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Element Ventures pulls in $130M to double-down on the fintech enterprise trend

By Mike Butcher

With the rise of Open Banking, PSD2 Regulation, insurtech and the whole, general fintech boom, tech investors have realized there is an increasing place for dedicated funds which double down on this ongoing movement. When you look at the rise of banking-as-a-service offerings, payments platforms, insurtech, asset management and infrastructure providers, you realize there is a pretty huge revolution going on.

European fintech companies have raised $12.3 billion in 2021 according to Dealroom, but the market is still wide open for a great deal more funding for B2B fintech startups.

So it’s no surprise that B2B fintech-focused Element Ventures has announced a $130 million fund to double down on this new fintech enterprise trend.

Founded by financial services veterans Stephen Gibson and Michael McFadgen, and joined by Spencer Lake (HSBC’s former vice chairman of Global Banking and Markets), Element is backed by finance-oriented LPs and some 30 founders and executives from the sector.

Element says it will focus on what it calls a “high conviction investment strategy,” which will mean investing in only around a handful of companies a year (15 for the fund in total) but, it says, providing a “high level of support” to its portfolio.

So far it has backed B2B fintech firms across the U.K. and Europe, including Hepster (total raised $10 million), the embedded insurance platform out of Germany which I recently reported on; Billhop (total raised $6.7 million), the B2B payment network out of Sweden; Coincover (total raised $11.6 million), a cryptocurrency recovery service out of the U.K.; and Minna (total raised $25 million), the subscription management platform out of Sweden.

Speaking to me over a call, McFadgen, partner at Element Ventures, said: “Stephen and I have been investing in B2B fintech together for quite a long time. In 2018 we had the opportunity to start element and Spencer came on board in 2019. So Element as an independent venture firm is really a continuation of a strategy we’ve been involved in for a long time.”

Gibson added: “We are quite convinced by the European movement and the breakthrough these fintech and insurtech firms in Europe are having. Insurance has been a desert for innovation and that is changing. And you can see that we’re sort of trying to build a network around companies that have those breakthrough moments and provide not just capital but all the other things we think are part of the story. Building the company from A to C and D is the area that we try and roll our sleeves up and help these firms.”

Element says it also will be investing in the U.S. and Asia.

Untitled Ventures joins the scramble for Russian & Eastern European startups with a $118M warchest

By Mike Butcher

Sorry Mr. Putin, but there’s a race on for Russian and Eastern European founders. And right now, those awful capitalists in the corrupt West are starting to out-gun the opposition! But seriously… only the other day a $100 million fund aimed at Russian speaking entrepreneurs appeared, and others are proliferating.

Now, London-based Untitled Ventures plans to join their fray with a €100 million / $118M for its second fund to invest in “ambitious deep tech startups with eastern European founders.”

Untitled says it is aiming at entrepreneurs who are looking to relocate their business or have already HQ’ed in Western Europe and the USA. That’s alongside all the other existing Western VCs who are – in my experience – always ready and willing to listen to Russian and Eastern European founders, who are often known for their technical prowess.

Untitled is going to be aiming at B2B, AI, agritech, medtech, robotics, and data management startups with proven traction emerging from the Baltics, CEE, and CIS, or those already established in Western Europe

LPs in the fund include Vladimir Vedeenev, a founder of Global Network Management>. Untitled also claims to have Google, Telegram Messenger, Facebook, Twitch, DigitalOcean, IP-Only, CenturyLinks, Vodafone and TelecomItaly as partners.

Oskar Stachowiak, Untitled Ventures Managing Partner, said: “With over 10 unicorns, €1Bn venture funding in 2020 alone, and success stories like Veeam, Semrush, and Wrike, startups emerging from the fast-growing regions are the best choice to focus on early-stage investment for us. Thanks to the strong STEM focus in the education system and about one million high-skilled developers, we have an ample opportunity to find and support the rising stars in the region.”

Konstantin Siniushin, the Untitled Ventures MP said: “We believe in economic efficiency and at the same time we fulfill a social mission of bringing technological projects with a large scientific component from the economically unstable countries of the former USSR, such as, first of all, Belarus, Russia and Ukraine, but not only in terms of bringing sales to the world market and not only helping them to HQ in Europe so they can get next rounds of investments.”

He added: “We have a great experience accumulated earlier in the first portfolio of the first fund, not just structuring business in such European countries as, for example, Luxembourg, Germany, Great Britain, Portugal, Cyprus and Latvia, but also physically relocating startup teams so that they are perceived already as fully resident in Europe and globally.”

To be fair, it is still harder than it needs to be to create large startups from Eastern Europe, mainly because there is often very little local capital. However, that is changing, with the launch recently of CEE funds such as Vitosha Venture Partners and Launchub Ventures, and the breakout hit from Romania that was UIPath.

The Untitled Ventures team:
• Konstantin Siniushin, a serial tech entrepreneur
• Oskar Stachowiak, experienced fund manager
• Mary Glazkova, PR & Comms veteran
• Anton Antich, early stage investor and an ex VP of Veeam, a Swiss cloud data management company
acquired by Insight Venture Partners for $5bln
• Yulia Druzhnikova, experienced in taking tech companies international
• Mark Cowley, who has worked on private and listed investments within CEE/Russia for over 20 years

Untitled Ventures portfolio highlights – Fund I
Sizolution: AI-driven size prediction engine, based in Germany
Pure app – spontaneous and impersonal dating app, based in Portugal
Fixar Global –  efficient drones for commercial use-cases, based in Latvia,
E-contenta – based in Poland
SuitApp – AI based mix-and-match suggestions for fashion retail, based in Singapore
• Sarafan.tech, AI-driven recognition, based in the USA
Hello, baby – parental assistant, based in the USA
Voximplant – voice, video and messaging cloud communication platform, based in the USA (exited)

Bielefeld survey highlights an emerging B2B, crypto, deep tech ecosystem

By Mike Butcher

Welcome to the city survey of Bielefeld, Germany, part of our ongoing survey into European cities. If you’d like your city featured, just fill in this form and add your city name. Once we have enough entries from a city, we will put your city on TechCrunch!

According to local media reports, Bielefeld’s has experienced a tech boom in recent years, with accelerators like the local Founders Foundation (backed by the Bertelsmann Foundation) and Garage 33 (at the University of Paderborn) attracting a new wave of young company founders to the East Westphalia-Lippe region.

Notable startups to emerge include Semalytix, Valuedesk, Zahnarzt-Helden, StudyHelp, PartWorks and AMendate.

Unfortunately, Bielefeld suffers from the same ailment the rest of Germany is subject to: Most startups gravitate to Berlin, followed by Munich, then Hamburg (according to an initiative from UnternehmerTUM in Munich).

However, as Business Punk magazine found earlier this year, the Ostwestfalen-Lippe region in northern North Rhine-Westphalia is home to some of Germany’s biggest companies. That means startups aiding large organizations to digitize post-pandemic have ready access to some of Germany’s largest companies and institutions.

Our survey respondents pointed out that the region is strong in sectors such as B2B because of the many old-school B2B companies in the manufacturing area. There is fairly ready access to many large family offices such as Dr. Oetker, Miele, CLAAS, Schüco and Bertelsmann, so there is a lot of capital available.

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“The region has a good momentum for startups in general, [largely] because of Founders Foundation. At the same time, them being the only institutional driver leads to a certain monoculture,” said one.

Deep tech technologies are a feature of the ecosystem, but there are “almost no B2C or direct-to-consumer” startups, said another respondent.

Commenting on the investment scene in the city, survey respondents said investors have “strong bonds to the industry and Mittelstand.” However, another commented that there are “only very few local investors with NRW or OWL focus like EnjoyVenture (Technologiefonds OWL), but not much more.”

That said, companies get decent attention from “national” investors, and Founders Foundation has really boosted the scene in the region. Angels are also becoming more active, and “there is a strong business angel community in Bielefeld who have been really supportive of the new startup scene.”

We surveyed:

Jonathan Maycock, co-founder and CEO, margin

Louis Schulze, ecosystem development manager, Founders Foundation

Stefan Trockel, founder and CEO, Mercury.ai

Jasper Steinlechner, CTO, Pektogram

Victoria Erdbrügger, co-founder and managing director, circuly

Manuel Rüsing, CTO, Synctive

Conner Kuhlmeyer, founder, reportio

Miriam Kleiner, talent acquisition manager, Founders Foundation

 


Jonathan Maycock, co-founder and CEO, margin

Which sectors is Bielefeld’s tech ecosystem strong in? What are you most excited by? What does it lack?
We are strong in the cryptotrading ecosystem. We are most excited by the adoption of Bitcoin as a financial asset by corporates and institutions as well as the ongoing network effect and adoption by the masses. We need to add support for DeFi trading venues alongside the centralized exchanges we already support.

Which are the most interesting startups in your city?
Semalytix, Zahnarzt-Helden, Coindex and Valuedesk.

What is the tech investment scene like in Bielefeld? What’s their focus?
Since Founders Foundation started in Bielefeld in 2016 the startup scene has exploded. We joined the first accelerator and since then 24 startups have been founded and come through its programs. There is a strong business angel community in Bielefeld that has been really supportive of the new startup scene.

With the shift to remote working, do you think will people stay in Bielefeld, move out, or will people move in?
We switched completely to home office once the pandemic got underway. For us, it has worked really well and we now have three employees who work outside of Bielefeld. Everything is more flexible now.

Who are the key startup people in your city (e.g., investors, founders, lawyers, designers, etc.)?
Sebastian Borek (CEO of the Founders Foundation), Eduard R. Doerrenberg (managing director, Dr. Wolff Group).

Where do you think Bielefeld’s tech scene will be in five years?
As Bielefeld is in the heart of the German “Mittelstand”, there are huge opportunities for tech startups to help these large industries take a leap forward with technical solutions using AI, blockchain and other technologies. The city is well served by Bielefeld University, which turns out highly qualified CS graduates every year. Especially with the superb backing of the Founders Foundation, the startup ecosystem in Bielefeld has a bright future.

Louis Schulze, ecosystem development manager, Founders Foundation

Which sectors is Bielefeld’s tech ecosystem strong in? What are you most excited by? What does it lack?
B2B, deep tech technologies.

Controversial WhatsApp policy change hit with consumer law complaint in Europe

By Natasha Lomas

Facebook has been accused of multiple breaches of European Union consumer protection law as a result of its attempts to force WhatsApp users to accept controversial changes to the messaging platforms’ terms of use — such as threatening users that the app would stop working if they did not accept the updated policies by May 15.

The consumer protection association umbrella group, the Beuc, said today that together with eight of its member organizations it’s filed a complaint with the European Commission and with the European network of consumer authorities.

“The complaint is first due to the persistent, recurrent and intrusive notifications pushing users to accept WhatsApp’s policy updates,” it wrote in a press release.

“The content of these notifications, their nature, timing and recurrence put an undue pressure on users and impair their freedom of choice. As such, they are a breach of the EU Directive on Unfair Commercial Practices.”

After earlier telling users that notifications about the need to accept the new policy would become persistent, interfering with their ability to use the service, WhatsApp later rowed back from its own draconian deadline.

However the app continues to bug users to accept the update — with no option not to do so (users can close the policy prompt but are unable to decline the new terms or stop the app continuing to pop-up a screen asking them to accept the update).

“In addition, the complaint highlights the opacity of the new terms and the fact that WhatsApp has failed to explain in plain and intelligible language the nature of the changes,” the Beuc went on. “It is basically impossible for consumers to get a clear understanding of what consequences WhatsApp’s changes entail for their privacy, particularly in relation to the transfer of their personal data to Facebook and other third parties. This ambiguity amounts to a breach of EU consumer law which obliges companies to use clear and transparent contract terms and commercial communications.”

The organization pointed out that WhatsApp’s policy updates remain under scrutiny by privacy regulations in Europe — which it argues is another factor that makes Facebook’s aggressive attempts to push the policy on users highly inappropriate.

And while this consumer-law focused complaint is separate to the privacy issues the Beuc also flags — which are being investigated by EU data protection authorities (DPAs) — it has called on those regulators to speed up their investigations, adding: “We urge the European network of consumer authorities and the network of data protection authorities to work in close cooperation on these issues.”

The Beuc has produced a report setting out its concerns about the WhatsApp ToS change in more detail — where it hits out at the “opacity” of the new policies, further asserting:

“WhatsApp remains very vague about the sections it has removed and the ones it has added. It is up to users to seek out this information by themselves. Ultimately, it is almost impossible for users to clearly understand what is new and what has been amended. The opacity of the new policies is in breach of Article 5 of the UCTD [Unfair Contract Terms Directive] and is also a misleading and unfair practice prohibited under Article 5 and 6 of the UCPD [Unfair Commercial Practices Directive].”

Reached for comment on the consumer complaint, a WhatsApp spokesperson told us:

“Beuc’s action is based on a misunderstanding of the purpose and effect of the update to our terms of service. Our recent update explains the options people have to message a business on WhatsApp and provides further transparency about how we collect and use data. The update does not expand our ability to share data with Facebook, and does not impact the privacy of your messages with friends or family, wherever they are in the world. We would welcome an opportunity to explain the update to Beuc and to clarify what it means for people.”

The Commission was also contacted for comment on the Beuc’s complaint — we’ll update this report if we get a response.

