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Sony announces investment and partnership with Discord to bring the chat app to PlayStation

By Devin Coldewey

Sony and Discord have announced a partnership that will integrate the latter’s popular gaming-focused chat app with PlayStation’s own built-in social tools. It’s a big move and a fairly surprising one given how recently acquisition talks were in the air — Sony appears to have offered a better deal than Microsoft, taking an undisclosed minority stake in the company ahead of a rumored IPO.

The exact nature of the partnership is not expressed in the brief announcement post. The closest we come to hearing what will actually happen is that the two companies plan to “bring the Discord and PlayStation experiences closer together on console and mobile starting early next year,” which at least is easy enough to imagine.

Discord has partnered with console platforms before, though its deal with Microsoft was not a particularly deep integration. This is almost certainly more than a “friends can see what you’re playing on PS5” and more of a “this is an alternative chat infrastructure for anyone on a Sony system.” Chances are it’ll be a deep, system-wide but clearly Discord-branded option — such as “Start a voice chat with Discord” option when you invite a friend to your game or join theirs.

The timeline of early 2022 also suggests that this is a major product change, probably coinciding with a big platform update on Sony’s long-term PS5 roadmap.

While the new PlayStation is better than the old one when it comes to voice chat, the old one wasn’t great to begin with, and Discord is not just easier to use but something millions of gamers already do use daily. And these days, if a game isn’t an exclusive, being robustly cross-platform is the next best option — so PS5 players being able to seamlessly join and chat with PC players will reduce a pain point there.

Of course Microsoft has its own advantages, running both the Xbox and Windows ecosystems, but it has repeatedly fumbled this opportunity and the acquisition of Discord might have been the missing piece that tied it all together. That bird has flown, of course, and while Microsoft’s acquisition talks reportedly valued Discord at some $10 billion, it seems the growing chat app decided it would rather fly free with an IPO and attempt to become the dominant voice platform everywhere rather than become a prized pet.

Sony has done its part, financially speaking, by taking part in Discord’s recent $100 million H round. The amount they contributed is unknown, but perforce it can’t be more than a small minority stake, given how much the company has taken on and its total valuation.

Will fintech unicorn Flywire’s proposed IPO reach escape velocity?

By Alex Wilhelm

It’s a big morning for fintech startups today: Flywire, a Boston-based magnet for venture capital, has filed to go public.

Flywire is a global payments company that attracted more than $300 million as a startup, according to Crunchbase, most recently raising a $60 million Series F last month. We don’t have its most recent valuation, but PitchBook data indicates that the company’s February 2020, $120 million round valued Flywire at $1 billion on a post-money basis.

So what we’re looking at here is a fintech unicorn IPO. A great way to kick off the week, to be honest, though I’d thought that Robinhood would be the next such debut.

Fintech venture capital activity has been hot lately, which makes the Flywire IPO interesting. Its success or failure could dictate the pace of fintech exits and fintech startup valuations in general, so we have to care about it.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


Regardless, we’re doing our regular work this morning. First, what does Flywire do and with whom does it compete? Then, a closer look at its financial results as we hope to get our hands around its revenue quality, aggregate economics and growth prospects.

After that, we’ll discuss valuations and which venture capital groups are set to do well in its flotation. The company had a number of backers, but Spark Capital, Temasek, F-Prime Capital, and Bain Capital Ventures made the major shareholder list, along with Goldman Sachs. So, a number of firms and funds are hoping for a big Flywire exit. Let’s dig in.

What is Flywire?

Flywire is a global payments company. Or, as it states in its S-1 filing, it’s “a leading global payments enablement and software company.” And it thinks that its market, and by extension itself, has lots of room to grow. While “substantial strides [have been] made in payments technology in the retail and e-commerce industries,” the company wrote, “massive sectors of our global economy—including education, healthcare, travel, and business-to-business, or B2B, payments—are still in the early stages of digital transformation.”

That’s the same logic behind Stripe’s epic valuation and the rising value of payments-focused companies like Finix.

Epic Games buys artist community ArtStation, drops commissions to 12%

By Sarah Perez

One the same day as Fortnite maker Epic Games goes to trial with one of the biggest legal challenges to the App Store’s business model to date, it has simultaneously announced the acquisition of the artist portfolio community ArtStation — and immediately lowered the commissions on sales. Now standard creators on ArtStation will see the same 12% commission rate found in Epic’s own Games Store for PCs, instead of the 30% it was before. This reduced rate is meant to serve as an example the wider community as to what a “reasonable” commission should look like. This could become a point of comparison with the Apple App Store’s 30% commission for larger developers like Epic as the court case proceeds.

ArtStation today offers a place for creators across gaming, media, and entertainment to showcase their work and find new jobs. The company has had a long relationship with Epic Games, as many ArtStation creators work with Epic’s Unreal Engine. However, ArtStation has also been a home to 2D and 3D creators across verticals, including those who don’t work with Unreal Engine.

The acquisition won’t change that, the team says in its announcement. Instead, the deal will expand the opportunities for creators to monetize their work. Most notably, that involves the commission drop. For standard creators, the fees will drop from 30% to 12%. For Pro members (who pay $9.95/mo for a subscription), the commission goes even lower — from 20% to 8%. And for self-promoted sales, the fees will be just 5%. ArtEngine’s streaming video service, ArtStation Learning, will also be free for the rest of 2021, the company notes.

The slashed commission, however, is perhaps the most important change Epic is making to ArtStation because it gives Epic a specific example as to how it treats its own creator communities. It will likely reference the acquisition and the commission changes during its trial with Apple, along with its own Epic Games Store and its similarly low rate. Already, Epic’s move had prompted Microsoft to lower its cut on game sales, too, having recently announced a similar 30% to 12% drop.

In the trial, Epic Games will try to argue that Apple has a monopoly on the iOS app ecosystem and it abuses its market power to force developers to use Apple’s payment systems and pay it commissions on the sales and in-app purchases that flow through those systems. Epic Games, like several other larger app makers, would rather use its own payment systems to avoid the commission — or at the very least, be able to point users to a website where they can pay directly. But Apple doesn’t allow this, per its App Store guidelines.

Last year, Epic Games triggered Fortnite’s App Store expulsion by introducing a new direct way to pay on mobile devices which offered a steep discount. It was a calculated move. Both Apple and Google immediately banned the game for violating their respective app store policies, as a result. And then Epic sued.

While Epic’s fight is technically with both Apple and Google, it has focused more of its energy on the former because Android devices allow sideloading of apps (a means of installing apps directly), and Apple does not.

Meanwhile, Apple’s argument is that Epic Games agreed to Apple’s terms and guidelines and then purposefully violated them in an effort to get a special deal. But Apple says the guidelines apply to all developers equally, and Epic doesn’t get an exception here.

However, throughout the course of the U.S. antitrust investigations into big tech, it was discovered that Apple did, in fact, make special deals in the past. Emails shared by the House Judiciary Committee as a part of an investigation revealed that Apple had agreed to a 15% commission for Amazon’s Prime Video app at the start, when typically subscription video apps are 30% in year one, then 15% in year two and beyond. (Apple says Amazon simply qualified for a new program.) Plus, other older emails revealed Apple had several discussions about raising commissions even higher than 30%, indicating that Apple believed its commission rate had some flex.

Ahead of today’s acquisition by Epic Games, ArtStation received a “Megagrant” from Epic during the height of the pandemic to help it through an uncertain period. This could may have pushed the two companies to further discuss deeper ties going forward.

“Over the last seven years, we’ve worked hard to enable creators to showcase their work, connect with opportunities and make a living doing what they love,” said Leonard Teo, CEO and co-founder of ArtStation, in a statement. “As part of Epic, we will be able to advance this mission and give back to the community in ways that we weren’t able to on our own, while retaining the ArtStation name and spirit.”

Equity Monday: TechCrunch goes Yahoo while welding robots raise $56M

By Alex Wilhelm

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

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

This morning was a notable one in the life of TechCrunch the publication, as our parent company’s parent company decided to sell our parent company to a different parent company. And now we’re to have to get new corporate IDs, again, as it appears that our new parent company’s parent company wants to rebrand our parent company. As Yahoo.

Cool.

Anyway, a bunch of other stuff happened as well:

We’re back Wednesday with something special. Chat then!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

Dell dumps another big asset moving Boomi to Francisco Partners and TPG for $4B

By Ron Miller

It’s widely known that Dell has a debt problem left over from its massive acquisition of EMC in 2016, and it seems to be moving this year to eliminate part of it in multi-billion chunks. The first step was spinning out VMware as a separate company last month, a move expected to net close to $10 billion.

The second, long expected, finally dropped last night when the company announced it was selling Boomi to a couple of private equity firms for $4 billion. Francisco Partners is joining forces with TPG to make the deal to buy the integration platform.

