Startups Weekly: US visa freeze is latest reason to build remote-first

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While the US tech industry relentlessly tries to do business with the rest of the world, this week it became further embroiled in national politics. High-skill immigration visas have been suspended until the end of the year by the Trump administration, precluding thousands of present and future startup employees and founders from coming to the US and building companies here.

Instead, the suspension is another accelerant to the global remote work trend that had already been a thing for many of us this decade, that has just been pushed to the mainstream because of the pandemic. For anyone trying to find great people to hire, the next funding check, or new markets, virtual solutions are often the only solutions available today.

Our resident immigration law expert, Sophie Alcorn, has been covering the issue in-depth this week, including an explainer about the crucial role of immigration in the economy for TechCrunch, and for Extra Crunch, an overview of what you can do if you’re affected. For subscribers, she also wrote about the impact of the Supreme Court overturning Trump’s termination of DACA.

On a personal note, our global editorial staff is looking forward to resuming our global events schedule as soon as possible regardless of these national political issues. We’re here for the startup world. In the meantime, here’s Alex Ames on how we’re connecting virtual Disrupt attendees this year.

Image Credits: Nigel Sussman (opens in a new window)

New York tech after the pandemic

The big industries and big-city amenities that have made New York City what it is are going to help power it forward even as more people and jobs appear to be heading away from city centers. At least that’s my takeaway from reading the 11 investors who Anthony Ha talked to this week in an Extra Crunch survey about the future of the startup hub. First, even if you can work from anywhere, millions of people will prefer that place to be New York — with the big-city housing supply, networking opportunities and amenities to attract people like before. Second, many key industries like finance, real estate, enterprise software, health care, media and other consumer products are not dying but being reinvented, and appear to be maintaining their centers in the city. Here’s Alexa von Tobel of Inspired Capital:

I’ve seen NYC grow into the powerful startup hub it’s become over the last decade, and I think that momentum will continue. Now that we’ve learned high productivity is indeed possible remotely, we expect to see companies maintain some element of a remote workforce within their broad hiring plans. But for startups in their earliest stages, I think there’s still a power to sitting side by side as you build a business. When founders are making their first hires and inking their first deals, NYC remains an incredible place to do that.

Some of those industry reinventions are more exciting than others. In a separate survey, Anthony talked to 5 investors who have tended to focus on advertising and marketing tech… the good news is that advertising and marketing costs are dropping and tech-driven efficiency is improving for the world. For founders in the space, though, the challenges have only grown as the pandemic has forced more ad budget cuts on top of shifts to the largest platforms. As John Elton of Greycroft put it:

Only the next technology breakthrough will provide fertile ground for the next wave of innovation, just as mobile and internet breakthroughs gave rise to today’s giants. Perhaps machine learning is that type of breakthrough, so we are looking at companies that use machine learning to dramatically improve what is possible in the space. The issue there is the scaled players are also very good at machine learning, so it may not be a technology that provides the same opportunity as prior disruptions.

TIm O’Reilly

O’Reilly talks investing beyond the VC financial bubble

Tim O’Reilly has been going a different route from much of Silicon Valley in recent years. While his publishing company, series of conferences, essays and investments have helped to shape the modern internet for decades, he says that venture capital has gone wrong. Here’s more from an interview on with Connie Loizos on TechCrunch this week:

[I]’ve been really disillusioned with Silicon Valley investing for a long time. It reminds me of Wall Street going up to 2008. The idea was, ‘As long as someone wants to buy this [collateralized debt obligation], we’re good.’ Nobody is thinking about: Is this a good product? So many things that what VCs have created are really financial instruments like those CDOs. They aren’t really thinking about whether this is a company that could survive on revenue from its customers. Deals are designed entirely around an exit. As long as you can get some sucker to take them, [you’re good]. So many acquisitions fail, for example, but the VCs are happy because — guess what? — they got their exit.

His firm, O’Reilly AlphaTech Ventures, has instead been focused in recent years on funding founders who are creating a product that is valued by customers and generates sustainable cash flow, on terms that incentivize organic growth.

 

They wrote your first check

Last week we launched a new effort to highlight investors who were the first to back your big and (increasingly) successful idea. It’s gotten a great response so far. From Danny Crichton:

Well, the TechCrunch community came through, since in just a few days, we’ve already received more than 500 proposals from founders recommending VCs who wrote their first checks and who have been particularly helpful in fundraising and getting a round closed.

If you haven’t submitted a recommendation, please help us using the form linked here.

The short survey takes five minutes, and could save founders dozens of hours armed with the right intel. Our editorial team is carefully processing these submissions to ensure their veracity and accuracy, and the more data points we have, the better the List can be for founders.

Check out Danny Crichton’s full post on TechCrunch for answers to questions that we’ve gotten frequently so far.

Across the week

TechCrunch:

A look at tech salaries and how they could change as more employees go remote

Apple will soon let developers challenge App Store rules

China’s GPS competitor is now fully launched

GDPR’s two-year review flags lack of ‘vigorous’ enforcement

The Exchange: IPO season, self-driving misfires and a fintech letdown

Extra Crunch:

What went wrong with Quibi?

Four perspectives: Will Apple trim App Store fees?

4 enterprise developer trends that will shape 2021

Ideas for a post-COVID-19 workplace

Plaid’s Zach Perret: ‘Every company is a fintech company’

Volcker Rule reforms expand options for raising VC funds

Around TechCrunch

Register for next week’s Pitches & Pitchers session

Join GGV’s Hans Tung and Jeff Richards for a live Q&A: June 30 at 3:30 pm EDT/12:30 pm PDT

Airtable’s Howie Liu to join us at Disrupt 2020

Zoom founder and CEO Eric Yuan will speak at Disrupt 2020

How to supercharge your virtual networking at Disrupt 2020

#EquityPod

From Alex Wilhelm:

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

This week was a bit feisty, but that’s only because Danny Crichton and Natasha Mascarenhas and I were all in pretty good spirits. It would have been hard to not be, given how much good stuff there was to chew over.

We kicked off with two funding rounds from companies that had received a headwind from COVID-19:

• Away raises new capital, reported to be $30 million to $40 million after revenue declines
• Sonder raises $170 million at a higher $1.3 billion valuation after seeing its hospitality business recover

Those two rounds, however, represented just one side of the COVID coin. There were also companies busy riding a COVID-tailwind to the tune of new funds:

• Hopin raised a $40 million Series A as its virtual events business accelerated
• DoNotPay raised an $18 million round at an $80 million valuation

But we had room for one more story. So, we talked a bit about Robinhood, its business model and the recent suicide of one of its users. It’s an awful moment for the family of the human we lost, but also a good moment for Robinhood to batten the hatches a bit on how its service works.

How far the company will go, however, in limiting access to certain financial tooling, will be interesting to see. The company generates lots of revenue from its order-flow business, and options are a key part of those incomes. Robinhood is therefore balancing the need to protect its users and make money from their actions. How they thread this needle will be quite interesting.

All that and we had a lot of fun. Thanks for tuning in, and follow the show on Twitter!

