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Nauta Capital, the pan-European VC that invests in “capital-efficient” B2B software companies and consumer tech, has announced the closing of a new €55 million “sidecar” fund dedicated to backing its existing later-stage portfolio companies.

The VC firm, with offices in London, Barcelona and Munich, typically invests in early-stage technology startups from late seed and at Series A. The new dedicated later-stage fund will be used to inject follow-on capital, mainly from Series C onwards.

The idea is to double-down on its most promising portfolio companies as they continue to scale up and raise later-stage funding, thus ensuring Nauta Capital doesn’t become too diluted. It also should be a draw for future co-investors who can be given assurances that Nauta has the capital required to join in on larger follow-on rounds.

“With this new follow-on fund, we can further support our portfolio, alongside other co-investors, throughout a company’s entire lifetime until exit,” says Carles Ferrer Roqueta, General Partner at Nauta Capital.

The VC has backed more than 40 companies. Existing portfolio include Brandwatch, Marfeel, BeMyEye, ForceManager, MishiPay, Talentry, Nextail and zenloop.

Meanwhile, Nauta Capital’s sidecar fund is said to be backed by the firm’s current investors hailing from continental Europe, the U.K. and the Americas. They include British Patient Capital, the European Investment Fund, the ICF and the ICO.

Below follows an email Q&A with Nauta Capital General Partner Carles Ferrer Roqueta, where we discuss the need for a sidecar fund, why now, and how Nauta Capital views Brexit.

TC: Your calling this a ‘sidecar’ fund for follow on investments, but many early-stage VCs earmark a portion of their main fund for follow on, so how is this any different?

CFR: Our funds indeed have dedicated follow-on reserves for existing portfolio companies. We are actually very conservative when calculating the amount of reserves we have for each of our investments to make sure we can support each of our companies throughout their growth. Having said this, some companies grow very fast and raise more money than expected initially, and then it may become difficult for our existing funds to maintain or use their full pro-rata. On the other hand, some companies may take longer to fully develop and more rounds can happen in the future, and these timings may not necessarily match with our funds that had initially backed them. In these situations, a sidecar fund is ideal to keep on supporting our companies with our family of funds that also gives a positive sign to new follow-on investors joining the company.

TC: Is this new follow on fund a sign of how high European valuations are right now, in the sense that it is designed to ensure you don’t get too diluted in future rounds?

CFR: Our model tends to stay away from over-heated valuations and we are very disciplined on the structures of our deals, which resemble each other. By consistently avoiding overpaying on deals, pressure for the next round is naturally released. When our companies progress well they then naturally see valuations grow rapidly, and some of these companies can use more funds to foster growth further. Our dilution is quite naturally protected in these situations, but still, when increasing capital is needed for growth acceleration on mature companies, our early stage funds may not always see a possible full pro rata participation. So our sidecar fund takes care of these situations.

TC: A fund of €55 million doesn’t feel like a lot of money for post Series C across potentially 40 plus companies. How do you see the maths playing out?

CFR: This is our first sidecar fund and we will learn a lot from it. Future sideCar funds we may raise may be larger once we fully test the model. We targeted 50M but the appetite across existing investors was very good, so we expanded it a bit further. We basically went back some years in time and checked how much money our funds had not been able to deploy on late stage follow on rounds. With real data we then made sure we will now have this vehicle that represents an upside opportunity for our investors in companies that are already in our portfolio, so naturally decreases risk also for them. Our portfolio has grown and will continue to grow with new early stage funds we will raise, so more opportunities for bigger sidecar funds may appear in the future.

TC: Did Brexit come into your thinking here or complicate things with regards to raising this new fund?

CFR: No, it was not an issue for us. We are a pan-European player with a very strong presence in London, Barcelona and Munich. We are fully committed to the U.K. with a strong team of 8 people and investing out of this hub in the U.K., Ireland and companies that use the U.K. as a landing platform. For instance, we have led an investment in a Helsinki-based company that has already created a 10 people team in London. In addition, we have 2 further offices in Barcelona and Munich, and that gives us a pretty good local access to deal-flow and talent around our different investment hubs. Our LP investors include fund of funds, financial institutions, one endowment, insurance, family offices and government agencies, all across the U.K., Continental Europe, Asia and the Americas.

