Category: UNCATEGORIZED

The four-year-old, Southern California athletic brand Vuori has picked up a $45 million growth equity investment from the investment firm Norwest Venture Partners.

The company, which says it’s profitable, will now join a stable of consumer startup brands that includes Birdies, Casper Sleep, Grove Collaborative, Jolyn, Kendra Scott, Madison Reed and Topo Athletic.

Founded by Joe Kudla, Vuori began as an athletic wear company focused on selling shorts, sweatshirts, hoodies, and t-shirts to men in a more muted palette than other options.

Focused on retailers like REI, Nordstrom, Equinox and Core Power Yoga, the company’s clothes retail from anywhere between $32 for shirts and hats and $188 for its most expensive jacket. 

“As devoted customers, it was apparent to us that Vuori had built versatile products with tremendous energy and soul,” said Jon Kossow, managing partner at Norwest. “This is exactly the type of positive brand experience we search for in our consumer investments, and we look forward to supporting Joe and the team as they continue to bring new products to market and delight their customers.”

It’s generally agreed that Higher Education in the United States has gradually become more and more unaffordable. Students are dependent on external financial resources for which many of them do not even qualify. Students that are able to secure a loan, often have to take on debts they can’t really afford. And if they don’t eventually land a job with enough income, they are saddled with debt for a very long time.

Much of the problem is that most student loan companies are not concerned with the overall financial well-being of their students, who often feel stuck, trying to repay a loan they cannot afford, without a backup organization that will help them figure it all out. We can see that in the figures. The student loan debt in the US has just reached $1.6 trillion dollars and more than quadrupled in the last 15 years.

With the student debt crisis getting out of hand, the topic has become a semi-permanent issue in the news.

Launching next week is a new startup under the Ycombinator accelerator called Blair which aims to address this seemingly intractable problem.

Blair finances college students through what’s called “Income Share Agreements” (ISA). Students receive funding for their tuition or costs of living and in turn pay back a percentage of their income for a fixed period of time after they graduate. Repayments adjust to individual income circumstances and by deferring payments in times of low income we protect the downside of the students.

It thus provides students with an alternative to debt which is tailored to their individual circumstances to ensure affordability. Blair’s underwriting process is based on the future potential of a student and not their credit score or co-signer, which could be a deal-breaker in traditional settings. Blair’s competitors are traditional student lenders: Sallie Mae, Sofi, Earnest, Wells Fargo, Citizen Bank, other banks. ISA companies include Vemo Education, Leif, Almapact, Lumni and Defynance.

In contrast to traditional student loan companies, Blair relies on being more aligned with the financial incentives of students, the idea being that it supports students in improving their employability by placing them in internships early, giving them access to industry mentors and coaching them individually on their career prospects.

The founders came up with the idea from personal experience. Constantin, one of the co-founders, is on an ISA himself, as are a lot of the company’s friends. They stumbled across the problem of student debt over and over again while studying in the US and noticed a stark difference between their friends in the US and their friends in Germany. The main reason is that 40% of the students at their alma maters in Germany use Income Share Agreements to finance their studies. They plan to use their experience from Europe and make ISAs more widespread in the US.

Students apply for funding on the website, and within minutes and get a personal quote shortly after. If they accept the quote, they receive their funding within a couple of days which they can use to pay for their tuition or cost of living. Once Blair issues the funding, it crafts a holistic career plan for each individual student and starts supporting them in landing the internships and jobs they want. This includes, for example, optimizing their application documents, preparing them for interviews or connecting them to mentors in their target industry. For context, they batch students together in funds and let external investors invest in the funds.

It receives a cut of the student repayments and carried interest if a student fund performs better than the target return. Additionally, it partners with companies that hire talent through the platform.

Blair has raised the first fund for 50 students and disbursed money for the first ten. The rest of the students will receive their money within the next weeks. After YC’s Demo Day the company will deploy a larger fund that will support 200 additional students.

“Our underwriting model is unique since we have based it on data from concluded ISA funds in European countries,” says cofounder Mike Mahlkow.

