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Yesterday — April 1st 2020Your RSS feeds

Self-driving car engineer Anthony Levandowski files motion to force Uber into arbitration

By Kirsten Korosec

Anthony Levandowski, the star self-driving car engineer who was at the center of a trade secrets lawsuit, has filed a motion to compel Uber into arbitration in the hopes that his former employee will have to shoulder the cost of at least $179 million judgment against him.

The motion to compel arbitration filed this week is part of Levandowski’s bankruptcy proceedings. It’s the latest chapter in a long and winding legal saga that has entangled Uber and Waymo, the former Google self-driving project that is now a business under Alphabet.

The motion represents the first legal step to force Uber to stand by an indemnity agreement with Levandowski. Uber signed an indemnity agreement in 2016 when it acquired Levandowski’s self-driving truck startup Otto . Under the agreement, Uber said it would indemnify — or compensate — Levandowski against claims brought by his former employer Google.

In Uber’s view the stakes are at least $64 million, according to the ride-hailing company’s annual report filed with the U.S. Securities and Exchange Commission . Although Levandowski, who was ordered in March 2020 to pay Google $179 million, is clearly shooting for more.

“For much of the past three years, Anthony ceded control of his personal defense to Uber because Uber insisted on controlling his defense as part of its duty to indemnify him. Then, when Uber didn’t like the outcome, it suddenly changed its mind and said it would not indemnify him. What Uber did is wrong, and Anthony has to protect his rights as a result,” Levandowksi’s lawyer Neel Chatterjee of Goodwin Procter said in an emailed statement to TechCrunch.

The backstory

Levandowski was an engineer and one of the founding members in 2009 of the Google self-driving project, which was internally called Project Chauffeur. The Google self-driving project later spun out to become Waymo, a business under Alphabet. Levandowski was paid about $127 million by Google for his work on Project Chauffeur, according to the court document filed this week.

Levandowski left Google in January 2016 and started Otto, a self-driving trucking company, with three other Google veterans Lior Ron, Claire Delaunay and Don Burnette. Uber acquired Otto less than eight months later.

Before the acquisition closed, Uber conducted due diligence including hiring outside forensic investigation firm Stroz Friedberg to review the electronic devices of Levandowski and other Otto employees, according to the recent court filing. The investigation discovered that Levandowski had files belonging to Google on his devices, as well as indications that evidence may have been destroyed.

Uber agreed to a broad indemnification agreement in spite of the forensic evidence, which would protect Levandowski against claims brought by Google relating to his previous employment. Levandowski was worried that Google would attempt to get back any or all of the $127 million in compensation he had received.

That forecast didn’t take long to come true. Two months after the acquisition, Google made two arbitration demands against Levandowski and Ron. Uber wasn’t a party to either arbitration. However, it was on the hook under the indemnification agreement, to defend Levandowski.

Uber accepted those obligations and defended Levandowski. While the arbitrations played out, Waymo separately filed a lawsuit in February 2017 against Uber, for trade secret theft. Waymo alleged in the suit, which went to trial and ended in a settlement, that Levandowski stole trade secrets, which were then used by Uber. Under the settlement, Uber agreed to not incorporate Waymo’s confidential information into their hardware and software. Uber also agreed to pay a financial settlement that included 0.34% of Uber equity, per its Series G-1 round $72 billion valuation. That calculated at the time to about $244.8 million in Uber equity.

Meanwhile, the arbitration panel issued an interim award in March 2019 against each of Google’s former employees, including a $127 million judgment against Levandowski. The judgment also included another $1 million that Levandowski and Ron were jointly liable for. Google submitted a request for interest, attorney fees and other costs. A final award was issued in December.

Ron settled in February with Google for $9.7 million. However, Levandowski, disputed the ruling. The San Francisco County Superior Court denied his petition in March, granting Google’s petition to hold Levandowski to the arbitration agreement under which he was liable.

As the legal wrangling between Google and Levandowski and Uber played out, the engineer faced criminal charges. In August 2019, he was indicted by a federal grand jury with 33 counts of theft and attempted theft of trade secrets while working at Google. Last month, Levandowski reached a plea agreement with the U.S. District Attorney and pleaded guilty to one count of stealing trade secrets.

What’s next

Levandowski’s lawyers argue that when the final judgment was entered against him, Uber reneged on its indemnification agreement. Levandowski said he was forced to file for Chapter 11 bankruptcy because Uber has refused to pay.

“While Uber and Levandowski are parties to an indemnification agreement, whether Uber is ultimately responsible for such indemnification is subject to a dispute between the Company and Levandowski,” Uber said, using similar language found in its annual report filed with the SEC.

Even if Levandowski’s legal team is able to convince a judge to compel Uber into arbitration, that doesn’t mean the outcome will be positive. Arbitration could take months to play out. In the end, Levandowski could still lose. But the filing allows Levandowski to speak out — albeit using legalese — and share details of his employment at Google and Uber. Among those are details about what Uber knew (and when) about Levandowski’s activities in recruiting Google employees as well as information he had downloaded onto his laptop, and discovered during the forensic investigation.

The first cracks between Uber and Levandowski appeared in April 2018, based on a timeline in the court document. It was then that Uber told Levandowski it intended to seek reimbursement for expenses used to defend him in the arbitration, according to claims laid out in the motion. Uber told Levandowski at the time, that one reason it was seeking reimbursement is because Levandowski “refused to testify at his deposition through an unjustifiably broad invocation of the Fifth Amendment.” Levandowski had used the Fifth Amendment in the deposition during the arbitration with Google.

Uber never requested Levandowski waive his Fifth Amendment rights and testify during the arbitration, according to the court document. Levandowski said that he immediately alerted Google and the arbitration panel that he was willing to testify and offered to make himself available for deposition before the arbitration hearing.

Levandowski-Uber Motion to Compel by TechCrunch on Scribd

Before yesterdayYour RSS feeds

Private tech companies mobilize to address shortages for medical supplies, masks and sanitizer

By Jonathan Shieber

Startups across the nation and around the world are looking for ways to relieve shortages of much-needed personal protective equipment and sanitizers used to halt the spread of COVID-19.

While some of the largest privately held technology companies, like SpaceX and Tesla, have shifted to manufacturing ventilators, smaller companies are also trying to pitch in and relieve scarcity locally.

Supplies have been difficult to come by in some of the areas hardest hit by the outbreak of the novel coronavirus, and the shortfalls have been made worse by a lack of coordination from the federal government. In some instances local governments have been bidding for supplies against each other and the federal government to acquire needed personal protective equipment.

On Sunday, New York’s governor Mario Cuomo pleaded with local governments to not engage in a bidding war. In fact, Kentucky was outbid by the Federal government for personal protective equipment.

“FEMA came out and bought it all out from under us,” Kentucky governor Andy Beshear told a local newspaper. “It is a challenge that the federal government says, ‘States, you need to go and find your supply chain,’ and then the federal government ends up buying from that supply chain.”

Against this backdrop local startups and maker spaces are stepping up to do what they can to fill the gap.

Alcohol brands are turning their attention to making hand sanitizer to distribute in communities experiencing shortages. 3D printing companies are working on new ways to manufacture personal protective equipment and swabs for COVID-19 testing. And one fast fashion retail startup is teaching its tailors and seamstresses how to make cloth masks for consumer protection.

AirCo, a New York-based startup that developed a process to use captured carbon dioxide to make liquor, shifted its efforts to making hand sanitizer for donations in communities in New York City.

Now, new alcohol brands Bev and Endless West are joining the manufacturing push.

Endless West announced this morning that it would shift production away from its distillery to begin making hand sanitizers. The World Health Organization approved their sanitizers, which the company will produce in its warehouse in San Francisco.

The 2-ounce bottles will be donated to local restaurants and bars that remain open for delivery, so that employees can use them and distribute them to customers. Bulk quantities will be distributed to healthcare organizations and facilities that need them.

Endless West also put out a call for other companies to provide supplies to hospitals and health organizations in the San Francisco Bay Area.

