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Apple’s dangerous path

By Lucas Matney

Hello friends, and welcome back to Week in Review.

Last week, we dove into the truly bizarre machinations of the NFT market. This week, we’re talking about something that’s a little bit more impactful on the current state of the web — Apple’s NeuralHash kerfuffle.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny


the big thing

In the past month, Apple did something it generally has done an exceptional job avoiding — the company made what seemed to be an entirely unforced error.

In early August — seemingly out of nowhere** — the company announced that by the end of the year they would be rolling out a technology called NeuralHash that actively scanned the libraries of all iCloud Photos users, seeking out image hashes that matched known images of child sexual abuse material (CSAM). For obvious reasons, the on-device scanning could not be opted out of.

This announcement was not coordinated with other major consumer tech giants, Apple pushed forward on the announcement alone.

Researchers and advocacy groups had almost unilaterally negative feedback for the effort, raising concerns that this could create new abuse channels for actors like governments to detect on-device information that they regarded as objectionable. As my colleague Zach noted in a recent story, “The Electronic Frontier Foundation said this week it had amassed more than 25,000 signatures from consumers. On top of that, close to 100 policy and rights groups, including the American Civil Liberties Union, also called on Apple to abandon plans to roll out the technology.”

(The announcement also reportedly generated some controversy inside of Apple.)

The issue — of course — wasn’t that Apple was looking at find ways that prevented the proliferation of CSAM while making as few device security concessions as possible. The issue was that Apple was unilaterally making a massive choice that would affect billions of customers (while likely pushing competitors towards similar solutions), and was doing so without external public input about possible ramifications or necessary safeguards.

A long story short, over the past month researchers discovered Apple’s NeuralHash wasn’t as air tight as hoped and the company announced Friday that it was delaying the rollout “to take additional time over the coming months to collect input and make improvements before releasing these critically important child safety features.”

Having spent several years in the tech media, I will say that the only reason to release news on a Friday morning ahead of a long weekend is to ensure that the announcement is read and seen by as few people as possible, and it’s clear why they’d want that. It’s a major embarrassment for Apple, and as with any delayed rollout like this, it’s a sign that their internal teams weren’t adequately prepared and lacked the ideological diversity to gauge the scope of the issue that they were tackling. This isn’t really a dig at Apple’s team building this so much as it’s a dig on Apple trying to solve a problem like this inside the Apple Park vacuum while adhering to its annual iOS release schedule.

illustration of key over cloud icon

Image Credits: Bryce Durbin / TechCrunch /

Apple is increasingly looking to make privacy a key selling point for the iOS ecosystem, and as a result of this productization, has pushed development of privacy-centric features towards the same secrecy its surface-level design changes command. In June, Apple announced iCloud+ and raised some eyebrows when they shared that certain new privacy-centric features would only be available to iPhone users who paid for additional subscription services.

You obviously can’t tap public opinion for every product update, but perhaps wide-ranging and trail-blazing security and privacy features should be treated a bit differently than the average product update. Apple’s lack of engagement with research and advocacy groups on NeuralHash was pretty egregious and certainly raises some questions about whether the company fully respects how the choices they make for iOS affect the broader internet.

Delaying the feature’s rollout is a good thing, but let’s all hope they take that time to reflect more broadly as well.

** Though the announcement was a surprise to many, Apple’s development of this feature wasn’t coming completely out of nowhere. Those at the top of Apple likely felt that the winds of global tech regulation might be shifting towards outright bans of some methods of encryption in some of its biggest markets.

Back in October of 2020, then United States AG Bill Barr joined representatives from the UK, New Zealand, Australia, Canada, India and Japan in signing a letter raising major concerns about how implementations of encryption tech posed “significant challenges to public safety, including to highly vulnerable members of our societies like sexually exploited children.” The letter effectively called on tech industry companies to get creative in how they tackled this problem.


other things

Here are the TechCrunch news stories that especially caught my eye this week:

LinkedIn kills Stories
You may be shocked to hear that LinkedIn even had a Stories-like product on their platform, but if you did already know that they were testing Stories, you likely won’t be so surprised to hear that the test didn’t pan out too well. The company announced this week that they’ll be suspending the feature at the end of the month. RIP.

FAA grounds Virgin Galactic over questions about Branson flight
While all appeared to go swimmingly for Richard Branson’s trip to space last month, the FAA has some questions regarding why the flight seemed to unexpectedly veer so far off the cleared route. The FAA is preventing the company from further launches until they find out what the deal is.

Apple buys a classical music streaming service
While Spotify makes news every month or two for spending a massive amount acquiring a popular podcast, Apple seems to have eyes on a different market for Apple Music, announcing this week that they’re bringing the classical music streaming service Primephonic onto the Apple Music team.

TikTok parent company buys a VR startup
It isn’t a huge secret that ByteDance and Facebook have been trying to copy each other’s success at times, but many probably weren’t expecting TikTok’s parent company to wander into the virtual reality game. The Chinese company bought the startup Pico which makes consumer VR headsets for China and enterprise VR products for North American customers.

Twitter tests an anti-abuse ‘Safety Mode’
The same features that make Twitter an incredibly cool product for some users can also make the experience awful for others, a realization that Twitter has seemingly been very slow to make. Their latest solution is more individual user controls, which Twitter is testing out with a new “safety mode” which pairs algorithmic intelligence with new user inputs.


extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

Our favorite startups from YC’s Demo Day, Part 1 
“Y Combinator kicked off its fourth-ever virtual Demo Day today, revealing the first half of its nearly 400-company batch. The presentation, YC’s biggest yet, offers a snapshot into where innovation is heading, from not-so-simple seaweed to a Clearco for creators….”

…Part 2
“…Yesterday, the TechCrunch team covered the first half of this batch, as well as the startups with one-minute pitches that stood out to us. We even podcasted about it! Today, we’re doing it all over again. Here’s our full list of all startups that presented on the record today, and below, you’ll find our votes for the best Y Combinator pitches of Day Two. The ones that, as people who sift through a few hundred pitches a day, made us go ‘oh wait, what’s this?’

All the reasons why you should launch a credit card
“… if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users….”


Thanks for reading, and again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny

Lucas Matney

SoftBank deepens commitment to LatAm with two new partners focused on early-stage investing

By Mary Ann Azevedo

In March 2019, SoftBank Group International made headlines when it announced the SoftBank Innovation Fund, which started out with a $2 billion commitment to invest in tech startups in Latin America.

A lot has changed since then. SoftBank changed the name of the fund to the SoftBank Latin America Fund, or LatAm Fund for short. The Japanese investment conglomerate has dramatically ramped up its investing in the region, and so have a number of other global investors. In fact, venture capitalists poured an estimated $6.2 billion into Latin American startups in the first half of 2021.

As evidence of its continued commitment to the region, SoftBank Group announced today that it has added two new managing partners to its LatAm Fund team: Rodrigo Baer and Marco Camhaji. The two will focus on “identifying and supporting” early-stage companies across the Latin American region, SoftBank told TechCrunch exclusively.

Baer and Camhaji will report to SoftBank Executive President & COO Marcelo Claure, who points out that the firm’s LatAm fund has invested in more than two-thirds of the nearly two dozen unicorns currently operating in the region. He said that SoftBank is today “one of the largest and most active” technology investors in the region.

 

The move is significant in that the hires represent an expansion of SoftBank LatAm Fund’s mandate and means that the firm is now backing companies at all stages in the region.

By bringing Baer and Camhaji on board, Claure said in a statement, SoftBank will “be better able to identify high-growth companies and support them at every step of their lifecycle.”

SoftBank describes Baer as one of the pioneers of Brazil’s venture capital industry. He has invested in more than 20 companies since 2010. According to Crunchbase, he co-founded Warehouse Investimentos in 2010, where he led deal-sourcing efforts. He joined the investment team of Redpoint eVentures, a LatAm-based early-stage VC fund, in June 2014. He also was previously an engagement manager at McKinsey and worked at Aurora Funds, a healthcare-services focused fund based in the US. He is also active with Endeavor and multiple angel groups. 

Prior to joining SoftBank, Camhaji was a business development principal at Amazon, establishing strategic partnerships with fintechs in Latin America. He also served as the CEO of Adianta, a Brazilian B2B invoice financing company. Previously, Camahji was a founder and partner at Yellow Ventures, making seed investments in technology startups. He was also a partner and CFO of Redpoint eVentures.

In August, Shu Nyatta, a managing partner at SoftBank who co-leads its $5 billion Latin America Fund, pointed out a dynamic that might seem obvious but is rarely articulated: Technology in LatAm is often more about inclusion rather than disruption.

“The vast majority of the population is underserved in almost every category of consumption. Similarly, most businesses are underserved by modern software solutions,” Nyatta told TechCrunch. “There’s so much to build for so many people and businesses. In San Francisco, the venture ecosystem makes life a little better for individuals and businesses who are already living in the future. In LatAm, tech entrepreneurs are building the future for everyone else.