“In the last two weeks, we received applications for funding totaling over 4 million dollars. Many of our students come from underprivileged backgrounds, often without any support network. Our goal is to build a human capital platform where individuals can access capital based on their future potential instead of their past and investors can participate in the upside potential of individuals in an ethical way” he adds.

WebKit, the open source engine that underpins Internet browsers including Apple’s Safari browser, has announced a new tracking prevention policy that takes the strictest line yet on the background and cross-site tracking practices and technologies which are used to creep on Internet users as they go about their business online.

Trackers are technologies that are invisible to the average web user, yet which are designed to keep tabs on where they go and what they look at online — typically for ad targeting but web user profiling can have much broader implications than just creepy ads, potentially impacting the services people can access or the prices they see, and so on. Trackers can also be a conduit for hackers to inject actual malware, not just adtech.

This translates to stuff like tracking pixels; browser and device fingerprinting; and navigational tracking to name just a few of the myriad methods that have sprouted like weeds from an unregulated digital adtech industry that’s poured vast resource into ‘innovations’ intended to strip web users of their privacy.

WebKit’s new policy is essentially saying enough: Stop the creeping.

But — and here’s the shift — it’s also saying it’s going to treat attempts to circumvent its policy as akin to malicious hack attacks to be responded to in kind; i.e. with privacy patches and fresh technical measures to prevent tracking.

“WebKit will do its best to prevent all covert tracking, and all cross-site tracking (even when it’s not covert),” the organization writes (emphasis its), adding that these goals will apply to all types of tracking listed in the policy — as well as “tracking techniques currently unknown to us”.

“If we discover additional tracking techniques, we may expand this policy to include the new techniques and we may implement technical measures to prevent those techniques,” it adds.

“We will review WebKit patches in accordance with this policy. We will review new and existing web standards in light of this policy. And we will create new web technologies to re-enable specific non-harmful practices without reintroducing tracking capabilities.”

Spelling out its approach to circumvention, it states in no uncertain terms: “We treat circumvention of shipping anti-tracking measures with the same seriousness as exploitation of security vulnerabilities,” adding: “If a party attempts to circumvent our tracking prevention methods, we may add additional restrictions without prior notice. These restrictions may apply universally; to algorithmically classified targets; or to specific parties engaging in circumvention.”

It also says that if a certain tracking technique cannot be completely prevented without causing knock-on effects with webpage functions the user does intend to interact with, it will “limit the capability” of using the technique” — giving examples such as “limiting the time window for tracking” and “reducing the available bits of entropy” (i.e. limiting how many unique data points are available to be used to identify a user or their behavior).

If even that’s not possible “without undue user harm” it says it will “ask for the user’s informed consent to potential tracking”.

“We consider certain user actions, such as logging in to multiple first party websites or apps using the same account, to be implied consent to identifying the user as having the same identity in these multiple places. However, such logins should require a user action and be noticeable by the user, not be invisible or hidden,” it further warns.

WebKit credits Mozilla’s anti-tracking policy as inspiring and underpinning its new approach.

Commenting on the new policy, Dr Lukasz Olejnik, an independent cybersecurity advisor and research associate at the Center for Technology and Global Affairs Oxford University, says it marks a milestone in the evolution of how user privacy is treated in the browser — setting it on the same footing as security.

“Treating privacy protection circumventions on par with security exploitation is a first of its kind and unprecedented move,” he tells TechCrunch. “This sends a clear warning to the potential abusers but also to the users… This is much more valuable than the still typical approach of ‘we treat the privacy of our users very seriously’ that some still think is enough when it comes to user expectation.”

Asked how he sees the policy impacting pervasive tracking, Olejnik does not predict an instant, overnight purge of unethical tracking of users of WebKit-based browsers but argues there will be less room for consent-less data-grabbers to manoeuvre.

“Some level of tracking, including with unethical technologies, will probably remain in use for the time being. But covert tracking is less and less tolerated,” he says. “It’s also interesting if any decisions will follow, such as for example the expansion of bug bounties to reported privacy vulnerabilities.”

“How this policy will be enforced in practice will be carefully observed,” he adds.

As you’d expect, he credits not just regulation but the role played by active privacy researchers in helping to draw attention and change attitudes towards privacy protection — and thus to drive change in the industry.