“We felt it was imperative to do our part and dedicate what resources we have to assist with shortages in the healthcare and food & beverage industries who keep the engine running and provide such important functions in this time of immense need throughout the community.” said Alec Lee, CEO of Endless West, in a statement.

Los Angeles-based Bev is no different.

“As an alcoholic beverage company, Bev is very lucky in that we are licensed to purchase ethanol directly from our suppliers, who are doing their part by discounting the product to anyone licensed to purchase it,” said Bev chief executive, Alix Peabody. “Community underscores everything we do here at Bev, and as such, we will be producing hand sanitizer and distributing it free of charge to the homeless and elderly communities here in Venice, populations who largely have insufficient access to healthcare and essential goods like sanitizer.”

Hand sanitizer is one sorely needed item in short supply, but there are others — including face masks, surgical masks, face shields, swabs and ventilator equipment that other startups are now switching gears to produce.

(Photo by PAU BARRENA/AFP via Getty Images)

In Canada, INKSmith, a startup that was making design and tech tools accessible for kids, has now moved to making face shields and is hiring up to 100 new employees to meet demand.

“I think in the short term, we’re going to scale up to meet the needs of the province soon. After that, we’re going to meet the demands of Canada,” INKSmith CEO Jeremy Hedges told the Canadian news outlet Global News.

3D printing companies like Massachusetts-based Markforged and Formlabs are both making personal protective equipment like face shields, as well as nasal swabs to use for COVID-19 testing.

Markforged is pushing ahead with a number of efforts to focus some of the benefits of 3D printing on the immediate problem of personal protective equipment for healthcare workers most exposed to COVID-19.

“We have about 20 people working on this pretty much as much as they can,” said Markforged chief executive, Gregory Mark. “We break it up into three different programs. The first stage is prototyping validation and getting first pass to doctors. The second is clinical trials and the third is production. We are in clinical trials with two. One is the nasal swab and two is the face shield.”

The ability to spin up manufacturing more quickly than traditional production lines using 3D printing means that both companies are in some ways better positioned to address a thousandfold increase in demand for supplies that no one anticipated.

“3D printing is the fastest way to make anything in the world up to a certain number of days, weeks, months or years,” says Mark. “As soon as we get the green light from hospitals, 10,000 printers around the world can be printing face shields and nose swabs.”

FormLabs, which already has a robust business supplying custom-printed surgical-grade healthcare products, is pushing to bring its swabs to market quickly.

“Not only can we help in the development of the swabs, but we can manufacture them ourselves,” says FormLabs chief product officer, David Lakatos.

Swabs for testing are in short supply in part because there are only a few manufacturers in the world who made them — and one of those primary manufacturers is in Italy, which means supplies and staff are in short supply. “There’s a shortage of them and nobody was expecting that we would need to test millions of people in short order,” says Lakatos.

FormLabs is also working on another piece of personal protective equipment — looking at converting snorkeling masks into respirators and face masks. “Our goal is to make one that is reusable,” says Lakatos. “A patient can use it as a respirator and you can put it in an autoclave and reuse it.”

In Brooklyn, Voodoo Manufacturing has repurposed its 5,000 square foot facility to mass-produce personal protective equipment. The company has set up a website, CombatingCovid.com, where organizations in need of supplies can place orders. Voodoo aims to print at least 2,500 protective face shields weekly and can scale to larger production volumes based on demand, the company said.

STAMFORD, CT – MARCH 23: Nurse Hannah Sutherland, dressed in personal protective equipment (PPE) awaits new patients at a drive-thru coronavirus testing station at Cummings Park on March 23, 2020 in Stamford, Connecticut. Availability of protective clothing for medical workers has become a major issue as COVID-19 cases surge throughout the United States. The Stamford site is run by Murphy Medical Associates. (Photo by John Moore/Getty Images)

Finally, Resonance, the fast fashion startup launched by the founder of FirstMark Capital, Lawrence Lenihan, is using its factory in the Dominican Republic to make face masks for consumers on the island and beyond.

“To contribute to the Dominican health efforts, Resonance is acting to utilize their resources to manufacture safety masks for distribution to local hospitals, nursing homes, and other high-risk facilities as quickly as possible. They have provided user-friendly instructions and material and will pay their sewers who can to make these masks from the security of their homes,” a spokesperson for the company wrote in an email. “Resonance is currently working to share this downloadable platform and simple instructions to their website, so anyone in the world can contribute to their own local communities.”

All of these efforts — and countless others too numerous to mention — point to the ways small companies are hoping to do something to help their communities stay safe and healthy in the midst of this global outbreak.

But many of these extreme measures may not have been necessary had governments around the world actively coordinated their response and engaged in better preparation before the situation became so dire.

There are a litany of errors that governments made — and are still making — in their efforts to respond to the pandemic, even as the private sector steps in and steps up to address them.

Zindi taps 12,000 African data scientists for solutions to COVID-19

By Jake Bright

Since its inception, Cape Town based crowdsolving startup Zindi has been building a database of data scientists across Africa.

It now has 12,000 registered on its its platform that uses AI and machine learning to tackle complex problems and will offer them cash-prizes to find solutions to curb COVID-19.

Zindi has an open challenge focused on stemming the spread and havoc of coronavirus and will introduce a hackathon in April. The current competition, sponsored by AI4D, tasks scientists to create models that can use data to predict the global spread of COVID-19 over the next three months.

The challenge is open until April 19, solutions will be evaluated against future numbers and the winner will receive $5000.

The competition fits with Zindi’s business model of building a platform that can aggregate pressing private or public-sector challenges and match the solution seekers to problem solvers.

Founded in 2018, the early-stage venture allows companies, NGOs or government institutions to host online competitions around data oriented issues.

Zindi’s model has gained the attention of some notable corporate names in and outside of Africa. Those who have hosted competitions include Microsoft, IBM and Liquid Telecom. Public sector actors — such as the government of South Africa and UNICEF — have also tapped Zindi for challenges as varied as traffic safety and disruptions in agriculture.

Zindi Team in Cape Town 1

Image Credits: Zindi

The startup’s CEO didn’t imagine a COVID-19 situation precisely, but sees it as one of the reasons she co-founded Zindi with South African Megan Yates and Ghanaian Ekow Duker.

The ability to apply Africa’s data science expertise, to solve problems around a complex health crisis such as COVID-19 is what Zindi was meant for, Lee explained to TechCrunch on a call from Cape Town.

“As an online platform, Zindi is well-positioned to mobilize data scientists at scale, across Africa and around the world, from the safety of their homes,” she said.

Lee explained that perception leads many to believe Africa is the victim or source of epidemics and disease. “We wanted to show Africa can actually also contribute to the solution for the globe.”

With COVID-19, Zindi is being employed to alleviate a problem that is also impacting its founder, staff and the world.

Lee spoke to TechCrunch while sheltering in place in Cape Town, as South Africa went into lockdown Friday due to coronavirus. Zindi’s founder explained she also has in-laws in New York and family in San Francisco living under similar circumstances due to the global spread of COVID-19.

Lee believes the startup’s competitions can produce solutions that nations in Africa could tap as the coronavirus spreads. “The government of Kenya just started a task force where they’re including companies from the ICT sector. So I think there could be interest,” she said.

Starting April, Zindi will launch six weekend hackathons focused on COVID-19.

That could be timely given the trend of COVID-19 in Africa. The continent’s cases by country were in the single digits in early March, but those numbers spiked last week — prompting the World Health Organization’s Regional Director Dr Matshidiso Moeti to sound an alarm on the rapid evolution of the virus on the continent.

By the WHO’s stats Wednesday there were 1691 COVID-19 cases in Sub-Saharan Africa and 29 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.

The trajectory of the coronavirus in Africa has prompted countries and startups, such as Zindi, to include the continent’s tech sector as part of a broader response. Central banks and fintech companies in Ghana, Nigeria, and Kenya have employed measures to encourage more mobile-money usage, vs. cash — which the World Health Organization flagged as a conduit for the spread of the virus.

The continent’s largest incubator, CcHub, launched a fund and open call for tech projects aimed at curbing COVID-19 and its social and economic impact.