Boomi is not unlike Mulesoft, a company that Salesforce purchased in 2018 for $6.5 billion, although a bit longer in tooth. They both help companies with integration problems by creating connections between disparate systems. With so many pieces in place from various acquisitions over the years, it seems like a highly useful asset for Dell to help pull these pieces together and make them work, but the cash is trumping that need.

Providing integration services is a growing requirement as companies look for ways to make better use of data locked in siloed systems. Boomi could help and that’s one of the primary reasons for the acquisition, according to Francisco executives.

“The ability to integrate and connect data and workflows across any combination of applications or domains is a critical business capability, and we strongly believe that Boomi is well positioned to help companies of all sizes turn data into their most valuable asset,” Francisco CEO Dipanjan Deb and partner Brian Decker said in a statement.

As you would expect, Boomi’s CEO Chris McNabb put a positive spin on the deal about how his new bosses were going to fuel growth for his company. “By partnering with two tier-one investment firms like Francisco Partners and TPG, we can accelerate our ability for our customers to use data to drive competitive advantage. In this next phase of growth, Boomi will be in a position of strength to further advance our innovation and market trajectory while delivering even more value to our customers,” McNabb said in a statement.

All of this may have some truth to it, but the company goes from being part of a large amorphous corporation to getting absorbed in the machinery of two private equity firms. What happens next is hard to say.

The company was founded in 2000, and sold to Dell in 2010. Today, it has 15,000 customer, but Dell’s debt has been well documented, and when you string together a couple of multi-billion deals as Dell has recently, pretty soon you’re talking real money. While the company has not stated it will explicitly use the proceeds of this deal to pay off debt as it did with the VMware announcement, it stands to reason that this will be the case.

The deal is expected to close later this year, although it will have to pass the typical regulatory scrutiny prior to that.

Gatheround raises millions from Homebrew, Bloomberg and Stripe’s COO to help remote workers connect

By Mary Ann Azevedo

Remote work is no longer a new topic, as much of the world has now been doing it for a year or more because of the COVID-19 pandemic.

Companies — big and small — have had to react in myriad ways. Many of the initial challenges have focused on workflow, productivity and the like. But one aspect of the whole remote work shift that is not getting as much attention is the culture angle.

A 100% remote startup that was tackling the issue way before COVID-19 was even around is now seeing a big surge in demand for its offering that aims to help companies address the “people” challenge of remote work. It started its life with the name Icebreaker to reflect the aim of “breaking the ice” with people with whom you work.

“We designed the initial version of our product as a way to connect people who’d never met, kind of virtual speed dating,” says co-founder and CEO Perry Rosenstein. “But we realized that people were using it for far more than that.” 

So over time, its offering has evolved to include a bigger goal of helping people get together beyond an initial encounter –– hence its new name: Gatheround.

“For remote companies, a big challenge or problem that is now bordering on a crisis is how to build connection, trust and empathy between people that aren’t sharing a physical space,” says co-founder and COO Lisa Conn. “There’s no five-minute conversations after meetings, no shared meals, no cafeterias — this is where connection organically builds.”

Organizations should be concerned, Gatheround maintains, that as we move more remote, that work will become more transactional and people will become more isolated. They can’t ignore that humans are largely social creatures, Conn said.

The startup aims to bring people together online through real-time events such as a range of chats, videos and one-on-one and group conversations. The startup also provides templates to facilitate cultural rituals and learning & development (L&D) activities, such as all-hands meetings and workshops on diversity, equity and inclusion. 

Gatheround’s video conversations aim to be a refreshing complement to Slack conversations, which despite serving the function of communication, still don’t bring users face-to-face.

Image Credits: Gatheround

Since its inception, Gatheround has quietly built up an impressive customer base, including 28 Fortune 500s, 11 of the 15 biggest U.S. tech companies, 26 of the top 30 universities and more than 700 educational institutions. Specifically, those users include Asana, Coinbase, Fiverr, Westfield and DigitalOcean. Universities, academic centers and nonprofits, including Georgetown’s Institute of Politics and Public Service and Chan Zuckerberg Initiative, are also customers. To date, Gatheround has had about 260,000 users hold 570,000 conversations on its SaaS-based, video platform.

All its growth so far has been organic, mostly referrals and word of mouth. Now, armed with $3.5 million in seed funding that builds upon a previous $500,000 raised, Gatheround is ready to aggressively go to market and build upon the momentum it’s seeing.

Venture firms Homebrew and Bloomberg Beta co-led the company’s latest raise, which included participation from angel investors such as Stripe COO Claire Hughes Johnson, Meetup co-founder Scott Heiferman, Li Jin and Lenny Rachitsky. 

Co-founders Rosenstein, Conn and Alexander McCormmach describe themselves as “experienced community builders,” having previously worked on President Obama’s campaigns as well as at companies like Facebook, Change.org and Hustle. 

The trio emphasize that Gatheround is also very different from Zoom and video conferencing apps in that its platform gives people prompts and organized ways to get to know and learn about each other as well as the flexibility to customize events.

“We’re fundamentally a connection platform, here to help organizations connect their people via real-time events that are not just really fun, but meaningful,” Conn said.

Homebrew Partner Hunter Walk says his firm was attracted to the company’s founder-market fit.

“They’re a really interesting combination of founders with all this experience community building on the political activism side, combined with really great product, design and operational skills,” he told TechCrunch. “It was kind of unique that they didn’t come out of an enterprise product background or pure social background.”

He was also drawn to the personalized nature of Gatheround’s platform, considering that it has become clear over the past year that the software powering the future of work “needs emotional intelligence.”

“Many companies in 2020 have focused on making remote work more productive. But what people desire more than ever is a way to deeply and meaningfully connect with their colleagues,” Walk said. “Gatheround does that better than any platform out there. I’ve never seen people come together virtually like they do on Gatheround, asking questions, sharing stories and learning as a group.” 

James Cham, partner at Bloomberg Beta, agrees with Walk that the founding team’s knowledge of behavioral psychology, group dynamics and community building gives them an edge.

“More than anything, though, they care about helping the world unite and feel connected, and have spent their entire careers building organizations to make that happen,” he said in a written statement. “So it was a no-brainer to back Gatheround, and I can’t wait to see the impact they have on society.”

The 14-person team will likely expand with the new capital, which will also go toward helping adding more functionality and details to the Gatheround product.

“Even before the pandemic, remote work was accelerating faster than other forms of work,” Conn said. “Now that’s intensified even more.”

Gatheround is not the only company attempting to tackle this space. Ireland-based Workvivo last year raised $16 million and earlier this year, Microsoft  launched Viva, its new “employee experience platform.”

Hangry, an Indonesian cloud kitchen startup with plans to become a global F&B company, closes $13M Series A

By Catherine Shu

Hangry, an Indonesian cloud kitchen startup that wants to become a global food and beverage company, has raised a $13 million Series A. The round was led by returning investor Alpha JWC Ventures, and included participation from Atlas Pacific Capital, Salt Ventures and Heyokha Brothers. It will be used to increase the number of Hangry’s outlets in Indonesia, including launching its first dine-in restaurants, over the next two years before it enters other countries.

Along with a previous round of $3 million from Alpha JWC and Sequoia Capital’s Surge program, Hangry’s Series A brings its total funding to $16 million. It currently operates about 40 cloud kitchens in Greater Jakarta and Bandung, 34 of which launched in 2020. Hangry plans to expand its total outlets to more than 120 this year, including dine-in restaurants.

Founded in 2019 by Abraham Viktor, Robin Tan and Andreas Resha, Hangry is part of Indonesia’s burgeoning cloud kitchen industry. Tech giants Grab and Gojek both operate networks of cloud kitchens that are integrated with their food delivery services, while other startups in the space include Everplate and Yummy.

One of the main ways Hangry sets itself apart is by focusing on its own brands, instead of providing kitchen facilities and services to restaurants and other third-party clients. Hangry currently has four brands, including Indonesian chicken dishes (Ayam Koplo) and Japanese food (San Gyu), that cost about 15,000 to 70,000 IDR per portion (or about $1 to $6 USD). Its food can be ordered through Hangry’s own app, plus GrabFood, GoFood and ShopeeFood.

“Given that Hangry has developed an extensive cloud kitchen network across Indonesia, we naturally would have interest from other brands to leverage our networks,” chief executive officer Viktor told TechCrunch. “However, our focus is to grow our brands since our brands are rapidly growing in popularity in Indonesia and require all kitchen resources that they need to realize their full potential.”

Providing food deliveries helped Hangry grow during COVID-19 lockdowns and social distancing, but in order to become a global brand within a decade, it needs to operate in multiple channels, he added.

“We knew that we will one day have to serve customers in all channels, including dine in,” said Viktor. “We started the hard way, doing delivery-first business, where we faced the challenges surrounding making sure our food still tastes good when it reaches customers’ homes. Now we feel ready to serve our customers in our restaurant premises. Our dine-in concept is an expansion of everything we’ve done in delivery channels.”