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

https://ift.tt/2BjGfA2 Startups Weekly: US visa freeze is latest reason to build remote-first https://ift.tt/3eGdOuy

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Newzoo forecasts 2020 global games industry will reach $159 billion

Games and esports analytics firm Newzoo released its highly cited annual report on the size and state of the video gaming industry yesterday. The firm is predicting 2020 global game industry revenue from consumers of $159.3 billion, a 9.3% increase year-over-year. Newzoo predicts the market will surpass $200 billion by the end of 2023.

Importantly, the data excludes in-game advertising revenue (which surged +59% during COVID-19 lockdowns, according to Unity) and the market of gaming digital assets traded between consumers. Advertising within games is a meaningful source of revenue for many mobile gaming companies. In-game ads in just the U.S. drove roughly $3 billion in industry revenue last year, according to eMarketer.

To compare with gaming, the global markets for other media and entertainment formats are:

• Pay TV: $226 billion in 2019 (excludes streaming services)
• Publishing: $261 billion in 2017, of which books accounted for $121 billion
• Film: $101 billion in 2019 ($42.5 billion from box office)
• Music: $62 billion in 2017 ($30 billion recorded music, $6 billion music publishing, $26 billion live music)
• Board games and playing cards: $12 billion in 2018
• Podcasting: $863 million 2020 advertising revenue (there is no good data on subscription and live events revenue in podcasting, but it is fair to estimate it at a fraction of the total ad revenue figure)

Counting gamers

Of 7.8 billion people on the planet, 4.2 billion (53.6%) of whom have internet connectivity, 2.69 billion will play video games this year, and Newzoo predicts that number to reach three billion in 2023. It broke down the current geographic distribution of gamers as:

• 1,447 million (54%) in Asia-Pacific
• 386 million (14%) in Europe
• 377 million (14%) in Middle East & Africa
• 266 million (10%) in Latin America
• 210 million (8%) in North America
  
  
  from Social – TechCrunch https://ift.tt/eA8V8J Newzoo forecasts 2020 global games industry will reach $159 billion Eric Peckham https://ift.tt/3870e0N
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Newzoo forecasts 2020 global games industry will reach $159 billion

{rss:content:encoded} Newzoo forecasts 2020 global games industry will reach $159 billion https://ift.tt/3870e0N https://ift.tt/31kb3vl June 27, 2020 at 12:00AM

Games and esports analytics firm Newzoo released its highly cited annual report on the size and state of the video gaming industry yesterday. The firm is predicting 2020 global game industry revenue from consumers of $159.3 billion, a 9.3% increase year-over-year. Newzoo predicts the market will surpass $200 billion by the end of 2023.

Importantly, the data excludes in-game advertising revenue (which surged +59% during COVID-19 lockdowns, according to Unity) and the market of gaming digital assets traded between consumers. Advertising within games is a meaningful source of revenue for many mobile gaming companies. In-game ads in just the U.S. drove roughly $3 billion in industry revenue last year, according to eMarketer.

To compare with gaming, the global markets for other media and entertainment formats are:

• Pay TV: $226 billion in 2019 (excludes streaming services)
• Publishing: $261 billion in 2017, of which books accounted for $121 billion
• Film: $101 billion in 2019 ($42.5 billion from box office)
• Music: $62 billion in 2017 ($30 billion recorded music, $6 billion music publishing, $26 billion live music)
• Board games and playing cards: $12 billion in 2018
• Podcasting: $863 million 2020 advertising revenue (there is no good data on subscription and live events revenue in podcasting, but it is fair to estimate it at a fraction of the total ad revenue figure)

Counting gamers

Of 7.8 billion people on the planet, 4.2 billion (53.6%) of whom have internet connectivity, 2.69 billion will play video games this year, and Newzoo predicts that number to reach three billion in 2023. It broke down the current geographic distribution of gamers as:

• 1,447 million (54%) in Asia-Pacific
• 386 million (14%) in Europe
• 377 million (14%) in Middle East & Africa
• 266 million (10%) in Latin America
• 210 million (8%) in North America
  

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TuSimple seeking $250 million in new funding to scale self-driving trucks

TuSimple, the self-driving truck startup backed by Sina, Nvidia, UPS and Tier 1 supplier Mando Corporation, is headed back into the marketplace in search of new capital from investors. The company has hired investment bank Morgan Stanley to help it raise $250 million, according to multiple sources familiar with the effort.

Morgan Stanley has sent potential investors an informational packet, viewed by TechCrunch, that provides a snapshot of the company and an overview of its business model, as well as a pitch on why the company is poised to succeed — all standard fare for companies seeking investors.

TuSimple declined to comment.

The search for new capital comes as TuSimple pushes to ramp up amid an increasingly crowded pool of potential rivals.

TuSimple is a unique animal in the niche category of self-driving trucks. It was founded in 2015 at a time when most of the attention and capital in the autonomous vehicle industry was focused on passenger cars, and more specifically robotaxis.

Autonomous trucking existed in relative obscurity until high-profile engineers from Google launched Otto, a self-driving truck startup that was quickly acquired by Uber in August 2016. Startups Embark and the now defunct Starsky Robotics also launched in 2016. Meanwhile, TuSimple quietly scaled. In late 2017, TuSimple raised $55 million with plans to use those funds to scale up testing to two full truck fleets in China and the U.S. By 2018, TuSimple started testing on public roads, beginning with a 120-mile highway stretch between Tucson and Phoenix in Arizona and another segment in Shanghai.

Others have emerged in the past two years, including Ike Robotics and Kodiak Robotics. Even Waymo is pursuing self-driving trucks. Waymo has talked about trucks since at least 2017, but its self-driving trucks division began noticeably ramping up operations after April 2019, when it hired more than a dozen engineers and the former CEO of failed consumer robotics startup Anki Robotics. More recently, Amazon-backed Aurora has stepped into trucks.

TuSimple stands out for a number of reasons. It has managed to raise $298 million with a valuation of more than $1 billion, putting it into unicorn status. It has a large workforce and well-known partners like UPS. It also has R&D centers and testing operations in China and the United States. TuSimple’s research and development occurs in Beijing and San Diego. It has test centers in Shanghai and Tucson, Arizona.

Its ties to, and operations in China can be viewed as a benefit or a potential risk due to the current tensions with the U.S. Some of TuSimple’s earliest investors are from China, as well as its founding team. Sina, operator of China’s biggest microblogging site Weibo, is one of TuSimple’s earliest investors. Composite Capital, a Hong Kong-based investment firm and previous investor, is also an investor.

In recent years, the company has worked to diversify its investor base, bringing in established North American players. UPS, which is a customer, took a minority stake in TuSimple in 2019. The company announced it added about $120 million to a Series D funding round led by Sina. The round included new participants, such as CDH Investments, Lavender Capital and Tier 1 supplier Mando Corporation.