Pan-African e-commerce company Jumia has offered African governments use of its last-mile delivery network for distribution of supplies to healthcare facilities and workers.

Zindi’s CEO Celina Lee anticipates the startup’s COVID-19 related competitions can provide additional means for policy-makers to combat the spread of the virus.

“The one that’s open right now should hopefully go into informing governments to be able to anticipate the spread of the disease and to more accurately predict the high risk areas in a country,” she said.

88 out of top 200 US cities have seen internet speeds decline this past week, 3 cities by more than 40%

By Sarah Perez

The impacts of telecommuting, shelter-in-place laws and home quarantines resulting from the COVID-19 outbreak are starting to impact broadband speeds across a number of U.S. cities, a new report has found. According to broadband analysis site BroadbandNow, 88 out of the top 200 most populous U.S. cities analyzed have now experienced some form of network degradation over the past week, compared with the 10 weeks prior, as more people are going online to work from home, video chat and stream movies and TV to keep themselves entertained. In a small handful of cities over the past week, there have even been significant degradations with download speeds dropping more than 40%, compared with the 10 weeks prior.

It’s not necessarily the areas hit hardest by the spread of the novel coronavirus that are experiencing the worst problems.

Cities including LA, Chicago, Brooklyn and San Francisco have seen little or no disruption in download speeds, the report claims. Seattle is also holding up well.

But New York City, now considered the epicenter of the virus in the U.S., saw download speeds drop by 24% last week, compared to the previous 10-week range. That said, NYC home network connections, which have a median speed of nearly 52 Mbps, are managing.

The good news is that in the majority of markets, network speeds are holding up.

But of the 88 out of 200 cities that saw declines, more than two dozen saw dips of either 20% below range or more, the data indicates.

These include:

Austin, TX (-44%); Charlotte, NC (-24%); Fayetteville, NC (-22%); Fort Lauderdale, FL (-29%); Hialeah, FL (-21%); Houston, TX (-24%); Irvine, CA (-20%); Jersey City, NJ (-25%); Kansas City, MO (-25%); Lawrenceville, GA (-24%); Littleton, CO (-22%); Marietta, GA (-29%); Miami, FL (-27%); Nashville, TN (-20%); New York, NY (-24%); Omaha, NE (-24%); Overland Park, KS (-33%); Oxnard, CA (-42%); Plano, TX (-31%); Raleigh, NC (-20%); Rochester, NY (-33%); St. Louis, MO (-21%) St. Paul, MN (-29%); San Jose, CA (-38%); Scottsdale, AZ (-32%); Washington, DC (-30%); and Winston-Salem, NC (-41%).

Three cities, in particular, were seeing serious network degradations of over 40%: Austin, TX (-44%), Winston Salem, NC (-41%), and Oxnard, CA (-42%). San Jose, CA was nearing this range, with a drop of 38%.

Internet service providers have been responding to the health crisis by suspending data caps, increasing base-level speeds and extending free access to low-income families during this time. But their ability to keep up with this level of high demand is being tested.

Streaming services, being one of the larger draws on bandwidth, have been lowering the quality of their streams to use less network capacity, as U.S. connectivity needs have grown. Yesterday, for example, YouTube announced it would default to SD connections to tame bandwidth demands. Amazon and Netflix have reduced stream quality in Europe. But despite record levels of network traffic in the U.S., Netflix hasn’t made any commitments to do the same in the U.S. Today, Netflix had an hour-long service interruption impacting some U.S. and European users.

Another area of concern is how well more rural areas will hold up with new stay-at-home and work-from-home orders in place. Often, these markets are only served by legacy technologies like DSL . So far, they’ve held up, BroadbandNow reports, but this could still change.

Market players won’t find buyers on the secondary market — yet

By Connie Loizos

Seasoned secondary players were expecting it. As the markets began to plummet in recent weeks, shareholders who’d turned down earlier offers to buy this or that holding were suddenly curious to see if those interested parties might still be interested. Alas, it was too late. The market was moving too fast. It still is.

“Up until last week, everyone was calling to get old pricing,” says Hans Swildens, the founder of 20-year-old Industry Ventures in San Francisco, an investment firm that invests in hundreds of venture funds and is also among the industry’s biggest buyers of secondary shares. “It was, ‘Hey, we reconsidered this offer. Could you pay me what the market was paying last month?’ ”

Swildens says that everybody in the secondaries market said no. They had no choice. “It’s almost impossible to buy when you don’t know what numbers you’re buying against. Buyers don’t know how far the [net asset value] of funds will go down. No one wants to buy something for $10 million that might be worth $5 million [in the not-too-distant future].”

Such is the state of affairs in the venture-backed world of startups right now. Though 2020 once promised to be a year of splashy IPOs and long-awaited liquidity for players across the ecosystem — from employees to founders to venture firms to the limited partners that invest in venture firms — it may well be remembered instead as the year that time stood still.

Certainly, everyone seems stuck in place right now.

While limited partners are largely avoiding their phones, and hoping the venture managers in their portfolio will stop asking for capital, venture firms that didn’t push their portfolio companies to go public are now feeling pressured to produce liquidity somewhere in their holdings, and that’s tougher than ever right now.  With some exceptions, cash-rich companies are in no hurry to go shopping (they also have to worry about looking monopolistic). With some exceptions, companies aren’t merging just yet (though expect a lot of this soon).

Now, secondary shops have hit the pause button, too, as everyone on the ground tries to get a better sense of where the bottom might be.

It could take one to three quarters to assess, say those in the know. For one thing, a lot of nontraditional players have propped up the venture market over the last decade, and some, including hard-hit corporations and family offices, might not have the wherewithal to support their venture managers, even if that’s not obvious today.

On the company level, there are also plenty of questions that are unanswerable at the moment. “Right now, everything is on pause in terms of activity,” says Swildens, adding that, “in a month, we’ll know more. Are people going back to work or not? What were Q1 numbers like? How does April look? Did this company miss revenue by 10% or 80%? Did it beat revenue in March or April? For the buy side, in a month, we’ll have data from the companies and the funds, while right now, no one knows how bad it is.”

In the meantime, secondary players are in the catbird’s seat, seemingly, even while they have to sit tight for what insiders say could be one to three quarters.

Chris Douvos, a longtime investor in venture funds, observes that there’s an “immense amount of capital looking for fund stakes,” meaning from outfits like Industry Ventures and roughly 75 other players in the market. “If I’m a VC right now, I’m wondering when [these] investors — folks who have billions of dollars in committed capital and love to buy fund stakes at 65 cents on the dollar — start capitulating, but that’s like six to nine months out when you really see [these transactions] happen.”

Swildens suggests that’s about right. “Sellers have to reset pricing expectations, then buyers have to come up with a price they are willing to pay, and those things have to meet. And that takes one to two quarters.”

What’s happening between now and then are calls, more calls, and endless number-crunching. Some of it is proving dismal, with a lot of those numbers shrinking as revenue slows and sales cycles grow harder. Some of it, around pre-IPO companies, is likely particularly agonizing. “All the boards and CEOs are trying to work out pro forma plans now,” says Swildens. “If they cut spending too much, growth slows too much and they can’t take the company public next year. They can’t cut to the bone, or they can’t list it.”

There are bright spots, however. As Swildens observes, “Everybody is being negatively impacted right now, with the exception of some bandwidth, infrastructure, fintech and edtech investments. For some of these, [this shutdown] has been kind of a good thing. Edtech companies’ prices are probably going to go up with tens of millions of people suddenly signing up for their services.”

Now to hurry up and wait.

Flexport, Arnold Schwarzenegger and others launch a fund to get supplies to front-line responders

By Darrell Etherington

There’s a global shortage of available protective equipment (PPE) and medical supplies for use by frontline responders working to fight the spread of the novel coronavirus, and the Frontline Responders Fund wants to channel donations to help address that shortage. The fund, which is seeking public donations via GoFundMe, will use all proceeds to cover the costs of transportation of these crucial supplies to the hospitals, clinics and public agencies that need them most.

