Category: UNCATEGORIZED

Just since months after raising $7 million in Series A funding, German SME banking provider Penta has been acquired by Finleap. Terms of the deal remain undisclosed, although I understand that the acquisition sees Finleap and Penta’s co-founders becoming the challenger bank’s sole owners, with all other shareholders exiting.

Launched in late 2014 by Hitfox Group and Ramin Niroumand, Finleap has developed 16 ventures from scratch, as well as acquiring a number of fintechs. Companies in its portfolio include banking platform solarisBank, of which Penta is a customer, and digital insurer Element, to name just two.

Penta says that becoming part of the Finleap “ecosystem” will help the SME banking provider increase the speed at which it expands internationally. This will include launching in Italy in partnership with Beesy, a Finleap portfolio company focusing on digital business banking for freelancers.

“Penta has a great product and a great team, serving especially the digital industry, which matches perfectly [with] Finleap’s focus on vertical banking,” FinLeap co-founder Niroumand tells me. “Additionally, with Pair Finance for digital debt collection and Perseus for cybersecurity, there are already two other players in the Finleap ecosystem offering services to a similar customer group like Penta, so they form a real value chain for the digital industry”.

To date, Penta counts over 5,500 digital businesses as customers, such as AirHelp, bepro11 and Global Digital Women. The banking fintech set out to fix SME banking, enabling customers to open a business bank account in just a few minutes online. Other features include a real-time overview of a business’ finances, debit cards with individual limits for employees, and accounting integration. Over the next year, Penta plans to add direct debits, SME loans, international transfers and more.

“The decision to go with Finleap was a strategic one,” says Penta co-founder Luka Ivicevic. “By becoming part of the finleap ecosystem, we’re able to accelerate our growth inside and outside of Germany at an unprecedented pace”.

Meanwhile, Niroumand says Penta will remain an independent business and that Finleap will not be part of the operational management of Penta. However, Penta will be able to benefit from Finleap’s resources and expertise. Penta will be able to get strong support from Finleap’s team of top talents,” he says.

“For example to accelerate their hiring efforts and to solve back-office tasks, so that the Penta team can focus completely on the development of the product and new features, like loans and direct debits. In terms of funding, Penta can also tap into Finleap’s network of corporate financial partners”.

Adds Ivicevic: “This is not an exit, but the next step of our growth, Finleap is the right partner for it”.

Sometimes, gentle reader, we report on things at TechCrunch because it’s information that we think you, as a member of our community should know, given your interests and sensibilities.

This is one of those times.

Do yourself a favor and watch the clip for Jim Jarmusch’s zombie movie.

The movie’s trailer bills it as “the greatest zombie cast ever disassembled” (and the movie’s trailer is not wrong).

You could watch it because it features Bill Murray, Adam Driver, Tilda Swinton, Chloë Sevigny, Steve Buscemi, Caleb Landon Jones, Iggy Pop, Sara Driver, Selena Gomez, Carol Kane, and Tom Waits.

You could watch it because it’s likely to be one of the greatest entrants into the zombie movie oeuvre ever.

Or you could simply watch it because it’s been a long April Fool’s Monday and you’d like to give your brain a break (before it’s consumed in the great zombie apocalypse).

There’s no tech angle to this, simply consider it service journalism (as in, we’re providing a service by bringing this gem to your attention).

And please, go see it in theaters when it opens in June, (based on the trailer) you’ll likely be very glad you did.

Also… Tom freaking Waits.

Investors took off their rose-colored glasses and looked at Lyft’s shares with fresh eyes after Friday’s ebullient debut.

And — judging by the company’s share price at the end of the day — what they saw wasn’t exactly to their liking.

Lyft’s shares suffered a pretty blue Monday in trading on the Nasdaq stock exchange today, closing down $9.28 (or 11.85%).

One trading after the pink confetti was swept up off the floor and analysts and investors had a different story to tell about one of the first unicorns to make its public debut.

Part of the reason for the company’s share price tumble was a report from Guggenheim Partners analyst Jake Fuller, which voiced skepticism about the ride hailing company’s path to profitability.

Lyft’s financial picture has always been challenged. That was clear from the moment it filed its financial documents with the Securities and Exchange Commission before its public debut.

As TechCrunch wrote at the time:

According to the filing, Lyft recorded $2.2 billion in revenue in 2018, more than double the $1 billion recorded in 2017. Meanwhile, losses have been growing considerably. The company posted a net loss of $911 million on the $2.2 billion in revenue and a $688 million loss on 2017’s $1 billion.