In a press statement, Alpha JWC Ventures partner Eko Kurniadi said, “In the span of 1.5 years, [Hangry] launched multiple brands across myriad tastes and categories, and almost all of them are amongst the best sellers list with superior ratings in multiple platforms, tangible examples of product-market fit. This is only the beginning and we can already foresee their growth to be a top local F&B brand in the country.”

Data was the new oil, until the oil caught fire

By Danny Crichton

We’ve been hearing how “data is the new oil” for more than a decade now, and in certain sectors, it’s a maxim that has more than panned out. From marketing and logistics to finance and product, decision-making is now dominated by data at all levels of most big private orgs (and if it isn’t, I’d be getting a résumé put together, stat).

So it might be a something of a surprise to learn that data, which could transform how we respond to the increasingly deadly disasters that regularly plague us, has been all but absent from much of emergency response this past decade. Far from being a geyser of digital oil, disaster response agencies and private organizations alike have for years tried to swell the scope and scale of the data being inputted into disaster response, with relatively meager results.

That’s starting to change though, mostly thanks to the internet of things (IoT), and frontline crisis managers today increasingly have the data they need to make better decisions across the resilience, response, and recovery cycle. The best is yet to come — with drones flying up, simulated visualizations, and artificial intelligence-induced disasters — what we’re seeing today on the frontlines is only the beginning of what could be a revolution in disaster response in the 2020s.

The long-awaited disaster data deluge has finally arrived

Emergency response is a fight against the fog of war and the dreadful ticking of the clock. In the midst of a wildfire or hurricane, everything can change in a matter of seconds — even milliseconds if you aren’t paying attention. Safe roads ferrying evacuees can suddenly become impassable infernos, evacuation teams can reposition and find themselves spread far too thin, and unforeseen conditions can rapidly metastasize to cover the entire operating environment. An operations center that once had perfect information can quickly find it has no ground truth at all.

Unfortunately, even getting raw data on what’s happening before and during a disaster can be extraordinarily difficult. When we look at the data revolution in business, part of the early success stems from the fact that companies were always heavily reliant on data to handle their activities. Digitalization was and is the key word: moving from paper to computers in order to transform latent raw data into a form that was machine-readable and therefore analyzable. In business, the last ten years was basically upgrading to version two from version one.

In emergency management however, many agencies are stuck without a version at all. Take a flood — where is the water and where is it going? Up until recently, there was no comprehensive data on where waters rose from and where they sloshed to. When it came to wildfires, there were no administrative datasets on where every tree in the world was located and how prone each is to fire. Even human infrastructure like power lines and cell towers often had little interface with the digital world. They stood there, and if you couldn’t see them, they couldn’t see you.

Flood modeling is on the cutting edge of disaster planning and response. Image Credits: CHANDAN KHANNA/AFP via Getty Images

Models, simulations, predictions, analysis: all of these are useless without raw data, and in the disaster response realm, there was no detailed data to be found.

After years of promising an Internet of Things (IoT) revolution, things are finally internet-izing, with IoT sensors increasingly larding up the American and world landscape. Temperature, atmospheric pressure, water levels, humidity, pollution, power, and other sensors have been widely deployed, emitting constant streams of data back into data warehouses ready for analysis.

Take wildfires in the American West. It wasn’t all that long ago that the U.S. federal government and state firefighting agencies had no knowledge of where a blaze was taking place. Firefighting has been “100 years of tradition unimpeded by progress,” Tom Harbour, head of fire response for a decade at the U.S. Forest Service and now chief fire officer at Cornea put it.

And he’s right. After all, firefighting is a visceral activity — responders can see the fires, even feel the burning heat echoing off of their flesh. Data wasn’t useful, particularly in the West where there are millions of acres of land and large swaths are sparsely populated. Massive conflagrations could be detected by satellites, but smoldering fires in the brush would be entirely invisible to the geospatial authorities. There’s smoke over California — exactly what is a firefighter on the ground supposed to do with such valuable information?

Today after a decade of speculative promise, IoT sensors are starting to clear a huge part of this fog. Aaron Clark-Ginsberg, a social scientist at RAND Corporation who researches community resilience, said that air quality sensors have become ubiquitous since they are “very cheap [and] pretty easy to use” and can offer very fine-grained understandings of pollution — a key signal, for instance, of wildfires. He pointed to the company Purple Air, which in addition to making sensors, also produces a popular consumer map of air quality, as indicative of the potential these days for technology.

Maps are the critical intersection for data in disasters. Geospatial information systems (GIS) form the basis for most planning and response teams, and no company has a larger footprint in the sector than privately-held Esri. Ryan Lanclos, who leads public safety solutions at the company, pointed to the huge expansion of water sensors as radically changing responses to certain disasters. “Flood sensors are always pulsing,“ he said, and with a “national water model coming out of the federal government ,” researchers can now predict through GIS analysis how a flood will affect different communities with a precision unheard of previously.

Digital maps and GIS systems are increasingly vital for disaster planning and response, but paper still remains quite ubiquitous. Image Credits: Paul Kitagaki Jr.-Pool/Getty Images

Cory Davis, the director of public safety strategy and crisis response at Verizon (which, through our parent company Verizon Media, is TechCrunch’s ultimate owner), said that all of these sensors have transformed how crews work to maintain infrastructure as well. “Think like a utility that is able to put a sensor on a power line — now they have sensors and get out there quicker, resolve it, and get the power back up.”

He noted one major development that has transformed sensors in this space the last few years: battery life. Thanks to continuous improvements in ultra-low-power wireless chips as well as better batteries and energy management systems, sensors can last a really long time in the wilderness without the need for maintenance. “Now we have devices that have ten-year battery lives,” he said. That’s critical, because it can be impossible to connect these sensors to the power grid in frontier areas.

The same line of thinking holds true at T-Mobile as well. When it comes to preventative planning, Jay Naillon, senior director of national technology service operations strategy at the telco, said that “the type of data that is becoming more and more valuable for us is the storm surge data — it can make it easier to know we have the right assets in place.” That data comes from flood sensors that can offer real-time warnings signals to planners across the country.

Telecom interest — and commercial interest in general — has been critical to accelerating the adoption of sensors and other data streams around disasters. While governments may be the logical end user of flood or wildfire data, they aren’t the only ones interested in this visibility. “A lot of consumers of that information are in the private sector,” said Jonathan Sury, project director at the National Center for Disaster Preparedness at the Earth Institute at Columbia University. “These new types of risks, like climate change, are going to affect their bottom lines,” and he pointed to bond ratings, insurance underwriting and other areas where commercial interest in sensor data has been profound.

Sensors may not literally be ubiquitous, but they have offered a window into the ambiguity that emergency managers have never had visibility into before.

Finally, there is the extensive datasets around mobile usage that have become ubiquitous throughout much of the world. Facebook’s Data for Good project, for instance, provides data layers around connectivity — are users connecting from one place and then later connecting from a different location, indicating displacement? That sort of data from the company and telcos themselves can help emergency planners scout out how populations are shifting in real-time.

Data, data, on the wall — how many AIs can they call?

Rivulets of data have now turned into floods of information, but just like floodwaters rising in cities across the world, the data deluge now needs a response all its own. In business, the surfeit of big data has been wrangled with an IT stack from data warehouses all the way to business intelligence tools.

If only data for disasters could be processed so easily. Data relevant for disasters is held by dozens of different organizations spanning the private, public, and non-profit sectors, leading to huge interoperability problems. Even when the data can be harmonized, there are large challenges in summarizing the findings down to an actual decision a frontline responder can use in their work — making AI a tough sale still today, particularly outside of planning. As Davis of Verizon put it, “now that they have this plethora of data, a lot of cities and federal agencies are struggling with how to use it.”

Unfortunately, standardization is a challenge at all scales. Globally, countries mostly lack interoperability, although standards are improving over time. Amir Elichai, the founder and CEO of 911 call-handling platform Carbyne, said that “from a technology standpoint and a standards standpoint, there is a big difference between countries,” noting that protocols from one country often have to be completely rewritten to serve a different market.

Tom Cotter, director of emergency response and preparedness at health care disaster response organization Project HOPE, said that even setting up communications between responders can be challenging in an international environment. “Some countries allow certain platforms but not others, and it is constantly changing,” he said. “I basically have every single technology communication platform you can possibly have in one place.”

One senior federal emergency management official acknowledged that data portability has become increasingly key in procurement contracts for technology, with the government recognizing the need to buy commercially-available software rather than custom-designed software. That message has been picked up by companies like Esri, with Lanclos stating that “part of our core mission is to be open and … create data and to share that openly to the public or securely through open standards.”

