Category: UNCATEGORIZED

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week we were helmed by Kate Clark and Alex Wilhelm, but those of you who love the show having guests on don’t despair. As we explain at the top, there’s a lot of folks coming on the show soon, many of whom you know by name.

But that’s to come, and we had a lot to chat through this week. Including, right from the jump, the latest gyrations in the stock market. Earlier this week tech stocks, and especially cloud and SaaS stocks, took a nosedive. Sentiment swung around later in the week when markets caught their breath and Lyft’s earnings went well. But the movement in highly-valued SaaS companies caught our eye. Perhaps if the market finally does correct, we’ll see growth stakes take the worst of it.

But it wasn’t all bad news on the show, a new app that raised $5 million caught Kate’s attention. It’s called Squad and it’s now backed by First Round Capital, the seed fund behind the likes of Uber . You can read Kate’s interview with the founder, Esther Crawford, here.

Next, we turned to two startups that are focused on male reproductive health. While we’ve covered startups focused on fertility before on the show, this is the first time we’ve delved into male-focused services that are designed to help men take part in conception. The news here is Dadi has raised another $5 million in venture capital funding. Legacy, the other male fertility company we discussed, is taking part in Y Combinator’s summer batch right now.

On the IPO-ish beat, we talked about Postmates which has a new stadium partnership, and, more importantly, permission to use cute robots to deliver things in San Francisco. After hearing about how small, rolling robots will handle last-mile deliveries for years, we’re excited for them to actually make it to market. In our view, technology of this sort won’t eliminate the need for human workers at on-demand shops, though they may replace some routine runs. Bring on the burrito robots.

We closed on Airbnb’s purchase of Urbandoor, yet another acquisition from the popular home-sharing company that will eventually go public. It has to, right? Perhaps Urbandoor will help unlock new revenues in the corporate travel space before we see an S-1. After all, Airbnb wants to debut with plenty of growth under its belt to help it meet valuation expectations. Adding revenue to its core business could be a good way to ensure that there’s new top-line to report.

More to come, including something special next week!

China’s EHang, a company focused on developing and deploying autonomous passenger and freight low-altitude vehicles, will build out its first operational network of air taxis and transports in Guangzhou. The company announced that the Chinese city would play host to its pilot location for a citywide deployment.

The pilot will focus on not only showing that a low-altitude, rotor-powered aircraft makes sense for use in cities, but that a whole network of them can operate autonomously in concert, controlled and monitored by a central traffic management hub that Ehang will develop together with the local Guangzhou government.

Ehang, which was chosen at the beginning of this year by China’s Civil Aviation Administration as the sole pilot company to be able to build out autonomous flying passenger vehicle services, has already demonstrated flights of its Ehang 184 vehicles carrying passengers in Vienna earlier this year, and ran a number of flights in Guangzhou in 2018 as well.

In addition to developing the air traffic control system to ensure that these operate safely as a fleet working in the air above city at the same time, Ehang will be working with Guangzhou to build out the infrastructure needed to operate the network. The plan for the pilot is to use the initial stages to continue to test out the vehicles, as well as the vertiports it’ll need to support their operation, and then it’ll work with commercial partners for good transportation first.

The benefits of such a network will be especially valuable for cities like Guangzhou, where rapid growth has led to plenty of traffic and high density at the ground level. It could also potentially have advantages over a network of autonomous cars or wheeled vehicles, since those still have to contend with ground traffic, pedestrians, cyclists and other vehicles in order to operate, while the low-altitude air above a city is more or less unoccupied.

As India continues its race to adopt digital payments at a pace and scale seen rarely worldwide, the country’s startups are quickly building solutions to bring financial services to businesses. And they are attracting significant capital from local investors and global giants to scale their ambitions.

Lendingkart, one of the many startups in the country that is helping micro, small and medium-sized enterprises access working capital, has raised $30 million as part of Series D financing round, it said on Friday. Existing investors Fullerton Financial Holdings, Bertelsmann India Investments, and India Quotient funded the round. The five-year-old, Bangalore-based startup has raised $143 million to date.