The complaint is just the latest pushback in Europe over the controversial terms change by Facebook-owned WhatsApp — which triggered a privacy warning from Italy back in January, followed by an urgency procedure in Germany in May when Hamburg’s DPA banned the company from processing additional WhatsApp user data.

Although, earlier this year, Facebook’s lead data regulator in the EU, Ireland’s Data Protection Commission, appeared to accept Facebook’s reassurances that the ToS changes do not affect users in the region.

German DPAs were less happy, though. And Hamburg invoked emergency powers allowed for in the General Data Protection Regulation (GDPR) in a bid to circumvent a mechanism in the regulation that (otherwise) funnels cross-border complaints and concerns via a lead regulator — typically where a data controller has their regional base (in Facebook/WhatsApp’s case that’s Ireland).

Such emergency procedures are time-limited to three months. But the European Data Protection Board (EDPB) confirmed today that its plenary meeting will discuss the Hamburg DPA’s request for it to make an urgent binding decision — which could see the Hamburg DPA’s intervention set on a more lasting footing, depending upon what the EDPB decides.

In the meanwhile, calls for Europe’s regulators to work together to better tackle the challenges posed by platform power are growing, with a number of regional competition authorities and privacy regulators actively taking steps to dial up their joint working — in a bid to ensure that expertise across distinct areas of law doesn’t stay siloed and, thereby, risk disjointed enforcement, with conflicting and contradictory outcomes for Internet users.

There seems to be a growing understanding on both sides of the Atlantic for a joined up approach to regulating platform power and ensuring powerful platforms don’t simply get let off the hook.

 

Germany’s VC industry is ready to take off, but bureaucrats need to release the handbrake

By Annie Siebert
Uwe Horstmann Contributor
Uwe Horstmann is co-founder and partner of the Berlin-based venture capital firm Project A Ventures.

The narrative suggests that Germany is lagging behind its European neighbors when it comes to building a globally competitive venture capital market. But I think that the next five years will be huge for the German venture capital sector, and that the signs for the future are very positive.

German startups raised €6.4 billion in 2020. That’s more than France, which came in at €5.7 billion. Another upside is that there is a healthy blend of local and international investment in the early-stage market. German funds dominate investments in German startups at the seed and Series A stages. As companies grow, overseas investment plays a huge part — half of the deals exceeding $50 million funding rounds are led entirely by foreign investors, while only 5% are run by German investors and 45% see a mix of foreign and domestic investors at the cap table.

I think this is where the German VC market needs to be right now. Great innovation is being sourced and backed by local funds. As these companies grow and become winners, they attract the best investors from around the globe, enabling the companies to internationalize from a German base, and the early-stage VCs reap the rewards and continue investing in local German talent. As the market matures, I am confident we will see more German VC money invested at the growth stages.

And the outlook is favorable. The German market is thriving. Even the pandemic did little to impact this fundamentally positive trend for the technology sector.

The German market is thriving. Even the pandemic did little to impact this fundamentally positive trend for the technology sector.

In addition to the growing level of both local and international investment into German tech, policymakers have created better conditions for startups and VC funds to thrive in Germany.

The German Federal Government launched the €10 billion Future Fund and has committed additional funds to the Deep Tech Future Fund. Not only does this immediately inject more capital into the market at the growth stage, but it also indicates that Germany is “open for business.” It sends a clear signal to the rest of the world that Germany understands the link between innovation and tangible improvements in society. It is a powerful and welcome indicator to funds from around the world.

Germany is incredibly attractive to tech talent, in addition to investors. More and more tech workers wish to relocate to Germany, with the welfare state providing a model for the future.

The long term looks good, too. Germany is famous the world over for its manufacturing and engineering sector. Germany is one of the few countries that still generates foreign trade surpluses through local production. Manufacturing and engineering are still yet to experience a massive leap in innovation. Therefore, German startups are extremely well positioned to benefit from the increasing activity in “Industry 4.0” innovation, with talent from Germany’s manufacturing heartland poised to blend with the ever-increasing pool of tech talent in Berlin and Munich.

Share options and spinoffs are the Achilles’ heel of the German startup scene

I think German VC and the tech market are due to take off and achieve new heights. However, there are two areas that need to be substantially improved: employee stock options and the regulations around spinoffs.

Germany is choking on its bureaucracy, and that threatens innovation. Tesla’s new Gigafactory is the latest example of how bureaucratic processes can slow everything down.

For startups in Germany, reforms on employee stock option plans (ESOP) are urgently needed for startup workers to benefit from the success of their companies and for the startup ecosystem to grow on its own.

The current bill to offer better tax benefits does not reflect the needs of the industry. For example, tax relief is only available for employees in companies that are younger than 10 years. If an employee changes employers, they must pay tax on company shares beforehand, which poses a significant risk of bankruptcy. Because many startups are still not profitable after 10 years, taxes should only be due when an employee makes an actual profit from their holdings — when they sell the shares. In the end, startups simply won’t offer new ESOPs to their employees.

Another example: spinoffs. Germany has the highest number of patent applications in Europe. However, startups often are not able to turn innovative technology into product-market fit. Spinoffs from the leading German research institutes have had a hard time gaining a foothold because they have been imposed with high institutional fixed and license costs when spinning off. Here, Germany needs to be more flexible and give startups the space and funding they need.

Lower the fixed costs and the enormous bureaucracy founders face when spinning off. Investors have to render more operational and organizational support for researchers-turned-founders. Furthermore, VCs must have the courage to invest more in innovative ideas and technologies that may take a bit longer to thrive. BioNTech is the best example of how this pays off in the long run.

More German unicorns?

As it stands, 2021 has already seen numerous new unicorns from Germany — with Personio, Mambu, Sennder, Gorillas and Trade Republic achieving billion-dollar valuations — and there are almost certainly more to come.

If regulators finally cut through the red tape around stock options and spinoffs, the German tech and VC industry will achieve new heights. I look forward to positive changes and an entire roster of German unicorns being minted in the years to come.

Swiss Post acquires e2e encrypted cloud services provider, Tresorit

By Natasha Lomas

Swiss Post, the former state-owned mail delivery firm which became a private limited company in 2013, diversifying into logistics, finance, transport and more (including dabbling in drone delivery) while retaining its role as Switzerland’s national postal service, has acquired a majority stake in Swiss-Hungarian startup Tresorit, an early European pioneer in end-to-end-encrypted cloud services.

Terms of the acquisition are not being disclosed. But Swiss Post’s income has been falling in recent years, as (snailmail) letter volumes continue to decline. And a 2019 missive warned its business needed to find new sources of income.

Tresorit, meanwhile, last raised back in 2018 — when it announced an €11.5M Series B round, with investors including 3TS Capital Partners and PortfoLion. Other backers of the startup include business angels and serial entrepreneurs like Márton Szőke, Balázs Fejes and Andreas Kemi. According to Crunchbase Tresorit had raised less than $18M over its decade+ run.

It looks like a measure of the rising store being put on data security that a veteran ‘household’ brand like Swiss Post sees strategic value in extending its suite of digital services with the help of a trusted startup in the e2e encryption space.

‘Zero access’ encryption was still pretty niche back when Tresorit got going over a decade ago but it’s essentially become the gold standard for trusted information security, with a variety of players now offering e2e encrypted services — to businesses and consumers.

Announcing the acquisition in a press release today, the pair said they will “collaborate to further develop privacy-friendly and secure digital services that enable people and businesses to easily exchange information while keeping their data secure and private”.

Tresorit will remain an independent company within Swiss Post Group, continuing to serve its global target regions of EU countries, the UK and the US, with the current management (founders), brand and service also slated to remain unchanged, per the announcement.

The 2011-founded startup sells what it brands as “ultra secure” cloud services — such as storage, file syncing and collaboration — targeted at business users (it has 10,000+ customers globally); all zipped up with a ‘zero access’ promise courtesy of a technical architecture that means Tresorit literally can’t decrypt customer data because it does not hold the encryption keys.

It said today that the acquisition will strengthen its business by supporting further expansion in core markets — including Germany, Austria and Switzerland. (The Swiss Post brand should obviously be a help there.)

The pair also said they see potential for Tresorit’s tech to expand Swiss Post’s existing digital product portfolio — which includes services like a “digital letter box” app (ePost) and an encrypted email offering. So it’s not starting from scratch here.

Commenting on the acquisition in a statement, Istvan Lam, co-founder and CEO of Tresorit, said: “From the very beginning, our mission has been to empower everyone to stay in control of their digital valuables. We are proud to have found a partner in Swiss Post who shares our values on security and privacy and makes us even stronger. We are convinced that this collaboration strengthens both companies and opens up new opportunities for us and our customers.”

Asked why the startup decided to sell at this point in its business development — rather than taking another path, such as an IPO and going public — Lam flagged Swiss Post’s ‘trusted’ brand and what he dubbed a “100% fit” on values and mission.

“Tresorit’s latest investment, our biggest funding round, happened in 2018. As usual with venture capital-backed companies, the lifecycle of this investment round is now beginning to come to an end,” he told TechCrunch.

“Going public via an IPO has also been on our roadmap and could have been a realistic scenario within the next 3-4 years. The reason we have decided to partner now with a strategic investor and collaborate with Swiss Post is that their core values and vision on data privacy is a 100% fit with our values and mission of protecting privacy. With the acquisition, we entered a long-term strategic partnership and are convinced that with Tresorit’s end-to-end encryption technology and the trusted brand of Swiss Post we will further develop services that help individuals and businesses exchange information securely and privately.”

“Tresorit has paved the way for true end-to-end encryption across the software industry over the past decade. With the acquisition of Tresorit, we are strategically expanding our competencies in digital data security and digital privacy, allowing us to further develop existing offers,” added Nicole Burth, a member of the Swiss Post Group executive board and head of communication services, in a supporting statement.

Switzerland remains a bit of a hub for pro-privacy startups and services, owing to a historical reputation for strong privacy laws.

However, as Republik reported earlier this year, state surveillance activity in the country has been stepping up — following a 2018 amendment to legislative powers that expanded intercept capabilities to cover digital comms.

Such encroachments are worrying but may arguably make e2e encryption even more important — as it can offer a technical barrier against state-sanctioned privacy intrusions.

At the same time, there is a risk that legislators perceive rising use of robust encryption as a threat to national security interests and their associated surveillance powers — meaning they could seek to counter the trend by passing even more expansive legislation that directly targets and or even outlaws the use of e2e encryption. (Australia has passed an anti-encryption law, for instance, while the UK cemented its mass surveillance capabilities back in 2016 — passing legislation which includes powers to compel companies to limit the use of encryption.)

At the European Union level, lawmakers have also recently been pushing an agenda of ‘lawful access’ to encrypted data — while simultaneously claiming to support the use of encryption on data security and privacy grounds. Quite how the EU will circle that square in legislative terms remains to be seen.

But there are also some more positive legal headwinds for European encryption startups like Tresorit: A ruling last summer by Europe’s top court dialled up the complexity of taking users’ personal data out of the region — certainly when people’s information is flowing to third countries like the US where it’s at risk from state agencies’ mass surveillance.

Asked if Tresorit has seen a rise in interest in the wake of the ‘Schrems II’ ruling, Lam told us: “We see the demand for European-based SaaS cloud services growing in the future. Being a European-based company has already been an important competitive advantage for us, especially among our business and enterprise customers.”

EU law in this area contains a quirk whereby the national security powers of Member States are not so clearly factored in vs third countries. And while Switzerland is not an EU Member it remains a closely associated country, being part of the bloc’s single market.

Nevertheless, questions over the sustainability of Switzerland’s EU data adequacy decision persist, given concerns that its growing domestic surveillance regime does not provide individuals with adequate redress remedies — and may therefore be violating their fundamental rights.

If Switzerland loses EU data adequacy it could impact the compliance requirements of digital services based in the country — albeit, again, e2e encryption could offer Swiss companies a technical solution to circumvent such legal uncertainty. So that still looks like good news for companies like Tresorit.

 

EU puts out final guidance on data transfers to third countries

By Natasha Lomas

The European Data Protection Board (EDPB) published its final recommendations yesterday setting on guidance for making transfers of personal data to third countries to comply with EU data protection rules in light of last summer’s landmark CJEU ruling (aka Schrems II).

The long and short of these recommendations — which are fairly long; running to 48 pages — is that some data transfers to third countries will simply not be possible to (legally) carry out. Despite the continued existence of legal mechanisms that can, in theory, be used to make such transfers (like Standard Contractual Clauses; a transfer tool that was recently updated by the Commission).

However it’s up to the data controller to assess the viability of each transfer, on a case by case basis, to determine whether data can legally flow in that particular case. (Which may mean, for example, a business making complex assessments about foreign government surveillance regimes and how they impinge upon its specific operations.)

Companies that routinely take EU users’ data outside the bloc for processing in third countries (like the US), which do not have data adequacy arrangements with the EU, face substantial cost and challenge in attaining compliance — in a best case scenario.

Those that can’t apply viable ‘special measures’ to ensure transferred data is safe are duty bound to suspend data flows — with the risk, should they fail to do that, of being ordered to by a data protection authority (which could also apply additional sanctions).

One alternative option could be for such a firm to store and process EU users’ data locally — within the EU. But clearly that won’t be viable for every company.