The analysis from Fuller simply makes clear that Lyft’s purported path to profitability is dependent on a number of steps that could prove very difficult for the company to execute.

“We see four paths to profitability: cut driver pay, turn off incentives, reduce insurance costs or shift to self-driving cars,” Fuller is quoted by MarketWatch as writing. “The first two would be tough in a highly competitive category, the third might not be enough by itself and the fourth is likely 10 years out.”

The ubiquitous corporate messaging service Slack is following in the footsteps of Spotify’s subscription music service and heading to the New York Stock Exchange for trading through a direct listing, according to the Wall Street Journal.

Slack, which reportedly had somewhere near $900 million on hand last October when it was prepping for its initial public offering, is likely choosing the direct listing route for some of the same reasons that Spotify had when it went public.

Here are the reasons we listed for Spotify’s decision last year around this time:

List Without Selling Shares– Spotify has plent of money with $1.3 billion in cash and securities, has no debt since it converted that into equity for investors, and has positive free cash flow

Liquidity – Investors and employees can sell on public market and sell at time of their choosing without investors shorting a lockup expiration, while new investors can join in

Equal Access– Bankers won’t get preferred access. Instead, the whole world will get access at the same time. “No underwriting syndicate, no limited float, no IPO allocations, no preferential treatment”.

Transparency – Spotify wants to show the facts about its business to everyone via today’s presentation, rather than giving more info to bankers in closed door meetings

Market-Driven Price Discovery – Rather than setting a specific price with bankers, Spotify will let the public decide what it’s worth. “We think the wisdom of crowds trumps expert intervention”.

Slack doesn’t need the money that could come from a public offering, but its longtime employees would like to see some liquidity, and so would its longtime investors.

Choosing the New York Stock Exchange likely gives the company some comfort, because unlike the Nasdaq, the NYSE has designated market makers on the floor of the exchange who can manage prices if the stock becomes really volatile in its first day of trading, according to the WSJ.

This year will be a banner year for public offerings in the U.S. and the NYSE and rival Nasdaq exchange are competing to see who can claim the most tech public offerings for the year.

Nasdaq struck an early blow with the Lyft public offering last week. But NYSE has claimed, Pinterest, Uber, and Slack which could be the biggest public offerings of the year.

Whatever the result, the public offering will be good news for investment firms like Accel, Andreessen Horowitz, Dragoneer Investments, General Atlantic, GV, Kleiner Perkins, Social Capital, Softbank Group, and Thrive Capital, which collectively invested roughly $1.2 billion into the company.

There’s no shortage of so-called femtech startups raising money right now, and it’s little wonder why.

Aside from the growing market opportunity — the global fertility services market is expected to reach $31 billion by 2023, says the consultancy Allied Market Research, nearly double where it stood in 2016 — more women are clamoring for information about their reproductive health, and 15-minute-long doctor visits aren’t doing the trick.

The newest recipient of venture dollars: NextGen Jane, a 4.5-year-old, Oakland, Ca.-based company that’s hoping to use blood wrung from tampons to find early markers of endometriosis and, later, it hopes, cervical cancer and other disorders. The company disclosed just today that it has secured $9 million in Series A funding led by Material Impact, a new fund focused on materials technology that we reported on last November. Other participants in the round include Access Industries, Viking Global Investors, Liminal Ventures, and numerous notable angels, including Ph.Ds from Harvard Medical School and Stanford University.

Its approach is far more palatable than the option women have long suffered, which is to have a small camera inserted into their pelvic cavity in search of endometrial cells. (Note: women typically wind up in this position only after enduring bewildering pain that drives them to see their doctors.) The idea with NextGen Jane instead is for a custom-made tampon to be worn for roughly two hours, placed inside a test tube as part of a home kit, and sent to a lab for further analysis.

Of course, it needs to work first, and the technology hasn’t been approved by the FDA. In fact, it hasn’t been proven at all.

The funding could, potentially, make the difference. In an interview with Technology Review last month, NextGen CEO and cofounder Ridhi Tariyal said that a clinical trial is designed and ready to go, but that NextGen Jane needed capital to run a trial on roughly 800 women in order to establish the diagnostic efficacy of menstrual blood. With funding, she’d said, it would take the company about two years to collect a meaningful amount of data.

NextGen Jane had previously raised $2.3 million in funding.

TechCrunch has been reporting extensively on the recent and dramatic uptick in femtech investing. You can find a much deeper dive regarding who has raised what lately and why right here.