Some recent SoftBank investments in the region include:

  • Kavak, a used car marketplace born in Mexico but now also operating in Brazil and Argentina. “Think of Carvana, but for emerging markets.”
  • Rappi, where “DoorDash-meets-Instacart,” operating across Latin America.
  • QuintoAndar, a Brazilian real estate marketplace.
  • Creditas unlocks the equity trapped in homes and cars and other important assets for Brazilians.
  • Gympass is a marketplace for fitness and wellness, provided through the enterprise to employees.

As global investors continue to flood the region with capital, it’s clear that SoftBank is getting even more aggressive about backing startups in Latin America.

Stockeld Dreamery loves cheese so much that it raised $20M to make it out of legumes

By Christine Hall

Cheese is one of those foods that when you like it, you actually love it. It’s also one of the most difficult foods to make from something other than milk. Stockeld Dreamery not only took that task on, it has a product to show for it.

The Stockholm-based company announced Thursday its Series A round of $20 million co-led by Astanor Ventures and Northzone. Joining them in the round — which founder Sorosh Tavakoli told TechCrunch he thought was “the largest-ever Series A round for a European plant-based alternatives startup,” was Gullspång Re:food, Eurazeo, Norrsken VC, Edastra, Trellis Road and angel investors David Frenkiel and Alexander Ljung.

Tavakoli previously founded video advertising startup Videoplaza, and sold it to Ooyala in 2014. Looking for his next project, he said he did some soul-searching and wanted the next company to do something with an environmental impact. He ended up in the world of food, plant-based food, in particular.

“Removing the animal has a huge impact on land, water, greenhouse gases, not to mention the factory farming,” he told TechCrunch. “I identified that cheese is the worst. However, though people are keen on shifting their diet, when they try alternative products, they don’t like it.”

Tavakoli then went in search of a co-founder with a science background and met Anja Leissner, whose background is in biotechnology and food science. Together they started Stockeld in 2019.

Pär-Jörgen Pärson, general partner at Northzone, was an investor in Videoplaza and said via email that Stockeld Dreamery was the result of “the best of technology paired with the best of science,” and that Tavakoli and Leissner were “using their scientific knowledge and vision of the future and proposing a commercial application, which is very rare in the foodtech space, if not unique.”

The company’s first product, Stockeld Chunk, launched in May, but not without some trials and tribulations. The team tested over 1,000 iterations of their “cheese” product before finding a combination that worked, Tavakoli said.

Advances in the plant-based milk category have been successful for the most part, not necessarily because of the plant-based origins, but because they are tasty, he explained. Innovation is also progressing in meat, but cheese still proved difficult.

“They are typically made from starch and coconut oil, so you can have a terrible experience from the smell and the mouth feel can be rubbery, plus there is no protein,” Tavakoli added.

Stockeld wanted protein as the core ingredient, so Chunk is made using fermented legumes — pea and fava in this case — which gives the cheese a feta-like look and feel and contains 30% protein.

Chunk was initially launched with restaurants and chefs in Sweden. Within the product pipeline are spreadable and melting cheese that Tavakoli expects to be on the market in the next 12 months. Melting cheese is one of the hardest to make, but would open up the company as a potential pizza ingredient if successful, he said.

Including the latest round, Stockeld has raised just over $24 million to date. The company started with four employees and has now grown to 23, and Tavakoli intends for that to be 50 by the end of next year.

The new funding will enable the company to focus on R&D, to build out a pilot plant and to move into a new headquarters building next year in Stockholm. The company also looks to expand out of Sweden and into the U.S.

“We have ambitious investors who understand what we are trying to do,” Tavakoli said. “We have an opportunity to think big and plan accordingly. We feel we are in a category of our own in a sense that we are using legumes for protein. We are almost like a third fermented legumes category, and it is exciting to see where we can take it.”

Eric Archambeau, co-founder and partner at Astanor Ventures, is one of those investors. He also met Tavakoli at his former company and said via email that when he was pitched on the idea of creating “the next generation of plant-based cheese,” he was interested.

“From the start, I have been continuously impressed by the Stockeld team’s diligence, determination and commitment to creating a truly revolutionary and delicious product,” Archambeau added. “They created a product that breaks the mold and paves the way towards a new future for the global cheese industry.”

Olsam raises $165M to buy up and scale consumer and B2B Amazon Marketplace sellers

By Ingrid Lunden

On the heels of Heroes announcing a $200 million raise earlier today, to double down on buying and scaling third-party Amazon Marketplace sellers, another startup out of London aiming to do the same is announcing some significant funding of its own. Olsam, a roll-up play that is buying up both consumer and B2B merchants selling on Amazon by way of Amazon’s FBA fulfillment program, has closed $165 million — a combination of equity and debt that it will be using to fuel its M&A strategy, as well as continue building out its tech platform and to hire more talent.

Apeiron Investment Group — an investment firm started by German entrepreneur Christian Angermayer (known first for biopharmaceuticals, then investing and crypto, including playing a role in SoftBank investing in Wirecard) — led the Series A equity round, with Elevat3 Capital (another Angermayer firm that has a strategic partnership with Founders Fund and Peter Thiel) also participating. North Wall Capital was behind the debt portion of the deal. We have asked and Olsam is only disclosing the full amount raised, not the amount that was raised in equity versus debt. Valuation is also not being disclosed.

Being an Amazon roll-up startup from London that happens to be announcing a fundraise today is not the only thing that Olsam has in common with Heroes. Like Heroes, Olsam is also founded by brothers.

Sam Horbye previously spent years working at Amazon, including building and managing the company’s Business Marketplace (the B2B version of the consumer Marketplace); while co-founder Ollie Horbye had years of experience in strategic consulting and financial services.

Between them, they had also built and sold previous marketplace businesses, and they believe that this collective experience gives Olsam — a portmanteau of their names, “Ollie” and “Sam” — a leg up when it comes to building relationships with merchants; identifying quality products (versus the vast seas of search results that often feel like they are selling the same inexpensive junk as each other); and understanding merchants’ challenges and opportunities, and building relationships with Amazon and understanding how the merchant ecosystem fits into the e-commerce giant’s wider strategy.

Olsam is also taking a slightly different approach when it comes to target companies, by focusing not just on the usual consumer play, but also on merchants selling to businesses. B2B selling is currently one of the fastest-growing segments in Amazon’s Marketplace, and it is also one of the more overlooked by consumers.”It’s flying under the radar,” Ollie said.

“The B2B opportunity is very exciting,” Sam added. “A growing number of merchants are selling office supplies or more random products to the B2B customer.”

Estimates vary when it comes to how many merchants there are selling on Amazon’s Marketplace globally, ranging anywhere from 6 million to nearly 10 million. Altogether those merchants generated $300 million in sales (gross merchandise value), and its growing by 50% each year at the moment.

And consolidating sellers — in order to achieve better economies of scale around supply chains, marketing tools and analytics, and more — is also big business. Olsam estimates that some $7 billion has been spent cumulatively on acquiring these businesses, and there are more out there: Olsam estimates that there are some 3,000 businesses in the UK alone making more than $1 million each in sales on Amazon’s platform.

(And to be clear, there are a number of other roll-up startups beyond Heroes also eyeing up that opportunity. Raising hundreds of millions of dollars in aggregate,  others have made moves this year include Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.)

“The senior team behind Olsam is what makes this business truly unique,” said Angermayer in a statement. “Having all been successful in building and selling their own brands within the market and having worked for Amazon in their marketplace team – their understanding of this space is exceptional.”

UK-based Heroes raises $200M to buy up more Amazon merchants for its roll-up play

By Ingrid Lunden

Heroes, one of the new wave of startups aiming to build big e-commerce businesses by buying up smaller third-party merchants on Amazon’s Marketplace, has raised another big round of funding to double down on that strategy. The London startup has picked up $200 million, money that it will mainly be using to snap up more merchants. Existing brands in its portfolio cover categories like babies, pets, sports, personal health and home and garden categories — some of them, like PremiumCare dog chews, the Onco baby car mirror, gardening tool brand Davaon and wooden foot massager roller Theraflow, category best-sellers — and the plan is to continue building up all of these verticals.

Crayhill Capital Management, a fund based out of New York, is providing the funding, and Riccardo Bruni — who co-founded the company with twin brother Alessio and third brother Giancarlo — said that the bulk of it will be going toward making acquisitions, and is therefore coming in the form of debt.

Raising debt rather than equity at this point is pretty standard for companies like Heroes. Heroes itself is pretty young: it launched less than a year ago, in November 2020, with $65 million in funding, a round comprised of both equity and debt. Other investors in the startup include 360 Capital, Fuel Ventures and Upper 90.

Heroes is playing in what is rapidly becoming a very crowded field. Not only are there tens of thousands of businesses leveraging Amazon’s extensive fulfillment network to sell goods on the e-commerce giant’s marketplace, but some days it seems we are also rapidly approaching a state of nearly as many startups launching to consolidate these third-party sellers.

Many a roll-up play follows a similar playbook, which goes like this: Amazon provides the marketplace to sell goods to consumers, and the infrastructure to fulfill those orders, by way of Fulfillment By Amazon and its Prime service. Meanwhile, the roll-up business — in this case Heroes — buys up a number of the stronger companies leveraging FBA and the marketplace. Then, by consolidating them into a single tech platform that they have built, Heroes creates better economies of scale around better and more efficient supply chains, sharper machine learning and marketing and data analytics technology, and new growth strategies. 