Law firms are likely to be very happy with this outcome since there will be increased demand for legal advice as companies grapple with how to structure their data flows and adapt to a post-Schrems II world.

In some EU jurisdictions (such as Germany) data protection agencies are now actively carrying out compliance checks — so orders to suspend transfers are bound to follow.

While the European Data Protection Supervisor is busy scrutinizing EU institutions’ own use of US cloud services giants to see whether high level arrangements with tech giants like AWS and Microsoft pass muster or not.

Last summer the CJEU struck down the EU-US Privacy Shield — only a few years after the flagship adequacy arrangement was inked. The same core legal issues did for its predecessor, ‘Safe Harbor‘, though that had stood for some fifteen years. And since the demise of Privacy Shield the Commission has repeatedly warned there will be no quick fix replacement this time; nothing short of major reform of US surveillance law is likely to be required.

US and EU lawmakers remain in negotiations over a replacement EU-US data flows deal but a viable outcome that can stand up to legal challenge as the prior two agreements could not, may well require years of work, not months.

And that means EU-US data flows are facing legal uncertainty for the foreseeable future.

The UK, meanwhile, has just squeezed a data adequacy agreement out of the Commission — despite some loudly enunciated post-Brexit plans for regulatory divergence in the area of data protection.

If the UK follows through in ripping up key tenets of its inherited EU legal framework there’s a high chance it will also lose adequacy status in the coming years — meaning it too could face crippling barriers to EU data flows. (But for now it seems to have dodged that bullet.)

Data flows to other third countries that also lack an EU adequacy agreement — such as China and India — face the same ongoing legal uncertainty.

The backstory to the EU international data flows issues originates with a complaint — in the wake of NSA whistleblower Edward Snowden’s revelations about government mass surveillance programs, so more than seven years ago — made by the eponymous Max Schrems over what he argued were unsafe EU-US data flows.

Although his complaint was specifically targeted at Facebook’s business and called on the Irish Data Protection Commission (DPC) to use its enforcement powers and suspend Facebook’s EU-US data flows.

A regulatory dance of indecision followed which finally saw legal questions referred to Europe’s top court and — ultimately — the demise of the EU-US Privacy Shield. The CJEU ruling also put it beyond legal doubt that Member States’ DPAs must step in and act when they suspect data is flowing to a location where the information is at risk.

Following the Schrems II ruling, the DPC (finally) sent Facebook a preliminary order to suspend its EU-US data flows last fall. Facebook immediately challenged the order in the Irish courts — seeking to block the move. But that challenge failed. And Facebook’s EU-US data flows are now very much operating on borrowed time.

As one of the platform’s subject to Section 702 of the US’ FISA law, its options for applying ‘special measures’ to supplement its EU data transfers look, well, limited to say the least.

It can’t — for example — encrypt the data in a way that ensures it has no access to it (zero access encryption) since that’s not how Facebook’s advertising empire functions. And Schrems has previously suggested Facebook will have to federate its service — and store EU users’ information inside the EU — to fix its data transfer problem.

Safe to say, the costs and complexity of compliance for certain businesses like Facebook look massive.

But there will be compliance costs and complexity for thousands of businesses in the wake of the CJEU ruling.

Commenting on the EDPB’s adoption of final recommendations, chair Andrea Jelinek said: “The impact of Schrems II cannot be underestimated: Already international data flows are subject to much closer scrutiny from the supervisory authorities who are conducting investigations at their respective levels. The goal of the EDPB Recommendations is to guide exporters in lawfully transferring personal data to third countries while guaranteeing that the data transferred is afforded a level of protection essentially equivalent to that guaranteed within the European Economic Area.

“By clarifying some doubts expressed by stakeholders, and in particular the importance of examining the practices of public authorities in third countries, we want to make it easier for data exporters to know how to assess their transfers to third countries and to identify and implement effective supplementary measures where they are needed. The EDPB will continue considering the effects of the Schrems II ruling and the comments received from stakeholders in its future guidance.”

The EDPB put out earlier guidance on Schrems II compliance last year.

It said the main modifications between that earlier advice and its final recommendations include: “The emphasis on the importance of examining the practices of third country public authorities in the exporters’ legal assessment to determine whether the legislation and/or practices of the third country impinge — in practice — on the effectiveness of the Art. 46 GDPR transfer tool; the possibility that the exporter considers in its assessment the practical experience of the importer, among other elements and with certain caveats; and the clarification that the legislation of the third country of destination allowing its authorities to access the data transferred, even without the importer’s intervention, may also impinge on the effectiveness of the transfer tool”.

Commenting on the EDPB’s recommendations in a statement, law firm Linklaters dubbed the guidance “strict” — warning over the looming impact on businesses.

“There is little evidence of a pragmatic approach to these transfers and the EDPB seems entirely content if the conclusion is that the data must remain in the EU,” said Peter Church, a Counsel at the global law firm. “For example, before transferring personal data to third country (without adequate data protection laws) businesses must consider not only its law but how its law enforcement and national security agencies operate in practice. Given these activities are typically secretive and opaque, this type of analysis is likely to cost tens of thousands of euros and take time. It appears this analysis is needed even for relatively innocuous transfers.”

“It is not clear how SMEs can be expected to comply with these requirements,” he added. “Given we now operate in a globalised society the EDPB, like King Canute, should consider the practical limitations on its power. The guidance will not turn back the tides of data washing back and forth across the world, but many businesses will really struggle to comply with these new requirements.”

 

Perspectives on tackling Big Tech’s market power

By Natasha Lomas

The need for markets-focused competition watchdogs and consumer-centric privacy regulators to think outside their respective ‘legal silos’ and find creative ways to work together to tackle the challenge of big tech market power was the impetus for a couple of fascinating panel discussions organized by the Centre for Economic Policy Research (CEPR), which were livestreamed yesterday but are available to view on-demand here.

The conversations brought together key regulatory leaders from Europe and the US — giving a glimpse of what the future shape of digital markets oversight might look like at a time when fresh blood has just been injected to chair the FTC so regulatory change is very much in the air (at least around tech antitrust).

CEPR’s discussion premise is that integration, not merely intersection, of competition and privacy/data protection law is needed to get a proper handle on platform giants that have, in many cases, leveraged their market power to force consumers to accept an abusive ‘fee’ of ongoing surveillance.

That fee both strips consumers of their privacy and helps tech giants perpetuate market dominance by locking out interesting new competition (which can’t get the same access to people’s data so operates at a baked in disadvantage).

A running theme in Europe for a number of years now, since a 2018 flagship update to the bloc’s data protection framework (GDPR), has been the ongoing under-enforcement around the EU’s ‘on-paper’ privacy rights — which, in certain markets, means regional competition authorities are now actively grappling with exactly how and where the issue of ‘data abuse’ fits into their antitrust legal frameworks.

The regulators assembled for CEPR’s discussion included, from the UK, the Competition and Markets Authority’s CEO Andrea Coscelli and the information commissioner, Elizabeth Denham; from Germany, the FCO’s Andreas Mundt; from France, Henri Piffaut, VP of the French competition authority; and from the EU, the European Data Protection Supervisor himself, Wojciech Wiewiórowski, who advises the EU’s executive body on data protection legislation (and is the watchdog for EU institutions’ own data use).

The UK’s CMA now sits outside the EU, of course — giving the national authority a higher profile role in global mergers & acquisition decisions (vs pre-brexit), and the chance to help shape key standards in the digital sphere via the investigations and procedures it chooses to pursue (and it has been moving very quickly on that front).

The CMA has a number of major antitrust probes open into tech giants — including looking into complaints against Apple’s App Store and others targeting Google’s plan to depreciate support for third party tracking cookies (aka the so-called ‘Privacy Sandbox’) — the latter being an investigation where the CMA has actively engaged the UK’s privacy watchdog (the ICO) to work with it.

Only last week the competition watchdog said it was minded to accept a set of legally binding commitments that Google has offered which could see a quasi ‘co-design’ process taking place, between the CMA, the ICO and Google, over the shape of the key technology infrastructure that ultimately replaces tracking cookies. So a pretty major development.

Germany’s FCO has also been very active against big tech this year — making full use of an update to the national competition law which gives it the power to take proactive inventions around large digital platforms with major competitive significance — with open procedures now against Amazon, Facebook and Google.

The Bundeskartellamt was already a pioneer in pushing to loop EU data protection rules into competition enforcement in digital markets in a strategic case against Facebook, as we’ve reported before. That closely watched (and long running) case — which targets Facebook’s ‘superprofiling’ of users, based on its ability to combine user data from multiple sources to flesh out a single high dimension per-user profile — is now headed to Europe’s top court (so likely has more years to run).

But during yesterday’s discussion Mundt confirmed that the FCO’s experience litigating that case helped shape key amendments to the national law that’s given him beefier powers to tackle big tech. (And he suggested it’ll be a lot easier to regulate tech giants going forward, using these new national powers.)

“Once we have designated a company to be of ‘paramount significance’ we can prohibit certain conduct much more easily than we could in the past,” he said. “We can prohibit, for example, that a company impedes other undertaking by data processing that is relevant for competition. We can prohibit that a use of service depends on the agreement to data collection with no choice — this is the Facebook case, indeed… When this law was negotiated in parliament parliament very much referred to the Facebook case and in a certain sense this entwinement of competition law and data protection law is written in a theory of harm in the German competition law.

“This makes a lot of sense. If we talk about dominance and if we assess that this dominance has come into place because of data collection and data possession and data processing you need a parameter in how far a company is allowed to gather the data to process it.”

“The past is also the future because this Facebook case… has always been a big case. And now it is up to the European Court of Justice to say something on that,” he added. “If everything works well we might get a very clear ruling saying… as far as the ECN [European Competition Network] is concerned how far we can integrate GDPR in assessing competition matters.

“So Facebook has always been a big case — it might get even bigger in a certain sense.”

France’s competition authority and its national privacy regulator (the CNIL), meanwhile, have also been joint working in recent years.

Including over a competition complaint against Apple’s pro-user privacy App Tracking Transparency feature (which last month the antitrust watchdog declined to block) — so there’s evidence there too of respective oversight bodies seeking to bridge legal silos in order to crack the code of how to effectively regulate tech giants whose market power, panellists agreed, is predicated on earlier failures of competition law enforcement that allowed tech platforms to buy up rivals and sew up access to user data, entrenching advantage at the expense of user privacy and locking out the possibility of future competitive challenge.

The contention is that monopoly power predicated upon data access also locks consumers into an abusive relationship with platform giants which can then, in the case of ad giants like Google and Facebook, extract huge costs (paid not in monetary fees but in user privacy) for continued access to services that have also become digital staples — amping up the ‘winner takes all’ characteristic seen in digital markets (which is obviously bad for competition too).

Yet, traditionally at least, Europe’s competition authorities and data protection regulators have been focused on separate workstreams.

The consensus from the CEPR panels was very much that that is both changing and must change if civil society is to get a grip on digital markets — and wrest control back from tech giants to that ensure consumers and competitors aren’t both left trampled into the dust by data-mining giants.

Denham said her motivation to dial up collaboration with other digital regulators was the UK government entertaining the idea of creating a one-stop-shop ‘Internet’ super regulator. “What scared the hell out of me was the policymakers the legislators floating the idea of one regulator for the Internet. I mean what does that mean?” she said. “So I think what the regulators did is we got to work, we got busy, we become creative, got our of our silos to try to tackle these companies — the likes of which we have never seen before.

“And I really think what we have done in the UK — and I’m excited if others think it will work in their jurisdictions — but I think that what really pushed us is that we needed to show policymakers and the public that we had our act together. I think consumers and citizens don’t really care if the solution they’re looking for comes from the CMA, the ICO, Ofcom… they just want somebody to have their back when it comes to protection of privacy and protection of markets.

“We’re trying to use our regulatory levers in the most creative way possible to make the digital markets work and protect fundamental rights.”

During the earlier panel, the CMA’s Simeon Thornton, a director at the authority, made some interesting remarks vis-a-vis its (ongoing) Google ‘Privacy Sandbox’ investigation — and the joint working it’s doing with the ICO on that case — asserting that “data protection and respecting users’ rights to privacy are very much at the heart of the commitments upon which we are currently consulting”.

“If we accept the commitments Google will be required to develop the proposals according to a number of criteria including impacts on privacy outcomes and compliance with data protection principles, and impacts on user experience and user control over the use of their personal data — alongside the overriding objective of the commitments which is to address our competition concerns,” he went on, adding: “We have worked closely with the ICO in seeking to understand the proposals and if we do accept the commitments then we will continue to work closely with the ICO in influencing the future development of those proposals.”

“If we accept the commitments that’s not the end of the CMA’s work — on the contrary that’s when, in many respects, the real work begins. Under the commitments the CMA will be closely involved in the development, implementation and monitoring of the proposals, including through the design of trials for example. It’s a substantial investment from the CMA and we will be dedicating the right people — including data scientists, for example, to the job,” he added. “The commitments ensure that Google addresses any concerns that the CMA has. And if outstanding concerns cannot be resolved with Google they explicitly provide for the CMA to reopen the case and — if necessary — impose any interim measures necessary to avoid harm to competition.

“So there’s no doubt this is a big undertaking. And it’s going to be challenging for the CMA, I’m sure of that. But personally I think this is the sort of approach that is required if we are really to tackle the sort of concerns we’re seeing in digital markets today.”