The story of how blood testing company Theranos rose to prominence, then collapsed following accusations of fraud, is getting told and retold in many forms: There’s reporter John Carreyrou’s book “Bad Blood,” plus an upcoming feature film adaptation starring Jennifer Lawrence, plus a podcast from Nightline called “The Dropout” — and “The Inventor,” a new HBO documentary directed by Alex Gibney.

Our colleague Josh Constine already reviewed the film after seeing it at Sundance, but we had thoughts of our own, which we hashed out with guest host Anna Escher on the latest episode of the Original Content podcast.

Gibney previously spoke to TechCrunch about his Steve Jobs documentary “The Man in the Machine,” arguing that a documentary has more to offer than just “a list of facts.”

Similarly, viewers who’ve read “Bad Blood” or followed the Theranos story closely may not discover many new facts in “The Inventor.” But even so, the film is worth watching for its clear distillation of what happened, and for its copious behind-the-scenes footage of Holmes (who ends up feeling like a major presence even though she wasn’t interviewed).

There are also some parallels to “Fyre,” the recent Netflix documentary about the Fyre Festival —particularly the focus on employees who get caught up in an entrepreneur’s grand vision, even when they knew their bosses were playing fast-and-loose with the facts.

And we also share our thoughts on the third season of “Queer Eye,” both its political message and our favorite cast member (Bobby forever!).

You can listen in the player below, subscribe using Apple Podcasts or find us in your podcast player of choice. If you like the show, please let us know by leaving a review on Apple. You can also send us feedback directly. (Or suggest shows and movies for us to review!)

Defy, the early stage venture investment firm founded by Neil Sequeira and Trae Vassallo, is putting a new twist on the venture partner model as it brings Brian Lee and Sujal Patel on board to help out with investing and guiding companies in the firm’s portfolio.

Just don’t call them venture partners.

Vassallo and Sequeira prefer the term “sage” to describe the folks they’re looking to bring in to help mentor their companies.

Here’s how the two describe it in a blog post about the new program:

Venture partner, operating partner, entrepreneur in residence, advisor etc, so many names and so many different implementations, so we decided to simply give our unique relationship it’s own name- a Sage.  

A “sage” is someone wise through reflection and experience and we thought that perfectly encapsulates what these active operating executives bring to Defy. As talented multi-time operators, seed investors and current CEOs, Defy Sages bring their operating experience, domain knowledge, and networks to help our portfolio.

Both Lee, a Los Angeles-based serial entrepreneur who founded or co-founded Honest Co., Shoedazzle, and LegalZoom; and Patel, whose deep background in enterprise software comes from years spent as a co-founder and executive of Isilon Systems and later at EMC, are “longtime friends of the firm” according to an interview with both Sequeira and Vassallo.

Through its twist on the venture partner model, which Defy is calling a “sage” program, the advisors get a bigger piece in the upside at a fund and individual deal level. “There is carry across the fund and on any individual company they’re involved in,” Sequeira said in an interview. 

For Lee, who’s running the Los Angeles-based early stage consumer investment practice BAM Ventures, the agreement with Defy is a chance to see early stage executives outside of his network and get exposure for some of the companies in his portfolio. “It’s almost a backstop for BAM Ventures,” said Lee.

Defy’s strategy hasn’t changed. The company will still be investing in traditional Series A deals — the $3 million to $10 million rounds that many firms now consider to be seed stage.

“Our goal is to create a right-sized firm, that means we can’t bring on lots of people or we end up in the same slope of everyone else where more people equals bigger fund which ultimately leads to larger checks,” Defy’s two founders wrote in a blog post announcing the Sage program. 

Already the program has born fruit, with Lee investing beside Defy in the cannabinoid product developer Prima, launched by Honest Co. co-founder Christopher Gavigan, and Shujinko receiving support from Patel as part of its initial $2.8 million round.

And Defy hopes to bring other partners on board to provide even more sage advice for the firm’s growing portfolio.

Bragi was a promising early contender in the bluetooth earbud space. The company came to prominence in 2014 with a massively success $3.3 million Kickstarter. And to its credit, it actually brought products like the Dash and Dash Pro to market, offering a compelling “smart” alternative to other devices.

Last month, however, the German company gave up the ghost, selling off its hardware business to an unnamed party. Wareable notes that early this year that Bragi’s online store went out of stock, and while it told the press that it had plans to refresh, that day never came. Instead, an outside party has purchased its product business.

Bragi confirmed the move in a statement from CEO Nikolaj Hviid. The executive was quick to add, however, that its conscious uncoupling from products like the Dash should not be viewed as the end for the company.