TuSimple has continued to scale its operations. As of March 2020, the company was making about 20 autonomous trips between Arizona and Texas each week with a fleet of more than 40 autonomous trucks. All of the trucks have a human safety operator behind the wheel.

https://ift.tt/eA8V8J TuSimple seeking $250 million in new funding to scale self-driving trucks https://ift.tt/2BMO9li

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Commenting platform Spot.IM becomes OpenWeb

Spot.IM, which offers a platform for publishers (including TechCrunch) to manage their user comments, announced this week that it’s rebranding as OpenWeb.

CEO and co-founder Nadav Shoval told me that the new name reflects a vision that’s far grander and more ambitious than the company’s initial product, a location-based messaging service.

“We all felt that this is the time to be proud of what we actually do,” Shoval said. “It’s about saving the open web.”

Specifically, Shoval is hoping to move more online conversations away from the big social platforms like Facebook and back to independent publishers. To illustrate this, he pointed to recent discussions about reexamining or revising Section 230 of the Communications Decency Act, a crucial legal protection for the big online platforms.

While you don’t have to take President Donald Trump’s complaints of Twitter censorship at face value, Shoval said the key is that “no one big tech company should control the conversation.”

To that end, the company has also unveiled an upgraded version of its platform, which includes features like scoring the overall quality of conversation for a specific publisher, incentivizing quality comments by allowing users to earn reputation points and even asking users to reconsider their comment if it appears to violate a publisher’s standards — OpenWeb describes these warnings as “nudges,” so you can still go ahead and post that comment if you want.

Spot.IM raises $25M to help publishers engage with readers

“We stopped focusing only on algorithms to identify bad behavior, which we’ve done for years and have become commodity,” said Ido Goldberg, OpenWeb’s senior vice president of product. “What we did here is, we put a lot of time into understanding how we should look at quality and scale in millions of conversations.”

A big theme in our conversation and demonstration was civility — for example, Goldberg showed me how OpenWeb’s nudges had convinced some users to adopt less incendiary language. But I argued that civility doesn’t always lead to quality conversations. After all, racist (and sexist and homophobic and otherwise hateful) ideas can be expressed in ostensibly polite language.

“For us, civility is the baseline,” Goldberg replied. “When things become incivil folks that want to [have a productive conversation] don’t want to be there.”

Shoval added, “There is no silver bullet for quality conversations.” He argued that OpenWeb is trying to encourage quality conversations without being seen as “East Coast lefties who are censoring the Internet” — a balance it tries to find by working with each of its publishers and being aware of different standards in different geographies. “What we want to do is a neverending journey.”

PACT Act takes on internet platform content rules with ‘a scalpel rather than a jackhammer’

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Agora starts life as a public company by more than doubling to $50 a share

Shares of Agora, a China and U.S.-based “real-time engagement” API company, soared today after it went public.

Yesterday Agora priced 17.5 million shares at $20 apiece, up from its target range of $16 to $18 per share. The firm raised $350 in its debut, or around 10 times its Q1 2020 revenue and is now amply capitalized and has runway for effectively forever, given its modest cash consumption as an ongoing concern.

But while the debut was a success, seeing Agora’s share price rise as quickly as it did was not universally popular. Regular critic of the traditional IPO process Bill Gurley — a venture capitalist, so someone with a stake in this particular gambit — weighed in:

Pretty amazing that there is a financial exercise on this planet involving hundreds of millions of dollars where its OK to not even get to 50% of the actual end result. The process is so rigged/broken at this point. They missed by more than the original guess. #marketpricing pic.twitter.com/MqmmYRw3ZM

— Bill Gurley (@bgurley) June 26, 2020

Let me translate. Gurley is irked — rightly, to at least some degree — that as Agora opened at $45 per share, the company’s IPO was awfully priced. By that we mean that the company should have sold its IPO shares not at $20, but at $45, the value at which the market quickly repriced them.

As $45 is more than twice $20, its bankers “missed by more than [their] original guess.” Given the number of shares the company sold, the mis-pricing could be worth up to $437.5 million!

There’s merit to this argument, but it’s not as complete a slam dunk as it might appear. Chat with CEOs of public companies and they will tell you about how important it is to have steady, stable, long-term shareholders of their equity. Those you might, say, meet on a roadshow and get to invest in your IPO shares.

Those groups — the long-term investors that tech folks claim to love so dearly — are likely a bit more price conscious than the momentum traders eager to find upside in recent debuts. That is, folks more likely to hold onto shares for a shorter period of time.

So, if you want long-term shareholders, you may have to price you IPO under the price the market may initially bear once trading begins.

Agora’s above-range IPO pricing underscores a welcoming IPO market

 

Still, holy shit $20 per share is not close to $45. Gurley has a point.

The future

Change may be coming. The Agora news rotates back to what the NYSE, an American exchange, is doing. Namely trying to come up with a way to let companies direct list (to just start trading, sans pricing or raising new capital), and raise capital. This gets rid of the issues that Gurley highlighted above. At least in theory.

Obviously, if that model becomes possible and long-term investors are willing to pay for shares in a slightly different manner, the new method will be far superior than the old for companies that are great. What sort of companies get burned from first-day pops the most? I reckon it’s the most attractive, or hyped companies.

The companies that would make the most attractive IPOs would use the new method, leaving — what? The detritus to go out the old-fashioned way? Signaling issues abound!

Anyway, it was a zany first day for Agora.

https://ift.tt/eA8V8J Agora starts life as a public company by more than doubling to $50 a share https://ift.tt/3g2UGHI

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Airvet, a telehealth veterinary platform, just clawed its way to a $14 million Series A round

Telemedicine is becoming more widely embraced by the day — and not just for humans. With a pet in roughly 65% of U.S. homes, there is now a dizzying number of companies enabling vets to meet with their furry patients remotely, including Petriage, Anipanion, TeleVet, Linkyvet, TeleTails, VetNOW, PawSquad, Vetoclock and Petpro Connect.

One of these — a two-year-old, 13-person, LA-based startup called Airvet — unsurprisingly thinks it is the best among the bunch, and it has persuaded investors of as much. Today, the company is announcing $14 million in Series A funding led by Canvas Ventures, with participation by e.ventures, Burst Capital, Starting Line, TrueSight Ventures, Hawke Ventures and Bracket Capital, as well as individual investors.

The pandemic played a role in Canvas’s decision, as did a smart model, suggests general partner Rebecca Lynn, who says she has looked at many telemedicine startups over the last 11 years and that she fell for Airvet after using the service for the animals that live on her own small farm. While vets were initially slow to embrace the shift to more telehealth visits, Airvet has “solved” some of the “objections unique to the space,” she says. Plus, “COVID has been a massive accelerant to adoption.”

We asked Airvet’s founder and CEO, Brandon Werber, to make the company’s case to us separately.

TC: Why start the company?

BW: My dad is one of the most well-known vets in the U.S. — celebrity vet Dr. Jeff Werber. We saw the impact that telehealth was making in the human world and wanted to bring the same access and level of care we get for ourselves to our pets. Since I grew up in the pet space, I know it intimately and recognized a lot of inefficiencies in the delivery of care and how vets have been unable to meet the evolving expectations of pet owners.

TC: How are you connecting vets with their pet patients?