Thornton also said: “I think as regulators we do need to step up. We need to get involved before the harm materializes — rather than waiting after the event to stop it from materializing, rather than waiting until that harm is irrevocable… I think it’s a big move and it’s a challenging one but personally I think it’s a sign of the future direction of travel in a number of these sorts of cases.”

Also speaking during the regulatory panel session was FTC commissioner Rebecca Slaughter — a dissenter on the $5BN fine it hit Facebook with back in 2019 for violating an earlier consent order (as she argued the settlement provided no deterrent to address underlying privacy abuse, leaving Facebook free to continue exploiting users’ data) — as well as Chris D’Angelo, the chief deputy AG of the New York Attorney General, which is leading a major states antitrust case against Facebook.

Slaughter pointed out that the FTC already combines a consumer focus with attention on competition but said that historically there has been separation of divisions and investigations — and she agreed on the need for more joined-up working.

She also advocated for US regulators to get out of a pattern of ineffective enforcement in digital markets on issues like privacy and competition where companies have, historically, been given — at best — what amounts to wrist slaps that don’t address root causes of market abuse, perpetuating both consumer abuse and market failure. And be prepared to litigate more.

As regulators toughen up their stipulations they will need to be prepared for tech giants to push back — and therefore be prepared to sue instead of accepting a weak settlement.

“That is what is most galling to me that even where we take action, in our best faith good public servants working hard to take action, we keep coming back to the same questions, again and again,” she said. “Which means that the actions we are taking isn’t working. We need different action to keep us from having the same conversation again and again.”

Slaughter also argued that it’s important for regulators not to pile all the burden of avoiding data abuses on consumers themselves.

“I want to sound a note of caution around approaches that are centered around user control,” she said. “I think transparency and control are important. I think it is really problematic to put the burden on consumers to work through the markets and the use of data, figure out who has their data, how it’s being used, make decisions… I think you end up with notice fatigue; I think you end up with decision fatigue; you get very abusive manipulation of dark patterns to push people into decisions.

“So I really worry about a framework that is built at all around the idea of control as the central tenant or the way we solve the problem. I’ll keep coming back to the notion of what instead we need to be focusing on is where is the burden on the firms to limit their collection in the first instance, prohibit their sharing, prohibit abusive use of data and I think that that’s where we need to be focused from a policy perspective.

“I think there will be ongoing debates about privacy legislation in the US and while I’m actually a very strong advocate for a better federal framework with more tools that facilitate aggressive enforcement but I think if we had done it ten years ago we probably would have ended up with a notice and consent privacy law and I think that that would have not been a great outcome for consumers at the end of the day. So I think the debate and discussion has evolved in an important way. I also think we don’t have to wait for Congress to act.”

As regards more radical solutions to the problem of market-denting tech giants — such as breaking up sprawling and (self-servingly) interlocking services empires — the message from Europe’s most ‘digitally switched on’ regulators seemed to be don’t look to us for that; we are going to have to stay in our lanes.

So tl;dr — if antitrust and privacy regulators’ joint working just sums to more intelligent fiddling round the edges of digital market failure, and it’s break-ups of US tech giants that’s what’s really needed to reboot digital markets, then it’s going to be up to US agencies to wield the hammers. (Or, as Coscelli elegantly phrased it: “It’s probably more realistic for the US agencies to be in the lead in terms of structural separation if and when it’s appropriate — rather than an agency like ours [working from inside a mid-sized economy such as the UK’s].”)

The lack of any representative from the European Commission on the panel was an interesting omission in that regard — perhaps hinting at ongoing ‘structural separation’ between DG Comp and DG Justice where digital policymaking streams are concerned.

The current competition chief, Margrethe Vestager — who also heads up digital strategy for the bloc, as an EVP — has repeatedly expressed reluctance to impose radical ‘break up’ remedies on tech giants. She also recently preferred to waive through another Google digital merger (its acquisition of fitness wearable Fitbit) — agreeing to accept a number of ‘concessions’ and ignoring major mobilization by civil society (and indeed EU data protection agencies) urging her to block it.

Yet in an earlier CEPR discussion session, another panellist — Yale University’s Dina Srinivasan — pointed to the challenges of trying to regulate the behavior of companies when there are clear conflicts of interest, unless and until you impose structural separation as she said has been necessary in other markets (like financial services).

“In advertising we have an electronically traded market with exchanges and we have brokers on both sides. In a competitive market — when competition was working — you saw that those brokers were acting in the best interest of buyers and sellers. And as part of carrying out that function they were sort of protecting the data that belonged to buyers and sellers in that market, and not playing with the data in other ways — not trading on it, not doing conduct similar to insider trading or even front running,” she said, giving an example of how that changed as Google gained market power.

“So Google acquired DoubleClick, made promises to continue operating in that manner, the promises were not binding and on the record — the enforcement agencies or the agencies that cleared the merger didn’t make Google promise that they would abide by that moving forward and so as Google gained market power in that market there’s no regulatory requirement to continue to act in the best interests of your clients, so now it becomes a market power issue, and after they gain enough market power they can flip data ownership and say ‘okay, you know what before you owned this data and we weren’t allowed to do anything with it but now we’re going to use that data to for example sell our own advertising on exchanges’.

“But what we know from other markets — and from financial markets — is when you flip data ownership and you engage in conduct like that that allows the firm to now build market power in yet another market.”

The CMA’s Coscelli picked up on Srinivasan’s point — saying it was a “powerful” one, and that the challenges of policing “very complicated” situations involving conflicts of interests is something that regulators with merger control powers should be bearing in mind as they consider whether or not to green light tech acquisitions.

(Just one example of a merger in the digital space that the CMA is still scrutizing is Facebook’s acquisition of animated GIF platform Giphy. And it’s interesting to speculate whether, had brexit happened a little faster, the CMA might have stepped in to block Google’s Fitibit merger where the EU wouldn’t.)

Coscelli also flagged the issue of regulatory under-enforcement in digital markets as a key one, saying: “One of the reasons we are today where we are is partially historic under-enforcement by competition authorities on merger control — and that’s a theme that is extremely interesting and relevant to us because after the exit from the EU we now have a bigger role in merger control on global mergers. So it’s very important to us that we take the right decisions going forward.”

“Quite often we intervene in areas where there is under-enforcement by regulators in specific areas… If you think about it when you design systems where you have vertical regulators in specific sectors and horizontal regulators like us or the ICO we are more successful if the vertical regulators do their job and I’m sure they are more success if we do our job properly.

“I think we systematically underestimate… the ability of companies to work through whatever behavior or commitments or arrangement are offered to us, so I think these are very important points,” he added, signalling that a higher degree of attention is likely to be applied to tech mergers in Europe as a result of the CMA stepping out from the EU’s competition regulation umbrella.

Also speaking during the same panel, the EDPS warned that across Europe more broadly — i.e. beyond the small but engaged gathering of regulators brought together by CEPR — data protection and competition regulators are far from where they need to be on joint working, implying that the challenge of effectively regulating big tech across the EU is still a pretty Sisyphean one.

It’s true that the Commission is not sitting on hands in the face of tech giant market power.

At the end of last year it proposed a regime of ex ante regulations for so-called ‘gatekeeper’ platforms, under the Digital Markets Act. But the problem of how to effectively enforce pan-EU laws — when the various agencies involved in oversight are typically decentralized across Member States — is one key complication for the bloc. (The Commission’s answer with the DMA was to suggest putting itself in charge of overseeing gatekeepers but it remains to be seen what enforcement structure EU institutions will agree on.)

Clearly, the need for careful and coordinated joint working across multiple agencies with different legal competencies — if, indeed, that’s really what’s needed to properly address captured digital markets vs structural separation of Google’s search and adtech, for example, and Facebook’s various social products — steps up the EU’s regulatory challenge in digital markets.

“We can say that no effective competition nor protection of the rights in the digital economy can be ensured when the different regulators do not talk to each other and understand each other,” Wiewiórowski warned. “While we are still thinking about the cooperation it looks a little bit like everybody is afraid they will have to trade a little bit of its own possibility to assess.”

“If you think about the classical regulators isn’t it true that at some point we are reaching this border where we know how to work, we know how to behave, we need a little bit of help and a little bit of understanding of the other regulator’s work… What is interesting for me is there is — at the same time — the discussion about splitting of the task of the American regulators joining the ones on the European side. But even the statements of some of the commissioners in the European Union saying about the bigger role the Commission will play in the data protection and solving the enforcement problems of the GDPR show there is no clear understanding what are the differences between these fields.”

One thing is clear: Big tech’s dominance of digital markets won’t be unpicked overnight. But, on both sides of the Atlantic, there are now a bunch of theories on how to do it — and growing appetite to wade in.

Cannabis and digital health startup Sanity Group closes $44.2M Series A led by Redalpine

By Mike Butcher

Berlin-based cannabis and digital health start-up Sanity Group has closed a $44.2M Series A financing round led by Swiss VC Redalpine along with US-based Navy Capital and SOJE Capital. GMPVC also participated in the round. This appears to be the largest round of cannabis funding in Europe to date and brings total investment in Sanity Group to $73M.

The new capital will be used to expand the Group’s medical division in Europe as well as a EU-GMP-compliant research and production facility near Frankfurt.

Previous investors include HV Capital, TQ Ventures, Atlantic Food Labs, Cherry Ventures, Bitburger Ventures, and SevenVentures. In addition, Sanity Group has attracted celebrity angels including music producers will.i.am, Scooter Braun, and actress Alyssa Milano.

Sanity’s cannabis-based platform is for mental health and chronic pain management, allowing the tracking of cannabis-based therapy digitally with a medical device. This tells customers how much of the active ingredient (THC, CBD or other cannabinoids) is being administered. This is then registered in a therapy diary.

Finn Age Hänsel, founder and managing director of Sanity Group said: “A round of this magnitude shows that cannabis is increasingly moving into the mainstream of investor awareness, and represents an important milestone in our business expansion on our way to becoming Europe’s leading cannabis company.”

Over an interview, he added: “So we are fully legal and operated in Germany. We are just about to enter the Czech Republic and Poland. The UK is one of the biggest markets we want to enter going forward because, as you might know, the whole area of medical cannabis is slowly but surely opening all over Europe, with Germany being the largest market, about 80% of all the cannabis cannabinoid-based therapies today. But actually, the UK being the number two, which is a super attractive market for us but we look further into the Czech Republic and Poland, because those are the markets that have opened up from a regulatory perspective, at the most, over the last two years, and then France will open up next year, but that’s basically one after the other.”

Sean Stiefel, CEO at Navy Capital said: “The European cannabis market faces exciting developments in the coming months. Compared to the North American market, Europe is now where we were in the U.S. about four years ago. We want to bring our expertise and experience to the table. For our first investment in Europe, it was important for us to find a team that understands the market and has real industry experts in its ranks.”

Adtech ‘data breach’ GDPR complaint is headed to court in EU

By Natasha Lomas

New York-based IAB Tech Labs, a standards body for the digital advertising industry, is being taken to court in Germany by the Irish Council for Civil Liberties (ICCL) in a piece of privacy litigation that’s targeted at the high speed online ad auction process known as real-time bidding (RTB).

While that may sound pretty obscure the case essentially loops in the entire ‘data industrial complex’ of adtech players, large and small, which make money by profiling Internet users and selling access to their attention — from giants like Google and Facebook to other household names (the ICCL’s PR also name-checks Amazon, AT&T, Twitter and Verizon, the latter being the parent company of TechCrunch — presumably because all participate in online ad auctions that can use RTB); as well as the smaller (typically non-household name) adtech entities and data brokers which also also involved in handling people’s data to run high velocity background auctions that target behavioral ads at web users.

The driving force behind the lawsuit is Dr Johnny Ryan, a former adtech insider turned whistleblower who’s now a senior fellow a the ICCL — and who has dubbed RTB the biggest data breach of all time.

He points to the IAB Tech Lab’s audience taxonomy documents which provide codes for what can be extremely sensitive information that’s being gathered about Internet users, based on their browsing activity, such as political affiliation, medical conditions, household income, or even whether they may be a parent to a special needs child.

The lawsuit contends that other industry documents vis-a-vis the ad auction system confirm there are no technical measures to limit what companies can do with people’s data, nor who they might pass it on to.

The lack of security inherent to the RTB process also means other entities not directly involved in the adtech bidding chain could potentially intercept people’s information — when it should, on the contrary, be being protected from unauthorized access, per EU law…

Ryan and others have been filing formal complaints against RTB security issue for years, arguing the system breaches a core principle of Europe’s General Data Protection Regulation (GDPR) — which requires that personal data be “processed in a manner that ensures appropriate security… including protection against unauthorised or unlawful processing and against accidental loss” — and which, they contend, simply isn’t possible given how RTB functions.

The problem is that Europe’s data protection agencies have failed to act. Which is why Ryan, via the ICCL, has decided to take the more direct route of filing a lawsuit.

“There aren’t many DPAs around the union that haven’t received evidence of what I think is the biggest data breach of all time but it started with the UK and Ireland — neither of which took, I think it’s fair to say, any action. They both said they were doing things but nothing has changed,” he tells TechCrunch, explaining why he’s decided to take the step of litigating to try to enforce Internet users’ data protection rights.

“I want to take the most efficient route to protection people’s rights around data,” he adds.