What is notable about Heroes, though — apart from the fact that it’s the first roll-up player to come out of the U.K., and continues to be one of the bigger players in Europe — is that it doesn’t believe that the technology plays as important a role as having a solid relationship with the companies it’s targeting, key given that now the top marketplace sellers are likely being feted by a number of companies as acquisition targets.

“The tech is very important,” said Alessio in an interview. “It helps us build robust processes that tie all the systems together across multiple brands and marketplaces. But what we have is very different from a SaaS business. We are not building an app, and tech is not the core of what we do. From the acquisitions side, we believe that human interactions ultimately win. We don’t think tech can replace a strong acquisition process.”

Image Credits: Heroes

Heroes’ three founder-brothers (two of them, Riccardo and Alessio, pictured above) have worked across a number of investment, finance and operational roles (the CVs include Merrill Lynch, EQT Ventures, Perella Weinberg Partners, Lazada, Nomura and Liberty Global) and they say there have been strong signs so far of its strategy working: of the brands that it has acquired since launching in November, they claim business (sales) has grown five-fold.

Collectively, the roll-up startups are raising hundreds of millions of dollars to fuel these efforts. Other recent hopefuls that have announced funding this year include Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), HeydayThe Razor GroupBrandedSellerXBerlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia. 

The picture that is emerging across many of these operations is that many of these companies, Heroes included, do not try to make their particular approaches particularly more distinctive than those of their competitors, simply because — with nearly 10 million third-party sellers today on Amazon globally — the opportunity is likely big enough for all of them, and more, not least because of current market dynamics.

“It’s no secret that we were inspired by Thrasio and others,” Riccardo said. “Combined with COVID-19, there has been a massive acceleration of e-commerce across the continent.” It was that, plus the realization that the three brothers had the right e-commerce, fundraising and investment skills between them, that made them see what was a ‘perfect storm’ to tackle the opportunity, he continued. “So that is why we jumped into it.”

In the case of Heroes, while the majority of the funding will be used for acquisitions, it’s also planning to double headcount from its current 70 employees before the end of this year with a focus on operational experts to help run their acquired businesses. 

Stipop offers developers and creators instant access to a huge global sticker library

By Taylor Hatmaker

With more than 270,000 stickers, Stipop’s library of colorful, character-driven expressions has a little something for everyone.

The company offers keyboard and social app stickers through ad-supported mobile apps on iOS and Android, but it’s recently focused more on providing stickers to developers, creators and other online businesses.

“We were able to gather so many artists because we actually began as our own app that provided stickers,” Stipop co-founder Tony Park told TechCrunch. The team took what they learned from running their own consumer-facing app — namely that collecting and licensing hundreds of thousands of stickers from artists around the world is hard work — and adapted their business to help solve that problem for others.

Stipop was the first Korean company to go through Yellow, Snapchat’s exclusive accelerator. The company is also part of Y Combinator’s Summer 2021 cohort.

Stipop’s sticker library is accessible through an SDK and an API, letting developers slot the searchable sticker library into their existing software. The company already has more than 200 companies that tap into its huge sticker trove, which offers a “single-day solution” for a process that would otherwise necessitate a lot more legwork. Stipop launched a website recently that helps developers integrate its SDK and API through quick installs.

“They can just add a single line of code inside their product and will have a fully customized sticker feature [so] users will be able to spice up their chats,” Park said.

Park points out that stickers encourage engagement — and for social software, engagement means growth. Stickers are a playful way to send characters back and forth in chat, but they also pop up in a number of other less obvious spots, from dating apps to ecommerce and ridesharing apps. Stipop even drives the sticker search in work collaboration software Microsoft Teams.

The company has already partnered with Google, which uses Stipop’s sticker library in Gboard, Android Messages and Tenor, a GIF keyboard platform that Google bought in 2018. That partnership drove 600 million sticker views within the first month. A new partnership between Stipop and Coca-Cola on the near horizon will add Coke-branded stickers to its sticker library and the company is opening its doors to more brands that understand the unique appeal of stickers in messaging apps.

Park says that people tend to compare stickers and gifs, two ways of wordlessly expressing emotion and social nuance, but stickers are a world unto themselves. Stickers exist in their own creative universe, with star artists, regional themes and original casts of characters that take on a life of their own among fans. “Sticker creators have their own profession,” Park said.

Visual artists can also find a lot of traction releasing stickers, even without sophisticated illustrations. And since they’re all about meaning rather than refinement, non-designers and less skilled artists can craft hit stickers too.

“Stickers are great for them because it [is] so easy to go viral,” Park said. The company has partnered with 8,000 sticker creators across 25 languages, helping those artists monetize their creations and generate income based on how many times a sticker is shared.

Stickers command their own visual language around the world, and Park has observed interesting cultural differences in how people use them to communicate. In the West, stickers are often used in place of text, but in Asia, where they’re used much more frequently, people usually send stickers to enhance rather than replace the meaning of text.

In East Asia, users tend to prefer simple black and white stickers, but in India and Saudi Arabia, bright, golden stickers top the trends. In South America, popular stickers take on a more pixelated, unique quality that resonates culturally there.

“With stickers, you fall in love with [the] characters you send… that becomes you,” Park said.

The pure hell of managing your JPEGs

By Natasha Mascarenhas

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

Natasha and Alex and Grace and Chris were joined by none other than TechCrunch’s own Mary Ann Azevedo, in her first-ever appearance on the show. She’s pretty much the best person and we’re stoked to have her on the pod.

And it was good that Mary Ann was on the show this week as she wrote about half the dang site. Which meant that we got to include all sorts of her work in the rundown. Here’s the agenda:

And that’s a wrap, for, well, at least the next five seconds.
Equity drops every Monday at 7:00 a.m. PDT, Wednesday, and Friday morning at 7:00 a.m. PDT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Netflix begins testing mobile games in its Android app in Poland

By Sarah Perez

Netflix today announced it will begin testing mobile games inside its Android app for its members in Poland. At launch, paying subscribers will be able to try out two games, “Stranger Things: 1984” and “Stranger Things 3” — titles that have been previously available on the Apple App Store, Google Play and, in the case of the newer release, on other platforms including desktop and consoles. While the games are offered to subscribers from within the Netflix mobile app’s center tab, users will still be directed to the Google Play Store to install the game on their devices.

To then play, members will need to confirm their Netflix credentials.

Members can later return to the game at any time by clicking “Play” on the game’s page from inside the Netflix app or by launching it directly from their mobile device.

“It’s still very, very early days and we will be working hard to deliver the best possible experience in the months ahead with our no ads, no in-app purchases approach to gaming,” a Netflix spokesperson said about the launch.

Let’s talk Netflix and gaming.

Today members in Poland can try Netflix mobile gaming on Android with two games, Stranger Things: 1984 and Stranger Things 3. It’s very, very early days and we’ve got a lot of work to do in the months ahead, but this is the first step. https://t.co/yOl44PGY0r

— Netflix Geeked (@NetflixGeeked) August 26, 2021

The company has been expanding its investment in gaming for years, seeing the potential for a broader entertainment universe that ties in to its most popular shows. At the E3 gaming conference back in 2019, Netflix detailed a series of gaming integrations across popular platforms like Roblox and Fortnite and its plans to bring new “Stranger Things” games to the market.

On mobile, Netflix has been working with the Allen, Texas-based game studio BonusXP, whose first game for Netflix, “Stranger Things: The Game,” has now been renamed “Stranger Things: 1984” to better differentiate it from others. While that game takes place after season 1 and before season 2, in the “Stranger Things” timeline, the follow-up title, “Stranger Things 3,” is a playable version of the third season of the Netflix series. (So watch out for spoilers!)

Netflix declined to share how popular the games had been in terms of users or installs, while they were publicly available on the app stores.

With the launch of the test in Poland, Netflix says users will need to have a membership to download the titles as they’re now exclusively available to subscribers. However, existing users who already downloaded the game from Google Play in the past will not be impacted. They will be able to play the game as usual or even re-download it from their account library if they used to have it installed. But new players will only be able to get the game from the Netflix app.

The test aims to better understand how mobile gaming will resonate with Netflix members and determine what other improvements Netflix may need to make to the overall functionality, the company said. It chose Poland as the initial test market because it has an active mobile gaming audience, which made it seem like a good fit for this early feedback.

Netflix couldn’t say when it would broaden this test to other countries, beyond “the coming months.”

The streamer recently announced during its second-quarter earnings that it would add mobile games to its offerings, noting that it viewing gaming as “another new content category” for its business, similar to its “expansion into original films, animation and unscripted TV.”

The news followed what had been a sharp slowdown in new customers after the pandemic-fueled boost to streaming. In North America, Netflix in Q2 lost a sizable 430,000 subscribers — its third-ever quarterly decline in a decade. It also issued weaker guidance for the upcoming quarter, forecasting the addition of 3.5 million subscribers when analysts had been looking for 5.9 million. But Netflix downplayed the threat of competition on its slowing growth, instead blaming a lighter content slate, in part due to Covid-related production delays.

 

 

 

 

 

Tuna raises $3M to address complexity of e-commerce payments in Latin America

By Christine Hall

Tuna, which means “fine tune” in Portuguese, is on a mission to “fine tune” the payments space in Latin America and has raised two seed rounds totaling $3 million, led by Canary and by Atlantico.