BW: We have two apps. One is for pet-owners to download to talk with a vet, and one is for vets to download to organize workflows and talk to their clients. We do not usurp any existing vet relationships. Instead, we partner with vet clinics and enable them to conduct telehealth visits and simultaneously enable pet-owners to have access to vets 24/7, even if they don’t live nearby a vet hospital.

A huge portion of pet owners in the U.S. don’t even have a primary vet. For serious health issues like surgery, animals still need to go in-person, and network vets can even refer them. We’ve also seen Airvet used as curbside check-in, where pet-owners can chat and follow their pet’s in-person vet appointment via live video from the parking lot.

TC: I see there is a minimum charge of $30 per visit. How do you make this model work financially for vets?

BW: Vets view us as an additional revenue-generating tool on top of their base income. We don’t hire vets. Our network of 2,600+ vets are largely the same vets who use Airvet within their own hospital. They can decide at will, like an Uber driver, to swipe online to be part of the on-demand network and take calls from pet parents anywhere in the country to generate additional income.

TC: What have you learned from startups that tried this model before?

BW: All the startups that came before us are not consumer-first and are just focused on building tools for vets, so their platforms cannot be used by every pet owner. Instead, they can only be used by pet owners whose own vets use that specific platform, which is a tiny fraction of vets and therefore a tiny fraction of pet parents.

TC: Do you have ancillary businesses? Beyond these vet visits, are you selling anything else?

BW: For now, just the vet visits, which range from a $30 minimum to higher, based on the vet and specialty. Over time, we have plans and partnerships lined up to expand into other pet health verticals.

A projected $99 billion will be spent on pets in the U.S. alone in 2020, and for us, telemedicine is only the beginning.

TC: Does Airvet involve specific practice management software?

BW: No. We provide the workflow layer enabling vets to schedule virtual appointments, which will soon be able to be fully integrated with their existing systems and workflows.

TC: When a customer calls a vet for $30, is there a time limit?

BW: There is no time limit and cases will usually stay open for three full days, so pet parents can continue to access the vet via chat for any follow-up questions or concerns.

TC: Are you competing at all on pricing?

BW: Our goal is to work alongside the hospitals, not to compete with them or replace them. You can’t take blood virtually or feel a tumor or do a dental. People always will need to go to the vet.

What we want to do is help [pet owners] understand when [to come in]. The average pet parent only goes to the vet 1.5 times a year. A huge segment of users on Airvet have already connected with a vet six times more than that and save time and stress in doing so.

It’s not about competing for us, it’s about being the provider of care in between office visits [and helping] pet parents who have used our service ultimately avoid an unnecessary emergency visit.

https://ift.tt/eA8V8J Airvet, a telehealth veterinary platform, just clawed its way to a $14 million Series A round https://ift.tt/2BLG80k

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Who really benefits from reskilling?

Nearly 40 million Americans are unemployed, and a recent study that examined more than 66,000 tech job layoffs found that sales and customer success roles are most vulnerable amid COVID-19. In response, some quarters of Silicon Valley are abuzz about a long-standing technology: reskilling, or training individuals to adopt an entirely new skillset or career for employment.

As millions look for a way to reenter the workforce, the question arises: Who really benefits from reskilling technology?

That depends on how you look at it, said Jomayra Herrera, a senior associate at Cowboy Ventures. Reskilling for a well-networked manager looks a lot different than it does for someone who doesn’t have as much leverage, and the vast majority of people fall into the latter. Not everyone has a friend at Google or Twitter to help them skip the online application and get right to the decision-makers.

Beyond the accessibility offered by live online classes, she pointed to the difference between assets and opportunities.

“You can give someone access to something, but it’s not true access unless they have the tools and structure to really engage with it,” Herrera said. In other words, how useful is content around reskilling if the company doesn’t support job placement post-training.

Herrera said companies must give individuals opportunities to test skills with real work and navigate the career path. Her mother, who did not go to college and speaks English as a second language, is looking to pursue training online. Before she can proceed, however, she has to surmount hurdles like language support, resume creation, job search and other challenges.

All of a sudden, content feels like a commodity, regardless of if it has active and social learning components. It’s part of the reason that MOOCs (massive open online courses) feel so stale.

Udacity, for example, was almost out of cash in 2018 and laid off more than half of its team in the past two years, according to The New York Times. Now, like other edtech companies, it is facing surges in usage.

https://ift.tt/eA8V8J Who really benefits from reskilling? https://ift.tt/383bP0U

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As advertisers revolt, Facebook commits to flagging ‘newsworthy’ political speech that violates policy

As advertisers pull away from Facebook to protest the social networking giant’s hands-off approach to misinformation and hate speech, the company is instituting a number of stronger policies to woo them back.

In a livestreamed segment of the company’s weekly all-hands meeting, CEO Mark Zuckerberg recapped some of the steps Facebook is already taking, and announced new measures to fight voter suppression and misinformation — although they amount to things that other social media platforms like Twitter have already enacted and enforced in more aggressive ways.

At the heart of the policy changes is an admission that the company will continue to allow politicians and public figures to disseminate hate speech that does, in fact, violate the Facebook’s own guidelines — butit will add a label to denote they’re remaining on the platform because of their “newsworthy” nature.

It’s a watered down version of the more muscular stance that Twitter has taken to limit the ability of its network to amplify hate speech or statements that incite violence.

Zuckerberg said:

A handful of times a year, we leave up content that would otherwise violate our policies if the public interest value outweighs the risk of harm. Often, seeing speech from politicians is in the public interest, and in the same way that news outlets will report what a politician says, we think people should generally be able to see it for themselves on our platforms.

We will soon start labeling some of the content we leave up because it is deemed newsworthy, so people can know when this is the case. We’ll allow people to share this content to condemn it, just like we do with other problematic content, because this is an important part of how we discuss what’s acceptable in our society — but we’ll add a prompt to tell people that the content they’re sharing may violate our policies.

The problems with this approach are legion. Ultimately, it’s another example of Facebook’s insistence that with hate speech and other types of rhetoric and propaganda, the onus of responsibility is on the user.

Zuckerberg did emphasize that threats of violence or voter suppression are not allowed to be distributed on the platform whether or not they’re deemed newsworthy, adding that “there are no exceptions for politicians in any of the policies I’m announcing here today.”

But it remains to be seen how Facebook will define the nature of those threats — and balance that against the “newsworthiness” of the statement.

The steps around election year violence supplement other efforts that the company has taken to combat the spread of misinformation around voting rights on the platform.

Facebook adds option for US users to turn off political ads, launches voting info hub

 

The new measures that Zuckerberg announced also include partnerships with local election authorities to determine the accuracy of information and what is potentially dangerous. Zuckerberg also said that Facebook would ban posts that make false claims (like saying ICE agents will be checking immigration papers at polling places) or threats of voter interference (like “My friends and I will be doing our own monitoring of the polls”).

Facebook is also going to take additional steps to restrict hate speech in advertising.