To date, Lendingkart Finance has issued over 60,000 loans to more than 55,000 small and medium-sized enterprises in 1,300 cities across all of India. In a statement, the startup said it would use the fresh capital to widen its lending range and find new clients. It also wants to refine and bulk up its product offering.

Like in other developing markets, many businesses in India, including those who are operating in the exporting space, have to wait for days before they get paid from their previous clients. This creates an immense challenge for many who don’t have any savings. Their options are severely limited as traditional banks find them too risky to lend money.

“Micro and small businesses represent a vibrant yet underserved segment of the Indian economy. The support of all of our customers, investors and employees is empowering us to build the leading financial services platform for this segment,” said Harshvardhan Lunia, Cofounder and Managing Director of Lendingkart.

Lendingkart competes with a handful of businesses, including Gurgaon-based Indifi, which raised $21 million earlier this week, Bangalore-based Zest Money, Five Star Finance, Capital Float and, in some capacity, Drip Capital, which recently raised $25 million.

After months of conflicting remarks from Huawei executives, the Chinese networking giant on Friday officially unveiled HarmonyOS, a mobile operating system it has built to power smartphones and smart home devices as the company attempts to cut its reliance on international giants.

HarmonyOS will be made available for smart screen products such as TV later this year, said Richard Yu, CEO of the Huawei consumer division at company’s developer conference. In the next three years, Huawei will look to bring HarmonyOS to more devices, he said.

The mobile operating system, which is open source, will be limited to use in China for now, though the company has plans to bring it to international markets at a later stage.

The announcement today comes months after the U.S. government put Huawei and more than 60 affiliates in an entity list, restricting U.S. firms from conducting businesses with the Chinese giant. In the aftermath, Google, Intel, and other companies that contribute much of the technology and solutions that go into a smartphone suspended their business with Huawei, the world’s second largest smartphone maker.

The ongoing trade war between the U.S. and China has already started to impact Huawei’s bottom line.

The company reiterated today that it intends to continue to use Android moving forward, but HarmonyOS is officially its back up plan if things go south.

More to follow…

Zindi is convening Africa’s data scientists to create AI solutions for complex problems.

Founded in 2018, the Cape Town-based startup allows companies, NGOs or government institutions to host online competitions around data-oriented challenges.

Zindi’s platform also coordinates a group of more than 4,000 data scientists based in Africa who can enroll to join a competition, submit their solution sets, move up a leader board and win the challenge — for a cash prize payout.

The highest purse so far has been $12,000, split across the top three data scientists in a competition, according to Zindi co-founder Celina Lee. Competition hosts receive the results, which they can use to create new products or integrate into their existing systems and platforms.

Zindi’s model has gained the attention of some big corporate names in and outside of Africa. Digital infrastructure company Liquid Telecom has hosted competitions.

This week, the startup announced a partnership with Microsoft to use cloud-based computing service Azure to power Zindi’s platform.

Microsoft will also host (and sport the prize money) for two competitions to find solutions in African agtech. In a challenge put forward by Ugandan IoT accelerator Wazihub, an open call is out for Zindi’s data scientist network to build a machine learning model to predict humidity.

In a $10,000 challenge for Cape Town-based startup FarmPin, Zindi’s leader board is tracking the best solutions for classifying fields by crop type in South Africa using satellite imagery and mobile phones.

 

There’s demand in Africa to rally data scientists to solve problems across the continent’s public and private sectors, according to Zindi CEO Celina Lee.

“African companies, startups, organizations and governments are in this phase right now of digitization and tech where they are generating huge amounts of data. There’s interest in leveraging things like machine learning and AI to capitalize on the asset of that data,” she told TechCrunch.

She also noted that “80% of Zindi’s competitions have some sort of social impact angle.”

Lee recognizes a skills gap and skills building component to Zindi as a platform. “Data science skills are relatively scarce still… and companies are looking for ways to access data science and AI solutions and talent,” she said.

“Then there’s this pool of young Africans coming out of universities working in data…looking for opportunities to build their professional profiles, hone their skills and connect to opportunities.”