Per Ryan, the Irish Data Protection Commission (DPC) has still not sent a statement of issues relating to the RTB complaint he lodged with them back in 2018 — so years later. In May 2019 the DPC did announce it was opening a formal investigation into Google’s adtech, following the RTB complaints, but the case remains open and unresolved. (We’ve contacted the DPC with questions about its progress on the investigation and will update with any response.)

Since the GDPR came into application in Europe in May 2018 there has been growth in privacy lawsuits  — including class action style suits — so litigation funders may be spying an opportunity to cash in on the growing enforcement gap left by resource-strapped and, well, risk-averse data protection regulators.

A similar complaint about RTB lodged with the UK’s Information Commissioner’s Office (ICO) also led to a lawsuit being filed last year — albeit in that case it was against the watchdog itself for failing to take any action. (The ICO’s last missive to the adtech industry told it to — uhhhh — expect audits.)

“The GDPR was supposed to create a situation where the average person does not need to wear a tin-foil hat, they do not need to be paranoid or take action to become well informed. Instead, supervisory authorities protect them. And these supervisory authorities — paid for by the tax payer — have very strong powers. They can gain admission to any documents and any premises. It’s not about fines I don’t think, just. They can tell the biggest most powerful companies in the world to stop doing what they’re doing with our data. That’s the ultimate power,” says Ryan. “So GDPR sets up these guardians — these potentially very empowered guardians — but they’ve not used those powers… That’s why we’re acting.”

“I do wish that I’d litigated years ago,” he adds. “There’s lots of reasons why I didn’t do that — I do wish, though, that this litigation was unnecessary because supervisory authorities protected me and you. But they didn’t. So now, as Irish politics like to say in the middle of a crisis, we are where we are. But this is — hopefully — several nails in the coffin [of RTB].”

We are going to court. Our lawsuit takes aim at Google, Facebook, Amazon, Twitter, Verizon, AT&T and the entire online advertising/tracking industry by challenging industry rules set by IAB TechLab. ⁦@ICCLtweethttps://t.co/D7NkyAILQg

— Johnny Ryan (@johnnyryan) June 16, 2021

The lawsuit has been filed in Germany as Ryan says they’ve been able to establish that IAB Tech Labs — which is NY-based and has no official establishment in Europe — has representation (a consultancy it hired) that’s based in the country. Hence they believe there is a clear route to litigate the case at the Landgerichte, Hamburg.

While Ryan has been indefatigably sounding the alarm about RTB for years he’s prepared to clock up more mileage going direct through the courts to see the natter through.

And to keep hammering home his message to the adtech industry that it must clean up its act and that recent attempts to maintain the privacy-hostile status quo — by trying to rebrand and repackage the same old data shuffle under shiny new claims of ‘privacy’ and ‘responsibility’ — simply won’t wash. So the message is really: Reform or die.

“This may very well end up at the ECJ [European Court of Justice]. And that would take a few years but long before this ends up at the ECJ I think it’ll be clear to the industry now that it’s time to reform,” he adds.

IAB Tech Labs has been contacted for comment on the ICCL’s lawsuit.

Ryan is by no means the only person sounding the alarm over adtech. Last year the European Parliament called for tighter controls on behavioral ads to be baked into reforms of the region’s digital rules — calling for regulation to favor less intrusive, contextual forms of advertising which do not rely on mass surveillance of Internet users.

While even Google has said it wants to depreciate support for tracking cookies in favor of a new stack of technology proposals that it dubs ‘Privacy Sandbox’ (although its proposed alternative — targeting groups of Internet users based on interests derived from tracking their browsing habits — has been criticized as potentially amplifying problems of predatory and exploitative ad targeting, so may not represent a truly clean break with the rights-hostile adtech status quo).

The IAB is also facing another major privacy law challenge in Europe — where complaints against a widely used framework it designed for websites to obtain Internet users’ consent to being tracked for ads online led to scrutiny by Belgium’s data protection agency. And, last year, its investigatory division found that the IAB Europe’s Transparency and Consent Framework (TCF) fails to meet the required standards of data protection under the GDPR.

The case went in front of the litigation chamber last week.

A verdict — and any enforcement action by the Belgian DPA over the IAB Europe’s TCF — remains pending.

Amid controversy, Dispo confirms Series A funding, high-profile advisors, and investors

By Amanda Silberling

It’s only been nine months since Dispo rebranded from David’s Disposables. But the vintage-inspired photo sharing app has experienced a whiplash of ups and downs, mostly due to the brand’s original namesake, YouTuber David Dobrik.

Like Clubhouse, Dispo was one of this year’s most hyped up new social apps, requiring an invite from an existing member to join. On March 9, when the company said “goodbye waitlist” and opened the app up to any iOS user, Dispo looked poised to be a worthy competitor to photo-sharing behemoths like Instagram. But, just one week later, Business Insider reported on sexual assault allegations regarding a member of Vlog Squad, a YouTube prank ensemble headed by Dispo co-founder David Dobrik. Dobrik had posted a now-deleted vlog about the night of the alleged assault, joking, “we’re all going to jail” at the end of the video.

It was only after venture capital firm Spark Capital decided to “sever all ties” with Dispo that Dobrik stepped down from the company board. In a statement made to TechCrunch at the time, Dispo said, “Dispo’s team, product, and most importantly — our community — stand for building a diverse, inclusive and empowering world.”

Dispo capitalizes on Gen Z and young millennial nostalgia for a time before digital photography, when we couldn’t take thirty selfies before choosing which one to post. On Dispo, when you take a photo, you have to wait until 9 AM the following day for the image to “develop,” and only then can you view and share it.

In both February and March of this year, the app hit the top ten of the Photo & Video category in the U.S. App Store. Despite the backlash against Dobrik, which resulted in the app’s product page being bombarded with negative comments, the app still hit the top ten in Germany, Japan, and Brazil, according to their press release. Dispo reportedly has not yet expended any international marketing resources.

Now, early investors in Dispo like Spark Capital, Seven Seven Six, and Unshackled have committed to donate any potential profits from their investment in the app to organizations working with survivors of sexual assault. Though Axios reported the app’s $20M Series A funding news in February, Dispo put out a press release this morning confirming the financing event. Though they intend to donate profits from the app, Seven Seven Six and Unshackled Ventures remain listed as investors, but Spark Capital is not. Other notable names involved in the project include high-profile photographers like Annie Leibovitz and Raven B. Varona, who has worked with artists like Beyoncé and Jay-Z. Actresses Cara Delevingne and Sofía Vergara, as well as NBA superstars Kevin Durant and Andre Iguodala, are also involved with the app as investors or advisors.

Dobrik’s role in the company was largely as a marketer – CEO Daniel Liss co-founded the app with Dobrik and has been leading the team since the beginning. After Dobrik’s departure, the Dispo team – which remains under twenty members strong – took a break from communications and product updates on the app. It’s expected that after today’s funding confirmation, the app will continue to roll out updates.

Dispo is quick to shift focus to the work of their team, which they call “some of the most talented, diverse leaders in consumer tech.” With the capital from this funding round, they hope to hire more staff to become more competitive with major social media apps with expansive teams, like Instagram and TikTok, and to experiment with machine learning. They will also likely have some serious marketing to do, now that their attempt at influencer marketing has failed massively.

Now more than ever, Dispo is promoting the app as a mental health benefit, hoping to shift the tide away from manufactured perfectionism toward more authentic social media experiences.

“A new era of start ups must emerge to end the scourge of big tech’s destruction of our political fabric and willful ignorance of its impact on body dysmorphia and mental health,” CEO Daniel Liss writes in a Substack post titled Dispo 2.0. “Imagine a world where Dispo is the social network of choice for every teen and college student in the world. How different a world would that be?”

But, for an app that propelled to success off the fame of a YouTuber with a history of less than savory behavior, that messaging might fall flat.

According to Sensor Tower, the highest Dispo has ever ranked in the Photo & Video category on the U.S. App Store was in January 2020, when it was still called David’s Disposables. The app ranked No. 1 in that category from January 7 to January 9, and on January 8, it reached No. 1 among all free iPhone apps.

Croatia’s Gideon Brothers raises $31M for its 3D vision-enabled autonomous warehouse robots

By Mike Butcher

Proving that Central and Eastern Europe remains a powerhouse of hardware engineering matched with software, Gideon Brothers (GB), a Zagreb, Croatia-based robotics and AI startup, has raised a $31 million Series A round led by Koch Disruptive Technologies (KDT), the venture and growth arm of Koch Industries Inc., with participation from DB Schenker, Prologis Ventures and Rite-Hite.

The round also includes participation from several of Gideon Brothers’ existing backers: Taavet Hinrikus (co-founder of TransferWise), Pentland Ventures, Peaksjah, HCVC (Hardware Club), Ivan Topčić, Nenad Bakić and Luca Ascani.

The investment will be used to accelerate the development and commercialization of GB’s AI and 3D vision-based “autonomous mobile robots” or “AMRs”. These perform simple tasks such as transporting, picking up and dropping off products in order to free up humans to perform more valuable tasks.

The company will also expand its operations in the EU and U.S. by opening offices in Munich, Germany and Boston, Massachusetts, respectively.

Gideon Brothers founders

Gideon Brothers founders. Image Credits: Gideon Brothers

Gideon Brothers make robots and the accompanying software platform that specializes in horizontal and vertical handling processes for logistics, warehousing, manufacturing and retail businesses. For obvious reasons, the need to roboticize supply chains has exploded during the pandemic.

Matija Kopić, CEO of Gideon Brothers, said: “The pandemic has greatly accelerated the adoption of smart automation, and we are ready to meet the unprecedented market demand. The best way to do it is by marrying our proprietary solutions with the largest, most demanding customers out there. Our strategic partners have real challenges that our robots are already solving, and, with us, they’re seizing the incredible opportunity right now to effect robotic-powered change to some of the world’s most innovative organizations.”

He added: “Partnering with these forward-thinking industry leaders will help us expand our global footprint, but we will always stay true to our Croatian roots. That is our superpower. The Croatian startup scene is growing exponentially and we want to unlock further opportunities for our country to become a robotics & AI powerhouse.”

Annant Patel, director at Koch Disruptive Technologies, said: “With more than 300 Koch operations and production units globally, KDT recognizes the unique capabilities of and potential for Gideon Brothers’ technology to substantially transform how businesses can approach warehouse and manufacturing processes through cutting edge AI and 3D AMR technology.”

Xavier Garijo, member of the Board of Management for Contract Logistics, DB Schenker, added: “Our partnership with Gideon Brothers secures our access to best in class robotics and intelligent material handling solutions to serve our customers in the most efficient way.”

GB’s competitors include Seegrid, Teradyne (MiR), Vecna Robotics, Fetch Robotics, AutoGuide Mobile Robots, Geek+ and Otto Motors.

Facebook’s use of ad data triggers antitrust probes in UK and EU

By Natasha Lomas

Facebook is facing a fresh pair of antitrust probes in Europe.

The UK’s Competition and Markets Authority (CMA) and the EU’s Competition Commission both announced formal investigations into the social media giant’s operations today — with what’s likely to have been co-ordinated timing.

The competition regulators will scrutinize how Facebook uses data from advertising customers and users of its single sign-on tool — specifically looking at whether it uses this data as an unfair lever against competitors in markets such as classified ads.

The pair also said they will seek to work closely together as their independent investigations progress.

With the UK outside the European trading bloc (post-Brexit), the national competition watchdog has a freer rein to pursue investigations that may be similar to or overlap with antitrust probes the EU is also undertaking.

And the two Facebook investigations do appear similar on the surface — with both broadly focused on how Facebook uses advertising data. (Though outcomes could of course differ.)

The danger for Facebook, here, is that a higher dimension of scrutiny will be applied to its business as a result of dual regulatory action — with the opportunity for joint working and cross-referencing of its responses (not to mention a little investigative competition between the UK and the EU’s agencies).

The CMA said it’s looking at whether Facebook has gained an unfair advantage over competitors in providing services for online classified ads and online dating through how it gathers and uses certain data.

Specifically, the UK’s regulator said it’s concerned that Facebook might have gained an unfair advantage over competitors providing services for online classified ads and online dating.

Facebook plays in both spaces of course, via Facebook Marketplace and Facebook Dating respectively.

In a statement on its action, CMA CEO, Andrea Coscelli, said: “We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors. Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice.”

The European Commission’s investigation will — similarly — focus on whether Facebook violated the EU’s competition rules by using advertising data gathered from advertisers in order to compete with them in markets where it is active.

Although it only cites classified ads as its example of the neighbouring market of particular concern for its probe.

The EU’s probe has another element, though, as it said it’s also looking at whether Facebook ties its online classified ads service to its social network in breach of the bloc’s competition rules.

In a separate (national) action, Germany’s competition authority opened a similar probe into Facebook tying Oculus to use of a Facebook account at the end of last year. So Facebook now has multiple antitrust probes on its plate in Europe, adding to its woes from the massive states antitrust lawsuit filed against it on home turf also back in December 2020.

“When advertising their services on Facebook, companies, which also compete directly with Facebook, may provide it commercially valuable data. Facebook might then use this data in order to compete against the companies which provided it,” the Commission noted in a press release.