For all its downsides though, the lack of interoperability can be ironically helpful for innovation. Elichai said that the “lack of standards is an advantage — you are not buying into a legacy standard,” and in some contexts where standards are lacking, quality protocols can be built with the assumption of a modern data workflow.

Even with interoperability though, the next challenge becomes data sanitation — and disaster data is dirty as … well, something. While sensor streams can be verified and cross-checked with other datasets, in recent years there has been a heavy increase in the quantity of citizen-submitted information that has to be carefully vetted before it is disseminated to first responders or the public.

With citizens having more access to smartphones than ever, emergency planners have to sanitize uploaded data uploaded in order to verify and make it useful. Image Credits: TONY KARUMBA/AFP via Getty Images

Bailey Farren, CEO and co-founder of disaster communications platform Perimeter, said that “sometimes citizens have the most accurate and real-time information, before first responders show up — we want citizens to share that with …government officials.” The challenge is how to filter the quality goods from the unhelpful or malicious. Raj Kamachee, the CIO of Team Rubicon, a non-profit which assembles teams of volunteer military veterans to respond to natural disasters, said that verification is critical, and it’s a key element of the infrastructure he has built at the organization since joining in 2017. “We’ve gotten more people using it so more feedback [and] more data [is] coming through the pipes,” he said. “So creating a self-service, a very collaborative approach.”

With quality and quantity, the AI models should come, right? Well, yes and no.

Sury of Columbia wants to cool down at least some of the hype around AI. “The big caveat with all of these machine learning and big data applications is that they are not a panacea — they are able to process a lot of disparate information, [but] they’re certainly not going to tell us exactly what to do,” he said. “First responders are already processing a lot of information,” and they don’t necessarily need more guidance.

Instead, AI in disasters is increasingly focused on planning and resilience. Sury pointed to OneConcern, a resiliency planning platform, as one example of how data and AI can be combined in the disaster planning process. He also pointed to the CDC’s Social Vulnerability Index and risk tools from FEMA that integrate different data signals into scalar values by emergency planners to optimize their contingency plans.

Yet, almost everyone I talked to was much more hesitant about the power of AI. As I discussed a bit in part one of this series regarding the disaster sales cycle, data tools have to be real-time and perfect every time given the lives that are on the line. Kamachee of Team Rubicon noted that when choosing tools, he avoids whiz-bang and instead looks at the pure utility of individual vendors. “We go high tech, but we prepare for low tech,” he said, empathizing that in disaster response, everything must be agile and adaptable to changing circumstances.

Elichai of Carbyne saw this pattern in his sales. There’s a “sensitivity in our market and the reluctance from time to time to adopt” new technologies he said, but acknowledged that “there is no doubt that AI at a certain point will provide benefits.”

Naillon of T-Mobile had similar views from the operator perspective, saying that “I can’t say that we really leverage AI very much” in the company’s disaster planning. Instead of AI as brain, the telecom company simply uses data and forecast modeling to optimally position equipment — no fancy GANs required.

Outside of planning, AI has helped in post-disaster recovery, and specifically around damage assessments. After a crisis transpires, assessments of infrastructure and private property have to be made in order for insurance claims to be filed and for a community to move forward. Art delaCruz, COO and president of Team Rubicon, noted that technology and a flourish of AI has helped significantly around damage assessments. Since his organization often helps rebuild communities in the course of its work, triaging damage is a critical element of its effective response strategy.

There’s a brighter future, other than that brightness from the sun that is going to burn us to a crisp, right?

So AI today is helping a bit with resilience planning and disaster recovery and not so much during emergency response itself, but there is certainly more to come across the entire cycle. Indeed, there is a lot of excitement about the future of drones, which are increasingly being used in the field, but there are concerns long term about whether AI and data will ultimately cause more problems than they solve.

Drones would seem to have an obvious value for disaster response, and indeed, they have been used by teams to get additional aerial footage and context where direct access by responders is limited. Kamachee of Team Rubicon noted that in the Bahamas on a mission, response teams used drones to detect survivors, since major roads were blocked. The drones snapped images that were processed using AI, and helped the team to identify those survivors for evacuation. He described drones and their potential as “sexy; very, very cool.”

Aerial views from drones can give disaster response teams much better real-time information, particularly in areas where on-the-ground access is limited. Image Credits: Mario Tama/Getty Images

Cotter of Project HOPE similarly noted that faster data processing translates to better responses. “Ultimately speed is what saves lives in these disasters,” he said. We’re “also able to manage more responses remotely [and] don’t have to send as many people downrange,” giving response teams more leverage in resource-constrained environments.

“I see more emergency management agencies using drone technology — search and rescue, aerial photography,” Davis of Verizon said, arguing that operators often have a mentality of “send a machine into a situation first.” He continued, arguing, “artificial intelligence is going to continue to get better and better and better [and] enable our first responders to respond more effectively, but also more efficiently and safer.”

With data flooding in from sensors and drones and processed and verified better than ever, disaster response can improve, perhaps even better than Mother Nature can galvanize her increasingly deadly whims. Yet, there is one caveat: will the AI algorithms themselves cause new problems in the future?

Clark-Ginsburg of RAND, perhaps supplying that typical RANDian alternatives analysis, said that these solutions can also create problems themselves, “technological risks leading to disaster and the world of technology facilitating disaster.” These systems can break, they can make mistakes, and more ominously — they can be sabotaged to increase chaos and damage.

Bob Kerrey, a co-chair of the 9/11 Commission, former senator and governor of Nebraska, and currently the board chairman of Risk & Return, a disaster response VC fund and philanthropy I profiled recently, pointed to cybersecurity as increasingly a wild card in many responses. “There wasn’t a concept called zero days — let alone a market for zero days — in 2004 [when the 9/11 Commission was doing its work], and now there is.” With the 9/11 terrorist attacks, “they had to come here, they had to hijack planes … now you don’t need to hijack planes to damage the United States,” noting that hackers “can be sitting with a bunch of other guys in Moscow, in Tehran, in China, or even your mother’s basement.”

Data is a revolution in the making for disaster response, but it may well cause a whole second-order set of problems that didn’t exist before. What is giveth is taketh away. The oil gushes, but then the well suddenly runs dry – or simply catches fire.


Future of Technology and Disaster Response Table of Contents


Big Tech is now worth so much we’ve forgotten to be shocked by the numbers

By Alex Wilhelm

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading. If you want it in your inbox every Saturday morning, sign up hereReady? Let’s talk money, startups and spicy IPO rumors.

TechCrunch isn’t a public-market-focused publication. We care about startups. But public tech companies can, at times, provide interesting insights into how the broader technology market is performing. So we pay what we might call minimum-viable attention to former startups that made it all the way to an IPO.

Then there are the Big Tech companies. In the United States the list is well-known: Facebook, Alphabet, Microsoft, Apple and Amazon. And, in a series of results that could indicate a hot market for startup growth, they had a smashingly good first quarter of 2021. You can read our notes on their results here and here, but that’s just part of the story.

Yes, the Big Tech financial results were good — as they have been for some time — but lost amid the usual earnings deluge of numbers is how shockingly accretive Big Tech’s recent performances have proven for their valuations.

Microsoft fell as low as the $135 per-share range last March. Today it’s worth $252 and change. Alphabet traded down to around $1,070 per share. Today the search giant is worth $2,410 per share.

The result of the huge share-price appreciation is that Apple is now worth $2.21 trillion, Microsoft $1.88 trillion, Amazon $1.76 trillion, Alphabet $1.60 trillion and Facebook $0.93 trillion. That’s around $8.4 trillion for the five companies.

Back in July of 2017, I wrote a piece noting that their aggregate value had reached the $3 trillion mark. That became $4 trillion in mid-2018. And then in the next three years or so it more than doubled again.

Why?

Myles Udland, a reporter at our sister publication Yahoo Finance, has at least part of the puzzle in a piece he wrote this week. Here’s Udland:

And while it seems that almost every earnings story has sort of followed this same arc, data also confirms that this is not just our imagination: corporate earnings have never been this far out of line with expectations.

Data out of the team at Refinitiv published Thursday showed the rate at which companies were beating estimates and the magnitude by which they were beating expectations through Thursday morning’s results were the best on record.

So earnings are beating the street’s guesses more frequently, and at a higher differential, than ever? That makes recent stock-market appreciation less worrisome, I suppose. And it helps explain why startups have been able to raise so much capital lately in the United States, as they have in Europe, and why private-market investors are pouring so much capital into fintech startups. And it’s probably why Zomato is going public and why we’re still waiting for the Robinhood debut.

This is what a market feels like when the underlying businesses are firing on all cylinders, it appears. Just don’t forget that no business cycle is unending, and no boom is forever.

An insurtech interlude

Extending The Exchange’s recent reporting regarding fintech funding, and our roundup from last week of insurtech startup rounds, a few more notes on the latter startup niche, which can be broadly viewed as part of the larger financial technology world.

