they are in vesting at such a furious pace.

Compounding the problem, not all LPs have received returns from their VC investments that they can recycle into new venture capital allocations. In some cases, this capital is still tied up in startups that are raising much more money than in the past and staying private longer. “We have some large exposures to blue chip names where IPOs have been rumored to be coming for a long time already, and now it’s maybe 2021, maybe 2022,” says one university endowment manager who asked not to be named. In other cases where startups have gone public, falling prices have prompted VCs to hang on to their shares instead of distribute them.

The result is that LPs are having to cut back on the number of managers they can fund, and that could mean bad news for venture capitalists and startups alike. These LPs don’t have much choice. As another LP who asked not to be named explains it, “We have a pretty structured allocation process, and we’re really trying to be creative,” he says. One venture manager who reappeared too quickly for more money was  “easy to walk away from,” says this person. “Others, we’re having to do financial backflips for them to remain strong partners.”

Either way, this LP adds, “We can’t add any new relationships right now,” meaning new venture teams in particular are out of luck. “When [VCs] shorten their fundraising cycle by nine months to a year, you can only squeeze the balloon so much.”

Backing up the truck

SoftBank’s $100 billion “Vision Fund” is one big reason LPs find themselves in their current predicament. From the moment Softbank began waving money around several years ago, it launched a vicious cycle.  According to Chris Douvos, whose investment firm, Ahoy Capital, owns stakes in such venture funds as True Ventures and First Round Capital, “When Andreessen Horowitz hit the scene a decade ago, they changed the tempo of investing and everyone got more aggressive in their dealmaking as a response. Then SoftBank entered the picture in a big way, and it was like a16z on steroids.”

In order to compete with Softbank’s money cannon, other funds supersized their own investment vehicles, and startup valuations soared. Uber and WeWork were prime examples. Uber went public, pricing below expectations, and its shares have been falling ever since. WeWork and its unconventional S-1 filing never made it past the starting gate.

Competitors are enjoying some schadenfreude: they can’t help but delight in SoftBank’s pain. But WeWork’s slow-motion implosion comes at an uncertain moment in time. If a second massive Vision Fund doesn’t come together — and that seems more than likely at this point — it would mean a sharp drop-off in startup funding. That alone might be fine. It might even be healthy for the ecosystem. But the world is also grappling with a U.S. administration that appears increasingly unhinged. More, a recession that seemed far away as recently as early July but could be around the corner.

Collectively, these elements could change the picture dramatically for LPs. Specifically, if LPs aren’t getting enough money back from VCs and their public holdings fall in value because the markets hit the skids, their commitments to venture funds could become even larger as a percentage basis of their overall portfolio. That would create even more imbalance in their asset allocation. Which would mean even less money for new funds. Which would translate into less money for startups. 

It’s a vicious cycle of another kind, in short.

Maybe it won’t happen. We aren’t there yet. But VCs of all sizes would be wise to take a lesson from their entrepreneurs and perfect their pitches. As is becoming clear, LPs can’t dole out capital at the same pace forever, especially without more money coming back to them. If VCs want to continue raising new funds, or raising funds as fast, they’d better have a very good story to tell.