Alex Tabor, Paul Ascher and Juan Pascual met each other on the engineering team of Peixe Urbano, a company Tabor co-founded and he referred to as a “Groupon for Brazil.” While there, they came up with a way to use A/B testing to create a way of dealing with payments in different markets.

They eventually left Peixe Urbano and started Tuna in 2019 to make their own payment product which enables merchants to use A/B testing of credit card processors and anti-fraud providers to optimize their payments processing with one integration and a no-code interface.

Tabor explained that the e-commerce landscape in Latin America was consolidated, meaning few banks controlled more of the market. The address verification system merchants use to verify a purchaser is who they say they are, involves sending information to a bank that is returned to the merchant with a score of whether that match is legitimate.

“In the U.S., that score is used to determine if the purchaser is legit, but they didn’t implement that in Latin America,” he added. “Instead, merchants in Latam have to tap into other organizations that have that data.”

That process involves manual analysis and constant adjusting due to fraud. Instead, Tuna’s A/B tests between processors and anti-fraud providers in real time and provides a guarantee that a decision to swap providers is based on objective data that considers all components of performance, like approval rates, and not just fees.

Over the past year, the company added 12 customers and saw its revenue increase 15%. It boasts a customer list that includes the large Brazilian fashion chain Riachuelo, and its platform integrates with others including VTEX, Magento and WooCommerce.

The share of e-commerce in overall retail is less than 10 percent in Latin America. Marcos Toledo, Canary’s managing partner, said via email that e-commerce in Latam is currently at an inflexion point: not only has the global pandemic driven more online purchases, but also fintech innovation that has occurred in recent years.

In Brazil alone, e-commerce sales grew 73.88% in 2020, but Toledo said there was much room for improvement. What Tuna is building will help companies navigate the situation and make it easier for more customers to buy online.

Toledo met the Tuna team from his partner, Julio Vasconcellos, who was one of the co-founders of Peixe Urbano. When the firm heard that the other Tuna co-founders were starting a business that was applying some of the optimization methods they had created at Peixe Urbano, but for every company, they saw it as an opportunity to get involved.

“The vast tech expertise that Alex, Paul and Juan bring to a very technical business is something that we really admire, as well as their vision to create a solution that can impact companies throughout Latin America,” Toledo said. “The no-code solution that Tuna is building is exciting because it is scalable and can help companies not only get better margins, but also drive their developers to other efforts — and developers have been a very scarce workforce in the region.”

To meet demand for an e-commerce industry that surpassed $200 billion in 2020, Tuna plans to use the new funding to build out its team and grow outbound customer success and R&D, Tabor said.

Up next, he wants to be able to show traction in payments optimization and facilitators in Brazil before moving on to other countries. He has identified Mexico, Colombia and Argentina as potential new markets.

 

‘No code’ process automation platform, Leapwork, fires up with $62M Series B

By Natasha Lomas

Copenhagen-based process automation platform Leapwork has snagged Denmark’s largest ever Series B funding round, announcing a $62 million raise co-led by KKR and Salesforce Ventures, with existing investors DN Capital and Headline also participating.

Also today it’s disclosing that its post-money valuation now stands at $312M. 

The ‘no code’ 2015-founded startup last raised back in 2019, when it snagged a $10M Series A. The business was bootstrapped through earlier years — with the founders putting in their own money, garnered from prior successful exits. Their follow on bet on ‘no code’ already looks to have paid off in spades: Since launching the platform in 2017, Leapwork has seen its customer base more than double year on year and it now has a roster of 300+ customers around the world paying it to speed up their routine business processes.

Software testing is a particular focus for the tools, which Leapwork pitches at enterprises’ quality assurance and test teams.

It claims that by using its ‘no code’ tech — a label for the trend which refers to software that’s designed to be accessible to non-technical staff, greatly increasing its utility and applicability — businesses can achieve a 10x faster time to market, 97% productivity gains, and a 90% reduction in application errors. So the wider pitch is that it can support enterprises to achieve faster digital transformations with only their existing mix of in-house skills. 

Customers include the likes of PayPal, Mercedes-Benz and BNP Paribas.

Leapwork’s own business, meanwhile, has grown to a team of 170 people — working across nine offices throughout Europe, North America and Asia.

The Series B funding will be used to accelerate its global expansion, with the startup telling us it plans to expand the size of its local teams in key markets and open a series of tech hubs to support further product development.

Expanding in North America is a big priority now, with Leapwork noting it recently opened a New York office — where it plans to “significantly” increase headcount.

“In terms of our global presence, we want to ensure we are as close to our customers as possible, by continuing to build up local teams and expertise across each of our key markets, especially Europe and North America,” CEO and co-founder Christian Brink Frederiksen tells TechCrunch. “For example, we will build up more expertise and plan to really scale up the size of the team based out of our New York office over the next 12 months.

“Equally we have opened new offices across Europe, so we want to ensure our teams have the scope to work closely with customers. We also plan to invest heavily in the product and the technology that underpins it. For example, we’ll be doubling the size of our tech hubs in Copenhagen and India over the next 12 months.”

Product development set to be accelerated with the chunky Series B will focus on enhancements and functionality aimed at “breaking down the language barrier between humans and computers”, as Brink Frederiksen puts it

“Europe and the US are our two main markets. Half of our customers are US companies,” he also tells us, adding: “We are extremely popular among enterprise customers, especially those with complex compliance set-ups — 40% of our customers come from enterprises banking, insurance and financial services.

“Having said that, because our solution is no-code, it is heavily used across industries, including healthcare and life sciences, logistics and transportation, retail, manufacturing and more.”

Asked about competitors — given that the no code space has become a seething hotbed of activity over a number of years — Leapwork’s initial response is coy, trying the line that its business is a ‘truly special snowflake’. (“We truly believe we are the only solution that allows non-technical everyday business users to automate repetitive computer processes, without needing to understand how to code. Our no-code, visual language is what really sets us apart,” is how Brink Frederiksen actually phrases that.)

But on being pressed Leapwork names a raft of what it calls “legacy players” — such as Tricentis, Smartbear, Ranorex, MicroFocus, Eggplant Software, Mabl and Selenium — as (also) having “great products”, while continuing to claim they “speak to a different audience than we do”.

Certainly Leapwork’s Series B raise speaks loudly of how much value investors are seeing here.

Commenting in a statement, Patrick Devine, director at KKR, said: “Test automation has historically been very challenging at scale, and it has become a growing pain point as the pace of software development continues to accelerate. Leapwork’s primary mission since its founding has been to solve this problem, and it has impressively done so with its powerful no-code automation platform.”

“The team at Leapwork has done a fantastic job building a best-in-class corporate culture which has allowed them to continuously innovate, execute and push the boundaries of their automation platform,” added Stephen Shanley, managing director at KKR, in another statement.

In a third supporting statement, Nowi Kallen, principal at Salesforce Ventures, added: “Leapwork has tapped into a significant market opportunity with its no-code test automation software. With Christian and Claus [Rosenkrantz Topholt] at the helm and increased acceleration to digital adoption, we look forward to seeing Leapwork grow in the coming years and a successful partnership.”

The proof of the no code ‘pudding’ is in adoption and usage — getting non-developers to take to and stick with a new way of interfacing with and manipulating information. And so far, for Leapwork, the signs are looking good.

With investors like Lightspeed and The Chainsmokers, Mexican neobroker Flink raises $57M to boost financial inclusion in LatAm

By Mary Ann Azevedo

Flink, a Mexico City-based neobroker, has raised $57 million in a Series B round of funding led by Lightspeed Venture Partners.

The financing comes just over six months after Flink raised $12 million in a Series A round led by Accel. Existing backers Accel, ALLVP, Clocktower and new investor Mantis Venture Capital (founded by The Chainsmokers) also put money in the Series B. Since its 2017 inception, the startup has raised nearly $70 million.

Neobrokers are defined as startups that are disrupting the investment industry by providing a platform for a wider range of consumers to partake in the stock market by offering them more incremental investment options and modern and easy mobile-based interfaces to manage their money. There is a growing number of them globally, including Scalable Capital, Bitpanda and Trade Republic in Europe.

For Mexico City-born Sergio Jiménez Amozurrutia, the fact that in his country of more than 120 million people, only a tiny fraction of the population has the ability to invest in the capital markets felt unfair. To him, the lack of widespread participation in investing is an example of the rich getting richer as part of an infrastructure “that is built for the wealthy.” The result of the imbalance is that a lot of people have historically been locked out of making potentially wealth-building investments.  

So after selling Easy Credit, a consumer lending platform he’d built with Rick Rafael Bueno (whom he met in 2015 at a hackathon at Tech de Monterrey), Amozurrutia set out to give Mexicans access to something he believed they’d never had access to: an app-based consumer trading platform.

Flink launched its app in 2018 with a wallet service, a digital and physical global debit card backed by Mastercard and, last year, it began offering the ability to buy and sell fractional shares from 30 pesos, without commissions, for NYSE-listed stocks.

“Users can invest as little as US$1 and with zero commissions,” Amozurrutia said. “We want Flink to be the easiest way to invest, save and use your money.” 