There’s certainly no doubt that privacy research is a vital ingredient for regulation to function in such a complex area — feeding complaints that trigger scrutiny that can in turn unlock enforcement and force a change of practice.

Although that’s also a process that takes time.

“The quality of cybersecurity and privacy technology policy, including its communication still leave much to desire, at least at most organisations. This will not change fast,” says says Olejnik. “Even if privacy is treated at the ‘C-level’, this then still tends to be about the purely risk of compliance. Fortunately, some important industry players with good understanding of both technology policy and the actual technology, even the emerging ones still under active research, treat it increasingly seriously.

“We owe it to the natural flow of the privacy research output, the talent inflows, and the slowly moving strategic shifts as well to a minor degree to the regulatory pressure and public heat. This process is naturally slow and we are far from the end.”

For its part, WebKit has been taking aim at trackers for several years now, adding features intended to reduce pervasive tracking — such as, back in 2017, Intelligent Tracking Prevention (ITP), which uses machine learning to squeeze cross-site tracking by putting more limits on cookies and other website data.

Apple immediately applied ITP to its desktop Safari browser — drawing predictable fast-fire from the Internet Advertising Bureau whose membership is comprised of every type of tracker deploying entity on the Internet.

But it’s the creepy trackers that are looking increasingly out of step with public opinion. And, indeed, with the direction of travel of the industry.

In Europe, regulation can be credited with actively steering developments too — following last year’s application of a major update to the region’s comprehensive privacy framework (which finally brought the threat of enforcement that actually bites). The General Data Protection Regulation (GDPR) has also increased transparency around security breaches and data practices. And, as always, sunlight disinfects.

Although there remains the issue of abuse of consent for EU regulators to tackle — with research suggesting many regional cookie consent pop-ups currently offer users no meaningful privacy choices despite GDPR requiring consent to be specific, informed and freely given.

It also remains to be seen how the adtech industry will respond to background tracking being squeezed at the browser level. Continued aggressive lobbying to try to water down privacy protections seems inevitable — if ultimately futile. And perhaps, in Europe in the short term, there will be attempts by the adtech industry to funnel more tracking via cookie ‘consent’ notices that nudge or force users to accept.

As the security space underlines, humans are always the weakest link. So privacy-hostile social engineering might be the easiest way for adtech interests to keep overriding user agency and grabbing their data anyway. Stopping that will likely need regulators to step in and intervene.

Another question thrown up by WebKit’s new policy is which way Chromium will jump, aka the browser engine that underpins Google’s hugely popular Chrome browser.

Of course Google is an ad giant, and parent company Alphabet still makes the vast majority of its revenue from digital advertising — so it maintains a massive interest in tracking Internet users to serve targeted ads.

Yet Chromium developers did pay early attention to the problem of unethical tracking. Here, for example, are two discussing potential future work to combat tracking techniques designed to override privacy settings in a blog post from nearly five years ago.

There have also been much more recent signs Google paying attention to Chrome users’ privacy, such as changes to how it handles cookies which it announced earlier this year.

But with WebKit now raising the stakes — by treating privacy as seriously as security — that puts pressure on Google to respond in kind. Or risk being seen as using its grip on browser marketshare to foot-drag on baked in privacy standards, rather than proactively working to prevent Internet users from being creeped on.

Hey hackathon fans, get ready to pack your bags and book your tickets to Berlin. That’s right, baby, the TC Hackathon returns to Disrupt Berlin 2019 on 11-12 December. We’re looking for creative code warriors of every stripe to compete in a grueling, exhilarating marathon that will test your physical, mental and technical limits.

It won’t cost you a thing to apply or to participate. Heck, we even give you a free Innovator pass to attend. Don’t wait on this opportunity — we’re limiting participation to 500 hackers. Apply to the TC Disrupt Berlin Hackathon 2019, compete against some of the best coders and makers in the world and let your freaky hack flag fly.

TechCrunch vets all applicants and if you make the cut, you’ll join a team (or bring one of your own) and spend the next 36 hours designing, coding and creating something new and amazing.