Flexport is facilitating the deliveries via their supply chain management platform and services, and are receiving donations via their grant making partner Charities Add Foundation of America (CAF), which facilitates the acceptance of charitable donations for Flexport.org, Flexport’s NGO for social good projects.

Already, Flexport has been taking steps to get equipment where it’s needed most: last week, it got 60,000 surgical masks, 34,000 gloves, 2,000 surgical gowns and 50 thermometers from MedShare to San Francisco’s Department of Public Health. But the organization wants to do more, both for SF and for other cites in that are looking for ways to shore up their own supplies.

“My neighbor is on the board of supervisors and she told me the city really needed help,” Petersen said via email earlier this week. “Naturally our team stepped in and applied our knowledge of supply chains and logistics plus a long standing partnership with MedShare.org to get them PPE quickly. Now we’re scaling that effort to get more supplies for SF as well as other cities and hospitals that are also in desperate need.”

The funds made available through this fundraising effort will go to securing not only PPE, but also “testing kits, thermometers, ventilators and medicines,” according to the project’s GoFundMe page, based on what medical service providers deem to be highest priority in terms of need.

Petersen says that effectively all of his time now is focused on logistics to support these ongoing efforts, and it looks like it’ll remain that way for the foreseeable future.

Other organizations, including Apple, and now SoftBank, have been donating large volumes of N95 respirators, a key piece of frontline protective equipment. Flexport’s work could facilitate continued supply, leveraging their supply chain relationships, to ensure that equipment makes its way to frontline staff as fast as it’s able to be produced.

Donations can be made directly through the fund’s GoFundMe page, and the total raised is sitting at just under $3 million as of this writing – helped in large part by sizeable donations from Silicon Valley leaders including Paul Graham, Jack Dorsey and Ron Conway, as well as celebrities including Edward Norton and Arnold Schwarzenegger.

Stanford cancels classes in response to novel coronavirus outbreak

By Danny Crichton

Following on the heels of several major cancellations of events the past few days, including the SXSW conference in Austin and the tech conference SaaStr, Stanford University, which is located in the heart of Silicon Valley in Palo Alto, California, announced late Friday that the school would cancel in-person classes for the final two weeks of the university’s winter quarter in response to the expanding outbreak of novel coronavirus, or COVID-19.

In a statement posted by the university, Stanford’s provost Persis Drell announced that the university would cancel two weeks of classes leading up to the university’s winter quarter exams, and “to the extent feasible” migrate classes to online formats.

In addition, professors are being encouraged by the administration to find ways of delivering functionally equivalent course material through online formats, and all exams for winter quarter are expected to be delivered remotely. The policy takes effect immediately starting with classes this coming Monday, March 9.

Furthermore, the university is canceling its annual Admit Weekend, where newly-admitted prospective freshman visit the palm-lined campus and learn more about the school before making a final decision on where to head for their undergraduate degrees. Tours of the campus have also been canceled.

The university in a separate note today acknowledged that two students are in self-isolation after “possible exposure” to the novel coronavirus. The university emphasized that neither student has affirmatively tested positive for the infection at this time.

The San Francisco Bay Area has seen increasing numbers of potential exposures to the novel coronavirus. Stanford itself has been on the vanguard of responding to the global pandemic, announcing the development of its own test earlier this week to detect the infection.

Apply to be a TC Top Pick at Disrupt SF 2020

By Neesha A. Tambe

If you’re an early-stage startup founder with a big vision and even bigger dreams, join us and more than 10,000 other like-minded startuppers at TechCrunch Disrupt San Francisco 2020 on September 14-16. Silicon Valley’s premiere early-stage startup extravaganza focuses on founders, investors and startup experts determined to disrupt and reshape technology.

Attending is awesome but attending and exhibiting at Disrupt — for free — is even better. What magic is this? No hocus-pocus required. Simply apply to our TC Top Picks program. Applying is also free, and it’s easy to do. However, earning that coveted Top Pick designation — not so easy.

TechCrunch editors have a keen eye for the qualities that translate into serious startup success. They’ll thoroughly review every application and then choose up to five stellar startups for each of the following categories.

AI, BioTech + HealthTech, Enterprise/SAAS, FinTech, Mobility, Retail + ecommerce, Robotics + Hardware IOT, Security/Privacy, Social Impact + Education, Space

Pro tip: Keep the phrase “up to five” in mind. If the editors feel only three startups fit the bill for any given category, they’ll stop at three.

Now that you know how to apply, let’s talk about why you should apply. Every Top Pick startup receives a free Startup Alley Exhibitor Package. As a Top Pick VIP, you’ll strut your impressive stuff for a full day in a prime location in Startup Alley, our exhibition floor. The package also includes three complimentary Founder passes to Disrupt SF 2020 — bring your crew and make the most of your time at the show.

Thousands of people, including investors and tech media, pour through Startup Alley, and everyone wants to know who made the Top Pick cut. You’ll reap invaluable exposure to potential customers, partners, mentors and again…investors. Who doesn’t love investors?

Here’s what Francisco Serra-Martins, founder of Australia-based Sonder Designs, says about his Top Pick experience.

“Being a TC Top Pick at Disrupt San Francisco not only helped us close out an additional $1 million investment for our seed round, it was an incredible opportunity to introduce our technology to an international community and to engage with the San Francisco startup ecosystem.”

One of the most exciting parts of earning a Top Pick designation is the media exposure. Hundreds of top media outlets attend Disrupt, and they’re all looking for great stories. And, drum roll please, your media experience also includes being interviewed by a TechCrunch editor live on the Showcase Stage.

We record the interview, edit the video and blast it across our social media networks. It’s a valuable marketing tool that you can use long after Disrupt ends.

Intrigued? Want to know more? Check out who we chose as TC Top Picks at Disrupt SF 2019.

TechCrunch Disrupt San Francisco 2020 takes place on September 14-16 at Moscone West. Take a chance and apply to be a TC Top Pick. If you’re not quite there yet, that’s OK. Come to Disrupt and learn from the best minds in the startup ecosystem. Buy an early-bird ticket here and save up to $1,800.

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

Lyft is the latest tech company to send employees home over coronavirus

By Natasha Mascarenhas

Ridesharing company Lyft has advised its San Francisco employees to go home after learning one staff member was in contact with someone exposed to coronavirus, or COVID-19. The team member has not exhibited any symptoms and is in touch with medical professionals, Lyft spokesperson Alexandra LaManna told TechCrunch.

“We are basing every step of our response process on CDC guidance, and out of an abundance of caution are encouraging our San Francisco headquarters employees to work from home for the remainder of this week,” Lyft shared in a statement. 

LaManna also said that Lyft HQ will be having an “enhanced cleaning process overnight.” 

The response is another in a slew of tech companies sending employees home to limit the chance of coronavirus spreading among staff. Earlier this week, Twitter encouraged all staff members to work from home. Amazon, LinkedIn, Microsoft and Google also advised some staff to work remotely based on fears of exposure. 

The ripple effect of COVID-19 on tech doesn’t stop at employees. A number of high-profile conferences have been canceled, including Facebook’s F8 conference and Google’s physical part of Cloud Next. SXSW and Y Combinator Demo Day have not yet disclosed whether or not their independent conferences, which garner thousands of people, will stay on.

Coronavirus has also started to impact the market, with Microsoft citing the outbreak as the reason for having supply-chain issues and an impact on earnings.

Frontline Ventures raises new $80M fund focused on bringing US firms to Europe

By Mike Butcher

Frontline Ventures, based in Dublin and London, has announced a new $80 million fund designed to assist U.S. tech companies expanding into Europe.

The new Frontline X fund — which means the firm now has $200 million under management — focuses mainly on growth-stage B2B companies and invests up to $5 million per company alongside lead investors in later-stage rounds. Frontline X will be led by partners Stephen McIntyre and Brennan O’Donnell.

The firm believes that flawed go-to-market strategies and weak local talent networks means that U.S. companies tend to lose too much money in foregone revenue when they expand into Europe, and the team is aiming to address this.

Ireland has been a crucial landing point, particularly for U.S. tech companies expanding into Europe, in part because of its low tax regime. No doubt, Irish investors are now realizing that with the U.K. leaving the EU, both Dublin and Ireland will become an even more attractive proposition.