“This applies in particular to online classified ads providers, the platforms on which many European consumers buy and sell products. Online classified ads providers advertise their services on Facebook’s social network. At the same time, they compete with Facebook’s own online classified ads service, ‘Facebook Marketplace’.”

The Commission added that a preliminary investigation it already undertook has raised concerns Facebook is distorting the market for online classified ads services. It will now take an in-depth look in order to make a full judgement on whether the social media behemoth is breaking EU competition rules.

Commenting in a statement, EVP Margrethe Vestager, who also heads up competition policy for the bloc, added: “Facebook is used by almost 3 billion people on a monthly basis and almost 7 million firms advertise on Facebook in total. Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups. We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data. In today’s digital economy, data should not be used in ways that distort competition.”

Reached for comment on the latest European antitrust probes, Facebook sent us this statement:

“We are always developing new and better services to meet evolving demand from people who use Facebook. Marketplace and Dating offer people more choices and both products operate in a highly competitive environment with many large incumbents. We will continue to cooperate fully with the investigations to demonstrate that they are without merit.”

Up til now, Facebook has been a bit of a blind spot for the Commission’s competition authority — with multiple investigations and enforcements chalked up by the bloc against other tech giants, such as (most notably) Google and Amazon.

But Vestager’s Facebook ‘dry patch’ has now formally come to an end.

The CMA, meanwhile, is working on wider pro-competition regulatory reforms aimed squarely at tech giants like Facebook and Google under a UK plan to clip the wings of the adtech duopoly.

 

In latest Big Tech antitrust push, Germany’s FCO eyes Google News Showcase fine print

By Natasha Lomas

The Bundeskartellamt, Germany’s very active competition authority, isn’t letting the grass grow under new powers it gained this year to tackle Big Tech: The Federal Cartel Office (FCO) has just announced a third proceeding against Google.

The FCO’s latest competition probe looks very interesting, as it’s targeting Google News Showcase — Google’s relatively recently launched product which curates a selection of third-party publishers’ content to appear in story panels on Google News (and other Google properties), content for which the tech giant pays a licensing fee.

Google started cutting content licensing deals with publishers around the world for News Showcase last year, announcing a total pot of $1 billion to fund the arrangements — with Germany one of the first markets where it inked deals.

However, its motivation to pay publishers to licence their journalism is hardly pure.

It follows years of bitter accusations from media companies that Google is freeloading off their content. To which the tech giant routinely responded with stonewalling statements — saying it would never pay for content because that’s not how online aggregation works. It also tried to fob off the industry with a digital innovation fund (aka Google News Initiative), which distributes small grants and offers free workshops and product advice, seeking to frame publishers’ decimated business models as a failure of innovation, leaving Google’s adtech machine scot free to steamroller on.

Google’s stonewalling-plus-chicken-feeding approach worked to stave off regulatory action for a long time, but eventually enough political pressure built up around the issue of media business models versus the online advertising duopoly that legislators started to make moves to try to address the power imbalance between traditional publishers and intermediating tech giants.

Most infamously in Australia, where lawmakers passed a news media bargaining code earlier this year.

Prior to its passage, both Facebook and Google, the twin targets for that law, warned the move could result in dire consequences — such as a total shutdown of their products, reduced quality or even fees to use their services.

Nothing like that happened, but lawmakers did agree to a last-minute amendment — adding a two-month mediation period to the legislation which allows digital platforms and publishers to strike deals on their own before having to enter into forced arbitration.

Critics say that allows for the two tech giants to continue to set their own terms when dealmaking with publishers, leveraging market muscle to strike deals that may disproportionately benefit Australia’s largest media firms — and doing so without any external oversight and with no guarantees that the resulting content arrangements foster media diversity and plurality or even support quality journalism.

In the EU, lawmakers acted earlier — taking the controversial route of extending copyright to cover snippets of news content back in 2019. (And Monday June 7 is the deadline for Member States to have transposed the rules into national law.)

France was among the first EU countries to bake the provision into national law — and its competition watchdog quickly ordered Google to pay for news reuse back in 2020 after Google tried to wiggle out of the legislation by stopping displaying snippets in the market.

It responded to the competition authority’s order with more obfuscation, though, agreeing earlier this year to pay French publishers for content reuse but also for their participation in News Showcase — bundling required-by-law payments (for news reuse) with content licensing deals of its own devising. And thereby making it difficult to understand the balance of mandatory payments versus commercial arrangements.

The problem with News Showcase is that these licensing arrangements are being done behind closed doors, in many cases ahead of relevant legislation and thus purely on Google’s terms — which means the initiative risks exacerbating concerns about the power imbalance between it and traditional publishers caught in a revenue bind as their business models have been massively disrupted by the switch to digital.

If Google suddenly offers some money for content, plenty of publishers might well jump — regardless of the terms. And perhaps especially because any publishers that hold out against licensing content to Google at the price it likes risk being disadvantaged by reduced visibility for their content, given Google’s dominance of the search market and content discoverability (via its ability to direct traffic to specific media properties, such as based on how prominently News Showcase content is displayed, for example).

The competition implications look clear.

But it’s still impressive that the Bundeskartellamt is spinning up an investigation into News Showcase so quickly.

The FCO said it’s acting on a complaint from Corint Media — looking at whether the announced integration of the Google News Showcase service into Google’s general search function is “likely to constitute self-preferencing or an impediment to the services offered by competing third parties”.

It also said it’s looking at whether contractual conditions include unreasonable terms (“to the detriment of the participating publishers”); and, in particular, “make it disproportionately difficult for them to enforce the ancillary copyright for press publishers introduced by the German Bundestag and Bundesrat in May 2021” — a reference to the transposed neighbouring right for news in the EU copyright reform.

So it will be examining the core issue of whether Google is trying to use News Showcase to undermine the new EU rights publishers gained under the copyright reform.

The FCO also said it wants to look at “how the conditions for access to Google’s News Showcase service are defined”.

Google launched the News Showcase in Germany on October 1 2020, with an initial 20 media companies participating — covering 50 publications. Although more have been added since.

Per the FCO, the News Showcase “story panels” were initially integrated in the Google News app but can now also be found in Google News on the desktop. It also notes that Google has said the panels will soon also appear in the general Google search results — a move that will further dial up the competition dynamics around the product, given Google’s massive dominance of the search market in Europe.

Commenting on its proceeding in a statement, Andreas Mundt, president of the Bundeskartellamt, said: “Cooperating with Google can be an attractive option for publishers and other news providers and offer consumers new or improved information services. However, it must be ensured that this will not result in discrimination between individual publishers. In addition, Google’s strong position in providing access to end customers must not lead to a situation where competing services offered by publishers or other news providers are squeezed out of the market. There must be an adequate balance between the rights and obligations of the content providers participating in Google’s programme.”

Google was contacted for comment on the FCO’s action — and it sent us this statement, attributed to spokesperson, Kay Oberbeck:

Showcase is one of many ways Google supports journalism, building on products and funds that all publishers can benefit from. Showcase is an international licensing program for news — the selection of partners is based on objective and non-discriminatory criteria, and partner content is not given preference in the ranking of our results. We will cooperate fully with the German Competition Authority and look forward to answering their questions.

The FCO’s scrutiny of Google News Showcase, follows hard on the heels of two other Google proceedings it opened last month, one to determine whether or not the tech giant meets the threshold of Germany’s new competition powers for tackling Big Tech — and another examining its data processing practices. Both remain ongoing.

The competition authority has also recently opened a proceeding into Amazon’s market dominance — and is also looking to extend another recent investigation of Facebook’s Oculus business, also by determining whether the social media giant’s business meets the threshold required under the new law.

The amendment to the German Competition Act came into force in January — giving the FCO greater powers to proactively impose conditions on large digital companies that are considered to be of “paramount significance for competition across markets” in order to pre-emptively control the risk of market abuse.

That it’s taking on so many proceedings in parallel against Big Tech shows it’s keen not to waste any time — putting itself in a position to come, as quickly as possible, with proactive interventions to address competitive problems caused by platform giants just as soon as it determines it can legally do that.

The Bundeskartellamt also has a pioneering case against Facebook’s “superprofiling” on its desk — which links privacy abuse to competition concerns and could drastically limit the tech giant’s ability to profile users. That investigation and case has been ongoing for years but was recently referred to Europe’s top court for an interpretation of key legal questions.

 

Ada Health closes $90M Series B led by Leaps by Bayer

By Natasha Lomas

The digital health space continues cooking on gas: Berlin-based Ada Health has closed a $90M Series B round of funding led by Leaps by Bayer, the impact investment arm of the German multinational pharma giant, Bayer AG. Other investors in the round include Samsung Catalyst Fund, Vitruvian Partners, Inteligo Bank, F4 and Mutschler Ventures.

The startup last raised around four years’ ago, reporting a $47M Series A round in 2017. But don’t be fooled by the low lettering of these rounds: Ada Health has been working on its symptom assessment tech for around a decade at this point — relying, in the first several years of its mission, on private funding from high net worth individuals in Germany and elsewhere in Europe.

Initially it was also focused on building a decision support tool for doctors before pivoting to directly addressing patients via an AI-driven symptom assessment app.

It’s not alone in offering this type of tool. Others in the space include Babylon, Buoy, K Health, Mediktor, Symptomate, WebMD and Your.MD — but Ada claims its app is the most used and highest rated by users. It can also point to a peer reviewed study it led, which was published in the BMJ, and compared the condition coverage, accuracy and safety of eight competitors. The study found its app led the pack on all fronts.

One reason for that edge is that Ada Health’s medical knowledge base covers around 30,000 ICD-10 codes (aka the alphanumeric codes used by doctors to represent different diagnoses) at this point — which co-founder and CEO, Daniel Nathrath, tells us is “by far the largest coverage of any of the systems in this space”.

The Ada Health app, which launched in late 2016 — and remains free to use — has been downloaded by more than 11 million people across 150 countries so far. Users have completed some 23M assessments using the tool which he likens to having “24/7 access to your trusted family doctor”.

Currently, the app has support for 10 languages. But the goal with the funding is to push for truly massive scale.

“The idea is to help as many people as possible get better access to healthcare around the world,” Nathrath tells TechCrunch. “Our ambition is, in a few years, that a billion people instead of 11M people will be using out technology. In order to get there we think that working with the right investors can help us accelerate that growth path and give more people the benefit of our technology faster.”

“With 11M app downloads I believe we are the most used AI symptom assessment technology that I know of in the world,” he goes on. “We are also the most rated and reviewed app in the medical category of the App Store and Google Play Store ever — after, what, just four years. With about 300,000 ratings and reviews, most of them five-star. So… we have gained some users but we think it’s just the beginning.

“Digital health — with all the things you see going on — is at an inflection point where it’s being realized not only by the users who have already been using our technology but also by health systems, governments, and payers, insurers, and life sciences companies — I think everyone has realized digital health is here to stay.”

As well as putting its symptom assessment app directly in the hands of patients, Ada Health offers a suite of enterprise solutions where partners pay it to be able to embed and deeply integrate its triage technology into their websites and digital services. That means they can use it to offer an entry point for their users — to help direct them to the correct service and provide administrative support by arming clinicians with health information provided by patient via the Ada interface (and the AI’s own assessment) ahead of the appointment.

One publicly disclosed customer for Ada’s enterprise offering is Sutter Health, in the Bay Area.

“They have integrated Ada into their own homepage and into their app so people can use it as a digital front door to the entire service of Sutter,” says Nathrath, explaining that the difference vs the version of the app that patients can download is “people don’t just get generic advice”. “It’s fully integrated. So if it says — for instance — you need to go to the emergency room… then you can go straight into appointment booking.

“And not only that; when you book the appointment the outcome of the Ada pre-assessment can then be shared with the health professional who will then look at you so the doctor doesn’t start from a blank sheet of paper but is already pre-briefed and gets decision support in terms of ‘this is constellation of symptoms the patient is reporting’ and ‘based on that these could be the most likely diagnosis and these should be the tests, examinations or investigations I should consider next to get to the confirmed diagnosis’.”

The added advantage for Ada’s enterprise partners is that patient data arrives with the doctor that sees them already structured so — after a few confirmations — they can easily import it into their documentation, saying precious minutes per patient, per Nathrath. “[If] you save a few minutes with each patient that means you have more time for the patients who really need you and not the patients who maybe has a cold and shows up in the emergency room, which unfortunately is a reality,” he adds.

With this enterprise strand of its business Ada is continuing to provide support for doctors. Nathrath suggests its patient-facing app is also being used for some informal decision support for doctors too.

More and more doctors are using the app “together with their patients”, he tells us, or else recommending it to their patients —  asking them “so what did Ada say?”.

The role of AI in healthcare will be a core one, Nathrath predicts — given that demand for healthcare professionals is always going to outstrip supply.

He argues that’s true even with rising use of telehealth platforms which can certainly make more efficient use of doctors’ time.

Ada did, at one point, offer a telehealth service itself — before deciding to fully focus its efforts on AI — so it’s approach now is to partner and integrate with other healthcare and health data providers throughout the care ecosystem.

“We think there’s a place for telehealth, obviously. It adds convenience. During the pandemic I guess it had a special role where for many it was almost the only way to interact with a doctor,” he says. “So we do see a place for telehealth but we also see an issue with telehealth in that it doesn’t address the structural issue in healthcare — that simply there aren’t enough doctors to serve the entire population of the world.”