Curious about these sponsored contests? We’ll roll out specifics on sponsors, challenges and prizes over the next few weeks. In the meantime, check out the sponsored contests, prizes and winners from last year’s Disrupt SF 2018 Hackathon. That’ll give you a sense of the kind of projects to expect.

Once the hack clock runs out and you’ve submitted your creation, a team of experts will judge all completed projects in a science-fair style format and select 10 finalists. On day two, those 10 teams will have two minutes to present and pitch their project on the Extra Crunch Stage. No pressure…just kidding. Lots of pressure.

Sponsors will announce the winners of their individual challenges — which come with cash prizes and other incentives. Then TechCrunch will select the best overall hack — and award that team a $5,000 cash prize.

And don’t worry — we’ll keep you fed, watered and caffeinated throughout the event. You’re gonna need all the energy you can muster.

Competing in the TC Hackathon is fast-paced, exhausting and fun. It’s also a great way to network, impress potential employers or meet your next collaborator. Space is limited and seats will go quickly, so apply to the TC Hackathon at Disrupt Berlin 2019 on 11-12 December. Show us your hack!

Eden Farm is a startup with the ambitious goal of building a food distribution network for Indonesia, where many restaurants currently rely on markets for fresh ingredients.

But this means high markups and unreliable supplies for restaurant owners and lower profits for farmers, co-founder and CEO David Gunawan tells TechCrunch. The company, part of Y Combinator’s current batch, wants to help both by simplifying the supply chain, ensuring stable pricing and reducing food waste. Eden Farm currently focuses on fresh produce and non-perishable items, but plans to expand its product line to meat and seafood, too.

The company launched in 2017 and now supplies produce from 60 farmers to more than 200 restaurants in six major cities: Jakarta, Tangerang, South Tangerang, Bekasi, Depok and Bogor. Eden Farm is currently raising an oversubscribed seed round. Gunawan says the target was originally intended to be $1 million, but has now increased to $1.75 million. Investors include Y Combinator and Everhaus.

Eden Farm started as a farm, but while talking to other farmers and researching the agricultural market, its founders realized there were many problems with food distribution in Indonesia.

“Every restaurant in Indonesia faces a huge problem with supply, stability and extreme price volatility,” Gunawan says. “Fruit and vegetable prices can go up and down around 30% to 50% every day. In peak season, for certain commodities, prices can go up ten times, like chilis in the summer.”

Eden Farm tackles the problem of supply and demand with a mobile app that gives demand forecasts to farmers so they can plan their next harvests. Traditionally, farmers don’t sell produce directly to restaurants, Gunawan says. Instead, their harvest goes through several layers of middlemen before arriving at markets.

Eden Farm is able to ensure price stability and also allow farmers to make more profit by purchasing produce wholesale from them. On the demand side, Eden Farm’s value proposition includes quality control. Before produce is delivered to restaurants, it is inspected and washed. Gunawan says restaurants typically have to dispose around 30% of the produce they purchase from markets, but Eden Farm has a 100% guarantee and will refund the price of any produce that is unusable. It also partners with two large markets in Jakarta to help supply large quantities of vegetables and ensure there are enough supplies during peak season. Gunawan says Eden Farm’s quality control can help save restaurants up to 50%.

Eden Farm wants to build a network similar to Sysco, the American food distribution giant, but it has to solve several problems unique to Indonesia.

“We are serving a very traditional industry. Farmers already have their own way of planting and their own culture, which has lasted for generations, and we’re trying to change that,” says Gunawan. “At first we didn’t know how to talk to them, how to convince them, but we learned a lot about how to pay respect to farmers. Every time we go to a village, for example, we know how to present, who to pay respects to, like the elders there. We have to do that before the elders will introduce us to the farmers in the area.”

The company currently handles about half of its deliveries in-house and uses third-party logistics providers for the rest. Most produce is sourced from farms close to where it is sold so it can be delivered in less than 24 hours, but Eden Farms goes further for some vegetables. For example, potatoes are purchased from farms in Central Java, while carrots come from North Sumatra.