Frontline has backed a number of successful companies in Seed Funds I and II, including Britebill (acquired by Amdocs), Logentries (acquired by Rapid7) and Orchestrate (acquired by CenturyLink) . Most recently, Frontline was an early investor in Pointy, which was acquired by Google last month.

Prior to joining Frontline, McIntyre setup Twitter’s European headquarters as the vice president of EMEA, and built its EMEA business. Prior to that he ran a substantial part of Google’s ads business.

O’Donnell joins Frontline X as a partner in San Francisco. He previously held multiple go-to-market leadership roles at Google in the U.S. and Europe and executive roles at Yammer, SurveyMonkey, Euclid and Airtable.

In a statement McIntyre said: “We’ve benchmarked the best of B2B software and seen that, by the time a company goes public, 30% of its revenue should be coming from Europe. But even the biggest names in tech fail to get there because of avoidable mistakes when they land. We’ve learned about international expansion the hard way as operators. The good news is that most of these problems are known and solvable.”

Frontline X already invested in the Series B of TripActions, a company that has gone on to raise from Andreessen Horowitz at a $4 billion valuation; People.ai’s $100 million Series C, together with Lightspeed, Andreessen Horowitz and ICONIQ; and Clearbanc’s $50 million Series B, with Emergence and Highland. The VC has also backed more than 60 companies with recent investments, including TeachCloud, Siren, Cloudsmith and Sweepr.

Ariel Cohen, the CEO of TripActions, commented that Frontline was “a crucial source of go-to-market advice.”

SF poised to pass Prop E, which could significantly reduce new supply of startup office space

By Lucas Matney

San Francisco is poised to pass a controversial proposition that would almost certainly limit further office space development in the city, perhaps pushing more tech companies and startups to set up their HQs elsewhere.

Prop E‘s passing, which seemed likely Wednesday afternoon following Tuesday’s election, ties office development approval to the city’s ability to meet affordable housing goals, something that the city and its developers haven’t proven themselves all that capable of doing in recent years. Amid skyrocketing rents and a homeless crisis, there’s been ample concerns that the structures in the city are being overstressed, low and moderate income residents are being pushed out and that the influx of tech startup presences is exacerbating the problem.

San Francisco had already been operating under voter-imposed annual limits for new office space via Prop M, a 1986 ballot measure that has limited annual office space allocations to 875,000 square feet of large office space (defined as building with more than 50,000 square feet). Prop E ties this office space maximum to regionally determined affordable housing goals, ones aimed much higher than San Francisco has been able to hit in recent years.

In the past decade, SF has built an average of 712 affordable housing units per year, according to the chief economist’s report. In the past twenty years, San Francisco annual affordable housing production has popped above 1,000 units only once. The latest goals, set by a state program, pin annual affordable housing production at 2,042 units per year. With Prop E, if San Francisco fell short of that annual goal, only building one-third of those 2,042 units, they would also only be able to allocate one-third of its 875,000 large space square footage to new large space projects.

Scarcity in office space has been a consistent issue for startups in SF. Last year, Stripe, one of the world’s most highly valued startups, cemented plans to leave San Francisco, citing the scarcity of office space in the city as part of its decision to leave, The San Francisco Chronicle reported.

Prop E’s passage is perhaps the worst institutional political failure I’ve seen in my 23 years in SF.

Prop E is a dumpster fire.

It‘ll reduce $ for affordable housing/transit, cost SF’s general fund billions, push out start-ups/nonprofits & fuel office sprawl (w increased VMT). https://t.co/97p2RZNAPO

— Scott Wiener (@Scott_Wiener) March 4, 2020

Mayor London Breed did not support Prop E, and the city’s own chief economist estimated Prop E would go onto cost the city tens of millions of dollars in revenues and thousands of jobs per year, limiting the city’s GDP growth by tens of billions over the next 20 years. The report didn’t mince words, “By tying future office development to an affordable housing target that the city has never met, the proposed measure is likely to lead to high office rents, reduced tax revenue, reduced incomes and reduced employment across the city’s economy.”

Proponents of the measure have hopes that tying office space allocation to affordable housing production will push major developers in the city to encourage affordable housing rather than standing in its way. The proposition was supported by the bulk of SF’s Board of Supervisors, many of whom have notably taken efforts to limit affordable housing production in their own districts.

Prop E was sponsored by TodCo, an SF organization which owns nearly 1,000 affordable housing units in the SoMa neighborhood, an area that is often the center of the city’s office space development, affordable housing development and homelessness crisis. In an interview with SF Public Press, TodCo’s director of community engagement Jon Jacobo pushed back on the city’s report, saying, “It’s not a doomsday scenario, instead of 50 percent growth, we’re going to get maybe 38 percent growth.”

The vote to pass Prop E currently has the support of 55% of SF voters with 100 of precincts reporting — though there are still a number of mail-in ballots to be counted which could affect outcomes.

WellSet is doing a limited launch in Los Angeles of its alternative medicine booking platform

By Jonathan Shieber

Alternative and holistic healthcare seekers in the Los Angeles area have a new service they can turn to in WellSet, the listing platform that launched on Tuesday. 

Through the service, customers coming off of the company’s existing waitlist can access its marketplace for finding acupuncturists, massage therapists, functional medicine practitioners, craniosacral therapists, nutrionists, life coaches and holistic therapists.

WellSet will serve up practitioners based on a users’ health concerns, the price, location, and type of practice on offer.

The company takes a 30% referral fee for its first booking and a 3% booking fee for future appointments booked through its platform. It also provides backend services like intake form management, insurance management and other logistical offerings, according to Bukowski.

Meltzer and Bukowski began working on the company two-and-a-half years ago, according to the chief executive. A former Yale-educated architect who worked for the starchitect Zaha Hadid, Bukowski founded the company because of her own experience with the healthcare industry. While in school she suffered through frequent trips to the hospital for what was an undiagnosed “mystery illness”, which she eventually treated holistically.

For the first 10,000 people to sign up for the company’s waitlist, WellSet is offering a $20 credit for the first session booked on the platform, once WellSet launches in their city.

So far the company has roughly 7,000 practitioners on the service and enough providers to launch in at least 5 major markets. Its deliberate rollout strategy will see the company opening its virtual doors in New York and San Francisco in the coming months.

The Los Angeles-based company was founded by Tegan Bukowski, who serves as co-founder and chief executive officer. Sky Meltzer, the company’s executive chairman and co-founder was the former chief executive of the yoga company, Manduka. Rounding out the team is Hanna Madrigan, a former Pinterest employee who now serves as the chief operating officer.

The company is backed by investors including Kleiner Perkins, Broadway Angels, a female-focused Silicon Valley investment firm, Kelly Noonan Gores, a writer, producer and director of HEAL documentary.

There’s a small holistic healing community growing in Los Angeles. Gwyneth Paltrow’s Goop is by far the best funded of these new companies, but startups like Kensho Health are making their presence felt as well.

Increasingly, holistic healing and functional medicine are seen as viable options for certain types of chronic conditions. The Centers for Medicare and Medicaid recently added acupuncture as a reimbursable treatment — opening the door to the possibility that other conditions may be covered by the government and private insurers.

NASA moves forward with 17 companies as part of bid to transform urban aerial transportation

By Jonathan Shieber

NASA and a clutch of startup and established companies are moving forward with plans to transform mobility in urban environments through the Urban Air Mobility Grand Challenge.

If it’s fully implemented, the new Urban Air Mobility system could enable air transit for things like package delivery, taxi services, expanded air medical services and cargo delivery to underserved or rural communities, the agency said in a statement.

The Grand Challenge series brings together companies developing new transportation or airspace management technologies, the Agency said.

“With this step, we’re continuing to put the pieces together that we hope will soon make real the long-anticipated vision of smaller piloted and unpiloted vehicles providing a variety of services around cities and in rural areas,” said Robert Pearce, NASA’s associate administrator for aeronautics, in a statement.

The idea is to bring companies to collaborate and also give regulatory agencies a window into the technologies and how they may work in concert to bring air mobility to the masses in the coming years.