Lee (who’s originally from San Francisco) co-founded Zindi with South African Megan Yates and Ghanaian Ekow Dukerand, who lead a team of six in the company’s Cape Town office. The startup hopes to get 10,000 data scientists across Africa on its platform by this year and 20,000 by next year, according to Lee.

“The idea is to just keep growing and growing our presence in every country in Africa,” Lee said. Zindi could add some physical presence in additional African countries by the end of this year, Lee added, noting Zindi currently hosts data scientists and competitions online and on the cloud from any country in Africa.

Zindi received its first funds from an undisclosed strategic investor and is in the process of raising a round. The startup, which does not disclose revenues, generates income by taking a fee from hosting competitions.

Zindi is also looking to add a recruitment service to connect data scientists to broader opportunities as a future source of revenue, according to Lee.

As a startup, Zindi’s emerging model could see it enter several existing domains in African business and tech. When Zindi adds recruitment, it could offer a service similar to talent accelerator Andela of connecting skilled African techies to jobs at established firms.

CEO Lee acknowledges such, but makes a distinction between data scientists and Andela’s developer focus. “We’re honing more in on statistical modeling, AI, machine learning and predictive analytics,” she said. “I also think the developer market in Africa is much more mature and lot of developers want to move into data science.”

In addition to competing on tech recruitment, Zindi could also become a cheaper and faster alternative for African companies and governments to contracting big consulting firms, such as Accenture, IBM or Bain.

Zindi’s co-founder Lee confirmed the startup has received inbound partnership interest from some established consulting firms — which indicates they’ve taken note of the startup.

“I think we are a bit disruptive because we’re offering companies in Africa the best data scientists in the continent at their fingertips,” she said.

Lee highlighted a couple distinctions between Zindi and data-driven consulting firms: affordability and potential scale.

The startup could also provide data science solutions to many African organizations that don’t have the resources to pay big consulting firms — meaning Zindi could be on to a much larger addressable market.

Silicon Valley investor Ronny Conway is raising his third early-stage venture fund, shows a new SEC filing that states the fund’s target is $140 million and that the first sale has yet to occur.

The now six-year-old firm, A.Capital, focuses on both consumer and enterprise tech, and has offices in Menlo Park and San Francisco.

Among the many brand-name companies in its portfolio are Coinbase, Airbnb, Pinterest, and Reddit. (You can find its other investments here.)

Conway led the seed-stage program of Andreessen Horowitz (a16z) for roughly four years in its earliest days and left in 2013 to raise his debut fund, which closed with $51 million in capital commitments. He also raised two, smaller parallel funds at the time.

According to SEC filings, he sought out $140 million for his second fund, though he never announced its close.

A.Capital is today run by Conway, along with General Partner Ramu Arunachalam (also formerly of a16z) and Kartik Talwar, who worked previously with Conway’s brother, Topher, and his famed father, Ron, at their separate venture firm, SV Angel.

Conway maintains a far lower profile than his father in particular, who throughout his venture career has nurtured relationships not only with founders but with tech reporters and local politicians.

Though now ancient history in Silicon Valley years, Ronny Conway was credited with introducing Andreessen Horowitz to Instagram during its earliest days.

Conway, a former Googler, met Instagram cofounder Kevin System in the several years when he, too, worked for the search giant, beginning in 2006. It turned out to be a highly worthwhile introduction, though it could have been even lucrative for a16z.

Though the firm made a seed-stage bet on the what was then a far simpler mobile photo-sharing app, a16z never followed up with another check because of investment in another photo-sharing startup that would eventually flounder (PicPlz).

It was a sensitive issue at the time for a16z, with some noting its missed opportunity. In fact, Ben Horowitz later felt compelled to write in a blog post that Andreessen Horowitz made $78 million from its $250,000 seed investment in Instagram when Facebook acquired it $1 billion in 2012.

Did you know that Russia’s security services, particularly those related to hacking / information security, have been in the throes of vicious high-stakes infighting for years? Did you know that the perceived Russian doctrine which informed much Western analysis of Russian strategies never actually existed? Did you know that the Kremlin’s secrecy has built an entire cottage industry of largely-unfounded rumors and conspiracy theories based on the few tantalizing details which do leak?