This time we’ll hear from Accel’s John Locke regarding his investments in The Zebra — which recently raised even more capital — and the insurtech space more broadly.

Asked why insurtech marketplaces like The Zebra have been able to raise so very much money in the last year, Locke said that it’s a mix of “insurance carriers […] finally embracing marketplaces and willing to design integrated consumer experiences with marketplaces,” along with more consumer “comparison shopping” and, finally, growth and revenue quality.

The Zebra, Locke said, is “still growing north of 100% at ~$120M+ revenue run-rate.” That means it can go public whenever it wants.

But on that matter, there has been some weakness in the stock market for some public insurtech companies. Is Locke worried about that? He’s neutral-to-positive, saying that his firm does not “think all the companies in the market will work but still thinks ‘insurtechs’ will take market share from incumbents over the next decade.” Fair enough.

And Accel is still considering more deals in the space, as are others. Locke said that the venture market for insurtech investments is “definitely more aggressive” this year than last.

Various and sundry

Closing today, a few notes on things that we didn’t get to that matter:

  • Productboard closed a $72 million Series C. First, that’s a huge round. Second, yes, Tiger did lead the deal. Third, the product management software company has around 4,000 customers today. That’s a lot. Add this company to your two-years-from-now IPO list.
  • Chinese bike-sharing startup Hello is going public in the United States. We are going to get back to this on Monday, but its F-1 filing is here. The company turned $926.3 million worth of 2020 revenues into $109.6 million in gross profit, and a net loss of $173.7 million in net losses. Yowza.
  • Darktrace went public this week. I know of it because it sponsors an F1 team that I adore, but it enters our world today as a recent U.K.-listed company. And after Deliveroo went kersplat, the resounding success of the Darktrace listing could make the U.K. a more attractive place to list than it was a week ago.
  • And, finally, drone delivery is, maybe, coming at last? U.K.-listed venture capital group Draper Esprit led the $25 million round into Manna, which wants to use unmanned drones in Ireland to deliver grub. “Manna sees a huge appetite for a greener, quieter, safer, and faster delivery service,” UKTN reports.

A long, weird week. Make sure to follow the second denizen of The Exchange’s writing team: Anna Heim. Okay! Chat next week!

Alex

Y Combinator-backed Uiflow wants to accelerate no-code enterprise app creation

By Alex Wilhelm

TechCrunch recently caught up with recent Y Combinator graduate Uiflow, a startup that is building a no-code enterprise app creation service.

If you are thinking wait, don’t a number of companies already do that?, the answer is yes. But what Quickbase, Smartsheet and others are working on isn’t quite the same thing, at least from the startup’s perspective.

Uiflow, a Bay Area-based concern that has been alive for far less than a year, has built an app creation tool that works with whatever backend a large company currently employs, and helps its development team build apps collaboratively. As the startup explained in a public posting, customer developers can import Figma files while their engineers can use existing UI libraries, and product managers can quickly vet an app’s logic.

The service is akin to a “cross between Unity and Figma,” Uiflow says.

Here’s what its own user interface looks like, per a screenshot the company provided to TechCrunch after an interview:

Per Y Combinator, the company has closed a pre-seed round of more than $500,000. The company told TechCrunch that it has been talking to investors lately — as essentially every Y Combinator-backed startup does after their public unveiling —  but appears to be holding off raising more capital until it fully launches self-service of its product; the company may also accelerate its hiring efforts once its self-serve GTM motion is more broadly available.

The startup told TechCrunch that after its Product Hunt launch it picked up around 1,200 signups. It’s vetting the group and letting in some as pilot customers. Those customers currently pay the company, so it has revenue, although the startup is more product-focused at the moment than centered around boosting its short-term revenues.

Uiflow thinks that its target customers are companies with 250 or more workers, the scale at which a company begins to start thinking about its own UI elements. However, Uiflow is talking to companies with 100 to 1,000 customers, it said.

The five-person team is building a service in a market that is more than active at the moment. As TechCrunch has explored, private-market investors are bullish on the no-code space, especially after the COVID-19 pandemic bolstered the pace at which companies large and small moved toward digital solutions. No-code and low-code services came into greater demand as accelerating digital transformation efforts met the market’s general dearth of available developer talent.

TechCrunch has covered the no-code space extensively in recent quarters, given both rising market demand for its products and what seemed to be growing investor demand for shares in startups pursuing the model. All that’s to say that there’s a reasonable chance that we’ll hear from Uiflow soon regarding a fresh capital raise. Let’s see how long that takes.

In the meantime, here’s a photo of the Uiflow team. In 2021-style, it’s a Zoom shot:

From upper left, clockwise: Michael Tildahl, Eric Rowell (CTO and co-founder), Brian Lichliter, Rocco Cataldo and D. Sol Eun (CEO and co-founder). Via the company. 

 

Optimism reigns at consumer trading services as fintech VC spikes and Robinhood IPO looms

By Anna Heim

With the Coinbase direct listing behind us and the Robinhood IPO ahead, it’s a heady time for consumer-focused trading apps.

Mix in the impending SPAC-led debut of eToro, general bullishness in the cryptocurrency space, record highs for some equities markets, and recent rounds from Public.com, M1 Finance and U.K.-based Freetrade, and you could be excused for expecting the boom in consumer asset trading to keep going up and to the right.

But will it? There are data in both directions. While recent information could indicate that some of the most lucrative trading activity at companies like Robinhood could be slowing, there’s also encouraging app download information that paints a more bullish picture regarding the durability of the boom in consumer interest regarding savings and investing, which The Exchange has had an eye on for some time.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


Our question today is this: How bullish are companies in the space about continued consumer interest in equities and other asset trading? And why? We’ll also put similar questions to their backers.

We’ve compiled notes from Accel’s Sameer Gandhi about views concerning Public as one of its backers and Index’s Jan Hammer about Robinhood and its market, as well as comments from Public.com and M1 Finance about what they see regarding consumer trading interest in the future. Thoughts from Robert Le, PitchBook’s senior emerging technology analyst, cap things off.

We’ll start with a short look at some data to help ground ourselves regarding where consumer trading demand appears to be today, then consider what the companies in the ring and their backers are thinking. We’ll close with a synthesis of all the perspectives to come up with hype-adjusted expectations for the rest of 2021.

Bullish data, bearish data

Coinbase executed its direct listing on the back of one of the most impressive quarters we’ve ever seen in the realm of business results, meaning it began to trade when it looked just about as good as a company can. Will the same hold true for Robinhood and company?

The second shot is kicking in

By Natasha Mascarenhas

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

First and foremost, Equity was nominated for a Webby for “Best Technology Podcast”! Drop everything and go Vote for Equity! We’d appreciate it. A lot. And even if we lose, well, we’ll keep doing our thing and making each other laugh. (Note: We are in last place, which is, well, something.)

Regardless, the Equity team got together once again this week to not only go over the news of the week, but also to do a little soul searching. You see, some news broke yesterday, so we figured that we had to talk about it in our usual style. So, here’s the rundown:

  • Do you want to buy TechCrunch? Apparently you can? Albeit probably along with a few billion dollars’ worth of other assets — whatever is left of Yahoo and AOL — you can now own an NFT. A non-fungible TechCrunch. What is ahead for us? We don’t know. So if you do know, tell us. Until then we’ll just yo-yo gently between panic and optimism, as per usual.
  • We also dug into the latest All Raise venture capital data, and the results were abysmal. 
  • Next up was the news that fintech startups are setting records in 2021, raising more capital than ever before. That brought us to the latest from Brex.
  • And then there was a suspicious trend when three fintech companies focused on teen banking raised in one exhale. We talk Step, Greenlight and Current.
  • Natasha talked about her last Startups Weekly post, in which she unpacked The MasterClass effect’s impact on edtech.
  • And to close, we discussed the latest cool-kid venture capital funds. Sure memes are cool, but did you know that they can help you raise a $10 million fund? They can!

We are back Monday morning with our weekly kick-off show. Have a great weekend!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

Developer-focused video platform Mux achieves unicorn status with $105M funding

By Anthony Ha

Barely more than eight months after announcing a $37 million funding round, Mux has another $105 million.

The Series D was led by Coatue and values the company at more than $1 billion (Mux isn’t disclosing the specific valuation). Existing investors Accel, Andreessen Horowitz and Cobalt also participated, as did new investor Dragoneer.

Co-founder and CEO Jon Dahl told me that Mux didn’t need to raise more funding. But after last year’s Series C, the company’s leadership kept in touch with Coatue and other investors who’d expressed interest, and they ultimately decided that more money could help fuel faster growth during “this inflection moment in video.”