“Bragi’s technology suite is applied beyond our own products to partners and headphone brands,” Hviid said. “The Dash Pro featured groundbreaking ultra efficient AI and software that could be updated with new features such as Amazon Alexa, language translation and personalized hearing. With the sale of our product business, Bragi has completed its transformation into a software, AI and IP licensing company.”

Of course, the AirPods came along in 2016, and did the thing that Apple does to markets — it’s a story we’ve seen played out time and time again with companies like Pebble.  New numbers out last week put Apple’s product at around 60 percent of the so-called “hearables” market. Other giants like Samsung, Bose and Jabra also make up a sizable chunk.

Ultimately, it seems, the market Bragi helped pioneer was quickly ceded existing giants. As such, maintaining its innovative work on the software and AI, while licensing IP certainly makes the most sense going forward. We noted the seemingly inevitability of the move at last year’s Mobile World Congress, when one of its EVP’s told us, “At some point we may not be a hardware company anymore. That was the plan from the beginning. That was not really a secret.”

We’ve reached out to Bragi for additional comment.

A new biography of Apple chief executive Tim Cook out this month describes the moment — and the deliberations — after the FBI issued an unprecedented legal order demanding Apple undermines the security of its flagship product.

The new book, Tim Cook: The Genius Who Took Apple to the Next Level by Leander Kahney, offers a first-hand view from former staff about how Apple battled against the order, which Cook said would be “too dangerous” to comply with.

Three years ago following the San Bernardino terrorist attack, which killed 12 people and injured dozens, the FBI demanded Apple create a special version of its mobile software capable of bypassing the encryption and other security features on an iPhone used by one of the shooters. But fearing the backdoored software could one day end in up in the wrong hands, Cook wrote in a public letter that the company would reject the order and fight the FBI in court. “This software would have the potential to unlock any iPhone in someone’s physical possession,” said Cook. What would ensue was a public battle between the tech giant and the government in a lawsuit lasting several months, until the government paid out for hackers to break into the device.

Apple long contented that the Justice Department’s wanted to fight Apple in the open to win over the public in the aftermath of the attack — painting Apple as helping terrorists — and sought a court order before the company could respond.

Had Apple lost the case, its long-running privacy and security mantra would be shattered. Cook is said to have “bet the company” on the decision to fight the order, according to former Apple general counsel Brian Sewell, who was quoted in the book.

Sewell described the FBI’s order as a tipping point following “a lot of activity” that preceded the decision by former FBI director James Comey to ask a judge to sign the order.

The order was issued an obscure law known as the All Writs Act, which the FBI interpreted as a way to ask a court to order a company to do something not otherwise covered by the law. An order cannot be “unduly burdensome,” a subjective term often determined by the court issuing the order.

Sewell said the FBI has as early as 2014 asked Apple for “getting access to phones on a mass basis” after Apple rolled out iOS 8, which encrypted iPhones and iPads with a passcode. Law enforcement struggled to get into devices they said was necessary to investigate crimes. There was no other feasible way to break into an iPhone — even with a court order. Not even Apple could unlock the devices. The company declined the FBI’s request.

But the book said law enforcement “saw it as an opportunity to force Apple’s hand,” wrote Kahney.

“There was a sense at the FBI that this was the perfect storm,” said Sewell, as quoted. “We now have a tragic situation. We have a phone. We have a dead assailant. This is the time that we’re going to push it. And that’s when the FBI decided to file [the order],” he said.

Apple knew public opinion was divided. But the company didn’t let up.

For the following two months, Apple’s executive floor at its former headquarters at One Infinite Loop in Cupertino “turned into a 24/7 situation room,” with an intensified effort to respond to press queries — which Apple had seldom done before, known historically as a secretive company.

The case eventually resolved without a trial. The day before Apple was meant to go head-to-head with the government in a California court, the government pulled the plug on its legal action. It had paid almost a million dollars to hackers to successfully break into the phone. Cook was said to be “disappointed” the case didn’t come to trial, according to Sewell, because he sought a resolution to the case that he believed would have ruled in Apple’s favor. The legality of the order remains unsettled today, despite efforts by the government to force other companies — like Facebook — to rework their software to allow access to police.

A spokesperson for the Justice Department did not immediately comment. Apple did not comment.

Tim Cook: The Genius Who Took Apple to the Next Level is on sale April 16.

Since its launch on our stage way back in 2010, Cloudflare has focused on making the internet faster and more modern — but the mobile internet has until recently been beyond its reach. Today the company introduced a new service called Warp described as “the VPN for people who don’t know what VPN stands for.”