“Specifically, we’re expanding our ads policy to prohibit claims that people from a specific race, ethnicity, national origin, religious affiliation, caste, sexual orientation, gender identity or immigration status are a threat to the physical safety, health or survival of others,” Zuckerberg said. “We’re also expanding our policies to better protect immigrants, migrants, refugees and asylum seekers from ads suggesting these groups are inferior or expressing contempt, dismissal or disgust directed at them.”

Zuckerberg’s remarks came days of advertisers— most recently Unilever and Verizon — announced that they’re going to pull their money from Facebook as part the #StopHateforProfit campaign organized by civil rights groups.

These some small, good steps from the head of a social network that has been recalcitrant in the face of criticism from all corners (except, until now. from the advertisers that matter most to Facebook). But they don’t do anything at about the teeming mass of misinformation that exists in the private channels that simmer below the surface of Facebook’s public facing messages, memes and commentary.

from Social – TechCrunch https://ift.tt/eA8V8J As advertisers revolt, Facebook commits to flagging ‘newsworthy’ political speech that violates policy Jonathan Shieber https://ift.tt/3i7KbET
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YC to cut the size of its investment in future YC startups

In a blog post this Friday afternoon, Y Combinator’s president Geoff Ralston said that the accelerator would make two changes to its terms for startups.

The first would see the size of the standard deal for YC startups decline from $150,000 for 7% (roughly a $2.1 million post-money valuation) to $125,000 for the same equity (or roughly a $1.79 million post-money valuation). The deal will continued to be offered using a SAFE, which YC and a group of others pioneered as a simpler investment option compared to convertible notes.

Interestingly, the firm is always writing into its terms that it will only take pro rata up to 4% of a subsequent round’s size, which is obviously smaller than the 7% ownership that the company is buying in its financing. That 4% number is a ceiling — in cases where the accelerator has less ownership than 4%, the smaller percentage applies. Full terms of Y Combinator’s deal are available on its website.

The new deal will apply to startups who join Y Combinator in the Winter 2021 batch, and doesn’t include startups in the current summer batch (who have already presumably been funded)

YC’s deal has varied over the years. When it first launched more than a decade ago, it offered terms of $20,000 for 6%.

A Y Combinator spokeswoman said that the change was in line with the fundraising and budget realties of the accelerator going forward. “The future of the economy is unpredictable, and we feel it is prudent during these times to switch to a leaner model,” she said. “In our case, we want to be set up to fund as many great founders as possible — especially during a time that is creating an unprecedented change to consumer and business behavior; with these changes comes endless opportunities for startups. And with the changes made to our standard deal, we can fund as many as 3000 more companies.”

Outside of budget, at least a couple of factors are potentially at work here. One is the increased use of Work From Anywhere, which presumably can help lower some of the running costs of a startup, particularly in its earliest days (i.e. no need to pay for that WeWork flex desk).

Work From Home is dead, long live Work From Anywhere

Y Combinator has also invested more of its funds into emerging markets startups, which can have dramatically lower costs of development given prevailing wages for talent in local markets.

Yet, the cutback is also a sign that the flood of capital entering the Valley in recent years has receded — if ever so slightly — in the wake of COVID-19. Valuations are depressing, and while $25,000 is not a massive loss considering the scale of later venture financings, the 16% valuation haircut is inline with other numbers we have seen in the Valley in recent weeks.

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Only 12 hours left to apply for Startup Battlefield at Disrupt 2020

It’s now o’clock, founders. A mere 12 hours stands between you and a chance to compete in Startup Battlefield and launch your pre-Series A startup during Disrupt 2020 — in front of the world’s influential technorati.

You won’t find a bigger launching pad, and this window of extraordinary opportunity slams shut on June 26 at 11:59 pm (PT). Apply to Startup Battlefield right here, right now.

This year’s legendary pitch competition is virtual, but the benefits and opportunity that comes from competing are very real and often life changing — for all participants not just the ultimate winner. Let’s explore that a bit more.

The top prize — $100,000 equity free cash — will do wonders for your bottom line. The TechCrunch feature article – brings you into the league of legends. The Disrupt cup and the acclaim that comes with winning, well, who doesn’t love bragging rights? But it’s the huge exposure — on a global scale — to media, investors, potential customers and big tech players looking to acquire promising startups, that can take Battlefield competitors on a whole new trajectory.

Here’s a quick look at how Startup Battlefield works. We accept applications from founders of any background, geography and industry as long as your company is early stage, has an MVP with a tech component (software, hardware or platform) and hasn’t received much major media coverage.

Our editors screen every application and will choose only startups they feel possess that certain je ne sais quoi. The epic pitch-off takes place during Disrupt 2020, which runs from Sept. 14 – 18. Note: This opportunity is 100 percent free. TechCrunch does not charge any application or participation fees or take any equity.

You’ll receive six weeks of free pitch coaching from TC editors to whip you into prime fighting trim. Plus a virtual webinar series with industry experts. You’ll have just 6 minutes to pitch and demo to the judges — a panel of expert VCs, entrepreneurs and TechCrunch editors. Then you’ll answer their questions — and they’ll have plenty.

Founders who survive the first round move to the finals on the last day of Disrupt. It’s lather-rinse-repeat as you pitch to a fresh set of judges. Then it’s time for the big reveal: one startup takes the title, the Disrupt cup and the $100,000.

Have you clicked the application link yet? No? Here are more reasons to apply. If you earn a spot in the competition, you get a Disrupt Digital Pro pass and you get to exhibit to people around the world in Digital Startup Alley — for free.

You’ll network with CrunchMatch, our AI-powered platform, to set up virtual 1:1 meetings with investors, media, potential customers and the throngs of folks eager to meet a Battlefield competitor.

Need more perks? We got you covered.

• A launch article featuring your startup on TechCrunch.com
• Access to Leading Voices Webinars: Hear top industry minds share their strategies for adapting and thriving during and after the pandemic
• A YouTube video promoted on TechCrunch.com
• Free subscription to Extra Crunch
• Free passes to future TechCrunch events

This no-cost, perk-packed opportunity disappears in just 12 hours. Do whatever it takes to keep your startup moving forward. Apply to compete in Startup Battlefield before the deadline expires on June 26 at 11:59 pm (PT).

Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.

https://ift.tt/eA8V8J Only 12 hours left to apply for Startup Battlefield at Disrupt 2020 https://ift.tt/2CHGJQV

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Unilever and Verizon are the latest companies to pull their advertising from Facebook

Advertiser momentum against Facebook’s content and monetization policies continues to grow.

Last night, Verizon (which owns TechCrunch) said it will be pausing advertising on Facebook and Instagram “until Facebook can create an acceptable solution that makes us comfortable and is consistent with what we’ve done with YouTube and other partners.”

Then today, it was joined by consumer goods giant Unilever, which said it will halt all U.S. advertising on Facebook, Instagram (owned by Facebook) and even Twitter, at least until the end of the year.

“Based on the current polarization and the election that we are having in the U.S., there needs to be much more enforcement in the area of hate speech,” Unilever’s executive vice president of global media Luis Di Como told The Wall Street Journal.