OK, you probably knew that last part. Everyone, or at least everyone who calls a social-media stranger with whom they disagree a “Russian bot,” is a Russian conspiracy theorist nowadays. And of course the evidence of widespread malevolent Russian activity, ranging from assassinations to hacking to social-media bombing, is copious.

But exactly which Russian organizations are doing what, and why — that’s a lot harder to establish. I’m reminded of old Cold War spy novels in which Kremlinologists analyzed the few public appearances of Politburo members, wrongfully reading great significance into who stood where and when, because they had little else to go on. Just like those bad old days, our instinct nowadays is to treat “Russia” as a single, well-oiled, tightly-orchestrated malignant machine.

Of course it’s nothing of the sort. Instead it is a complex, seething, tiered morass of many figures and institutions, often incentivized against one another, in a time of profound and rapid change. Today I attended a Black Hat talk by Kimberley Zenz, who opened with a plea for nuanced consideration of Russia and Russian activities. She’s right, of course, but sadly the Internet tends to be where nuance goes to die.

This nuance, though, is especially fascinating, the stuff of spy thrillers. In 2017 a slew of Russian intelligence officials and hackers — along with, inexplicably, Kaspersky Lab’s Head of Investigations — were suddenly arrested. One was “apparently forcibly removed from a meeting with fellow FSB officers — escorted out with a bag over his head” according to Stratfor. A case was eventually made against them for “high treason in favor of the United States.”

Four individuals were this year sentenced to up to 22 years in prison. (They are appealing.) Andrei Gerasimov, the longtime director of Russia’s Information Security Center, “a shadowy unit … thought to be Russia’s largest inspectorate when it comes to domestic and foreign cyber capabilities, including hacking,” resigned a week after this case emerged.

Stratfor again: ‘Because the charges are treason, the case is considered “classified” by the state, meaning no official explanation or evidence will be released.’ From this fog of secrecy, half a dozen different rumors and theories have emanated. Are the charges entirely trumped-up to eliminate rivals? Did someone leak to the US to attack their rivals, only to see this backfire spectacularly? Did the FSB turn a hacking group which then discovered something they really shouldn’t have about a powerful oligarch? Who can say?

Of course another conspiracy theory is the nuance-free “well-oiled malignant machine” one, in which this case is just an instance of said machine expelling a bit of grit from its innards. It’s remarkable how common this “monolithic Russian single-voiced hive-mind” analysis has become. Here’s Politico, for instance, after the above scandal broke: “Lately, Russia appears to be coming at the United States from all kinds of contradictory angles … Confused? Only if you don’t understand the Gerasimov Doctrine.”

That doctrine — named after General Valery Gerasimov, please note, not repeat not the now-disgraced former-FSB-director Andrei Gerasimov mentioned above — is used there to explain away all Russian activity, even that which appears self-contradictory, as a deliberately bewildering diversity of tactics used to “achieve an environment of permanent unrest and conflict within an enemy state.” It was cited yesterday in another Black Hat talk, which I was so unimpressed by I’ll diplomatically refrain from discussing further. It is consistently cited by Russian policy analysts to this day.

But the problem with the Gerasimov Doctrine as a cornerstone of modern Kremlinology is that — according to the very person who coined the term! — it never actually existed. (Ironically it stems from a conspiracy theory on General Gerasimov’s part: that the CIA instigated the Arab Spring.) Instead, rather than a campaign informed by a unifying doctrine, Russian activity is

largely opportunistic, fragmented, even sometimes contradictory. Some major operations are coordinated, largely through the presidential administration, but most are not. Rather, operations are conceived and generally carried out by a bewildering array of “political entrepreneurs” hoping that their success will win them the Kremlin’s favor

That sounds like an awfully important distinction to make, and it leads to the most interesting thing (to me) about Ms. Zenz’s talk; her mention that “the Russian government considers Russian cybercriminals to be a strategic asset,” and that one side effect of this treason case is that it has greatly chilled information sharing and cooperation between Russia and the West regarding online threats.