TC: More broadly, what would be your favoured outcome for the U.K. and Brexit?

CFR: Hard to tell with the recent events at Parliament! I genuinely believe that the most important thing is, independent of the outcome, to bring back certainty to fundamental issues like access to talent, funding and feasible frictionless trade and communication. Situations of impasse are always tricky in long cycle industries like VC. Our portfolio companies, although very agile by nature, need certainty for the long term. I am sure this will be achieved.

Last month, it became widely known that MySpace has lost much of the user data uploaded to it before 2016, including potentially million of music tracks from between 2003 to 2015. This is a significant loss for people who may not have used the site anymore, but took for granted that it would remain an online scrapbook of the years when Myspace was the go-to social network, including for musicians promoting their work. A new collection of MP3s hosted by the Internet Archive, however, may help some users recover lost music (and memories).

ANNOUNCING THE MYSPACE MUSIC DRAGON HOARD, a 450,000 song collection of mp3s from 2008-2010 on MySpace, gathered before they were all “deleted” by mistake. https://t.co/oIunuHF7wc includes a link to a special custom search and play mechanism that lets you search and play songs. pic.twitter.com/aGkFPDBN7r

— Jason Scott (@textfiles) April 4, 2019

Called the MySpace Music Dragon Hoard, the collection contains 450,000 songs. While this is just a small percentage of the tracks reportedly lost (according to estimates, up to 53 million songs from 14 million artists were deleted), it contains early work from now-famous artists including Donald Glover and Katy Perry, as Twitter user @pinkpushpop discovered.

This is so cool! I’ve already found early clips from Donald Glover, 2 Chainz, Katy Perry, Nicki Minaj, Jeffree Star, Rza, Pitbull and others.

There’s even some that you can’t find anywhere else, that would have been lost to the interwebs. This is amazing!

— Katrina (@pinkpushpop) April 4, 2019

Jason Scott of the Internet Archive said on Twitter that the set was compiled by “an anonymous academic group who were studying music networks and grabbed 1.3 terabytes of mp3s to study from MySpace in roughly 2008-2010 to do so.” After learning about the data loss, they offered the collection to Scott.

While it appears that the tracks were lost during a data migration, MySpace has remained tight-lipped about the situation, leading to speculation that the loss may not have been accidental.

If it feels like your Amazon search results have been overwhelmed with promotions for their private-label brands, like Amazon Basics, Mama Bear or Daily Ritual, that may be changing. As lawmakers pay more attention to the most powerful tech companies, Amazon has begun quietly removing some of the more obvious promotions, including banner ads, for its private-label products, reports CNBC, which spoke to Amazon sellers and consultants.

Amazon’s aggressive marketing of its own private brands, with ads that often appear in search results above listings for competing items from third-party sellers, have raised antitrust concerns. The company’s increasingly strong gripe on the U.S. retail market has been under scrutiny for years, but pressure intensified last month when Massachusetts senator and Democratic presidential primary candidate Elizabeth Warren announced that breaking up tech giants Amazon, Google and Facebook (and other companies with an annual global revenue above $25 billion that provide marketplace, exchange or third-party connectivity as “platform utilitilies”) in order to reduce their economic dominance will be a major part of her platform. This means that Amazon Marketplace and Basics would be split apart, and acquisitions including Whole Foods and Zappos would be spun out.

While there isn’t a banner ad, products from an Amazon private label brand, Daily Ritual, still dominate results for “black jersey tunic”

Amazon’s private brands quickly became a major threat to third-party sellers on its platform, increasing from about a dozen brands in 2016, when some of its products began taking the lead in key categories like batteries, speakers and baby wipes, to a current roster of more than 135 private label brands and 330 brands exclusive to Amazon, according to TJI Research.

While Amazon benefits from higher margins, cost-savings from a more efficient supply chain and new data, third-party sellers often suffer. For example, they may have to cut prices to stay competitive, and even lower prices may not be enough attract customers away from Amazon’s promotions for its own items, which show up in many search results.

Other recent measures Amazon has taken to ward off antitrust scrutiny include reportedly getting rid of its price parity requirement for third-party sellers, which meant they were not allowed to sell the same products on other sites for lower prices.

TechCrunch has contacted Amazon for comment.