The effort to bring advertiser pressure to bear on Facebook began with a campaign called #StopHateforProfit, which is coordinated by the Anti-Defamation League, the NAACP, Color of Change, Free Press and Sleeping Giants. The campaign is calling for changes that are supposed to improve support for victims of racism, anti-Semitism and hate, and to end ad monetization on misinformation and hateful content.

The list of companies who have agreed to pull their advertising from Facebook also includes outdoor brands like REI, The North Face and Patagonia. (An important caveat: Gizmodo noted that it’s not clear whether these advertisers are also pulling their money from the Facebook Audience Network.)

We have taken the decision to stop advertising on @Facebook, @Instagram & @Twitter in the US.

The polarized atmosphere places an increased responsibility on brands to build a trusted & safe digital ecosystem. Our action starts now until the end of 2020.https://t.co/flHhKid6jD pic.twitter.com/QdzbH2k3wx

— Unilever #StaySafe (@Unilever) June 26, 2020

Facebook provided the following statement in response to Unilever’s announcement:

We invest billions of dollars each year to keep our community safe and continuously work with outside experts to review and update our policies. We’ve opened ourselves up to a civil rights audit, and we have banned 250 white supremacist organizations from Facebook and Instagram. The investments we have made in AI mean that we find nearly 90% of Hate Speech [and take] action before users report it to us, while a recent EU report found Facebook assessed more hate speech reports in 24 hours than Twitter and YouTube. We know we have more work to do, and we’ll continue to work with civil rights groups, GARM, and other experts to develop even more tools, technology and policies to continue this fight.

And Twitter provided a statement from Sarah Personette, vice president of global client solutions:

Our mission is to serve the public conversation and ensure Twitter is a place where people can make human connections, seek and receive authentic and credible information, and express themselves freely and safely. We have developed policies and platform capabilities designed to protect and serve the public conversation, and as always, are committed to amplifying voices from underrepresented communities and marginalized groups. We are respectful of our partners’ decisions and will continue to work and communicate closely with them during this time.

As of 1:57 p.m. EDT, Facebook stock was down more than 7% from the start of trading. CEO Mark Zuckerberg said he will also be addressing these issues at a town hall starting at 2 p,m. EDT today.

Big outdoor brands join #StopHateForProfit campaign, boycott Facebook and Instagram ads

 

from Social – TechCrunch https://ift.tt/eA8V8J Unilever and Verizon are the latest companies to pull their advertising from Facebook Anthony Ha https://ift.tt/3exANbg
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Running a queer dating startup amid a pandemic and racial justice uprising

The events of the past few months have shaken the lives of everyone, but especially Black people in the U.S. COVID-19 has disproportionately impacted members of the Black community while police violence has recently claimed the lives of George Floyd, Tony McDade, Breonna Taylor, Rayshard Brooks and others. 

Two weeks ago, two Black transgender women, Riah Milton and Dominique “Rem’mie” Fells were murdered. In light of their deaths, activists took to the streets to protest the violence Black trans women face. Two days after Floyd’s killing, McDade, a Black trans man was shot and killed by police in Tallahassee, Florida. 

In light of Pride month coinciding with one of the biggest racial justice movements of the century amid a pandemic, TechCrunch caught up with Robyn Exton, founder of queer dating app Her, to see how her company is navigating this unprecedented moment. 

Exton and I had a wide-ranging conversation including navigating COVID-19 as a dating startup, how sheltering in place has affected product development, shifting the focus of what is historically a month centered around LGBTQ people to include racial justice work and putting purpose back into Pride month.

“Pride exists because there is inequality within our world and within our community and still there is no clear focus on what it is we should be fighting for as a community,” Exton says. “It almost feels like since equal marriage was passed, there’s a range of topics but no clear voice saying this is what everyone should focus on right now. And then obviously everything changed after George Floyd’s murder. Over the course of the following weekend, we canceled pretty much everything that was going out that talked still about Pride as a celebration. Especially for Black people within our community, in that moment of so much trauma, it felt completely wrong to talk about Pride just in general.”

Worldwide, Pride events have been canceled as a result of the pandemic. But it gives people and corporations time to reflect on what kind of presence they want to have in next year’s Pride celebrations.

from Social – TechCrunch https://ift.tt/eA8V8J Running a queer dating startup amid a pandemic and racial justice uprising Megan Rose Dickey https://ift.tt/3eDeEsa
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Fleetsmith customers unhappy with loss of third-party app support after Apple acquisition

{rss:content:encoded} Fleetsmith customers unhappy with loss of third-party app support after Apple acquisition https://ift.tt/3g2DZfw https://ift.tt/3dFU0X0 June 26, 2020 at 08:50PM

When Apple confirmed it had acquired Fleetsmith, a mobile device management vendor, on Wednesday, it seemed like a straightforward purchase, but Fleetsmith customers quickly learned a key piece of functionality had stopped working  — and many weren’t happy about it.

Apple systems administrators began complaining on social media on the morning of the acquisition announcement that the company was no longer allowing them to connect to third-party applications.

“Primarily Fleetsmith maintained a third party app catalog, so you could deploy things like Chrome or Zoom to your Macs, and Fleetsmith would maintain security updates for those apps. This was the main reason we purchased Fleetsmith,” a Fleetsmith customer told TechCrunch.

The customer added that the company described this functionality as a major feature in a company blog post:

Fleetsmith handles this all for you automatically. Once the version is enforced, it is downloaded and queued for install immediately across the device fleet. Most apps will update silently and automatically once they’re restarted, but users can also choose to do the update manually. Our agent will remind users about the update periodically, and then once the enforcement date hits, it will give them an opportunity to save work and then run the update itself.

Apple has acquired Fleetsmith, a startup that helps IT manage Apple devices remotely

As it turned out, Apple had made it clear that it was discontinuing this feature in an email to Fleetsmith customers on the day of the transition. The email included links to several help articles that were supposed to assist admins with the transition. (The email is included in full at the end of the article).

The general consensus among admins that I spoke to was that these articles were not terribly helpful. While they described a way to fix the issues, they said that Apple has turned what was a highly automated experience into a highly manual one, effectively eliminating the speed and ease of use advantage of having then update feature in the first place.

Apple did confirm that it had responded to some help ticket requests after the changes this week, saying that it would soon restore some configurations for Catalog apps, and were working with impacted customers as needed. The company did not make clear, however, why they removed this functionality in the first place.

Fleetsmith offered a couple of key features that appealed to Mac system administrators. For starters, it let them set up new Macs automatically out of the box. This allows them to ship a new Mac or other Apple device, and as soon as the employee powers it up and connects to WiFi, it connects to Fleetsmith where systems administrators can track usage and updates. In addition, it allowed System Administrators to enforce Apple security and OS updates on company devices.

What’s more, it could also do the same thing with third-party applications like Google Chrome, Zoom or many others. When these companies pushed a new update, system administrators could make sure all users had the most recent version running on their machines. This is the key functionality that was removed this week.