Image Credits: Lightspeed’s Mercedes Bent and Flink founding team / Lightspeed

The demand for what the startup has to offer is clearly there. Since launching its first brokerage product in July of 2020, Flink has 1.6 million users, up from 1 million users at the time of its February raise. Over 85% of its users are first-time investors. GenZers seem to be the most interested in investing — 27% of the app’s clients are between 18 and 25 years old, while 22% are millennials, execs say.

“Most legacy Mexican banks cater to less than 1% of the population — meaning most Mexicans don’t have a bank account, let alone a brokerage account,” Amozurrutia said at the time of the company’s last raise. “At Flink, we’re guided by the belief that Mexico’s financial system should work for everyone — not only a select few.”

The company is growing its user base by 38% per month and revenue by 31% per month, according to  Amozurrutia, and touts a user acquisition cost of 62 cents. It is currently the largest retail brokerage service in Mexico, he said. Flink has 110 employees, up from 25 people a year ago today.

The startup plans to use its new capital to keep growing its team, toward product development and to expand its service to different countries in Latin America.

“The lack of access for retail investing is all over LATAM, and at Flink we want to change that,” Amozurrutia told TechCrunch. “We are focused on offering the opportunity to invest and grow their money to everyone in LATAM.”

Lightspeed Partner Mercedes Bent said her firm “fell in love” with Flink’s mission and impact on the country’s “financial ecosystem.” It was also impressed by the company’s unique features, including allowing Mexican investors to access the U.S. stock market and invest fractional shares.

“Many equities platforms only let you invest in equities in your own country,” she said. “Flink also has a big focus on education and creating an investment experience that makes it easy for their users to onboard.” For example, Bent noted, Flink has a podcast dubbed “Finanzas en órbita” that provides financial and stock market education in México.

In a blog post, Bent and Will Kohler wrote that they could feel the company’s passion and vision for creating more financial inclusion in Mexico, even via a Zoom call.

“The excitement leapt through the video screen,” the pair wrote. “…Flink’s vision for the future goes beyond accessing stocks, and we wanted to be a part of it.”

Flink marks Lightspeed’s third investment in Mexico, alongside Stori and Frubana, and Bent and Kohler say there is “more to come.”

“We are big believers in México, and bullish on LATAM,” they wrote.

Mindset, an artist-driven mental wellness audio platform, raises $8.7M in seed funding

By Amanda Silberling

Mindset, a platform featuring personal story collections from recording artists, announced today that it raised $8.7 million in seed funding.

As co-founders of the K-pop-focused podcast production company DIVE Studios, brothers Brian Nam, Eric Nam and Eddie Nam noticed that the studio’s best-performing content came from podcast episodes where stars discussed how they handle struggles in their personal lives. So, the Nam brothers came up with the idea for Mindset, an off-shoot of DIVE Studios.

“We found that this was a unique selling point people really wanted more of — so we started to think about ways to really double-down on that aspect,” said CEO Brian Nam. “How do we provide more of this valuable content to Gen Z and young millennial audiences? We decided that there wasn’t really the right kind of platform out there for this type of storytelling, so we decided to develop our own mobile platform to uniquely share these stories in an audio format.”

Image Credits: Mindset

In its current format, Mindset features four audio collections from artists like Jae, Tablo, BM and Mindset co-founder Eric Nam, who happens to be a K-pop star himself. Each collection has 10 episodes of around 10 to 20 minutes long — the introductory episode is free, but to gain access to the rest of an individual artist’s collection, users must pay $24.99. The app also has free Boosters, which are Calm-like, five-minute clips of bedtime stories and motivational mantras.

“Up until now, the primary source of income, especially for musicians, has been touring, music streams and then maybe some endorsement deals, but we’re able to unlock this fourth one, which is monetizing your stories,” Nam said. “The pricing is similar to how they might price a ticket, or how they would sell merchandise.”

Mindset isn’t meant to be a therapy app. “We’re not licensed therapists, we don’t try to act like we are,” Nam said. Rather, it’s a way for artists to share more intimate experiences with their fans to show that behind they music, they’re people too.

Mindset launched in an MVP (minimum viable product) version in February. Nam declined to share active user or revenue numbers, but said that the app gained enough traction that by May, it raised venture funding. The $8.7 million round is led by Union Square Ventures with strategic participants like record executive Scooter Braun (of TQ Ventures), who has more recently made headlines over the Taylor Swift masters controversy. Other backers include Twitch co-founder Kevin Lin, Opendoor co-founder Eric Wu, and more.

“Scooter Braun was a strategic investor,” Nam told TechCrunch.

Braun has also worked with artists like Ariana Grande, Justin Bieber and Demi Lovato.

“He’s really opened a lot of doors for us to branch out into the Hollywood and Western space, where we traditionally came from the K-pop space,” Nam added.

Mindset is putting its seed funding toward content creation, hiring and product development. The app is currently available on iOS and Android, but it will officially launch on September 14. After that, Mindset will release another audio collection from an artist or actor every two weeks. Nam declined to share who these artists will be. 

Myelin launches second venture fund to target North America, Europe, Latin America

By Christine Hall

Venture capital firm Myelin on Wednesday launched its second fund, Myelin II, that will invest in some 40 early-stage technology companies in North America, Europe and Latin America.

The firm was started in 2020 by serial entrepreneurs Matías Nisenson, Martin Varsavsky and Alec Oxenford, who lead the firm remotely from Latin America. They are joined by Cesar Levene, an international tax and law expert.

Nisenson previously founded and sold two startups, Tiempy, a social media tool, and Experimental, a blockchain-based online gaming company, while Varsavsky has founded eight companies, and currently is founder of Goggo Network, developer of autonomous mobility networks.

“As an entrepreneur, I build ‘unicorns,’ and now I’m searching for them with Myelin,” said Varsavsky in a written statement.

Meanwhile, Oxenford is founder and former CEO of letgo, an online secondhand marketplace. He told TechCrunch that Nisenson and Varsavsky were good friends that were successful and smart, so it made sense to join them in the firm. He had not been an investor prior, but as a founder, said he wanted to help other entrepreneurs not make the same mistakes he did.

The firm aims to raise between $25 million and $50 million for the second fund, Oxenford said. The fund is industry agnostic, but they are attracted to seed and Series A startups in biotech, fintech, proptech, femtech and food tech.

It also partners with large portfolios and networks for leads. An average check size for the firm is $250,000 to $500,000 for a first check, and $1 million to $3 million for follow-on funding.

However, Oxenford sees check sizes increasing as valuations, especially in Latin America, are rising and more capital is flowing. This also makes it more difficult to identify the companies with substance.

“Having been founders — all three of us — we can understand a bit better than others whether there is substance, and the projects have true potential,” he added. “We look for unicorn potential, some revenue, a serial entrepreneur and a good culture that is data-driven. We are taking a special approach that is founders helping founders in various stages of their careers.”

The new fund follows Myelin I, which invested several millions into 23 startups, including CookUnity and Buenbit. Nisenson says the first fund was “mostly proof-of-concept,” and was his first time as a fund manager, though Varsavsky had worked on other funds. They decided to have a very small fund and co-invest with larger funds.

“We found that nano funds can outperform big funds because you can invest in every deal,” Nisenson added. “The big funds don’t care because you are not competing with them.”

 

Suing your way to the stars

By Lucas Matney

Hello friends, and welcome back to Week in Review!

I’m back from a very fun and rehabilitative couple weeks away from my phone, my Twitter account and the news cycle. That said, I actually really missed writing this newsletter, and while Greg did a fantastic job while I was out, I won’t be handing over the reins again anytime soon. Plenty happened this week and I struggled to zero in on a single topic to address, but I finally chose to focus on Bezos’s Blue Origin suing NASA.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.


The big thing

I was going to write about OnlyFans for the newsletter this week and their fairly shocking move to ban sexually explicit content from their site in a bid to stay friendly with payment processors, but alas I couldn’t help myself and wrote an article for ole TechCrunch dot com instead. Here’s a link if you’re curious.

Now, I should also note that while I was on vacation I missed all of the conversation surrounding Apple’s incredibly controversial child sexual abuse material detection software that really seems to compromise the perceived integrity of personal devices. I’m not alone in finding this to be a pretty worrisome development despite Apple’s intention of staving off a worse alternative. Hopefully, one of these weeks I’ll have the time to talk with some of the folks in the decentralized computing space about how our monolithic reliance on a couple tech companies operating with precious little consumer input is very bad. In the meantime, I will point you to some reporting from TechCrunch’s own Zack Whittaker on the topic which you should peruse because I’m sure it will be a topic I revisit here in the future.

Now then! Onto the topic at hand.

Federal government agencies don’t generally inspire much adoration. While great things have been accomplished at the behest of ample federal funding and the tireless work of civil servants, most agencies are treated as bureaucratic bloat and aren’t generally seen as anything worth passionately defending. Among the public and technologists in particular, NASA occupies a bit more of a sacred space. The American space agency has generally been a source of bipartisan enthusiasm, as has its goal to return astronauts to the lunar surface by 2024.