SpaceX has completed the first tethered jump for its Starship prototyped, Elon Musk confirmed in a tweet Wednesday evening.

Called the Starhopper because it’s making limited hops to test the landing capabilities of the Starship vehicle, the tethered jump represents the first firing of a rocket engine at the company’s Boca Chica launch site.

The hops are similar to the testing that preceded the commercial development and use of SpaceX’s reusable Falcon 9 rockets. Those tests, the Grasshopper and the F9R Dev, were critical to the development of those earlier rockets in the same way that these early launches will pave the way for SpaceX’s interplanetary Starship.

The Starhopper is SpaceX’s smaller prototype for what will eventually be its Starship vehicle, which the company hopes will make its first cargo flights by 2022. Musk wants the vehicle to make its first passenger flight in 2023, when the Starship will voyage to the moon. That would be followed by a crewed Mars flight slated for 2024 and the construction of a Mars Base by 2028.

Musk first debuted the new rocket in January. And since the start of the year the company has been testing several components for the new launch vehicle. Most recently, the company tested a new heat shield design that should protect the rocket as it reenters Earth’s atmosphere.

Tesla delivered 63,000 of its electric vehicles in the first quarter of the year, nearly a one-third drop from the previous quarter, the company reported late Wednesday. Tesla cautioned that it expects first quarter profits to be negatively impacted by lower than expected delivery volumes and several pricing adjustments.

Deliveries included about 50,900 Model 3 vehicles and 12,100 Model S and X SUVs.

Tesla said despite the challenges that it “ended the quarter with sufficient cash on hand.”

Tesla blamed the striking difference in numbers on its efforts to increase deliveries of its Model 3 electric car in Europe and China, which was fraught with challenges and caused delays.

“Due to a massive increase in deliveries in Europe and China, which at times exceeded 5x that of prior peak delivery levels, and many challenges encountered for the first time, we had only delivered half of the entire quarter’s numbers by March 21, ten days before end of quarter,” Tesla said in its report. “This caused a large number of vehicle deliveries to shift to the second quarter. At the end of the first quarter, approximately 10,600 vehicles were in transit to customers globally.”

Those numbers appear to be further pressured by a drop in Model S and Model X deliveries. Deliveries of the Model S and X dropped by more than half compared to the fourth quarter.

Tesla delivered 90,966 vehicles during the fourth quarter. Of those, 27,607 were Model S sedans and Model X SUVs and 63,359 were Model 3s.

Developing …. 

When it comes to representing yourself on social media, who you actually portray yourself as has always been a bit of a caricature. That thinking has always made it a little interesting to examine how a company like Facebook approaches avatar design for services like their VR avatar system.

Oculus Avatars has undergone a number of transformations and today they’re pushing an update that creates more robust facial expressions that are more human-like than the stiff representations that past iterations showcased. The new “Expressive Avatars” are certainly the company’s most unsettling to date, but they’re also the most ambitious.

The company calls the update, the “culmination of user feedback and years of research and innovations in machine learning, engineering, and design.”

There’s this oft-repeated concept of the uncanny valley where things get up to a certain point of realism but then it’s just deeply unsettling because the representation is close but not quite there. That’s pretty evident here. Oculus initially chose to veer wide when it came to structuring its avatar system based on how people actually looked, but with their latest expressive avatars update, things seem to be moving in a different direction.

In a blog post, the company seemed to acknowledge the risks of going all-in on realism while emphasizing that the trade-offs were worth it. They say, they discovered people are simply more willing to interact with avatars when they look and behave more like humans.

“Back in 2016, we made a conscious decision to avoid showing what we didn’t know in order to better represent what we knew with certainty. Since then, we’ve learned a great deal not only about how our hardware canhelpus simulate believable behaviors with higher confidence, but also about how we can use machine learning and well-understood priors to translate subtle signals into great social presence.”

The new avatars boast more realistic mouth and eye movements, a small upgrade that Facebook maintains was intensely challenging to pull off.

This could be a bit of a perilous direction to choose. After all, there’s really one ideal the company can hit, recreating a perfect digital person. They’ve already copped to designing deeply human-like avatar systems, the limits here are obviously both the low-power of today’s consumer systems and the inabilities of the platforms to infer very much in terms of interaction and movement aside from what’s captured precisely by sensors.