It’s not clear why Apple chose to strip out these features outlined in the email to customers, but it seems likely that most of this functionality  isn’t coming back, other than restoring some configurations for Catalog apps.

Email that went out to Fleetsmith customers the day of the acquisition outlining the changes:

 

Attempts to reach Fleetsmith founders for comment were unsuccessful. Should that change we will update the article.

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Tim O’Reilly makes a persuasive case for why venture capital is starting to do more harm than good

Tim O’Reilly has a financial incentive to pooh-pooh the traditional VC model, wherein investors gamble on nascent startups in hopes of seeing many times their money back. Bryce Roberts, who is O’Reilly’s longtime investing partner at the early-stage venture firm O’Reilly AlphaTech Ventures (OATV), now actively steers the partnership away from these riskier investments and into companies around the country that are already generating revenue and don’t necessarily want to be blitzcaled.

Yet in an interview with O’Reilly last week, he nonetheless argued persuasively for why venture capital, in its current iteration, has begun to make less sense for more founders who genuinely want to build sustainable businesses. The way he sees it, the venture industry is no longer as focused on finding small companies that might one day change the world but more on creating financial instruments for the wealthy — and that shift has real consequences.

Below, we’re pulling out parts of that conversation that may be of interest to readers who are either debating raising venture capital, debating raising more venture capital, and even those who have been turned away from VCs and perhaps dodged a bullet in the process. At a minimum, O’Reilly — who bootstrapped his own company, O’Reilly Media, 42 years ago and says it now produces “a couple hundred million dollars in revenue” yearly — provides a lot of food for thought.

TechCrunch: A lot of companies celebrated Juneteenth this year, which is a big deal. There’s been a lot of talk about making the venture industry more inclusive. How far — or not — do you think we’ve come in the venture industry on this front?

Tim O’Reilly: The thing that I would say about VC and about really everything in tech is, this concept of structural racism [is really the problem]. People think that all it matters is, ‘Well, my values are good, my heart’s in the right place, I donate to charities,’ and we don’t actually fix the systems that cause the problems.

With VCs, the networks from which they’re drawing entrepreneurs are not that different [than they have been historically]. But more importantly, the goals of the VC model are not that different. The industry sets a goal, and it has a certain kind of financial shape, which is inherently exclusionary.

How so?

The typical VC model is looking for this high-growth company with exit potential, because it’s looking for this big financial return from an IPO or acquisition, and that selects for a certain type of founder. My partner Bryce decided two funds ago [to] look for companies that are kind of disparaged as lifestyle companies that are trying to build sustainable businesses with cash flow and profits. They’re the kind of small businesses, and small business entrepreneurs, that have banished from America, partly because of the VC myth, which is really about creating financial instruments for the wealthy.

He came up with a version of a SAFE note that allows the founders to buy out the VC at a predetermined amount if they ever become sufficiently profitable but also gives them the optionality, because periodically, some of them do end up becoming a rocket ship. But the founder is not on the treadmill of: you have to get out.

When you start saying, ‘Okay, we’re going to look for sustainable businesses,’ you look all over the country, and Bryce ended up [with a portfolio] that’s made up of more than 50% women founders and 30% people of color, and it has been an incredible investment strategy.

That’s not to say that people who are African-American or women can’t also lead companies that are part of the high-growth VC model that’s typical of Silicon Valley.

No, of course not. Of course, they could lead. The talent pool is just much greater [when you look outside of Silicon Valley]. There’s a certain kind of bro culture in Silicon Valley and if you don’t fit in, sure [you could find a way], but there are a lot of impediments. That’s what we mean by structural racism.

To your point about insular networks, a prominent Black VC, Charles Hudson, has noted that a lot of [traditional VCs] just don’t know have regular or professional associations with Black people, which hampers how they find companies. How has Bryce fostered some of these connections, because it does feel like traditional VCs are right now trying to figure out how to better do this.

It’s breaking the geographic isolationism of Silicon Valley. It’s breaking the business model isolationism of Silicon Valley that says: only things that fit this particular profile are worth investing in. Bryce didn’t go out there and say, ‘I want to go find people of color to invest in.’ What he said was, ‘I want to have a different kind of investment in different places in the United States.’ And when he did that, he naturally found entrepreneurs who reflect the diversity of America.

That’s what we have to really think about. It’s not: how do we get more Black and brown founders into this broken Silicon Valley model. It’s: how do we go figure out what the opportunities are helping them to grow businesses in their communities?

Are LPs interested in this kind of model? Does it have the kind of growth potential that they need to service their endowments?

It was a bit of a struggle when we did fund four, which was focused on [this newer model]. It was about a third of the size of fund three. But for fund five, the fundraising is [going] like gangbusters. Everybody wants in because the model has proven itself.

I don’t want to name names, but there are two companies [in the portfolio] that are kind of in similar businesses. One was in our third fund and was sort of a traditional Silicon Valley-style investment. And the other was an investment in Idaho of all places. The first company, which involved a more traditional seed round, we’ve ended up putting in $2.5 million for a 25% stake. The one in Idaho we put in 500,000 for a 25% stake, and the one in Idaho is now twice the size of the Silicon Valley one and growing much faster.

So from what you’re seeing, the returns are actually going to be better than with a traditional Silicon Valley venture [approach].

As I said, I’ve been really disillusioned with Silicon Valley investing for a long time. It reminds me of Wall Street going up to 2008. the idea was, ‘As long as someone wants to buy this [collateralized debt obligation], we’re good.’ Nobody is thinking about: is this a good product?

So many things that what VCs have created are really financial instruments like those CDOs. They aren’t really thinking about whether this is a company that could survive on revenue from its customers. Deals are designed entirely around an exit. As long as you can get some sucker to take them, [you’re good]. So many acquisitions fail, for example, but the VCs are happy because — guess what? — they got their exit.

But now, because funds are raised so quickly, VCs have to show much more traction, which is where things like blitzscaling come in.

Just the way you’re describing it. Can’t you hear what’s wrong with that? It’s for the benefit of the VCs, the VCs have to show, not the entrepreneurs have to show.

Aren’t the LPs addicted to that crack? Don’t they want to see that quick financial traction?

Yeah, but you know that VC returns have actually lagged public markets for four decades now. It’s a little bit like the lottery. The only sure winners are the VCs because the VCs who don’t return their fund get their management fees every year.

A huge amount of the VC capital doesn’t return. Everybody just sees the really big wins. And I know when they happen, it’s really wonderful. But I think [those rare wins] have gotten an outsize place, and they’ve displaced other kinds of investment. It’s part of the structural inequality in our society, where we’re building businesses that are optimized for their financial return rather than their return to society.

https://ift.tt/eA8V8J Tim O’Reilly makes a persuasive case for why venture capital is starting to do more harm than good https://ift.tt/3dFLx6a

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Running a queer dating startup amid a pandemic and racial justice uprising

The events of the past few months have shaken the lives of everyone, but especially Black people in the U.S. COVID-19 has disproportionately impacted members of the Black community while police violence has recently claimed the lives of George Floyd, Tony McDade, Breonna Taylor, Rayshard Brooks and others. 