“Our partnership with the FAA will be a key factor in the successful and safe outcomes for industry that we can expect from conducting these series of Grand Challenges during the coming years,” Pearce said, in a statement.

Getting the agreements signed are the first step in a multi-stage process that will culminate in the challenge’s official competition in 2022. There are preliminary technological tests that will take place this year.

“We consider this work as a risk reduction step toward Grand Challenge 1,” said Starr Ginn, NASA’s Grand Challenge lead. “It is designed to allow U.S. developed aircraft and airspace management service providers to essentially try out their systems with real-world operations in simulated environments that we also will be flight testing to gain experience.”

Partnerships for the challenge fall into three categories:

  • Developmental Flight Testing: These are industry partners providing vehicles that will fly in the challenge.
  • Developmental Airspace Simulation: Companies will test traffic management services in NASA-designed airspace simulations for urban air mobility.
  • Vehicle Provider Information Exchange: These partners are also working closely with NASA to provide information about their vehicles so NASA can prep them for possible flight activities that will occur during the 2022 Grand Challenge.

The Grand Challenge is managed through NASA’s Advanced Air Mobility project, which was established in the agency’s Aeronautics Research Mission Directorate to coordinate urban air mobility activities.

Companies participating in the challenge include:

  • Joby Aviation of Santa Cruz, California
  • AirMap, Inc., of Santa Monica, California
  • AiRXOS, Inc., of Chantilly, Virginia
  • ANRA Technologies, Inc., of Chantilly, Virginia
  • ARINC Inc., of Cedar Rapids, Iowa
  • Avision, Inc., of Santa Monica, California
  • Ellis & Associates, Los Angeles, California, a wholly owned subsidiary of Lacuna Technologies, Palo Alto, California
  • GeoRq LLC of Holladay, Utah
  • Metron Aviation, Inc., of Herndon, Virginia
  • OneSky Systems Inc., of Exton, Pennsylvania
  • Uber Technologies, Inc., of San Francisco, California
  • The University of North Texas of Denton, Texas
  • Bell Textron of Ft. Worth, Texas
  • The Boeing Company of Chantilly, Virginia
  • NFT Inc., of Mountain View, California
  • Prodentity, LLC of Corrales, New Mexico
  • Zeva Inc., of Spanaway, Washington

Waymo brings in $2.25 billion from outside investors, Alphabet

By Kirsten Korosec

Waymo, the former Google self-driving car project that is now a business under Alphabet, said Monday it raised $2.25 billion in a fundraising round led by Silver Lake, Canada Pension Plan Investment Board, and Mubadala Investment Company.

This is the company’s first external investment, which also included Magna, Andreessen Horowitz, and AutoNation and its parent company Alphabet.

“We’ve always approached our mission as a team sport, collaborating with our OEM and supplier partners, our operations partners, and the communities we serve to build and deploy the world’s most experienced driver,” said Waymo CEO John Krafcik said in blog the company posted Monday. “Today, we’re expanding that team, adding financial investors and important strategic partners who bring decades of experience investing in and supporting successful technology companies building transformative products. With this injection of capital and business acumen, alongside Alphabet, we’ll deepen our investment in our people, our technology, and our operations, all in support of the deployment of the Waymo Driver around the world.”

The round follows a flurry of activity in the past year that illustrated Waymo efforts to ramp up into a commercial enterprise. Much of the activity has focused on mapping and testing its autonomous vehicle technology in new locales such as Florida while continuing to expand its core fleet in Mountain View, Calif., and the Phoenix area.

Waymo has long focused on testing and eventually launching an on-demand ride-hailing service called Waymo One using its autonomous vehicles in the suburbs surrounding Phoenix. In October, Waymo began pulling safety drivers out of some of the vehicles on its Waymo One service.

But here have been other expansions, including a focus on finding new business applications for its autonomous vehicle technology such as delivery and trucking and even a plan to start selling its custom lidar sensors, to companies outside of self-driving cars such as robotics, security and agricultural technology.

In January, Waymo announced that it would begin mapping and eventually testing its autonomous long-haul trucks in Texas and parts of New Mexico.

Waymo has also expanded through acquisitions and partnerships. Waymo acquired in December a U.K. company called Latent Logic that spun out of Oxford University’s computer science department. The company uses a form of machine learning called imitation learning that could beef up Waymo’s simulation efforts. The acquisition marked the launch of Waymo’s first European engineering hub, which will be in Oxford, U.K.

Last spring, Waymo hired more than a dozen engineers from Anki, the robotics startup that shut down in April. The 13 robotics experts includes Anki’s  co-founder and former CEO Boris Sofman, who is leading engineering in the autonomous trucking division.

Waymo also locked in an exclusive partnership with Renault and Nissan to research how commercial autonomous vehicles might work for passengers and packages in France and Japan.

Google, Toyota invest in WhereIsMyTransport to map transport in emerging cities

By Mike Butcher

In emerging markets, up to 80% of the population may have to rely on informally-run public transport to get around. Literally, privately-run buses and cars. But journey-planning apps that work well for commuters in developed markets like New York or London do not work well in emerging markets, which is why you can’t just flip open an app like Citymapper in Lagos, Nigeria. Furthermore, mobility is a fundamental driver of social, political, and economic growth and if you cannot get around then you can’t grow as a country. So it’s pretty important for these emerging economies.

WhereIsMyTransport specialises in mapping these formal and informal public transport networks in emerging markets. They have mapped 34 cities in Africa and are mapping cities in India, Southeast Asia, and Latin America. Its integrated mobility API includes proprietary algorithms, features, and capabilities designed for complex transit networks in these emerging markets.

It’s now raised a $7.5 million Series A funding round led by Liil Ventures, that also includes returning investors Global Innovation Fund and Goodwell Investments, plus new strategic investment from Google, Nedbank, and Toyota Tsusho Corporation (TTC).

The platform now has more than 750,000 km of routes in 39 cities and the new strategic investment will drive further international expansion.

Devin de Vries, said: “We make the invisible visible, by collecting all kinds of data related to public transport and turning the data into information that can be shared with the people who need it most. In emerging markets, the mobility ecosystem is complex; informal public transport doesn’t behave like formal public transport. Data and technology solutions that work well in London or San Francisco wouldn’t make anything like the same impact, if any at all, in the cities where we work. Our solutions are designed specifically to overcome these contextual challenges.”

Mr. Masato Yamanami, Automotive Division’s CEO of Toyota Tsusho Corporation. “Our division’s global network, that covers 146 countries, is primarily focused on new emerging countries where people rely on informal public transport. Through strategic collaboration with WhereIsMyTransport, we will establish better and more efficient mobility services that help to resolve social challenges and contribute to the overall economic development of nations, primarily emerging nations.”

Alix Peterson Zwane, Chief Executive Officer, Global Innovation Fund said: “Informal and often unreliable mass transit is a significant problem that disproportionately affects poor people. We are excited to continue to work with WhereIsMyTransport to make mass transportation in emerging cities more accessible and more efficient.”

The fundraising landscape is shifting in 2020

By Walter Thompson
Elizabeth Yin Contributor
Elizabeth Yin is a founder and general partner of Hustle Fund, a pre-seed venture capital fund that invests in hilariously early software startups across the U.S., Canada and Southeast Asia.

When I was a founder many years ago, I felt like I heard constantly conflicting advice and opinions on raising money for my startup.

It’s easy to raise. It’s hard to raise. If it’s easy to raise, you should raise a LOT of money. You should raise a little money. You should try to go for a high valuation. You should raise at a “normal valuation” so it doesn’t bite you later.

It was hard to understand what was going on and what I should actually do.

Many years later, now as a VC, it turned out that most of the things you hear people say about fundraising are generally true and generally good pieces of advice. All at the same time. Even when these ideas conflict. How is that possible?