Facebook’s new Avatar system goes live today on Oculus mobile and PC platforms.

Carlos Ghosn, the former Nissan Motor chairman who was released on $9 million bail last month following three earlier indictments for financial wrongdoing, is being questioned by Tokyo prosecutors and could be rearrested, the Japanese public broadcaster NHK is reporting.

NHK showed a video clip of a van leaving Ghosn’s residence Thursday and reported that prosecutors plan to question and are ready to “rearrest” Ghosn on suspicion of aggravated breach of trust. The prosecutors suspect Ghosn of misappropriating company funds for personal use.

Ghosn created a new verified Twitter account in the past few days and on Wednesday tweeted “I’m getting ready to tell the truth about what’s happening. Press conference on Thursday, April 11.”

Developing. 

Carlos Ghosn, the former Nissan Motor chairman who was released on $9 million bail last month following three earlier indictments for financial wrongdoing, is being questioned by Tokyo prosecutors and could be rearrested, the Japanese public broadcaster NHK is reporting.

NHK showed a video clip of a van leaving Ghosn’s residence Thursday and reported that prosecutors plan to question and are ready to “rearrest” Ghosn on suspicion of aggravated breach of trust. The prosecutors suspect Ghosn of misappropriating company funds for personal use.

Ghosn created a new verified Twitter account in the past few days and on Wednesday tweeted “I’m getting ready to tell the truth about what’s happening. Press conference on Thursday, April 11.”

Developing. 

Toyota said Wednesday it will give royalty-free access to its nearly 24,000 patents related to electrification technology and systems through 2030 in a move that aims encourage rival automakers to adopt the low-emissions and fuel-saving technology.

Collectively the patents represent core technologies that can be applied to the development of various types of electrified vehicles including hybrid electric, plug-in hybrid electric vehicles, and fuel cell electric vehicles, Toyota said. This follows Toyota’s decision back in 2015 to offer 5,680 patents related to its fuel cell electric vehicles.

The Japanese automaker said it will also offer technical support — for a fee — to other manufacturers that are developing and selling electrified vehicles when they use Toyota’s motors, batteries, power control units, control ECUs and other and other vehicle electrification system technologies as part of their powertrain systems.

Toyota, noting the time, money and other resources necessary to develop “sustainable mobility,” said that opening up its patents will “further promote the widespread use of electrified vehicles, and in so doing, help governments, automakers, and society at large accomplish goals related to climate change.”

“Based on the high volume of inquiries we receive about our vehicle electrification systems from companies that recognize a need to popularize hybrid and other electrified vehicle technologies, we believe that now is the time for cooperation,” said Shigeki Terashi, Member of the Board and Executive Vice President of Toyota Motor Corporation. “If the number of electrified vehicles accelerates significantly in the next 10 years, they will become standard, and we hope to play a role in supporting that process.”

The patents run the gamut of what you might find in a hybrid vehicles. Toyota is adding some 2,590 patents related to electric motors, 2,020 patents related to PCUs, 7,550 patents related to system controls, 1,320 engine transaxle patents, 2,200 charger patents, and 2,380 additional fuel cell patents — bringing the total of fuel cell related patents to 8,060.

The decision to open up thousands of patents comes at an interesting time for Toyota and the auto industry. Toyota popularized hybrid cars with the Prius. The company has sold more than 13 million hybrid vehicles globally. And in the past few years, automakers have followed suit in a more meaningful way than simply offering one hybrid model.

However, many automakers view hybrids as a bridge technology — a means to an all-electric end. Jaguar Land Rover, GM, Ford, and others are all either selling or plan to sell a pure electric vehicle with more being added to their various vehicle portfolios every year. And as far as TechCrunch can tell, the patents that Toyota is offering aren’t related to an all-electric system.

It should be noted that this bridge is a long one; the transition from gas to hybrid to electric will take years if not decades for the traditional automaker. And the while the leap to all-electric vehicles is coming, some automakers are still sorting out their hybrid strategy.

Ruhnn, a company that enables influencers to sell through ecommerce and is plotting to change the faces of China’s fashion industry, has raised $125 million after it listed on the Nasdaq on Wednesday.