Eden Farm works mostly with small, traditional farms, but it also carries produce like lettuce and kale from hydroponic farms. After finishing Y Combinator, Gunawan says the startup will begin focusing on expanding into five new cities: Bandung, Surabaya, Bali, Medan and Malang. As its order volumes increase, the company will begin focusing on smaller markets and once it hits 25,000 restaurants, expand into meat and seafood.

Imagine a moving tower made of huge cement bricks weighing 35 metric tons. The movement of these massive blocks is powered by wind or solar power plants and is a way to store the energy those plants generate. Software controls the movement of the blocks automatically, responding to changes in power availability across an electric grid to charge and discharge the power that’s being generated.

The development of this technology is the culmination of years of work at Idealab, the Pasadena, Calif.-based startup incubator, and Energy Vault, the company it spun out to commercialize the technology, has just raised $110 million from SoftBank Vision Fund to take its next steps in the world.

Energy storage remains one of the largest obstacles to the large-scale rollout of renewable energy technologies on utility grids, but utilities, development agencies and private companies are investing billions to bring new energy storage capabilities to market as the technology to store energy improves.

Understanding what makes something offensive or hurtful is difficult enough that many people can’t figure it out, let alone AI systems. And people of color are frequently left out of AI training sets. So it’s little surprise that Alphabet/Google -spawned Jigsaw manages to trip over both of these issues at once, flagging slang used by black Americans as toxic.

To be clear, the study was not specifically about evaluating the company’s hate speech detection algorithm, which has faced issues before. Instead it is cited as a contemporary attempt to computationally dissect speech and assign a “toxicity score” — and that it appears to fail in a way indicative of bias against black American speech patterns.

The researchers, at the University of Washington, were interested in the idea that databases of hate speech currently available might have racial biases baked in — like many other datasets that suffered from a lack of inclusive practices during formation.

They looked at a handful of such databases, essentially thousands of tweets annotated by people as being “hateful,” “offensive,” “abusive,” and so on. These databases were also analyzed to find language strongly associated with African American English or white-aligned English.

Combining these two sets basically let them see whether white or black vernacular had a higher or lower chance of being labeled offensive. Lo and behold, black-aligned English was much more likely to be labeled offensive.

For both datasets, we uncover strong associations between inferred AAE dialect and various hate speech categories, specifically the “offensive” label from DWMW 17 (r = 0.42) and the “abusive” label from FDCL 18 (r = 0.35), providing evidence that dialect-based bias is present in these corpora.

The experiment continued with the researchers sourcing their own annotations for tweets, and found that similar biases appeared. But by “priming” annotators with the knowledge that the person tweeting was likely black or using black-aligned English, the likelihood that they would label a tweet offensive dropped considerably.

This isn’t to say necessarily that annotators are all racist or anything like that. But the job of determining what is and isn’t offensive is a complex one socially and linguistically, and obviously awareness of the speaker’s identity is important in some cases, especially in cases where terms once used derisively to refer to that identity have been reclaimed.

What’s all this got to do with Alphabet, or Jigsaw, or Google? Well, Jigsaw is a company built out of Alphabet — which we all really just think of as Google by another name — with the intention of helping moderate online discussion by automatically detecting (among other things) offensive speech. Its PerspectiveAPI lets people input a snippet of text and receive a “toxicity score.”

As part of the experiment, the researchers fed a bunch of the tweets in question to Perspective. What they got saw was “correlations between dialects/groups in our datasets and the Perspective toxicity scores. All correlations are significant, which indicates potential racial bias for all datasets.”

So basically, they found that Perspective was way more likely to label black speech as toxic, and white speech otherwise. Remember, this isn’t a model thrown together on the back of a few thousand tweets — it’s an attempt at a commercial moderation product.

As this comparison wasn’t the primary goal of the research, but rather a byproduct, it should not be taken as some kind of massive takedown of Jigsaw’s work. On the other hand, the differences shown are very significant and quite in keeping with the rest of the team’s findings. At the very least it is, as with the other datasets evaluated, a signal that the processes involved in their creation need to be reevaluated.