Which brings us to some news this week. While so much digital ink was spilled on Jeff Bezos’s little jaunt to the edge of space, cowboy hat, champagne and all, there’s been less fanfare around his space startup’s lawsuit against NASA, which we’ve now learned will delay the development of a new lunar lander by months, potentially throwing NASA’s goal to return astronauts to the moon’s surface on schedule into doubt.

Bezos’s upstart Blue Origin is protesting the fact that they were not awarded a government contract while Elon Musk’s SpaceX earned a $2.89 billion contract to build a lunar lander. This contract wasn’t just recently awarded either, SpaceX won it back in April and Blue Origin had already filed a complaint with the Government Accountability Office. This happened before Bezos penned an open letter promising a $2 billion discount for NASA which had seen budget cuts at the hands of Congress dash its hoped to award multiple contracts. None of these maneuverings proved convincing enough for the folks at NASA, pushing Bezos’s space startup to sue the agency.

This little feud has caused long-minded Twitter users to dig up this little gem from a Bezos 2019 speech — as transcribed by Gizmodo — highlighting Bezos’s own distaste for how bureaucracy and greed have hampered NASA’s ability to reach for the stars:

“To the degree that big NASA programs become seen as jobs programs and that they have to be distributed to the right states where the right Senators live, and so on. That is going to change the objective. Now your objective is not to, you know, whatever it is, to get a man to the moon or a woman to the moon, but instead to get a woman to the moon while preserving X number of jobs in my district. That is a complexifier, and not a healthy one…[…]

Today, there would be, you know, three protests, and the losers would sue the federal government because they didn’t win. It’s interesting, but the thing that slows things down is procurement. It’s become the bigger bottleneck than the technology, which I know for a fact for all the well meaning people at NASA is frustrating.

A Blue Origin spokesperson called the suit, an “attempt to remedy the flaws in the acquisition process found in NASA’s Human Landing System.” But the lawsuit really seems to highlight how dire this deal is to the ability of Blue Origin to lock down top talent. Whether the startup can handle the reputational risk of suing NASA and delaying America’s return to the moon seems to be a question very much worth asking.


Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Boring Company Hawthorne test tunnel in Hawthorne, south of Los Angeles, California on December 18, 2018.

Photo: ROBYN BECK/AFP via Getty Images

Other things

Here are the TechCrunch news stories that especially caught my eye this week:

OnlyFans bans “sexually explicit content”
A lot of people had pretty visceral reactions to OnlyFans killing off what seems to be a pretty big chunk of its business, outlawing “sexually explicit content” on the platform. It seems the decision was reached as a result of banking and payment partners leaning on the company.

Musk “unveils” the “Tesla Bot”
I truly struggle to even call this news, but I’d be remiss not to highlight how Elon Musk had a guy dress up in a spandex outfit and walk around doing the robot and spawned hundreds of news stories about his new “Tesla Bot.” While there certainly could be a product opportunity here for Tesla at some point, I would bet all of the dogecoin in the world that his prototype “coming next year” either never arrives or falls hilariously short of expectations.

Facebook drops a VR meeting simulator
This week, Facebook released one of its better virtual reality apps, a workplace app designed to help people host meetings inside virtual reality. To be clear, no one really asked for this, but the company made a full court PR press for the app which will help headset owners simulate the pristine experience of sitting in a conference room.

Yes, this looks dumb. But avatar-based work apps are coming for your Zooms, and Facebook made a pretty convincing one here. https://t.co/aGvOW6zm8U

— Lucas Matney (@lucasmtny) August 19, 2021

Social platforms wrestle with Taliban presence on platforms
Following the Taliban takeover of Afghanistan, social media platforms are being pushed to clarify their policies around accounts operated by identified Taliban members. It’s put some of the platforms in a hairy situation.

Facebook releases content transparency report
This week, Facebook released its first ever content transparency report, highlighting what data on the site had the most reach over a given time period, in this case a three-month period. Compared to lists highlighting which posts get the most engagement on the platform, lists generally populated mostly by right wing influencers and news sources, the list of posts with the most reach seems to be pretty benign.

Safety regulators open inquiry into Tesla Autopilot
While Musk talks about building a branded humanoid robot, U.S. safety regulators are concerned with why Tesla vehicles on Autopilot are crashing into so many parked emergency response vehicles.


 

Image Credits: Nigel Sussman

Extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

The Nuro EC-1
“..Dave Ferguson and Jiajun Zhu aren’t the only Google self-driving project employees to launch an AV startup, but they might be the most underrated. Their company, Nuro, is valued at $5 billion and has high-profile partnerships with leaders in retail, logistics and food including FedEx, Domino’s and Walmart. And, they seem to have navigated the regulatory obstacle course with success — at least so far…”

A VC shares 5 keys to pitching VCs
“The success of a fundraising process is entirely dependent on how well an entrepreneur can manage it. At this stage, it is important for founders to be honest, straightforward and recognize the value meetings with venture capitalists and investors can bring beyond just the monetary aspect..

A crash course on corporate development
“…If you’re going to get acquired, chances are you’re going to spend a lot of time with corporate development teams. With a hot stock market, mountains of cash and cheap debt floating around, the environment for acquisitions is extremely rich.”


Thanks for reading! Until next week…

Lucas M.

São Paulo’s QuintoAndar real estate platform raises $120M, now valued at $5.1B

By Mary Ann Azevedo

Less than three months after announcing a $300 million Series E, Brazilian proptech QuintoAndar has raised an additional $120 million.

New investors Greenoaks Capital and China’s Tencent co-led the round, which included participation from some existing backers as well. São Paulo-based QuintoAndar is now valued at $5.1 billion, up from $4 billion at the time of its last raise in late May. With the extension, the startup has now raised more than $700 million since its 2013 inception. Ribbit Capital led the first tranche of its Series E.

QuintoAndar describes itself as an “end-to-end solution for long-term rentals” that, among other things, connects potential tenants to landlords and vice versa. Last year, it also expanded into connecting home buyers to sellers. Its long-term plan is to ​​evolve into a one-stop real estate shop that also offers mortgage, title insurance and escrow services.

To that end, earlier this month, the startup acquired Atta Franchising, a 7-year-old São Paulo-based independent real estate mortgage broker. Specifically, acquiring Atta is designed speed up its ability to offer mortgage services to its users. QuintoAndar also plans to explore the possibility of offering a product to perform standalone transactions outside of its marketplace in partnership with other brokers, according to CEO and co-founder Gabriel Braga.

This year, QuintoAndar expanded operations into 14 new cities in Brazil. Eventually, QuintoAndar plans to enter the Mexican market as its first expansion outside of its home country but it has not yet set a date for that step. Today, the company has more than 120,000 rentals under management and about 10,000 new rentals per month. Its rental platform is live in 40 cities across Brazil, while its home-buying marketplace is live in four (Sao Paulo, Rio de Janeiro, Belo Horizonte and Porto Alegre) and seeing more than 10,000 sales in annualized terms.

QuintoAndar, he said, is open to acquiring more companies that it believes can either help it accelerate in a particular way or add something it had not yet thought about.

“We’re receptive to the idea but our core strategy is to focus on organic growth and our own innovation and accelerate that,” Braga said.

Why raise more money so soon?

The Series E was oversubscribed with investors who got in and “some who could not join,” according to Braga.

Greenoaks and Tencent, he said, couldn’t participate because of “timing issues.”

“We kept talking and they came back to us after the round, and wanted to be involved so we found a way to have them on board,” Braga said. “We did not need the money. But we have been constantly overachieving on the forecast that we shared with our investors. And that’s part of the reason why we had this extension.”

Greenoaks’ long-term time horizon was appealing because the firm’s investment was designed to be “perpetual capital with no predefined timeframe,” Braga said.

“We’re doing our best to build an enduring company that will be around for many, many years, so it’s good to have investors who share that vision and are technically aligned,” he added.

Greenoaks Partner Neil Shah said his firm believes that what QuintoAndar is building will “fundamentally reshape real estate transactions, enhancing transparency, expanding options for Brazilians seeking housing, dramatically simplifying the experience for landlords and driving increased investment into real estate across the country.” He also believes there is big potential for the company to take its offering to other parts of Latin America.

“We look forward to being partners for decades to come,” he added. 

Tencent’s experience in China is something QuintoAndar also finds valuable.

“We believe we can learn a lot from them and other Chinese companies doing interesting stuff there,” Braga said.

QuintoAndar isn’t the only Brazilian prop tech firm raising big money: In March, São Paulo digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. Then, about one month later, it revealed a $100 million extension that valued the company at $2.9 billion.

 

Rutter comes out of stealth with $1.5M in funding for its e-commerce API

By Christine Hall

Rutter, a remote-first company, is developing a unified e-commerce API that enables companies to connect with data across any platform.

On Friday the company announced it was emerging from stealth with $1.5 million in funding from a group of investors including Haystack, Liquid 2 and Basis Set Ventures.

Founders Eric Yu and Peter Zhou met in school and started working on Rutter, which Zhou called “Plaid for commerce,” in 2017 before going through the summer 2019 Y Combinator cohort.

They stumbled upon the e-commerce API idea while working in education technology last year. The pair were creating subscription kits and learning materials for parents concerned about how their children would be learning during the global pandemic. Then their vendor customers had problems listing their storefronts on Amazon, so they wrote scripts to help them, but found that they had to write separate scripts for each platform.