The company sold 10 million American Depositary Shares at $12.5 a pop, the midpoint of its expected range. In an earlier filing with the U.S. Securities and Exchange Commission, the Alibaba-backed firm targeted to raise $200 million from its initial public offering.

While big brands in the U.S. are turning to influencers for marketing actions, a similar trend has been brewing in China. Key opinion leaders, or KOLs as they are locally called, build up millions of followers across social media on account of their expertise in specific fields, ranging from video games to Korean fashion. Recognizing their commercial possibility, savvy talent managers jostle to sign these stars to generate ecommerce success.

Frost & Sullivan’s data shows sales generated by China’s KOLs reached 32.9 billion yuan ($4.9 billion) in 2017 and are expected to produce a healthy 40.4 percent compounded annual growth rate (CAGR) over the next five years. Though in its nascent state, the KOL economy has charmed China’s younger generations. Ruhnn says more than 80 percent of the fans following its KOLs are millennials, or, people born between the 1980s to early 2000s.

Ruhnn’s management team / Photo: Ruhnn via Weibo

Ruhnn, which was founded in 2016 by Feng Min, a former online shop owner, is one of the early movers to capitalize on China’s up-and-coming internet stars. The Alibaba-backed company supplies a suite of services for KOLs to connect with fans on one hand and brands and retailers on the other. That means influencers receive training to grow their fame and create digital content to market products. In 2018, Ruhn’s batch of 113 contracted KOLs generated 2 billion yuan ($300 million) in total sales and collected nearly 150 million fans across various social channels.

The firm, which is based in Alibaba’s backyard Hangzhou in eastern China, is more than a talent agency in the traditional sense. The startup operates online stores for online stars and takes care of the full ecommerce cycle, from product design, manufacturing, warehousing, delivery (which it enables through third-party logistics firms) all the way to after-sales services.

The majority of Ruhnn’s revenues comes from direct sales of fashion and lifestyle goods, but the company carved out a less asset-heavy platform model in 2017. The approach essentially lets third-party stores and merchants buy advertising services from Ruhnn’s rank of KOLs. Ruhnn has grown this segment from less than 1 percent of its total revenues in 2017 to 11.7 percent in the nine months ended December 2018.

Companies like Ruhnn, which are sometimes called KOL “facilitators” or “incubators,” not only empower internet celebrities; they are also crucial to social platforms hungry for content. Ruhnn’s stars are all over the Chinese internet, engaging users on WeChat, Weibo and Douyin, which is TikTok’s local version.

Zhang Dayi and her fans / Photo: Zhang Dayi via Weibo

Ruhnn and other ecommerce sites that rely on KOLs to sell, such as NYSE-listed, Hangzhou-based Mogu, are also tipped to shake up China’s fashion supply chain. Traditionally, brands get consumer reaction only after they put things on sale. KOL facilitators flip that process by asking influencers to try on brands’ sample garments. From there the stars will ask fans for feedback, based on which brands can adjust their design and factory orders. Ruhnn has also barcoded its inventory, so KOLs and retailers know exactly how consumer tastes are shifting in real time.

In terms of financial outlook, Ruhnn’s revenues increased from 577.9 million yuan ($86.1 million) to 947.6 million yuan between 2017 and 2018. The company is still operating in the red, incurring a net loss of about 90 million yuan, up from 40.1 million yuan a year ago.

Despite being the largest KOL facilitator by revenue according to data from Frost & Sullivan, Ruhnn faces a few hurdles. A report (in Chinese) done by Tencent shows people born after the 2000s are growing tired of being sold to by KOLs. In addition, China could tighten its tax laws around the nascent KOL industry that can have revenue implications for companies like Ruhnn.

The most pressing issue is perhaps Ruhnn’s overreliance on a small handful of top KOLs. One particular influencer, Zhang Dayi, accounted for about half of its total sales for nearly three years. That means Ruhnn is under tremendous pressure to retain Zhang, who currently serves as the firm’s marketing chief, be it through financial incentives or marketing support for the celebrity.

The problem is not unique to Ruhnn, as creators are key to all of China’s content-heavy platforms including esports streaming site Huya and short video app Douyin. These companies have spent generously to recruit KOLs and deployed big data to track user sentiments, but we all know that a celebrity’s success is at times a matter of luck.