“We’re building Ada as a multi-sided platform,” he adds. “We’ll be computing different sources of input data — which is sensor data, wearables data, lab data, genetic testing data — that’s on the input side — and then on the more downstream, on the next step after Ada, we can partner with any telehealth company in the world. And we’re seeing enormous interest from literally all corners of the world where telehealth companies approach us. And insurance companies and governments — where they say yes there is a use-case for telehealth but we basically need something before that, that filters people to the right next step.”

Whatever that right next step is in a patient’s care journey, “Ada is like the gatekeeper at the beginning of the journey that then sends you on your way,” is how Nathrath puts it.

The overarching vision is that Ada becomes not just an app in your pocket but an omnipresent “personal health companion” — or what it describes as “a personal operating system for health” — which is powerful enough to deliver preventative healthcare by being able to aggregate all sorts of data and spot health issues sooner so as to enable earlier and less costly interventions.

“What we’re building is really much more than a symptom assessment technology,” he tells TechCrunch. “Where you would also take into account lab results which can now be done much more direct to consumer than was previously possible, sensors and wearables data — and you probably say that Samsung is one of our investors but we’re obviously talking to all the large players in the space about this; how we can integrate that data best — and all the way to genetic testing and even the full genome sequence.

“When you take all these different sources of health information and compute them against each other on a continuous basis you’ll have something like an early warning system for your health — which, again, from a population health and system level perspective should be desirable for anyone who’s in charge of providing healthcare or paying for healthcare because you can catch the problem when it’s still a £100 problem and not yet a £100,000 a year problem.”

Given that ambition it’s interesting that big pharma is investing in Ada. (And its PR notes that it’s also in talks with Bayer on a potential strategic partnership.) But Nathrath suggests that the industry is well aware of the shifts being driven by digital health — and keen to avoid it’s own ‘Kodak moment’, i.e. by not adapting to the coming changes in a timely enough manner.

If AI-powered health interventions end up being so successful that they can shrink drug bills through earlier intervention and more preventative care then it makes good business sense for big pharma to be plugged into the cutting edge of digital health.

At the same time this type of tech might end up driving demand for medicines — exactly because of its scalability and because it can present a higher dimension view of more people’s health — meaning there’s more opportunity for increased prescription. So there’s not really a downside for pharma to get involved here.

“We’re really excited about the possibilities we can find by working together [with pharmaceutical companies] to really deliver a better healthcare experience to patients,” says Nathrath. “If you look at Bayer they have a consumer health business, they also have a pharmaceutical business and if you look at the cases within Ada if you look at the top ten most common ones it’s very comparable to what a GP would see all the time and a lot of those basically can end up in the recommendation towards healthcare where oftentimes an over the counter drug will be enough to address the issue. One area where Bayer has a lot of offerings, of course. But then their spectrum goes all the way towards rare diseases — where we’re also particularly strong. Where they have some drugs that help patients with very rare conditions.”

There are also potentially major research riches to be derived from the health data generated via Ada’s app which could also be interesting to pharma companies doing drug discovery.

Although Nathrath emphasizes that app users’ data is never used for research purpose without explicit consent from the individual (as is required under Europe’s General Data Protection Act).

But he also notes that Ada is able to do some interesting studies based on aggregated user data, too — giving an example of how it looked at kids mental health during COVID-19 lockdowns, comparing areas where schools had been shut vs those where they had remained open. “You could really compare what happened in different countries,” he says, noting that rates of depression in kids in Germany where schools and pre-schools were closed went up by over 100%, whereas in Switzerland where schools remained opened throughout there was no rise and even a slight improvement in children’s mental health.

In another example, involving aggregated data from usage of the app in US, he says it was able to show that it could have spotted a measles epidemic via the cases in the app slightly sooner than the CDC’s official announcement of an epidemic.

“If you think about the potential of that, in terms of spotting outbreaks earlier, that can be quite significant,” he suggests.

“We think there’s really a long list of ways we can work together [with researchers, policymakers and pharma companies] for the benefit of patients,” he adds. “The mission of all the people I spoke to at Bayer was really similar to ours — which is to help people, basically… That’s why we’re really happy to work with them.”

Commenting on the funding in a statement, Dr. Jürgen Eckhardt, head of Leaps by Bayer, added: “Investing in breakthrough technologies that drive digital change in healthcare is one of the strategic imperatives for Leaps by Bayer and for the entire field of healthcare. Ada’s truly transformative technology, combining powerful artificial intelligence with an emphasis on medical rigor and high levels of clinical accuracy will lead the way in helping more patients and consumers in achieving better health outcomes sooner by intervening earlier in their healthcare journey.”

Glovo splurges $208M on three Delivery Hero brands in the Balkans

By Natasha Lomas

The high stakes game of chess (or, well, consolidation chicken) that is on-demand food delivery rolls on today with a little more territorial swapping in Europe: Barcelona-based Glovo has agreed to buy three of Berlin-based Delivery Hero’s food delivery brands in Central and Eastern Europe — with deals that it said are worth a total value of €170 million (~$208M).

Specifically, it’s picking up Delivery Hero’s foodpanda brand in Romania and Bulgaria; the Donesi brand in Serbia, Montenegro, Bosnia and Herzegovina; and Pauza in Croatia.

There’s some notable symmetry here: Last year Delivery Hero shelled out $272M for a bunch of Glovo’s LatAm brands, as the latter gave up on a region it had already started withdrawing from in its quest for profitability.

Glovo said then that it would be focusing on “key markets where we can build a long-term sustainable business and continue to provide our unique multi-category offering to our customers”.

Earlier this month the Barcelona-based ‘deliver anything’ app also announced it was picking up Ehrana, a local delivery company in Slovenia. So it’s been on quite the (local) shopping spree of late.

Its existing operational footprint covers markets in South West Europe, Eastern Europe and Sub-Saharan Africa. So its attention here, on the Balkans, suggests it sees a chance to eke out profitable potential in more of Central Europe too.

Glovo said the transactions in Bosnia Herzegovina, Bulgaria, Croatia, Montenegro and Serbia are expected to close “within the next few weeks”, subject to fulfilment of closing conditions and relevant regulatory approvals.

While it said Romania will be completed following approval from the competition authority — but gave no timeline for that.

Its splurge on Central and Eastern European rival food delivery brands follows a $528M Series F funding round in April — so it’s evidently not short of VC cash to burn spend.

Commenting in a statement, Oscar Pierre, CEO and co-founder, said: “It’s always been central to our long-term strategy to focus on markets where we see clear opportunities to lead and where we can build a sustainable business. Central and Eastern Europe is a very important part of that plan. The region has really embraced on-demand delivery platforms and we’re very excited to be strengthening our presence and increasing our footprint in countries that continue to show enormous potential for growth.” 

In another supporting statement Delivery Hero made it clear it has bigger fish to fry (than can be served up to hungry customers in the Balkans) right now.

“Delivery Hero has built a clear leading business in the Balkan region in the last couple of years. However, with a lot of operational priorities on our plate, we believe Glovo would be better positioned to continue building an amazing experience for our customers in this region,” said Niklas Östberg, its CEO and co-founder.

A relevant, recent development for Delivery Hero‘s business is the decision to re-enter its home market of Germany — Europe’s biggest economy — under its foodpanda brand, starting in its home city of Berlin this summer (but with a national expansion planned to follow).

This is notable because back in 2018 it sold its German operations to another on-demand food delivery rival, the Dutch giant Takeaway.com — in a $1.1BN deal which included the Lieferheld, Pizza.de and foodora brands — temporarily stepping out of the competitive fray. (Meanwhile Takeaway.com has since merged with the UK’s Just Eat to become… Just Eat Takeaway so, uh, keep up.)

Delivery Hero is returning to Germany now because it can, and because the market is huge. A two-year non-compete clause between it and Just Eat Takeaway recently expired — allowing for reheating (rehashing?) of the competitive food delivery mix in German cities.

Speaking to the FT back in May about this market return, Östberg suggested Delivery Hero has girded itself (and its investors) for a long fight.

“We don’t see necessarily that we are going to go in and win the market in the next year or so. This is a 10-year game,” he said. “Of course we will definitely make sure we put in enough money to be the clear number two, the clear challenger [to Just Eat Takeaway.com].”

Winning at food delivery is certainly a(n expensive) marathon, not a sprint.

There are also of course multiple races being run in markets around the world, depending on local conditions and competitive mix — with the chance that the winner of the biggest and most lucrative races will reach such a position of VC-sponsored glory that it can buy up the top competitors from the smaller races and consolidate everything — maximizing economies of scale and gaining the ability to squeeze out fresh competition to grab a juicy profit for themselves.

Or, well, that’s the theory. Competition regulators are likely to take increasing interest in this space, for one thing. Rising awareness of gig economy workers rights is also putting pressure on the model.

For now, the thin-margin food delivery business needs the right base conditions to survive. The model only functions in cities and ideally in highly dense urban environments. Most of the players in this space also do not employ the armies of riders that are needed to make deliveries — because doing so would make the model far more costly. And in Europe political attention on gig economy workers rights could force reforms that raise regional operational costs, putting further pressure on margins.

Spain has its own labor reforms in train that will affect Glovo in its home market, for example.

Achieving sustainability (i.e. profitability without the need for ongoing VC funding injections) remains a huge hurdle for delivery apps. It will likely require massive market consolidation and/or convincing users to switch from making the occasional order of a hot meal on a weekend to relying on app-based delivery for far more of their local shopping needs — not just lunch/dinner but groceries and toiletries, and other fast moving consumers goods and household items.

It’s notable that super fast grocery delivery is a major focus for Glovo, for example — which has recently been building out networks of inner city dark stores to service in-app convenience store shopping.

Lots of other on-demand app players are also ramping up on that front. Including Delivery Hero — which has been paying more attention to groceries (picking up InstaShop last year in a deal worth $360M).

Glovo building out in Central Europe while exiting markets further afield suggests it believes it can use a concentrated market footprint to drive operational efficiencies and strong order margins through a tightly integrated meal delivery and dark store play.

If it can do that — and offer at least the whiff of profitability — it could make its business an attractive future acquisition target for a larger global giant that’s looking to up the ‘consolidation chicken’ stakes by bolting on new regions.

A larger player like Delivery Hero may even be a potential future suitor — having shown it’s happy to return to markets it left earlier. After all, it surely knows Glovo’s business pretty well since they’ve done a number of market swaps. But, for now, that’s pure speculation.

Zooming out, what the on-demand model of app-based urban convenience means for the future of urban environments is a whole other question — and one which both competition and urban regulators will need to ponder very carefully.

If the rush to scale delivery platforms drives unstoppable consolidation that sees smaller players gobbled up by a few global giants — that can then use their size and scale to outcompete local shops — it may spell even more dark times for the traditional High Street and its family-run bodegas.

Local retail in many places has already been hammered by Internet giants like Amazon. Delivery apps are another high tech threat to bricks-and-mortar shopping. Touch of a button convenience does carry wider costs.

 

With new Partner Colin Hanna, and Shikha Ahluwalia as Associate, Balderton puts down roots in Berlin

By Mike Butcher

As of now, one fo the UK’s biggest and most active tech VCs has a new partner. Principal Colin Hanna has spearheaded several of Balderton’s deals in the past couple of years, and has now been appointed a Partner. But there’s a twist to this plot. He will be officially based in Berlin (where he’s lived since 2019), thus giving the VC a more powerful reach, being based, as it is, solely in London.

Hanna said: “Having been with Balderton for five years, I am humbled to now call my mentors my Partners. I look forward to strengthening Balderton’s unique approach from Berlin as we engineer serendipity for European founders with planet-scale ambition.”

Bernard Liautaud, Managing Partner of Balderton commented: “We are delighted to announce Colin’s promotion to Partner. Since he joined Balderton in 2016, Colin has had a significant impact on both Balderton and our portfolio… Colin has strengthened our position in DACH by establishing our permanent presence in Berlin and bringing in Shikha Ahluwalia, whom we are delighted to have. In addition, he was instrumental in the definition of the Balderton Sustainable Future Goals. We have no doubt Colin will be highly successful in his new role.”

The story does not end there, however. Joining him will be tech entrepreneur and founder Shikha Ahluwalia as an Associate covering the DACH region.

co-founded SBL, the D2C women’s fashion e-commerce company in India. Prior to that she was had a tech advisory boutique, and was previously with JP Morgan’s Investment Banking Division in London.

Balderton has 10 current investments across DACH including Contentful, Infarm, SOPHiA Genetics, McMakler, Demodesk, and vivenu.

Ahluwalia commented: “Over the past few years, I have seen the DACH start-up ecosystem evolve rapidly. We at Balderton believe the next European giant will be a technology company and know that the DACH ecosystem plays a significant role in helping form category-leading technology companies. As a former founder myself, I have first-hand experience with the unique challenges of running young businesses. I am excited to contribute and support founders on their own journey as part of Balderton Capital.”

Speaking to me over an interview Hanna said: “Shikha’s hiring deepens our commitment to the local Berlin ecosystem and to the DACH region more broadly. We have been actively supporting Founders in Germany for more than a decade.”

After spending his childhood in Jakarta and Hong Kong, and picking up a degree in Political Economy, Hanna has carved out a career in venture investing – at Balderton since July 4, 2016 – looking at it through the prism on the rise of urban living, grassroots-driven technologies like open source and crypto, and the political ramifications of technology.