Because, like anything else, different pieces of advice are apt for different types of companies and founders. Today’s fundraising landscape is particularly an interesting time of bifurcation that’s worth laying out in detail.

https://techcrunch.com/2020/02/26/qa-with-hustle-funds-elizabeth-yin-on-the-2020-fundraising-landscape/

For some founders, it’s never been an easier time to raise

In the San Francisco Bay Area, if you’re a founder who has a “well-branded” resume, it’s a fantastic time to raise money at the earliest stages. It almost doesn’t even matter what company you’re building. You will get funding. You could be leaving Pinterest to start a company. Maybe you went to MIT and then did a 10-year stint at Google. Or maybe you were a former YC founder who is taking a second crack at a company. Or maybe you sold your last business for $10 million. If you did any of these things, it’s a great time.

For these founders, I’m seeing massive party rounds here in San Francisco — $3 million – $5 million seed rounds. Sometimes $10 million rounds right out of the gates! My friend, a fantastic serial entrepreneur with an exit, raised $8 million recently at $30 million+ post-money valuation with only a very early version of a product. Investors literally threw money at her and her round was oversubscribed.

SaaS is hot

And then, even if you don’t fit this profile, you can still generate a lot of heat on your fundraise. In the last few months, VCs have become very concerned about profitability. It’s not enough to be working on a fast-growth startup anymore. In part, we’ve all seen big-name startups that were once the darlings of Silicon Valley flounder in the late-stage markets because of high burn rates and being nowhere close to profitability.

And VCs have gotten quite scared. Almost to a fault.

So, I’m seeing companies at the Series A and Series B stages with 30% MoM growth that were popular before now struggle to raise their next rounds because they are not profitable. The feedback they receive is to “come back when you’re profitable or really close to it.” This mentality change has had a huge impact on marketplaces and e-commerce companies — companies that don’t have predictable repeat customers or high margins.

On the flip side, SaaS companies have become the new darlings VCs have gone gaga for. SaaS businesses have repeat customers, strong lifetime values and upsell potentials. They are capital-efficient, high-margin businesses. And if you are growing well as a differentiated (differentiated being a key word) SaaS company, you probably have many VCs knocking on your door — at all stages early and late even if you are not on the coasts.

For most founders, it’s still challenging (as always) to raise money

For everyone else, after reading news stories about such large fundraises, it can be confusing to understand why their own fundraise is so challenging. Why is it so hard for me to raise money?

It turns out that fundraising is still hard for everyone else. Even in the Bay Area, if you don’t fall into the categories above, it’s hard. People often erroneously think that just being in San Francisco will miraculously make fundraising easier. That’s far from true. There are certainly many people who get funded there, but there are also just many more startups in San Francisco than elsewhere. Outside the SF Bay Area, it’s even harder to raise. So we have a weird Goldilocks and the Three Bears situation. Some companies are really hot. Most are really cold.

The press mostly writes about the hot deals, like companies that raise $5 million seed rounds and went through YC. After all, no one wants to read about how someone’s fundraising process is going horribly — that’s just not a news story that sells. So now, everyone thinks Silicon Valley is littered with gold just by reading the news. The reality is that San Francisco mostly has poop on the ground and a small number of people will find a Benjamin once in a while.

Valuations are all over the board

I’m seeing valuations well above $10 million post — even $20 million post for hot seed-stage companies. And then for companies that are cold, the valuations are where they’ve always been — largely anchored based on geography. As low as $1 million post within U.S. and Canada. And it can even be lower elsewhere globally.

So when people ask me what a fair valuation is, it’s a really hard question. It depends on where you are, what you’re working on and what your background is. Many people think valuations are based on a company’s progress. That’s just not how it works. Valuations are based on supply and demand. Supply of your fundraising round. And investor demand for your fundraising round. Valuations go up when more investors are interested in investing. There’s no such thing as a “typical” valuation.

Everyone’s mental model will be shifting

Friends outside of Silicon Valley often ask me if I think this time VCs will favor profitable companies over fast growth.

I think the answer is VCs would love to back profitable companies with fast growth.

(That, of course, begs the question in this day and age with other debt or revenue-based financing options why such a company would raise a lot of VC money, but that’s besides the point.)

That said, I do think that in this new era we are entering in 2020, companies that focus on profitability will separate the winners from the losers in the next few years. Thriftier founders will win.

Now, here’s the irony. As we go into this new age where frugality is a strength, I think that the startup journey will actually be harder for the founders who are able to raise their large seed rounds so quickly at high valuations. From past experience, I’ve found that founders who can raise easily in a first raise really struggle later on subsequent raises because they don’t know just how hard a fundraise can be. Moreover, founders who can raise large amounts in the beginning tend to be less frugal and often burn through too much cash before their progress really kicks in. In contrast, overlooked founders who have often found it challenging to raise know that they need to be frugal by default, because it’s unclear how hard the next fundraise will be. These founders know they need to make the business work with or without investors.

The ironic twist is that investors throw money at founders with particular resumes because they believe those founders will be the most likely to succeed with big exits. A strength can quickly turn into a weakness in this market.

My hope for all founders in 2020

My hope for all founders is that they focus on staying thrifty, watch cashflow and chip away at getting to profitability so they can own their own destiny. By focusing on customers, instead of investors, you can sell more and sell quicker. Ultimately, the end goal for a company is to be able to serve customers sustainably and effect change in our larger society.

And that’s what I wish all startups find in 2020, so they don’t have to care about the whims and fancies of investors as they change with the times.


Read our extended interview with Elizabeth Yin (Extra Crunch membership required).

Particle lays off 10% of staff and co-founder departs after ‘turbulent period’

By Zack Whittaker

San Francisco-based startup Particle was one of the rising stars in the Internet of Things space, raising more than $81 million to date on the promise of helping to manage and secure the next generation of connected devices.

But the company is only now emerging from what its co-founder and chief executive Zach Supalla called a “turbulent period,” prompting layoffs and cost-cutting to help stay afloat, TechCrunch has learned.

Founded in 2012, Particle snagged $40 million in its Series C fundraise last October from big industrial investors including Qualcomm Ventures and Energy Impact Partners, signaling strong support for the company’s mission. The startup pitches its flagship platform as an all-in-one solution to manage and secure IoT devices with encryption and security, but also scalability and data autonomy.

But a recent email sent by Supalla to his staff — obtained by TechCrunch — shows the company is course-correcting after a recent revenue miss.

The email, which the company confirmed was sent by the chief executive, said Particle laid off 14 staff earlier this month, representing about 10% of the company. The layoffs of both engineering and support staff came just weeks after co-founder and chief technology officer Zachary Crockett quietly departed the company for “unrelated” reasons, said Supalla. (Crockett did not respond to a request for comment.)

According to Supalla’s email to staff, Particle’s revenue goal in 2019 was $16 million but it ended the year with $10.3 million. Supalla cited, among other things, “operational challenges” with the business that he said kept the company “from executing as well as we could.”

Supalla said that the company still has a “flush” bank account with more than $30 million in the bank, but the company’s current burn rate of $2 million per month is “uncomfortably high.”

“We would only have until early 2021 to prepare for the next stage of financing the company,” he said.

The email added that the company is bringing on $10 million in venture debt, but Supalla told TechCrunch that the deal is “still in progress.” Particle is aiming to reduce its burn rate to about $1.6 million per month, which Supalla’s email said would be achievable with the recent layoffs but also reducing discretionary budgets, including marketing.

The cost-cutting will “put us in a position of financial strength,” the email said, adding that the company has “no intentions” of further layoffs.

Although the 14 staff have been given severance, one source said that some are still waiting for the payouts — some two weeks after the announcement — which Supalla confirmed in an email. TechCrunch also learned that former staff were asked to sign non-disclosure agreements. Supalla told TechCrunch that these agreements come with non-disparagement clauses, but that anyone laid off that wanted to be released from the non-disparagement terms would be.

Supalla’s email is hardly the death knell for the company, but questions remain about its revenue targets and its efforts to reduce its monthly burn rate. The chief executive’s email said, candidly, that while layoffs can signal financial duress, they’re all too often made too late and “as a last resort.”

“That’s not what’s happening here,” said Supalla. “We have plenty of money in the bank and are making prudent cuts to strengthen the business.”