In case you’re one of those people, and there’s no shame in it, a VPN is a virtual private network: something that acts as an intermediary between you and the wider internet, allowing you to customize how you connect in many helpful ways, such as changing your apparent location or avoiding IP-based tracking.

The trouble with these services is that many of them just aren’t very good. Trusting a company you’ve never heard of with all your internet traffic just isn’t generally a good idea, and even the biggest and most most proven VPN providers are far from household names. What’s more, they can introduce latency and performance issues, which on the mobile web are already trouble enough. In the best case they may take configuration and tweaking that casual users aren’t up to.

Warp, according to a blog post by CEO Matthew Prince, will provide many of the benefits of a VPN with none of the drawbacks, speeding up your connection while adding privacy and security.

“We’ve been tinkering with this idea for 3 or 4 years,” Prince told me. Originally there was the idea of making a browser, “but that’s insane,” he said; Apple and Google would crush it. Besides, everything is going app-based and mobile — the real opportunity, they perceived, lay in the layer between those things and the broader internet: “So, a VPN, and it made all the sense in the world for us.”

But they didn’t want to simply compete with a bunch of small providers appealing to a variety of niche power users.

“To be honest, for the vast majority of existing VPN users, this is probably not the right solution for them,” admitted Prince. “If you want to change your country to access Netflix while you’re traveling, there are lots of people that offer that service, but that’s not the market we’re getting into. We wanted something with mass appeal instead of trying to cannibalize what’s out there.”

In order to do become a drawback-free default for millions of users, Cloudflare didn’t so much build something from the ground up as adapt nascent work by developers on the cutting edge of networking. It rewrote the already efficient open source VPN layer created by Wireguard to be even more so, and added in a UDP-based protocol created by Neumob, a company it bought in late 2017. Add to this the large network of Cloudflare servers all around the world and it’s a recipe for a quick, secure service that could very well be both better and faster than your existing connection.

You may remember that at this time last year, Cloudflare debuted its DNS service, 1.1.1.1, both for desktops and mobile (via the 1.1.1.1 app). It’s leveraging this presence to offer Warp as an optional and free upgrade.

So what is it? When your mobile wants to make a connection for a Google search or to get an update for an app or whatever, there’s a whole process of reaching out on the internet, finding the right IP to talk to, establishing a secure connection, and so on. Cloudflare’s Warp VPN (like other VPNs) takes over this process, encrypting where it otherwise might not be, but also accelerating it by passing the requests over its own network using that Neumob protocol.

The technical aspects will no doubt be exposed and inspected in time, but Cloudflare claims that using Warp should improve your connection and make it more secure, while preventing your DNS lookup data (which says exactly which sites you request to connect to) from being collected and sold. Prince said his post lacked direct comparisons to existing VPNs because they don’t think those are relevant for the millions of non-VPN-using people they’re targeting with Warp.

“Will people do comparisons? Yes. Will I retweet those when they make us look good? Yes,” Prince said. “But we don’t expect to take a lot of users from them. We want the market to expand – we want to be the biggest VPN in the world without taking a single user from any other provider.”

Part of that is the lack of some of existing VPNs’ most attractive features, such as blocking ads at the IP level. Prince said he and the others at the company were uncomfortable with the idea of picking and choosing content, not least because many of their customers are ad-supported sites. “There’s just something creepy about when the internet’s underlying pipes start making editorial decisions,” Prince said. “When we start messing with the contents of a page, even if people want us to, it sets a dangerous precedent.”

Warp can be offered for free because the company is planning a more high-end service that it’ll sell for a monthly fee. Later, an enterprise version could be sold to replace the clunky ones currently out there (which many of our readers likely have already had the pleasure of using). Prince says he envisions a day when a kid can walk into the living room at home and say, “Mom, the internet is being slow, can I use your corporate VPN?” Unlikely, but even CEOs of major infrastructure companies have dreams. Be kind.

Until then, like the rest of Cloudflare’s connectivity suite, Warp will be free and come with few if any caveats.

Well, except one — it’s not available yet. They wanted to make the announcement on April 1 because it’s exactly a year since they announced 1.1.1.1 (get it? 4/1?), but they missed the date. (“I wanted to just turn this on for everyone, but our tech operations team was like, ‘No. You’re not allowed to do that. The network would fall over.’ “) So what you can do now is get the 1.1.1.1 app and request a spot in line. Since they just announced it, the wait probably won’t be that long… oh.

Okay.