I’ve asked the researchers for a bit more information on the paper and will update this post if I hear back. In the meantime you can read the full paper, which was presented at the Proceedings of the Association for Computational Linguistics in Florence, below:

The Risk of Racial Bias in Hate Speech Detection by TechCrunch on Scribd

VMware today confirmed that it is in talks to acquire software development platform Pivotal Software, the service best known for commercializing the open-source Cloud Foundry platform. The proposed transaction would see VMware acquire all outstanding Pivotal Class A stock for $15 per share, a significant markup over Pivotal’s current share price (which unsurprisingly shot up right after the announcement).

Pivotal’s shares have struggled since the company’s IPO in April 2018. The company was originally spun out of EMC Corporation (now DellEMC) and VMware in 2012 to focus on Cloud Foundry, an open-source software development platform that is currently in use by the majority of Fortune 500 companies. A lot of these enterprises are working with Pivotal to support their Cloud Foundry efforts. Dell itself continues to own the majority of VMware and Pivotal, and VMware also owns an interest in Pivotal already and sells Pivotal’s services to its customers as well. It’s a bit of an ouroboros of a transaction.

Pivotal Cloud Foundry was always the company’s main product, but it also offered additional consulting services on top of that. Despite improving its execution since going public, Pivotal still lost $31.7 million in its last financial quarter as its stock price traded at just over half of the IPO price. Indeed, the $15 per share VMware is offering is identical to Pivotal’s IPO price.

An acquisition by VMware would bring Pivotal’s journey full circle, though this is surely not the journey the Pivotal team expected. VMware is a Cloud Foundry Foundation platinum member, together with Pivotal, DellEMC, IBM, SAP and Suse, so I wouldn’t expect any major changes in VMware’s support of the overall open-source ecosystem behind Pivotal’s core platform.

It remains to be seen whether the acquisition will indeed happen, though. In a press release, VMware acknowledged the discussion between the two companies but noted that “there can be no assurance that any such agreement regarding the potential transaction will occur, and VMware does not intend to communicate further on this matter unless and until a definitive agreement is reached.” That’s the kind of sentence lawyers like to write. I would be quite surprised if this deal didn’t happen, though.

Buying Pivotal would also make sense in the grand scheme of VMware’s recent acquisitions. Earlier this year, the company acquired Bitnami and last year, it acquired Heptio, the startup founded by two of the three co-founders of the Kubernetes project, which now forms the basis of many new enterprise cloud deployments and, most recently, Pivotal Cloud Foundry.

International money transfer startup TransferWise’s debit card is now available in Australia and New Zealand, with a Singapore launch expected by the end of this year as the company expands its presence in the Asia-Pacific region. TransferWise’s debit card, which features low, transparent fees and exchange rates, first launched in the United Kingdom and Europe last year before arriving in the United States in June. Since its launch, the company claims the debit card has been used for 15 million transactions.

Australian and New Zealand customers will have access to the TransferWise Platinum debit Mastercard (a business debit card is also available). Cards are linked to TransferWise accounts, which give holders bank account numbers and details in multiple countries, making it easier and cheaper to send and receive multiple currencies. The company says that over the past year, customers have deposited more than $10 billion in their accounts.

TransferWise’s debit cards allow users to spend in more than 40 currencies at real exchange rates. In an email, co-founder and CEO Kristo Käärmann told TechCrunch that TransferWise decided to launch its debit card in Australia and New Zealand because its business there has already been growing quickly. “In addition to responding to customer demand, launching the card in Australia and New Zealand was also driven by the fact that Aussies and Kiwis are being overcharged by banks for using their own money abroad. It is expensive to use debit, travel and credit cards for spending or withdrawals,” he said.

Käärmann added that “independent research conducted by Capital Economics showed that Australians lost $2.14 billion last year alone just for using their bank issued card abroad. This is because banks and other providers charge transaction fees every time someone uses their card abroad, plus an inflated exchange rate. Similarly, in New Zealand, Kiwis lost $1 billion simply for using their card abroad.”

One of TransferWise’s competitive advantages is that unlike most legacy banking and money transfer services, its accounts and cards were designed from the start to be used internationally. “While there are existing multi-currency cards that exist in Australia and New Zealand, they are prohibitively expensive to use. For example in Australia, the TransferWise Platinum debit Mastercard is on average 11 times cheaper than most travel, debit, prepaid and credit cards,” Käärmann said.