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EV fleet management gets another venture-backed contender as Electriphi raises $3.5 million

By Jonathan Shieber

Electriphi, a provider of charging management and fleet monitoring software for electric vehicles, has joined the scrum of startups looking to provide services to the growing number of electric vehicle fleets in the U.S.

The San Francisco-based company has just raised $3.5 million in seed funding from investors including Wireframe Ventures, the Urban Innovation Fund, and Blackhorn Ventures. Lemnos Labs and Acario Innovation also participated in the round.

Electriphi’s pitch has resonated with school districts. It counts the Twin Rivers Unified School District in Sacramento, Calif. as one of its benchmark customers.

“Twin Rivers Unified School District has the largest fleet of electric school buses in North America, and our ambition is to transition to a fully electric fleet in the coming years,” said Tim Shannon, transportation services director, Twin Rivers Unified School District, in a statement. “This is a significant undertaking, and we needed a trusted partner that could provide us state-of-the-art charging management and help us with data collection and monitoring.”

There are several companies pursuing this market — all with either a bit of a head start, significant corporate backers, or more capital. Existing offerings from EVConnect, GreenLots, GreenFlux, AmplyPower all compete with Electriphi.

The company is betting that the experience of co-founder, Muffi Ghadiali, a former senior director at ChargePoint who led hardware and software development for fast charging infrastructure, can sway customers. Joining Ghadiali is Sanjay Dayal, who previously worked at Agralogics, Tibco, Xamplify, Versata and Sybase

There’s also the sheer scale of the opportunity, which is likely to see multiple companies emerge as winners.

“There are millions of public and commercial fleet vehicles in the U.S. alone that we rely on daily for transportation, delivery and services, ” said Paul Straub, managing partner, Wireframe Ventures. “Many of these are beginning to consider electrification and the opportunity is tremendous.”

Alphabet takes the wind out of its Makani energy kites

By Frederic Lardinois

Google today announced that it is calling it quits on its efforts to build and monetize its Makani wind energy kites. Makani, which was founded in 2006, came into Google/Alphabet seven years ago as a Google X project. Last year, the company spun it out of X and made it a standalone Alphabet unit. Now, Makani’s time at Alphabet as an “Other Bet” is at an end. The company is still hoping to work with Shell, one of its earliest partners, to see how the technology can be used in another way, though.

“After considering many factors, I believe that the road to commercial viability is a much longer and riskier road than we’d hoped and that it no longer makes sense for Makani to be an Alphabet company,” says Astro Teller, captain of Moonshots at X and xhairman of the Makani board, in a statement. Teller, it’s worth noting, does not oversee Alphabet’s Other Bets.

“While it’s tempting to say that all climate-related ideas deserve investment, remaining clear-eyed and directing resources to the opportunities where we think we can have the greatest impact isn’t just good business; it’s essential when it comes to a problem as urgent as the climate crisis,” Teller added.

While at X/Alphabet, the team managed to get a 20kW demonstration project off the ground and expanded this to a unit capable of producing up to 600kW. Still, though, Alphabet clearly didn’t see a path forward to turning Makani into a viable (and profitable) project in the long run.

“Creating an entirely new kind of wind energy technology means facing business challenges as well as engineering challenges,” writes Fort Felker, who became the lead for Makani at X in 2015. “Despite strong technical progress, the road to commercialization is longer and riskier than hoped, so from today Makani’s time at Alphabet is coming to an end.”

Back in the day, when it first acquired Makani, Google probably wouldn’t have worried all that much about whether this project made good business sense. Those freewheeling times at Google are behind us, though, and, at this point, there is an expectation that even these forward-looking Other Bets have to become standalone businesses in the long run.

New Early Stage speakers to talk fundraising strategies, growth marketing and PR

By Jordan Crook

TC Early Stage SF goes down on April 28, and we are getting pretty damn excited about it!

The show will bring together 50+ experts across startup core competencies, such as fundraising, operations and marketing. We’ll hear from VCs on how to create the perfect pitch deck and how to identify the right investors for you. We’ll hear from lawyers on how to navigate the immigration process when hiring, and how to negotiate the cap table. And we’ll hear from growth hackers on how to build a high-performance SEO engine, and PR experts on how to tell your brand’s story.

And that’s just the tip of the iceberg.

Today, I’m pleased to announce four more breakout sessions.


Lo Toney

Toney is the founding managing partner of Plexo Capital, which was incubated and spun out from GV. Before Plexo, Toney was a partner with Comcast Ventures, where he led the Catalyst Fund, and then moved to GV where he focused on marketplace, mobile and consumer products. Toney also has operational experience, having served as the GM of Zynga Poker, the company’s largest franchise at the time.

Think Like a PM for VC Pitch Success

Your pitchdeck is not just a reflection of your business, it’s a product unto itself. Your startup’s success, and avoiding the end of your runway, depends on the conversion rate of that product. Hear from Plexo Capital founding partner Lo Toney about how thinking like a PM when crafting your pitch deck can produce outstanding results.


Krystina Rubino and Lindsay Piper Shaw

Shaw and Rubino are marketing consultants for Right Side Up, a growth marketing consultancy. Prior to Right Side Up, Shaw scaled podcast campaigns for brands like quip, Lyft and Texture, and has worked with brands like McDonald’s, Honda, ampm, and Tempur Sealy. Rubino has worked with companies across all stages and sizes, including Advil, DoorDash, P&G, Lyft and Stitch Fix.

Why You Need Podcasts in Your Growth Marketing Mix

Podcast advertising is widely viewed as a nascent medium, but smart companies know it can be a powerful channel in their marketing mix. Opportunity is ripe — get in early and you can own the medium, box out competitors and catapult your growth. Krystina Rubino and Lindsay Piper Shaw have launched and scaled successful podcast ad campaigns for early-stage startups and household name brands and will be sharing their strategies for companies to succeed in this often misunderstood channel.


Jake Saper

Jake Saper, the son of serial co-founders, has been obsessed with entrepreneurialism from a young age. His origin in venture capital started at Kleiner Perkins, and he moved on to become a partner at Emergence in 2014, where he became a Kauffman Fellow. He serves on the boards of Textio, Guru, Ironclad, DroneDeploy, and Vymo, and his self-described “nerdy love” of frameworks has only grown over the years.

When It Comes to Fundraising, Timing Is Everything

There are some shockingly common timing mistakes founders make that can turn an otherwise successful fundraise into a failure. We’ll talk through how to avoid them and how to sequence efforts from the time you close your seed to ensure you find the right partner (at the right price!) for Series A and beyond.


April Conyers

Conyers has been in the communications industry for 15 years, currently serving as the senior director of Corporate Communications at Postmates . Before Postmates, Conyers served as a VP at Brew PR, working with clients like Automattic, NetSuite, Oracle, Doctor on Demand and about.me. During that time, she also found herself on BI’s “The 50 Best Public Relations People In The Tech Industry In 2014” list.

The Media Is Misunderstood, But Your Company Shouldn’t Be

With the media industry in a state of flux, navigating the process of telling your story can be confusing and overwhelming. Hear from Postmates Senior Director of Corporate Communication April Conyers on how startups should think about PR, and how to get your message across in a hectic media landscape.


Early Stage SF goes down on April 28, with more than 50 breakout sessions to choose from. However, don’t worry about missing a breakout session, because transcripts from each will be available to show attendees. And most of the folks leading the breakout sessions have agreed to hang at the show for at least half the day and participate in CrunchMatch, TechCrunch’s great app to connect founders and investors based on shared interests.

Here’s the fine print. Each of the 50+ breakout sessions is limited to around 100 attendees. We expect a lot more attendees, of course, so signups for each session are on a first-come, first-serve basis. Buy your ticket today and you can sign up for the breakouts we are announcing today, as well as those already announced. Pass holders will also receive 24-hour advance notice before we announce the next batch. (And yes, you can “drop” a breakout session in favor of a new one, in the event there is a schedule conflict.)

So get your TC Early Stage: San Francisco pass today, and get the inside track on the sessions we announced today, as well as the ones to be announced in the coming weeks.

Possible sponsor? Hit us up right here.

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