With Rutter, customers only need one script to connect anywhere. Its APIs connect to e-commerce platforms like Shopify, Walmart and Amazon so that tech customers can build functions like customer support and chatbots, Yu told TechCrunch.

Lan Xuezhao, founding and managing partner of Basis Set Ventures, said via email that she was “super excited” about Rutter first because of the founders’ passion, grit and speed of iteration to a product. She added it reminded her of another team that successfully built a business from zero to over $7 billion.

“After watching them (Rutter) for a few years, it’s clear what they built is powerful: it’s the central nervous system of online commerce,” Xuezhao added.

As the founders see it, there are two big explosions going on in e-commerce: the platform side with the adoption of headless commerce — the separating of front end and back end functions of an e-commerce site, and new companies coming in to support merchants.

The new funding will enable Yu and Zhou to build up their team, including hiring more engineers.

Due to the company officially launching at the beginning of the year, Yu did not disclose revenue metrics, but did say that Rutter’s API volume was doubling and tripling in the last few months. It is also supporting merchants that connect with over 5,000 stores.

Some of Rutter’s competitors are building one aspect of commerce, like returns, warranties and checkouts, but Yu said that since Shopify represents just 10% of e-commerce, the company’s goal is to take merchants beyond the marketplace by being “that unified app store for merchants to find products.”

“We think that in the future, the e-commerce stack of a merchant will look like the SaaS stack of a software company,” Zhou added. “We want to be the glue that holds that stack together for merchants.”

 

Argentine fintech Ualá lands $350M at a $2.45B valuation in SoftBank, Tencent-led round

By Mary Ann Azevedo

The dollars keep flowing into Latin America.

Today, Argentine personal finance management app Ualá announced it has raised $350 million in a Series D round at a post-money valuation of $2.45 billion.

SoftBank Latin America Fund and affiliates of China-based Tencent co-led the round, which included participation from a slew of existing backers including funds managed by Soros Fund Management LLC, funds managed by affiliates of Goldman Sachs Asset Management, Ribbit Capital, Greyhound Capital, Monashees and Endeavor Catalyst. New funds, such as D1 Capital Partners and 166 2nd also put money in the round in addition to angel investors such as Jacqueline Reses and Isaac Lee.

The round is believed to be the largest private raise ever by an Argentinian company and brings Uala’s total raised to $544 million since its 2017 inception.

Founder and CEO Pierpaolo Barbieri, a Buenos Aires native and Harvard University graduate, has said his ambition was to create a platform that would bring all financial services into one app linked to one card.

Today, Ualá says it has developed “a complete financial ecosystem” including universal accounts, a global Mastercard card, bill payment options, investment products, personal loans, installments (BNPL) and insurance. It has also launched merchant acquiring, Ualá Bis, a solution for entrepreneurs and merchants that allows selling through a payment link or mobile point-of-sales (mPOS) . 

The startup has issued more than more than 3.5 million cards in its home country and in Mexico, where it launched operations last year. The company claims that more than 22% of 18 to 25 year olds in Argentina have a Ualá card. At the time of its Series C raise in November 2019, it had issued 1.3 million cards.

Image Credits: Ualá

Over 1 million users invest in the mutual fund available on the Ualá app, which the company claims is the second largest mutual fund in Argentina in number of participants. The company, which has aimed to provide more financial transparency and inclusion in the region, says that 65% of its users had no credit history prior to downloading the app.

Ualá plans to use its new capital to continue expanding within Latin America, develop new business verticals and do some hiring with the plan of having 1,500 employees by year’s end. It currently has more than 1,000 employees.

“We are most impressed by Ualá’s ambition and execution. Our investment will propel the next stage of their vision, furthering a regional ecosystem that can make financial services more accessible and transparent across LatAm,” said Marcelo Claure, CEO of SoftBank Group International and COO of SoftBank Group, in a written statement.

Orchata raises $4M, aims to build a ‘Gopuff for Latin America’

By Christine Hall

Luis Mario Garcia grew up in Mexico making deliveries for the grocery stores in his neighborhood. After honing his startup skills in San Francisco, he returned to Mexico with the idea of building a software company.

That’s when he met his co-founder Javier Gonzalez and the pair started Orchata in 2020, a mobile app enabling consumers to get groceries delivered in 15 minutes, with no substitutes and at supermarket prices. Products delivered include fresh fruit, beverages, bread, medicine and household essentials, Garcia told TechCrunch.

Orchata does this by operating a network of micro fulfillment centers — it is already operating in two cities — with technology for efficient picking and hyperfast delivery.

Online food delivery sales in Latin America are projected to reach $9.8 billion by 2024, with the global pandemic driving demand for faster delivery, according to Statista. Garcia sees three different waves in this market: the first one being traditional supermarkets, where you can spend hours, which led to the second wave of food delivery companies, including some big players in the region — for example Rappi in Colombia, which in July raised $500 million in Series F funding at a $5.25 billion valuation in a round led by T. Rowe Price, and Cornershop in Chile, which was acquired by Uber in 2019.

However, Garcia said many of these services still take more than an hour from order to doorstep and may require phone calls if an item is not available. He wants to be part of a third wave — software that is integrated with inventory and delivery that is super fast, and no substitutions.

“This is similar to what is going on around the world, but there is a huge opportunity to bring convenience, to be the Gopuff for Latin America, and we want to build it first in the region,” Garcia said.

The Monterrey-based company was part of Y Combinator’s summer 2020 cohort and on Friday announced a $4 million seed round from a group of investors, including Y Combinator, JAM Fund, FJ Labs, Venture Friends, Investo and Foundation Capital, and angel investors Ross Lipson, Mike Hennessey, Brian Requarth and Javier Mata.

Jonathan Lewy, co-founder of Grin Scooters and founder of Investo, is also an investor in Rappi. He said Garcia was building a product for the end user, with the key being the building of the infrastructure and inventory. Lewy believes Garcia understands how quick delivery should be done and that it is not just about offering a mobile app, but building the technology behind it.

Meanwhile, Justin Mateen, general partner at JAM Fund, and co-founder of Tinder and an early-stage investor, met Garcia over a year ago and was one of the company’s first investors. He said Garcia’s and Gonzalez’s initial idea for the model of grocery stores was still not solving the problem, but then they pivoted to doing fulfillment and inventory themselves.

“He fits the mold of what I look for in a founder, and he is the type of founder that doesn’t give up,” Mateen said. “Luis finally agreed to let me double down on my investment. The model makes sense now, he is on to something and it is now going to be about execution of capital as he scales.”

Both Mateen and Lewy agree that there will be similar apps coming because food delivery is such a large market, but that Orchata has a clear advantage of owning the customer experience from beginning to end.

Having only launched four months ago, Orchata is already processing thousands of orders and is seeing 100% monthly growth. The new funding will enable Orchata to expand into three new cities in Mexico. Garcia is also eyeing Colombia, Brazil, Peru and Chile for future expansion.

The company is also targeting multiple use cases, including someone noticing a forgotten item while cooking to consumers shopping for the week or teenagers needing food for a party.

“We are going to be super convenient to customers, and we think every use case for food delivery will be this way in the future,” Garcia said. “We will eventually introduce our own brands and foods with the goal of being that app that is there anytime you need it.”

 

Wonder Brands picks up $20M, aims to build marketplace of Latin American e-commerce brands

By Christine Hall

E-commerce roll-up companies are big in the United States, and Wonder Brands wants to be that for Latin America.

The Mexico-based company closed on $20 million in seed funding, co-led by ALLVP and Mountain Nazca, with participation from CoVenture, Victory Park Capital, GFC, QED (Fontes), Korify Capital and Endeavor Catalyst.

Wonder Brands co-founders Nicolás Gonzalez Luna and Federico Malek came together to start the company in January 2021 to acquire digital brands in the MercadoLibre and Amazon ecosystem. It then leverages its technology to scale their operations and grow sales by taking care of the marketing, analytics, supply chain management and working capital needs of the companies. It focuses on companies in the areas of home and garden, sports and fitness, beauty and personal care.

“MercadoLibre has a larger share, but Amazon is entering the region quickly, so there is not one dominating marketplace. MercadoLibre may have half the market, but then it is more balanced between a number of different platforms,” Gonzalez Luna told TechCrunch. “That diversification means operations here are more complex than the classic Amazon seller. Negotiations take longer and require more discussion about who you are to get the trust in you. That’s why we will be doing fewer, but larger deals than our U.S. counterparts.”

Malek’s background is on the commerce side, having worked at Argentinian insurtech company iunigo.com before founding e-commerce fulfillment company Avenida.com, which was acquired by Groupon in 2010. He then worked as Groupon’s managing director in the region. He knew Gonzalez Luna, whose background includes Goldman Sachs where he focused on M&A.

Michael Breitstein, principal at CoVenture, said his firm has made a variety of investments on the debt and equity sides of e-commerce and believes Malek and Gonzalez Luna provide a “great one-two punch” with their backgrounds, as well as the ability to raise capital and build out a platform.