Building on the thesis popularized by A16Z co-founder Marc Andreessen, Dahl said, “I think video’s eating software, the same way software was eating the world 10 years ago.” In other words, where video was once something we watched at our desks and on our sofas, it’s now everywhere, whether we’re scrolling through our social media feeds or exercising on our Pelotons.

“We’re at the early days of a five- or 10-year major transition, where video is moving into being a first-class part of every software project,” he said.

Dahl argued that Mux is well-suited for this transition because it’s “a video platform for developers,” with an API-centric approach that results in faster publishing and reliable streaming for viewers. Its first product was a monitoring and analytics tool called Mux Data, followed by its streaming video product Mux Video.

“If you’re going to build a video platform and do it data-first, you need heavy data and monitoring and analytics,” Dahl explained. “We built the data layer [and then] we built the streaming platform.”

Customers include Robinhood, PBS, ViacomCBS, Equinox Media, and VSCO — Dahl said that while Mux works with digital media companies, “our core market is software.” He suggested that back when the company was founded in 2015, video was largely seen as a “niche,” or “something you needed if you were ESPN or Netflix.” But the last few years have illustrated that “video is a fundamental part of how we communicate” and that “every software company should have video as a core part of its products.”

Mux founders Adam Brown, Steven Heffernan, Matt McClure and Jon Dahl

Mux founders Adam Brown, Steven Heffernan, Matt McClure and Jon Dahl

Not surprisingly, demand increased dramatically during the pandemic. During the past year, on-demand streaming via the Mux platform growing by 300%, while live video streaming grew 3700% and revenue quadrupled.

“Which is a lot of work,” Dahl said with a laugh. “We definitely spent a lot of the last year ramping and scaling and investing in the platform.”

This new funding will allow Mux (which has now raised a total of $175 million) to continue that investment. Dahl said he plans to grow the team from 80 to 200 employees and to explore potential acquisitions.

“We were impressed by Mux’s laser focus on the developer community, and saw impressive customer retention and expansion indicative of the strong value their solutions provide,” said Coatue General Partner David Schneider in a statement. “This funding will enable Mux to continue to build on their customer-centric platform and we are proud to partner with Mux as it leads the way to this hybrid future.”

IBM is acquiring cloud app and network management firm Turbonomic for up to $2B

By Ingrid Lunden

IBM today made another acquisition to deepen its reach into providing enterprises with AI-based services to manage their networks and workloads. It announced that it is acquiring Turbonomic, a company that provides tools to manage application performance (specifically resource management), along with Kubernetes and network performance — part of its bigger strategy to bring more AI into IT ops, or as it calls it, AIOps.

Financial terms of the deal were not disclosed, but according to data in PitchBook, Turbonomic was valued at nearly $1 billion — $963 million, to be exact — in its last funding round in September 2019. A report in Reuters rumoring the deal a little earlier today valued it at between $1.5 billion and $2 billion. A source tells us the figure is accurate.

The Boston-based company’s investors included General Atlantic, Cisco, Bain, Highland Capital Partners, and Red Hat. The last of these, of course, is now a part of IBM (so it was theoretically also an investor), and together Red Hat and IBM have been developing a range of cloud-based tools addressing telco, edge and enterprise use cases.

This latest deal will help extend that further, and it has more generally been an area that IBM has been aggressive in recently. Last November IBM acquired another company called Instana to bring application performance management into its stable, and it pointed out today that the Turbonomic deal will complement that and the two technologies’ tools will be integrated together, IBM said.

Turbonomic’s tools are particularly useful in hybrid cloud architectures, which involve not just on-premise and cloud workloads, but workloads that typically are extended across multiple cloud environments. While this may be the architecture people apply for more resilience, reasons of cost, location or other practicalities, the fact of the matter is that it can be a challenge to manage. Turbonomic’s tools automate management, analyse performance, and suggest changes for network operations engineers to make to meet usage demands.

“Businesses are looking for AI-driven software to help them manage the scale and complexity challenges of running applications cross-cloud,” said Ben Nye, CEO, Turbonomic, in a statement. “Turbonomic not only prescribes actions, but allows customers to take them. The combination of IBM and Turbonomic will continuously assure target application response times even during peak demand.”

The bigger picture for IBM is that it’s another sign of how the company is continuing to move away from its legacy business based around servers and deeper into services, and specifically services on the infrastructure of the future, cloud-based networks.

“IBM continues to reshape its future as a hybrid cloud and AI company,” said Rob Thomas, SVP, IBM Cloud and Data Platform, in a statement. “The Turbonomic acquisition is yet another example of our commitment to making the most impactful investments to advance this strategy and ensure customers find the most innovative ways to fuel their digital transformations.”

A large part of the AI promise in the world of network operations and IT ops is how it will afford companies to rely more on automation, another area where IBM has been very active. (In a very different application of this technology — in business services — this month, it acquired MyInvenio in Italy to bring process mining technology in house.)

The promise of automation, meanwhile, is lower operation costs, a critical issue for managing network performance and availability in hybrid cloud deployments.

“We believe that AI-powered automation has become inevitable, helping to make all information-centric jobs more productive,” said Dinesh Nirmal, General Manager, IBM Automation, in a statement. “That’s why IBM continues to invest in providing our customers with a one-stop shop of AI-powered automation capabilities that spans business processes and IT. The addition of Turbonomic now takes our portfolio another major step forward by ensuring customers will have full visibility into what is going on throughout their hybrid cloud infrastructure, and across their entire enterprise.”

Fintech startups set VC records as the 2021 fundraising market continues to impress

By Anna Heim

While waiting for full first-quarter venture capital results for fintech startups to drop, we knew that they were going to be outsized. The Exchange previously explored the pace at which huge venture rounds were invested into the startup niche, noting that by mid-March the fintech market had already recorded a record number of $100 million rounds.

But the largest venture capital rounds are only part of the fintech investing picture, so we were looking forward to getting a deeper look into what happened in the critical startup sector more generally. We’ve now got the data, so today we’re digging in with both hands.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.


Per a CB Insights compilation of Q1 2021 fintech venture capital data from around the world, the first three months of the year were the most valuable period for fintech investing, ever. Somewhat shockingly, the first quarter beat the infamous second quarter of 2018, when Ant Group raised a $14 billion round, so skewing the category’s longitudinal data that some analyst groups simply discount it for analytical purposes.

It wasn’t necessary this time: The 614 tracked fintech deals in Q1 were worth a total of $22.8 billion, per the report, enough to set an all-time high, Ant Group be damned. Per CB Insights, the quarter’s fintech VC deal volume rose a modest 15% compared to the year-ago quarter, while VC dollar volume in the sector shot 98% higher over the same interval.

The boom in funding was a global affair, as we’ll get into shortly. We’re also going to chat sub-sectors in the fintech world, parsing where there’s the most venture activity to track, and, critically, where VCs are pushing — or pulling back — their attention and capital.

So, where did the fintech venture capital market push the most money in the first quarter, and why? We’ll be chatting data as we go, but The Exchange also enlisted VCs from three continents who have made fintech investments to help provide context: We’ll hear from Jesse Wedler, a partner at CapitalG based in North America; Kola Aina, a general partner at Ventures Platform based in Africa; and Shiyan Koh, a general partner at Hustle Fund based in Asia.

Let’s talk a few key fintech numbers, and then rip into venture results by geography and focus.

Huge checks, myriad exits

While we’re looking beyond the largest checks today to get a more holistic perspective on the state of the fintech venture capital world, we cannot discount them. So, briefly, what matters from the mega-round space, or the funding category of rounds worth nine figures and more? Some 57 were raised by fintech startups around the world in the first quarter, or about 4.5 per week. That number was 30 in Q4 2020, and just 21 in Q1 2020.

The first quarter’s 57 mega-deals were worth a huge 69% of total venture capital in the fintech space during the quarter. Don’t be shocked by that figure; a single mega-round can add up to the value of 50 seed deals pretty easily.

The huge results should also not be a complete surprise, CapitalG’s Wedler told TechCrunch in an email, as “the reality is that fintech has been a hot category for years.” What could be driving the recent acceleration in capital disbursement into financial technology startups? Wedler mused it’s a combination of “the ubiquity of smartphones and the modern internet, the development of modern cloud technology, and advancements in APIs and modular services.”

Firstbase raises $13M to make remote work suck less

By Alex Wilhelm

The chance that I am ever willing to commute on a regular basis again in the future is zero. It’s too inefficient. And while workers and employers are somewhat split on where they stand on the question of remote toil, the COVID-19 pandemic has permanently shaken up the working world; we’re not going back to the pre-COVID normal.

To support what could be droves of workers sticking to distance-labor instead of returning to offices, Firstbase is building a software-and-hardware solution to quickly get remote workers the tools and support they need. And today the company announced that it closed a $13 million Series A led by Andreessen Horowitz. B Capital Group and Alpaca VC also put capital into the round; TechCrunch first caught wind of Firstbase when it took part in an Acceleprise accelerator cohort in mid-2020.