TransferWise cards don’t have transaction fees or exchange rate markups and cardholders are allowed to withdraw up to AUD $350 every 30 days for free at any ATM in the world.

The company is currently talking to regulators in several Asian countries, a process that can take up to two years, Käärmann said. It was recently granted a remittance license in Malaysia and plan to make its remittance service available there by end of this year.

Flatfair, a London-based fintech that lets landlords offer “deposit-free” renting to tenants, has raised $11 million in funding.

The Series A round is led by Index Ventures, with participation from Revolt Ventures, Adevinta, Greg Marsh (founder of Onefinestay), Jeremy Helbsy (former Savills CEO), and Taavet Hinrikus (TransferWise co-founder).

With the new capital, Flatfair says it plans to hire a “significant” number of product engineers, data scientists and business development specialists.

The startup will also invest in building out new features as it looks to expand its platform with “a focus on making renting fairer and more transparent for landlords and tenants”.

“With the average deposit of £1,110 across England and Wales being just shy of the national living wage, tenants struggle to pay expensive deposits when moving into their new home, often paying double deposits in between tenancies,” Flatfair co-founder and CEO Franz Doerr tells me when asked to frame the problem the startup has set out to solve.

“This creates cash flow issues for tenants, in particular for those with families. Some tenants end up financing the deposit through friends and family or even accrue expensive credit card debt. The latter can have a negative impact on the tenants credit rating, further restricting important access to credit for things that really matter in a tenants life”.

To remedy this, Fatfair’s “insurance-backed” payment technology provides tenants with the option to pay a per-tenancy membership fee instead of a full deposit. They do this by authorising their bank account via debit card with Flatfair, and when it is time to move out, any end-of-tenancy charges are handled via the Flatfair portal, including dispute resolution.

So, for example, rather than having to find a rental deposit equivalent to a month’s rent, which in theory you would get back once you move out sans any end-of-tenancy charges, with Fatfair you pay about a quarter of that as a non-refundable fee.

Of course, there are pros and cons to both, but for tenants that are cashflow restricted, the startup’s model at least offers an alternative financing option.

In addition, tenants registered with Flatfair are given a “trust score” that can go up over time, helping them move tenancy more easily in the future. The company is also trialing the use of Open Banking to help with credit checks by analysing transaction history to verify that you have paid rent regularly and on time in the past.

Landlords are said to like the model. Current Flatfair clients include major property owners and agents, such as Greystar, Places for People, and CBRE. “Before Flatfair, deposits were the only form of tenancy security that landlords trusted,” claims Doerr.

In the event of a dispute over end-of-tenancy charges, both landlords and tenants are asked to upload evidence to the Flatfair platform and to try to settle the disagreement amicably. If they can’t, the case is referred by Flatfair to an independent adjudicator via mydeposits, a U.K. government-backed deposit scheme the company is partnering with.

“In such a case, all the evidence is submitted to mydeposits and they come back with a decision within 24 hours,” explains Doerr. “[If] the adjudicator says that the tenant owes money, we invoice the tenant who has then has 5 days to pay. If the tenant doesn’t pay, we charge her bank account… What’s key here is having the evidence. People are generally happy to pay if the costs are fair and where clear evidence exists, there’s less to argue about”.

More broadly, Doerr says there’s significant scope for digitisation across the buy-to-let sector and that the big vision for Flatfair is to create an “operating system” for rentals.

“The fundamental idea is to streamline processes around the tenancy to create revenue and savings opportunities for landlords and agents, whilst promoting a better customer experience, affordability, and fairness for tenants,” he says.

“We’re working on a host of exciting new features that we’ll be able to talk about in the coming months, but we see opportunities to automate more functions within the lifecycle of a tenancy and think there are a number of big efficiency savings to be made by unifying old systems, dumping old paper systems and streamlining cumbersome admin. Offering a scoring system for tenants is a great way of encouraging better behaviour and given housing represents most people’s biggest expense, it’s only right renters should be able to build up their credit score and benefit from paying on time”.