Though there is a lot of competition to acquire digitally native companies in the $1 million revenue range, Malek said Wonder Brands will focus on larger sellers and operators, with a deal target of at least $5 million in revenue. They are also taking a “buy and build” approach rather than the “buy and consolidate” business model many of the other roll-up companies have, he added.

With its approach, the company’s goal is to enable its acquired companies to sell on multiple channels. It provides support in four areas: category management and brand development, marketing and performance, technology to automate processes like inventory and logistics and operations to manage all of the channels needed. For example, in Latin America, inventory has to be consolidated into one warehouse, but then separated depending on the sales channel, Malek.

Acquiring and scaling companies is big business. London-based Hahnbeck Business Systems, an e-commerce M&A firm that tracks funding to FBA (fulfillment by Amazon) acquirers all over the world, reports that e-commerce roll-up companies raised $7.24 billion in disclosed funding to date.

According to the different sources, reports say Latin American e-commerce company MercadoLibre has a market cap of between $70 billion and $94.billion. Meanwhile, marketplace merchants accounted for 55% of units sold on Amazon.com, according to the retailer. In 2020, that accounted for $300 billion in sales, according to Marketplace Pulse estimates based on Amazon disclosures.

The seed financing enables Wonder Brands to invest in building a team to focus on the four support areas and marketing. The company has 20 employees currently and plans to triple that in the next month. The funding is also complementing larger debt facilities that the company has available to acquire brands. Its target is to make six or seven acquisitions this year.

The company is on target to achieve $55 million in revenue by the end of the year and will then move toward $100 million in revenue in the next 12 months, Malek said. It currently operates in Mexico and plans to begin operations in Brazil by the end of 2021.

 

Contact, a platform for creatives backed by Maisie Williams, raises $1.9M seed led by Founders Fund

By Mike Butcher

With the pandemic digitizing every aspect of our lives, the Creator Economy has taken off like never before, with some estimates saying it’s now a $100 billion+ market. And yet, managing your professional life as a model, actor, writer or designer remains a mish-mash of emails, manual booking processes and dreaded PDFs. Creatives face late payments, and often opaque industry practices, even as top talent agencies have collectively achieved a valuation of $20 billion. But while modeling talent can be charged as much as a 20-40% commission fee, social media has been gradually displacing traditional agencies by reducing the barriers to entry and making talent more accessible. However, as everyone knows, social media is nowhere near a place anyone can manage their career.

Late last year the Contact platform launched, initially offering models a way to take bookings and manage some aspects of their work. It’s now looking to address the wider problems referred to above, with a new round of funding involving some key players in the creative industries.

It’s backed and supported by Maisie Williams, best known for her work on “Game of Thrones”, who has become Creative Strategist and Advisor to the startup after becoming a passionate advocate for better conditions for creatives in the industry.

Contact has now raised a $1.9 million (£1.4 million) seed round of funding led by Founders Fund. Also participating is LAUNCH (the fund led by investor Jason Calacanis), Sweet Capital (via Pippa Lamb), Rogue VC (via Alice Lloyd George) and Angel investors Simon Beckerman (co-founder of Depop), Eric Wahlforss (co-founder of SoundCloud and now Dance), Abe Burns and Joe White.

Although Contact’s initial incarnation is addressing the modeling world, its vision is far bigger. Contact co-founder and CEO Reuben Selby — a fashion designer who was formerly of William’s founding team, when she started her career — has worked with Nike, Thom Browne and JW Anderson. He says the platform aims to become a scalable back-end solution across the $104.2 billion Creator Economy, “democratizing” access to the world’s best creative talent.

Reuben Selby

Reuben Selby. Image Credits: Reuben Selby

Selby, who recently spoke about being a founder with autism, is also the founder and creative director of his own label, Reuben Selby, and co-founder of Cortex, a creative agency and community. Selby is joined by CTO Josh McMillan, previously of Deliveroo, Daisie, the Government Digital Service and others.

While its competitors might, broadly speaking, include Patreon, Creatively and The Dots, it’s fair to say that Contact’s vision to bring many aspects of these platforms under one roof could be described as ambitious; it is also tantalising.

In a radical move for what is an industry dominated by agencies, individuals and businesses can discover and book creators and creative services directly, without going through an agency.

Contact initially launched its platform in October 2020 with the ability to discover and book fashion models, but post-fundraising plans to roll out other creative verticals such as photographers, stylists, videographers, and more.

Selby says the idea for Contact has been informed by his own personal experiences trying to break into the creative industry as a model, photographer and creative director. After finding scant methods for secure and safe ways to get paid — while booking companies lacked basic technological tools — he realized that “middle-men” and agencies were the main players that benefitted, taking cuts on both sides and often still delivering a sub-par product.

So how does Contact work?

When a Creator joins, they are able to showcase their portfolio across different creative services and take direct bookings.

A business can then browse and discover talent using filters, shortlist creative talent, provide details about the job and book creators directly. Creatives can accept or reject jobs via the web platform or, soon, via a smartphone app. Once the job has been completed, the talent gets paid out via Contact.

Since soft-launching within the modeling vertical, Contact says it has onboarded almost 600 creatives and over 1,400 clients, including Depop, Farfetch, Nike, Vivienne Westwood and Vogue. Users of the platform have increased 100% YoY, says the startup.

Selby says Contact intends to remain in the background and allow the talent to brand itself independently across different verticals. Crucially, Contact does not take money from creators, only booking companies, from which it will levy a 20% fee on transactions.

Commenting, Trae Stephens, partner at Founders Fund, said: “We are always excited when we find founders who seem to have been born to build a specific company. Reuben definitely seems like one of those founders. We are really excited to watch the company scale and expand into new creative verticals.”

Pippa Lamb, partner at Sweet Capital, added: “The team at Contact have been pushing frontiers in the creator economy long before ‘the creator economy’ became a buzzword. Contact possesses a rare combination of world-class technical talent with the raw innovation of today’s most creative minds. We are excited about this next chapter.”

Williams, best known for playing Arya Stark on “Game of Thrones”, is no stranger to working on startups. She previously contributed to the Daisie platform, which continues to connect creators with one another to work on each others’ projects, helping creators find collaborators for their art.

But clearly her desire to disrupt the creative world largely controlled by “middle men” was not sated by the experience.

Speaking to me in an exclusive interview, Williams and Selby outlined their vision:

Selby said the existing marketplace for models is just the start: “The vision has always been about creatives, and getting creatives paid for their work. We basically started out in one vertical, the modeling industry… and we’re in the process of rolling out new verticals so bringing on photographers, makeup artists, stylists, etc. But that’s a very very small part of the overall vision.”

He said the focus now is “on the distribution of work, how that relationship works with that audience, how they can monetize it. So it’s basically giving them a toolkit to monetize their creativity rather than just the physical constraints. That’s what we’re exploring right now. We have this marketplace but we see that as being a very small part, but the larger piece.”

He said the marketplace model can connect brands directly to creators or creatives, but, he said, brands continue to have a great deal of power: “The creators are just sitting there waiting for somebody to give them something. So we’re now working out how they can just distribute their own work and monetize it in their own ways, with the back end of how all of the logistics work, and the operational side handled by the product that we’ve built, handling the payments and the licensing and insurance.”

Despite being a major Hollywood star, Williams told me the creative and entertainment industry she’s familiar with and works in remains stuck in an old world of emails and links, rather than the kinds of platforms the tech industry is used to building and using: “Being someone who has been represented by talent agencies for my career, that whole interaction online is emails. At no point are any of the assets digitised. There’s no ‘vault’ where all of my scripts go. There’s no place where I can upload all of my audition tapes. It’s always just a link in an email. There’s not really an industry standard. From an agency perspective, none of the work that they do is very streamlined or directional.”

She says that needs to change: “There’s a casting process and at the moment, it’s a hugely dated way of doing things between the casting directors and the actors, the writers etc. We want to build a very streamlined process.”

Speaking about the investors he’s assembled to back Contact, Selby said the team chose Founders Fund to be their lead investor because of their approach: “The way that they work with founders… I found that personally very empowering. [They] give you a lot of freedom and space to think creatively. So there was a clear alignment.”

Talking about the other angel investors in the round he said: “People like Eric and Simon are majorly connected in fashion and music culture in general.”

Speaking about how the entertainment industry might react to Contact, Williams said: “Actors have many other things that they do. Being able to have a platform that they can monetize all those other things is really important, especially because, as an actor you spend a lot of time unemployed.” But, she said, the system is constructed in such as a way that “you’re only as valuable as the auditions your agent puts you up for. It’s not very inspiring or rewarding. So a lot of actors make their own shows on streaming platforms or create their own documentaries or sell their work in other ways.”

She said Contact wants to be able to facilitate that through the platform, and for creatives to have more independence: “The film industry and the music industry is full of incredibly talented people who are multitalented across many different industries. But they are still, kind of held by representatives and agencies and record labels or managers who have a lot of power in, sort of, keeping them ‘small’. Being able to introduce something which can offer so many other tools, I think, is really important.”

It’s clear that the vision Selby, his co-founders and Williams have is very big. The question is, will they be able to pull it off?

It has to be said, however, that the combination of a passionate Gen Z-influential team (with added star power), a full-blown technology platform, heavyweight U.S. investors and angels pulled from creative industries certainly points to the potential for success.

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