Notably Firstbase didn’t start with its current product focus. As is common amongst startups, it was born as something else entirely. With an original fintech bent, the company went remote back in 2018. But the experience wasn’t stellar, Firstbase co-founder and CEO Chris Herd told TechCrunch. It was hard to get workers the technology they needed, and hard to get it back if they left the company, he explained.

Later, with the fintech effort low on capital and time, the company realized that some internal tech it had built to help support remote staff’s hardware and software needs might have broader application. Firstbase pivoted in late 2019, and by March of 2020 Herd told TechCrunch that his company had 600 companies on its waitlist. That number has since multiplied.

The company’s product is two-fold. It’s a software service that helps companies track and manage their hardware assets that remote workers use. And it’s a hardware service that can pre-install software on hardware and ship it to employees, and provide remote IT support. Notably customers can either use Firstbase’s software alone, which they pay for on a SaaS basis, or both its software and hardware offerings.

Firstbase has two sources of gross margin. Its software business will generate obvious software incomes, and the company can extract gross profit from its hardware business, Herd explained. The hardware part of the startup’s model appears more nascent than the software component. Firstbase only began onboarding customers last November, making it a yet-nascent startup that is allowed to still be figuring things out.

TechCrunch asked Herd what it costs to kit out a remote worker today. He said that it varied, but could land between $2,000 and $5,000, though he added that Firstbase will allow customers to pay those costs over time as a series of flat payments.

What’s ahead for the company? Per its CEO, the merely 10-person company, three of whom are part-time, would like to grow its staff by four or five-fold this year. And unsurprisingly, Firstbase intends to hew to its remote roots, meaning that it won’t be looking for workers in a single geographic region. Some of the staff it intends to hire will be in its sales org, a focus that Herd mentioned during our interview. The company will also build out more enterprise-friendly software features with its new capital, allowing it to target larger customers.

Let’s see how far Firstbase can scale with its Series A. And if it gets pre-empted before the year ends.

MoviePass co-founder’s PreShow Interactive raises $3M to expand into gaming

By Anthony Ha

PreShow Interactive is giving gamers a new way to earn in-game currency in exchange for watching ads — a concept that’s become familiar in mobile games but hasn’t really made much headway on PCs or consoles.

The startup is led by MoviePass’ founding CEO Stacy Spikes. When I spoke to Spikes about PreShow two years ago, he was beta testing an app that provided users with free movie tickets in exchange for watching ads. But obviously, theatrical moviegoing has taken a big hit in the past year.

Spikes told me yesterday that he’d always hoped to bring the PreShow concept to four categories — theatrical movies, gaming, subscription streaming and video on demand — but the pandemic forced the startup to shift focus more quickly than expected and explore what a gaming experience might look like.

The current plans is to launch a new PreShow Interactive app this summer, where viewers can connect their in-game accounts and identify how much virtual currency they want to earn. Then they watch a package of ads and PreShow will automatically transfer the currency to their account — in other words, it’s buying the currency for them.

Users will have to download a separate app to watch the ads and get the benefits, but Spikes said this is actually better than trying to integrate advertising or branded content into the game itself, which can be a slow process for the developer and the advertiser, while also being distracting for the players. And this means PreShow Interactive should able to support 20,000 games at launch, across PCs, consoles and virtual reality.

PreShow Interactive

Image Credits: PreShow Interactive

“We just didn’t see the purpose of spending the time on integrations when it’s not really necessary,” he added. “Our deal is only with the consumer for their time. We’re saying, ‘This is your time. It has value.'”

One of the key elements to Preshow’s approach is technology that can detect when the viewer is actually looking at their phone screen — the ads will stop playing if you turn away. Critics have described this as “creepy surveillance tech,” but Spikes claimed that early PreShow users have embraced the approach. He also argued that it’s more transparent than the data collection and targeting currently driving online advertising.

“We used to think data was the new oil, but now our feeling is that permission and engagement and attention is the new oil,” he said.

In addition to revealing its new strategy, PreShow is announcing that it has raised $3 million in seed funding led by Harlem Capital, with participation Canaan Partners, Wavemaker Ventures, Front Row Fund, ROC Fund, BK Fulton and Monroe Harris.

And to be clear, Spikes said PreShow isn’t abandoning theatrical movies. He said that the PreShow app will eventually offer both movie and gaming deals “under one roof,” but brands aren’t currently eager to advertise to moviegoers.

“We’re ready to go when the marketplace is ready to go,” he said.

 

Zynga and Rollic acquire the hyper-casual game studio behind High Heels

By Anthony Ha

Last year, Zynga bought hyper-casual game maker Rollic. Today, Rollic is a Zynga subsidiary, and it’s announcing the acquisition of another game studio called Uncosoft.

Like Rollic, Uncosoft develops hyper-casual games and is based in Turkey (Istanbul in Rollic’s case, Izmir in Uncosoft’s). In fact, Rollic has already published a couple of Uncosoft games, most notably High Heels, in which the player navigates an obstacle course in increasingly ridiculous high heels — the company said High Heels (or, if you insist, High Heels!) has been downloaded more than 60 million times since it launched in January, and it’s even been praised for bringing “queer joy to the top of the App Store charts.”

Rollic co-founder and CEO Burak Vardal told me that when you’re in the hyper-casual gaming business, you’re “always looking for product-oriented teams.” And it sounds like Vardal is impressed by what he’s seen of the Uncosoft team, making him confident that it can successfully build “new titles like High Heels.”

“Producing a game together as development studio and publisher, you already start working like a merged company,” he said. “You argue about game design all day, you share strategies […] and you — not on purpose — start learning about how that company operates, how are the founders, how is the art team.”

Meanwhile, Uncosoft CEO Edip Enes Çakır said in a statement that there has been “unprecedented harmony” between the two teams as they’ve worked together in recent years, and that “our culture and vision of making global games will be augmented with the expertise of Rollic and Zynga.”

Rollic was actually Zynga’s fourth acquisition in Istanbul, so it’s clear that the city and country are becoming a bit of a hub. Vardal said Rollic does have partners outside of Turkey, but he suggested that the country has been particularly successful with hyper-casual games because of its huge student population.

Verdal also suggested that High Heels points to a path that other hyper-casual games might follow to success: namely, TikTok.

“The animations of the game and the character mechanic are what we call TikTok-able,” he said. “It had a huge impact in Gen Z and huge organic reach in TikTok […] The new generation wants content that feeds that ecosystem.”

The financial terms of the acquisition were not disclosed.

Vivid Money raises $73 million to build a European financial super app

By Romain Dillet

German startup Vivid Money has raised a new $73 million Series B funding round (€60 million) led by Greenoaks with existing investor Ribbit Capital also participating. Following today’s funding round, Vivid Money has reached a valuation of $436 million (€360 million).

Vivid Money could be considered as a Revolut competitor designed specifically for the Eurozone. Built on top of Solarisbank for the banking infrastructure, the company lets you send, receive, spend, invest and save money in different ways.

When you create an account, you get a German IBAN that starts with DE as well as a metal card. There are no card details on the card itself — everything is available in the app instead. Like other fintech startups, Vivid Money lets you control your card from the app — you can lock it and unlock it, add it to Google Pay and Apple Pay, etc.

After that, you can top up your account and hold dozens of different currencies. When you pay with your card abroad, the startup applies a small mark-up on the current exchange rate — you should get a better exchange rate than what you usually get with a regular bank.

In addition to this fairly standard feature set, Vivid Money offers stock trading with fractional shares. You can invest in stocks and ETFs and there’s no commission. Similarly, you can buy, hold and share cryptocurrencies from the app. The startup has partnered with CM Equity AG for those features.

The company also has a cashback program and a premium subscription for €9.90 per month. Paid users get higher limits on free cash withdrawals, the ability to create a virtual card, support for additional currencies and better cashback rewards.

Finally, users can create sub-accounts called pockets. You can move money around from one pocket to another and add other users to your pockets. Each pocket has its own IBAN, which means that you can pay for certain bills with a separate pocket. You can also associate your card with a specific pocket for upcoming purchases.

Vivid Money has managed to add a ton of features in no time. It now has a ton of money on its bank account. Now let’s see if it can attract a significant user base to compete with other, well-established European fintech players.

TravelPerk raises $160M in equity and debt after a year of derailed business trips

By Natasha Lomas

The pandemic has hammered the travel sector over the past 12 months so you’d be forgiven for feeling a bit of pre-COVID-19 déjà vu at this news: Business trip booking platform TravelPerk is announcing a $160M Series D.

The round, which is a mix of equity and debt funding, is led by London-based growth equity firm Greyhound Capital. Existing investors also participated (specifically: DST, Kinnevik, Target Global, Felix Capital, Spark Capital, Heartcore, LocalGlobe and Amplo).