Does this strategic status in turn mean that Russian hackers are likely to be government operatives, and/or Russian infosec companies in bed with their government? I am no Kremlinologist, but it seems to me more that the very question is wrong and should be unasked. Rather, the relatively sharp differences between “private sector,” “government,” and “criminal,” defined in nations with a strong rule of law, don’t really exist in a nation like modern Russia where those distinctions can, and often do, blur together.

Facebook is facing exposure to billions of dollars in potential damages as a federal appeals court on Thursday rejected Facebook’s arguments to halt a class action lawsuit claiming it illegally collected and stored the biometric data of millions of users.

The class action lawsuit has been working its way through the courts since 2015, when Illinois Facebook users sued the company for alleged violations of the state’s Biometric Information Privacy Act by automatically collecting and identifying people in photographs posted to the service.

Now, thanks to an unanimous decision from the 9th U.S. Circuit Court of Appeals in San Francisco, the lawsuit can proceed.

The most significant language from the decision from the circuit court seems to be this:

 We conclude that the development of face template using facial-recognition technology without consent (as alleged here) invades an individual’s private affairs and concrete interests. Similar conduct is actionable at common law.

The American Civil Liberties Union came out in favor of the court’s ruling.

“This decision is a strong recognition of the dangers of unfettered use of face surveillance technology,” said Nathan Freed Wessler, staff attorney with the ACLU Speech, Privacy, and Technology Project, in a statement. “The capability to instantaneously identify and track people based on their faces raises chilling potential for privacy violations at an unprecedented scale. Both corporations and the government are now on notice that this technology poses unique risks to people’s privacy and safety.”

As April Glaser noted in “Slate”, Facebook already may have the world’s largest database of faces, and that’s something that should concern regulators and privacy advocates.

“Facebook wants to be able to certify identity in a variety of areas of life just as it has been trying to corner the market on identify verification on the web,” Siva Vaidhyanathan told Slate in an interview. “The payoff for Facebook is to have a bigger and broader sense of everybody’s preferences, both individually and collectively. That helps it not only target ads but target and develop services, too.”

That could apply to facial recognition technologies as well. Facebook, thankfully, doesn’t sell its facial recognition data to other people, but it does allow companies to use its data to target certain populations. It also allows people to use its information for research and to develop new services that could target Facebooks billion-strong population of users.

As our own Josh Constine noted in an article about the company’s planned cryptocurrency wallet, the developer community poses as much of a risk to how Facebook’s products and services are used and abused as Facebook itself.

Facebook has said that it plans to appeal the decision. “We have always disclosed our use of face recognition technology and that people can turn it on or off at any time,” a spokesman said in an email to “Reuters”.

Now, the lawsuit will go back to the court of U.S. District Judge James Donato in San Francisco who approved the class action lawsuit last April for a possible trial.

Under the privacy law in Illinois, negligent violations could be subject to damages of up to $1,000 and intentional violations of privacy are subject to up to $5,000 in penalties. For the potential 7 million Facebook users that could be included in the lawsuit those figures could amount to real money.

“BIPA’s innovative protections for biometric information are now enforceable in federal court,” added Rebecca Glenberg, senior staff attorney at the ACLU of Illinois. “If a corporation violates a statute by taking your personal information without your consent, you do not have to wait until your data is stolen or misused to go to court. As our General Assembly understood when it enacted BIPA, a strong enforcement mechanism is crucial to hold companies accountable when they violate our privacy laws. Corporations that misuse Illinoisans sensitive biometric data now do so at their own peril.”

These civil damages could come on top of fines that Facebook has already paid to the U.S. government for violating its agreement with the Federal Trade Commission over its handling of private user data. That resulted in one of the single largest penalties levied against a U.S. technology company. Facebook is potentially on the hook for a $5 billion payout to the U.S. government. That penalty is still subject to approval by the Justice Department.

Glow is a new startup that says it wants to help podcasters build media business.

That’s something co-founder and CEO Amira Valliani said she tried to do herself. After a career that included working in the Obama White House and getting an MBA from Wharton, she launched a podcast covering local elections in Cambridge, Mass., and she said that after the initial six episodes, she struggled to find a sustainable business model.