Two weeks ago, two Black transgender women, Riah Milton and Dominique “Rem’mie” Fells were murdered. In light of their deaths, activists took to the streets to protest the violence Black trans women face. Two days after Floyd’s killing, McDade, a Black trans man was shot and killed by police in Tallahassee, Florida. 

In light of Pride month coinciding with one of the biggest racial justice movements of the century amid a pandemic, TechCrunch caught up with Robyn Exton, founder of queer dating app Her, to see how her company is navigating this unprecedented moment. 

Exton and I had a wide-ranging conversation including navigating COVID-19 as a dating startup, how sheltering in place has affected product development, shifting the focus of what is historically a month centered around LGBTQ people to include racial justice work and putting purpose back into Pride month.

“Pride exists because there is inequality within our world and within our community and still there is no clear focus on what it is we should be fighting for as a community,” Exton says. “It almost feels like since equal marriage was passed, there’s a range of topics but no clear voice saying this is what everyone should focus on right now. And then obviously everything changed after George Floyd’s murder. Over the course of the following weekend, we canceled pretty much everything that was going out that talked still about Pride as a celebration. Especially for Black people within our community, in that moment of so much trauma, it felt completely wrong to talk about Pride just in general.”

Worldwide, Pride events have been canceled as a result of the pandemic. But it gives people and corporations time to reflect on what kind of presence they want to have in next year’s Pride celebrations.

https://ift.tt/eA8V8J Running a queer dating startup amid a pandemic and racial justice uprising https://ift.tt/3eDeEsa

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Volcker Rule reforms expand options for raising VC funds

It’s time to put on our thinking caps so we can discuss an esoteric but important policy change and how it is going to impact the VC world.

The 2008 financial crisis devastated the global economy. One of the reforms that came from the detritus of that situation was a policy known as the Volcker Rule.

The rule, proposed by former Fed chairman Paul Volcker and passed into law with the Dodd-Frank Act, was designed to limit the ways that banks could invest their balance sheets to avoid the kind of cataclysmic systemic risks that the world witnessed during the crisis. Many banks faced a liquidity crunch after investing in mortgage-backed securities (MBSs), collateralized debt obligations (CDOs), and other even more arcane speculative financial instruments (like POGs, or Piles Of Garbage) in seeking profits.

A number of reforms are underway to the Volcker Rule, which has been a domestic regulatory priority for the Trump administration since Inauguration Day.

One of the unintended consequences of the rule is that it limited banks from investing in certain “covered funds,” which was written broadly enough that it, well, covered VC firms as well as hedge funds and other private equity vehicles. Reforms to that policy (and to the rule in general) have been proposed for a decade with little traction until recently.

Now, a number of reforms are underway to the Volcker Rule, which has been a domestic regulatory priority for the Trump administration since Inauguration Day.

Proposed amendments to the Volcker Rule could be a lifeline for venture firms hit by market downturn

First, a simplification to some of the rule’s regulations was passed late last year and went into effect in January. Now, a final rule to reform the Volcker Rule’s applications to VC firms, among other issues, was agreed to by a group of U.S. regulatory agencies, and will go into effect later this year.

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Near Space Labs expands high-altitude Earth imagery to Texas and ramps remote deployment

The ongoing COVID-19 crisis has had a number of unexpected impacts on global economic activity – most of them negative. But the pandemic has also highlighted the need for alternative solutions to challenges where traditional solutions now prove either too costly, or too difficult to do while maintaining good health and safety practices. Near Space Labs, a startup focused on providing timely, location-specific, high resolution Earth imaging from balloons in the stratosphere, is one company that has found its model remarkably well-suited to the conditions that have arisen due to the coronavirus crisis.

Near Space Labs is in the process of expanding its offering to Texas, with some imagery already collected, and the team in active conversations with a number of potential customers about subscribing to its imaging services ahead of launching the first full batch of collected imagery by early next month. Adding a new geography in the middle of a pandemic required Near Space Labs to move up the development of a way for it to easily ship and deploy its balloon-lofted imaging equipment using remote instruction with local technical talent, which now means it’s ready to effectively spin up an imaging operation very quickly, on-demand basically anywhere in the world, with simple, minimal training to onboard and equip local operators on-demand.

“With travel restrictions, we had to figure out how to deploy hardware in a fully remote way,” explained Near Space Labs’ CEO Rema Matevosyan. “That had been a challenge that we wanted to tackle at some point, for our scalability – but instead we had to tackle that ASAP. Today, I’m really proud to say that the Swift, our robotic vehicles are able to be shipped anywhere on the globe in a small suitcase. And with a few videos, and a manual, it’s super easy to train new people to launch.”

Swift is basically a sophisticated camera attached to a balloon that flies between 60,000 and 85,000 feet, with short duration flights that can nonetheless capture up to 270 square miles of imagery at 30cm per inch resolution in a single pass. Swift is also designed to be able to go up frequently, making trips up to as frequently as twice per day, and it’s designed to provide quick turnaround times for processed images, compared to long potential waits for imaging from geosynchronous or even LEO satellites based on orbital schedules, ground station transmission times and other factors.

Image Credits: Near Space Labs

And because Near Space Labs can basically ship its imaging equipment in a suitcase and have just about anyone train quickly to use it effectively, vs. having to build a satellite that requires delivery via rocket and operation by highly trained engineers, it can offer considerable savings vs. the space-based competition – at a time when cost sensitivity for public institutions and the organizations looking for this kind of data aren’t eager to open their wallets.

“In these uncertain economic times, margins and fiscal responsibility become very important for people,” Matevosyan explained. “We have the perfect solution for that – our approach is very flexible, very low-cost. Even states are ‘bankrupt,’ – so everybody’s looking for ways to improve their margins, and to improving their spend.”

Matevosyan told me that Near Space Labs has seen an uptick in interest in its product from two directions as a result of the ongoing global economic shifts – first, there are customers who have traditionally sourced this imaging from satellite providers and who are looking for cost savings and a product that more closely fits their geographic and timing needs. Second, there are organizations looking to start using this kind of imagery for the first time, as an alternative to in-person inspection or sensing, because of the ways in which COVID-19 has put restrictions on workforces.

“COVID also put a spotlight in general on the remote sensing industry, because people are unable to, for instance, go down to the assets or the sites that they usually would check manually,” she said. “So that started looking into remote sensing solutions, and we saw an uptick in applications and signups to our imagery. One example industry where that’s happening is conservation. Conservation wasn’t a vertical that was super active in our pipeline. But suddenly with COVID, it became pretty active.”

Matevosyan says that it took Near Space just “days” to ramp a new technical team to be able to launch its Swifts in Texas, and that’s representative of the speed at which it can now scale to establish imaging basically anywhere in the world. Flexibility and scalability were always key assets of the business, she says, but the COVID crisis pushed that essential value to the forefront, and could help propel the company’s growth a lot quicker than expected.

https://ift.tt/3i51OVA Near Space Labs expands high-altitude Earth imagery to Texas and ramps remote deployment https://ift.tt/3hYLrtI

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