No valuation is being disclosed, nor is the split between equity and debt. So it’s a bit more of a convoluted ‘vote of confidence’ vs TravelPerk’s pre-pandemic raises — as you’d expect given the locked down year we’ve all had.

The Series D means the 2015-founded Barcelona-based startup has pulled in a total of $294M to-date for its user-friendly retooling of business trip booking geared toward ‘global SMEs’, following a top-up of $60M (in 2019) to its 2018 $44M Series C — which itself fast-followed a $21M Series B that same year.

TravelPerk’s approach is akin to a consumerization play for the (non-enterprise end of) business trip booking, combining what it bills as “the world’s largest bookable travel inventory” — letting users compare, book and invoice trains, cars, flights, hotels and apartments from a range of providers including Kayak, Skyscanner, Expedia, Booking.com, and Airbnb — with tools for businesses to manage and report trips.

There’s the obligatory freemium tier for the smallest teams. It also offers 24/7 traveler support, a flexible booking option and an open API for custom integrations.

There was no funding announcement for TravelPerk in 2020, as investors took a break from the pandemic-struck sector. But earlier this year it told TechCrunch it had been starting to see interest picking up again, as of fall 2020. The closing of a Series D now — albeit debt and equity — suggests VCs are getting over the worst of their travel wobbles.

(Another sign on that front is the $155M Series E raise for U.S.-based TripActions, which closed in January on a $5BN valuation, as U.S. corporate travel lifted off from 2020’s lows.)

TravelPerk’s PR talks bullishly about momentum and using the funds to accelerate ‘global growth’, even as the coronavirus continues to hit parts of Europe and the U.S. — its two main markets — despite what are relatively advanced vaccination rollouts (especially the US) vs other parts of the world.

At the time of writing, COVID-19 is taking a particularly heavy toll on India, where the health system looks to be careening out of control in the face of a massive wave of infections. Parts of Latin America are also struggling. A third of the way through 2021 the pandemic looks far from done. And that makes for a still uncertain outlook for business travel over the coming months.

The typical pre-pandemic business trip is now a Zoom call, while former conference calls may have morphed into emails or group chatter in Slack. And there’s no immediate reason for that to change, given remote-working professionals have had a year to adjust to a richer mix of digital comms tools.

In 2021 it’s hard to imagine an overwhelming return for business travel — not least as plenty of offices remain shuttered. The contagion risk vs hard-to-quantify in-person networking rewards associated with non-essential business trips will surely see work trips remaining a hard sell for a lot of companies.

Still, TravelPerk and its investors are willing to bet that work trips will rebound — in time.

The plan is to be ready to meet what it expects will be a far more ‘moveable feast’ of business travel demand in the future.

“Travel is definitely coming back,” says CEO and co-founder, Avi Meir. “We can see that already with the numbers. In the US for instance, we can see a 70-75% recovery in domestic flights compared to the baseline before COVID-19.

“In Europe it’s a little less certain right now, as vaccine rollout isn’t as fast, but you can look to other parts of the world and with some degree of certainty predict what the European recovery will eventually look like by looking at those examples.”

“We expect the overall global recovery in travel to be uneven over the next year, with different countries reopening at different times, meaning constantly changing guidelines and restrictions,” he goes on. “We’ll continue living in a stage of uncertainty probably for the next 12 months or longer.

“We’ve realised from speaking to our customers that the demand for travel is there, people are eager to do these trips, but this period of uncertainty makes it difficult for them so we’re focused on finding solutions that can address that.”

TravelPerk didn’t sit on its hands last year as global business travel cratered. Instead, it focused on investing in product development, making bets on how it needs to tool up for the new climate of increased uncertainty — including by taking a number of steps toward making its business more resilient to the ravages of COVID-19.

Last October it launched an API — saying it wanted to help the wider travel industry access up to date info on coronavirus restrictions. It also picked up a risk management startup, called Albatross, back in July, to feed its own resilience efforts.

Another more recent acquisition was geared toward scaling its business in the U.S. — where domestic travel looks to be recovering faster than Europe. In January it announced it was buying YC-backed rival NexTravel — gaining a base in Chicago.

At the same time, it inked a partnership with Southwest Airlines to plug a key gap in its U.S. offering.

Meir avoids breaking out any revenue growth projections for the U.S. or Europe for this year or next, when we ask, which suggests he’s preparing for lean growth in the short term.

What he does say is that investors were impressed TravelPerk managed to grow its customer base 2x in 2020 (it now has 3,000+ businesses using its platform, including a bunch of familiar startup names) — and that it avoided making layoffs (when other travel businesses swung the axe).

“Last year we doubled the size of our customer-base and we now have over 3,000 businesses using the platform, including the likes of Wise, Farfetch, GetYourGuide and Monzo. The travel budget under management also increased by almost 100% over the last 12 months,” he tells TechCrunch.

“The reason we had such interest from investors with this round is because we had, given the context, a really good 2020. We doubled our customer base, avoided making layoffs, and most importantly we were there for our customers when they needed us, constantly investing in the product to enable safe travel during Covid.”

The thesis TravelPerk is now working to is that “flexibility, safety and sustainability” will be more important than ever for business travellers, per Meir.

“Flexibility, because travel still has a lot of friction due to the different restrictions and travel lockdowns mean that a trip could be cancelled at really short notice,” says Meir. “Safety, so that every traveler knows not only what specific health requirements are in place at their destination, but also that they will get updates in real time if anything changes. Sustainability, because in this period businesses have been taking stock and realising that we all have to do more in terms of our environmental impact — and of course travel is a big part of this.”

“We have worked hard to respond quickly to these requirements,” he continues. “We updated our product and product roadmap to better match these new needs. Our flexible booking tool FlexiPerk [which TravelPerk happened to launch pre-pandemic, in summer 2019] guarantees refunds on cancelled trips at short notice; our risk-management API TravelSafe keeps travellers updated in real time on local health guidelines and restrictions; and GreenPerk, our sustainability tool, directly reduces carbon emissions through initiatives run by our partner Atmosfair.”

Sustainability and business travel aren’t a natural pairing, however. Certainly not for air travel — where environmental groups accuse carbon offsetting schemes of boiling down to ‘greenwashing’ when what’s really needed to achieve a reduction in CO2e emissions is for people to take fewer flights.

TravelPerk launched its GreenPerk offsetting scheme in February 2020, letting customers pay a fee per carbon tonne to cover its guesstimate of the total emissions toll their trip will generate. But it’s only been applied to 10% of its business volume so far.

With 90% not even being offset, you hardly need to be Greta Thunberg to call that the opposite of ‘sustainable’.

Still, Meir says he expects the offset percentage to “grow rapidly”. “We intend to use this funding to develop GreenPerk even further,” he says, adding: “We want to be the standard bearer for the industry in terms of sustainable business travel.”

However when asked whether TravelPerk might seek to advance sustainability by supporting digital replacement itself (such as by being able to offer its users videoconferencing as an alternative to flying) he declines to comment, saying: “We don’t have anything to share yet on how we’ll advance that goal [sustainability] right now, but we’re working on some exciting ideas!”

Coming up with creative ways to reduce the need for business travel certainly doesn’t feature in TravelPerk’s near term vision.

Meir predicts a “full comeback” for business travel — arguing that “the meetings that matter happen in person” — while conceding that the travel industry will nonetheless be very different. (Hence its goal of “building the products for that [more flexible] future”.)

“We expect to double down on growth in the U.S. and Europe and that includes making key hires across all roles, especially in our hubs in Chicago, London, and Barcelona,” he says, adding that it expects the team to grow “rapidly” in the next 12-24 months (without putting any numbers on the planned hires).

TravelPerk will also continue to eye acquisition targets, per Meir. “Following our first two acquisitions, of Albatross and NexTravel, this funding round will also help us to continue being aggressive in our growth strategy. We aim to complete more acquisitions this year,” he says on that. 

“Whilst many other providers have been in hibernation over the past year, we’ve been aggressive, continuing to update our product and growing our customer base, and we think that gives us a great foundation for growth in 2021 and beyond,” he adds.

Commenting on the Series D in a statement, Pogos Saiadian, investor at Greyhound Capital, said: “There is no doubt that from 2021 onwards the average business trip will look very different to how it did in 2019. We are confident that business travel will recover and thrive in the years ahead. We also believe that people will, more than ever before, need a platform like TravelPerk that has deep inventory, excellent ‘seven-star’ customer service, provides a great traveler experience and integrates with the broader tech-stack.

“We believe that this is a huge long-term opportunity, and as customers ourselves, we see first-hand the tremendous value that TravelPerk provides across organizations, from finance to admin and the travellers themselves. The fact the company is beating growth expectations already for this year further supports our belief that TravelPerk is a true market leader, and we are delighted to be supporting the next stage of the company’s growth with this investment.”

 

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