Valliani (pictured above with her co-founder and chief product officer Brian Elieson) recalled thinking, “Well, I got this one grant and I’d love to do more, but I need to figure out a way to pay for it.” She realized that advertising didn’t make sense, but when a listener expressed interest in paying her directly, none of the existing platforms made it easy.

“I just couldn’t figure it out,” she said. “I felt an acute need, and I thought, ‘Are there other people out there there who haven’t been able to figure out how to do it, because the lift is just too high?'”

That’s the need Glow tries to address with its first product — allowing podcasters to create paid subscriptions . To do that, podcasters create a subscription page on the Glow site, where they can accept payments and then allow listeners to access paywalled content from the podcast app of their choice.

Glow started testing the product with the startup-focused podcast Acquired, which is now bringing in $35,000 in subscription fees through Glow. More recently, it’s signed up the Techmeme Ride Home, Twenty Thousand Hertz, The Newsworthy and others.

When asked about the broader landscape of podcast startups (including several that support paid subscriptions), Valliani said there are three main problems that podcasters face: Hosting, monetization and distribution.

Hosting, she said, is “largely a solved problem,” so Glow is starting out by trying to “solve for monetization through the direct relationship with listener.” Eventually, it could move into distribution, though that doesn’t mean launching a Glow podcast app: “For us, we think distribution means helping podcasts grow their audience.”

The startup announced today that it has raised $2.3 million in seed funding. The round was led by Greycroft, with participation from Norwest Venture Partners, PSL Ventures, WndrCo and Revolution’s Rise of the Rest Seed Fund, as well as individuals investors including Nas and Electronic Arts CTO Ken Moss.

“Our first hire after this funding round will be someone focused on podcast success,” Valliani said. “Of course, we’re going to build the product [but we’re] doubling down on this market; we better make sure that [podcasters] are prepared to launch programs that are as successful as possible.”

The Hyundai Nexo, a hydrogen fuel cell SUV first unveiled at CES 2018, has earned a top safety award from the Insurance Institute for Highway Safety.

The award, announced Thursday, marks two firsts. The Nexo is the first fuel cell vehicle to earn IIHS’s top safety award. Then again, it’s also the first fuel cell vehicle IIHS has ever tested.

The top safety pick+ award is for 2019 Hyundai Nexo vehicles built after June 2019, when the automaker adjusted the headlights to provide better visibility through curves. Any Nexo vehicles produced prior to June still get high marks, but fall short of the top award. Instead, they qualify for IIHS’ second-tier top safety award. The Nexo joins other 2019 Hyundai and Kia vehicles to earn top safety pick+ awards, including the Hyundai Elantra, Kia Niro hybrid and Kia Soul.

The market for the Nexo is small right now. Within the U.S., the new vehicle, which has a base price of $58,300, is only sold in California. Deliveries of the vehicle to California residents began in December 2018. The vehicle has been available to customers in Korea since early 2018.

Normally, such a limited vehicle wouldn’t be included in IIHS’s routine test schedule, the organization said. Hyundai nominated the vehicle for testing. IIHS says it ended up benefitting too because it gave the organization an early opportunity to evaluate a hydrogen fuel cell vehicle.

Earning this top safety pick+ award isn’t easy. A vehicle has to earn good ratings in the driver-side small overlap front, passenger-side small overlap front, moderate overlap front, side, roof strength and head restraint tests. It also needs an advanced or superior rating for front crash prevention and a good headlight rating.

The Nexo, a midsize luxury SUV, has good ratings in all six crashworthiness tests, IIHS said. The Nexo’s standard front crash prevention system earned a superior rating. The vehicle avoided collisions in 12 mph and 25 mph track tests and has a forward collision warning system that meets National Highway Traffic Safety Administration criteria, according to IIHS.

The Nexo could someday become more common, and even used in fleets. Self-driving vehicle startup Aurora has been working with Hyundai and Kia for the last year to integrate its “Driver” into Hyundai’s Nexo.