He sits on the Board of companies like e-bikes startup VanMoof, Finoa (a crypto custodian), Rahko (quantum computing drug discovery, and helped lead on investments into Traefik and Luno and Vivenu).

One these you might pick up from all those is that they err towards the ‘purpose-driven’ side of the equation.

He told me: “I believe the next generation of Founders, particularly in Europe, care more about just their bank accounts and want to build companies that generate impact and are not afraid to take a view on how they want the world to change. Measuring this is a challenge and something we are trying to do with our SFGs at Balderton which I helped spearhead. I believe that when companies like Coinbase and others go “apolitical” they commit themselves to defending the structural status quo rather than becoming agents of deliberate change.”

“My point about purpose driven companies is that when I think when employees want to work with companies believe in their values and you try to tell them those aren’t important, that could be viewed as political. I don’t think we should be we should be muffling the employees.”

Does he think Coinbase, and also recent more recently Basecamp / 37 Signals were wrong to so-called ‘depoliticize’ their businesses?

“I think, I think every CEO is free to run their company how they see fit. But I think that that poses challenges for them on the talent side. I understand, as an American, how charged and how destructive the political climate became, and so I can really understand and empathize why certain choices were made at that time, because you get to a point where that where the conversation becomes toxic… I hope that the steps that they’ve taken, don’t strangle dialogue and conversation that’s constructive about how we want to make an impact and change the world, either as individuals or with the companies we work for,” he said.

Hanna also told me that he think VCs should be wary that the shift to remote will make it easier to invest more widely. “You have to more background checks on founders now, and things like that. But is it a ‘little bit’ more dangerous or is it ‘50% more dangerous’ the fact that people aren’t meeting up in person?”

Financing for students startup StudentFinance raises $5.3M seed from Giant and Armilar

By Mike Butcher

Fintech startup StudentFinance – which allows educational institutions to offer success-based financing for students – has raised a $5.3m (€4.5m) seed round co-led by Giant Ventures and Armilar Venture Partners. It’s now raised $6.6m total, to date.

StudentFinance launched in Spain first, followed by Germany and Finland, with the UK planned this year. Existing investors Mustard Seed Maze and Seedcamp, along with Sabadell Venture Capital, also participated.

The startup, which launched at the beginning of 2020, provides the tech back end for institutions to offer flexible payment plans in the form of ISAs. It also provides data intelligence on the employment market to predict job demand.

It now has 35 education providers signed up managing over €5m worth of ISAs. It also works with upskilling platforms including Ironhack and Le Wagon. StudentFinance’s competitors include (in the USA) Blair, Leif, Vemo Education, Chancen (Germany-based) and EdAid (UK-based).

As for why StudentFinance stands out from those companies, Mariano Kostelec, co-founder & CEO of StudentFinance, said: “StudentFinance is the only platform in this space providing the full end-to-end, cross-border infrastructure to deliver ISAs for students whilst helping to plug the growing skills gap. Not only do we provide the infrastructure to support the ISA financing model, but we also provide data intelligence on the employment market and a career-as-a-service platform that focuses on placing students in the right job. We are creating an equilibrium between supply and demand.”

With an ISA, students only start paying back tuition once they are employed and earning above a minimum income threshold, with payments structured as a percentage of their earnings. This makes it a ‘success-based model’, says Student Finance, which shifts the risk away from the students. They are likely to be popular as workers need to resell with the onset of digitization and the pandemic’s effects.

The startup was founded in 2019 by Mariano Kostelec, Marta Palmeiro, Sergio Pereira and Miguel Santo Amaro. Kostelec and Santo Amaro previously built Uniplaces, which raised $30m as a student housing platform in Europe.

Cameron Mclain, Managing Partner of Giant Ventures, commented: “What StudentFinance has built empowers any educational institution to offer ISAs as an alternative to upfront tuition or student loans, broadening access to education and opportunity.”

Duarte Mineiro, Partner at Armilar Venture Partners, commented: “StudentFinance is a great opportunity to invest in because aside from its very compelling core purpose, this is a sound business where its economics are backed by a solid proprietary software technology.”

Sia Houchangnia, Partner at Seedcamp, commented: “The need for reskilling the workforce has never been as acute as it is today and we believe StudentFinance has an important role to play in tackling this societal challenge.”

Angel backers include investors, which includes: Victoria van Lennep (founder of Lendable); Martin Villig (founder of Bolt); Ed Vaizey (the UK’s longest-serving Culture & Digital Economy Minister); Firestartr (UK-based early-stage VC); Serge Chiaramonte (UK fintech investor); and more.

Dabbel gets $4.4M to cut CO2 by automating HVAC control for commercial buildings

By Natasha Lomas

Düsseldorf-based proptech startup Dabbel is using AI to drive energy efficiency savings in commercial buildings.

It’s developed cloud-based self-learning building management software that plugs into the existing building management systems (BMS) — taking over control of heating and cooling systems in a way that’s more dynamic than legacy systems based on fixed set-point resets.

Dabbel says its AI considers factors such as building orientation and thermal insulation, and reviews calibration decisions every five minutes — meaning it can respond dynamically to changes in outdoor and indoor conditions.

The 2018-founded startup claims this approach of layering AI-powered predictive modelling atop legacy BMS to power next-gen building automation is able to generate substantial energy savings — touting reductions in energy consumption of up to 40%.

“Every five minutes Dabbel reviews its decisions based on all available data,” explains CEO and co-founder, Abel Samaniego. “With each iteration, Dabbel improves or adapts and changes its decisions based on the current circumstances inside and outside the building. It does this by using cognitive artificial intelligence to drive a Model-Based Predictive Control (MPC) System… which can dynamically adjust all HVAC setpoints based on current/future conditions.”

In essence, the self-learning system predicts ahead of time the tweaks that are needed to adapt for future conditions — saving energy vs a pre-set BMS that would keep firing the boilers for longer.

The added carrot for commercial building owners (or tenants) is that Dabbel squeezes these energy savings without the need to rip and replace legacy systems — nor, indeed, to install lots of IoT devices or sensor hardware to create a ‘smart’ interior environment; the AI integrates with (and automatically calibrates) the existing heating, ventilation, and air conditioning (HVAC) systems.

All that’s needed is Dabbel’s SaaS — and less than a week for the system to be implemented (it also says installation can be done remotely).

“There are no limitations in terms of Heating and Cooling systems,” confirms Samaniego, who has a background in industrial engineering and several years’ experience automating high tech plants in Germany. “We need a building with a Building Management System in place and ideally a BACnet communication protocol.”

Average reductions achieved so far across the circa 250,000m² of space where its AI is in charge of building management systems are a little more modest but a still impressive 27%. (He says the maximum savings seen at some “peak times” is 42%.)

The touted savings aren’t limited to a single location or type of building/client, according to Dabbel, which says they’ve been “validated across different use cases and geographies spanning Europe, the U.S., China, and Australia”.

Early clients are facility managers of large commercial buildings — Commerzbank clearly sees potential, having incubated the startup via its early-stage investment arm — and several schools.

A further 1,000,000m² is in the contract or offer phase — slated to be installed “in the next six months”.

Dabbel envisages its tech being useful to other types of education institutions and even other use-cases. (It’s also toying with adding a predictive maintenance functionality to expand its software’s utility by offering the ability to alert building owners to potential malfunctions ahead of time.)

And as policymakers around the global turn their attention to how to achieve the very major reductions in carbon emissions that are needed to meet ambitious climate goals the energy efficiency of buildings certainly can’t be overlooked.

“The time for passive responses to addressing the critical issue of carbon emission reduction is over,” said Samaniego in a statement. “That is why we decided to take matters into our own hands and develop a solution that actively replaces a flawed human-based decision-making process with an autonomous one that acts with surgical precision and thanks to artificial intelligence, will only improve with each iteration.”

If the idea of hooking your building’s heating/cooling up to a cloud-based AI sounds a tad risky for Internet security reasons, Dabbel points out it’s connecting to the BMS network — not the (separate) IT network of the company/building.

It also notes that it uses one-way communication via a VPN tunnel — “creating an end-to-end encrypted connection under high market standards”, as Samaniego puts it.

The startup has just closed a €3.6 million (~$4.4M) pre-Series A funding round led by Target Global, alongside main incubator (Commerzbank’s early-stage investment arm), SeedX, plus some strategic angel investors.

Commenting in a statement, Dr. Ricardo Schaefer, partner at Target Global, added: “We are enthusiastic to work with the team at Dabbel as they offer their clients a tangible and frictionless way to significantly reduce their carbon footprint, helping to close the gap between passive measurement and active remediation.”

 

Pinterest introduces Idea Pins, a video-first feature aimed at creators

By Sarah Perez

Pinterest is expanding further into the creator community with today’s launch of a video-first feature called “Idea Pins,” aimed at creators who want to tell their stories using video, music, creative editing tools and more. The feature feels a lot like Pinterest’s own take on TikTok, mixed with Stories, as the new Pins allow creators to record and edit creative videos with up to 20 pages of content, using tools like voiceover recording, background music, transitions and other interactive elements.

The company says Idea Pins evolved out of its tests with Story Pins, launched into beta in September 2020, after various stages of development beginning the year prior. At the time, Pinterest explained that Story Pins were different from the Stories you’d find on other social networks, like Snapchat or Instagram, because they focused on what people were doing — like trying new ideas or new products, not giving you snapshots of a creator’s personal life.

Another notable differentiator was that Story Pins weren’t ephemeral. That is, they didn’t disappear after a certain amount of time, but rather could be surfaced through search and other discovery mechanisms.

Over the past eight months since their debut, Pinterest has worked with Story Pin creators on the experience. That’s led to the new concept of the Idea Pin — essentially a rebranded Story Pin, which now offers a broader suite of editing tools than what was previously available.

Video is a key element in Idea Pins, as the Pins target the increased consumer demand for short-form video content of a creative nature — like what’s being delivered through TikTok, Instagram Reels, YouTube Shorts and elsewhere. The videos in the Pins can be up to 60 seconds on iOS, Android and web for each page, with up to 20 total pages per Pin.

Image Credits: Pinterest

Creators can edit their videos by adding their own voiceover or using a “ghost mode” transition tool to better showcase their before-and-afters by overlaying one part of a video on another. And they can save drafts of their work in progress.

But Idea Pins still include a number of features common to Stories, like adding stickers or tagging other creators with an @username, for instance. Pinterest says it will start with over 100 stickers featuring hand-drawn illustrations focused on top categories and behaviors it expects to see, like food-themed illustrations, stickers for before-and-afters, seasonal moments, and more.

Pinterest is also working with the royalty-free music database Epidemic Sound to offer a catalog of free tracks for use in Idea Pins.

And because many creators will use Idea Pins to inspire people to try a recipe or project of some sort, they can include “detail pages” where viewers can find the ingredient list or instructions, which is handy.

Image Credits: Pinterest

Pins are shared to Pinterest, where the company says they help the creator build an audience by being distributed in several places across its platform, including in some markets, by locating Pins for creators you follow right at the top of the home page.

Creators can also apply topic tags when publishing to ensure they’re surfaced when people are seeking that sort of content. Each Idea Pin can have up to 10 topic tags, which help to distribute the content in a targeted way to users via the home feed and search, the company says.

While Pins can help creators build an audience on Pinterest, they can use Idea Pins to grow their audience on other platforms, too. The company says it will offer export options that let people share their Pins across the web and social media. To do so, they download their Pin as a video which includes a Pinterest watermark and profile name — a trick learned from TikTok. This can then be reshared elsewhere.

Image Credits: Pinterest

Pinterest users, meanwhile, can save Idea Pins like any other Pin on the platform.

“We believe the best inspiration comes from people who are fueled by their passions and want to bring positivity and creativity into the world,” said Pinterest co-founder and Chief Design and Creative Officer Evan Sharp, in a statement about the launch. “On Pinterest, anyone can inspire. From creators to hobbyists to publishers, Pinterest is a place where anyone can publish great ideas and discover inspiring content. We have creators with extraordinary ideas on Pinterest, and with Idea Pins, creators are empowered to share their passions and inspire their audiences,” he added.

The new Idea Pin format is rolling out today to all creators (users with a business account) in the U.S., U.K., Australia, Canada, France, Germany, Austria and Switzerland.

Image Credits: Pinterest

Pinterest says, during tests, it found that Idea Pins were more engaging than standard Pins, with 9x the average comment rate. The number of Idea Pins (previously known as Story Pins) has also grown by 4x since January, as more creators adopted the format.

To help creators track how well Pins are performing, Pinterest is expanding its Analytics feature to include a new Followers and Profile Visits-driven metric to show creators how their Idea Pins have driven deeper engagement with their account.

The company says the next step is to make Idea Pins more shoppable, which it’s doing now with tests of product tagging underway.

Pinterest has been increasing its investment in the creator community in recent months, with the launch of its first-ever Creator Fund last month, and this month’s test of livestreamed events with 21 creators. It’s also now testing creator and brand collaborations with a select number of creators, including Domonique PantonPeter Som and GrossyPelosi, it says.

Image Credits: Pinterest

While Idea Pins seem like a natural pivot from Pinterest’s founding as an inspiration and idea board, it will face serious competition when it comes to wooing the professional creator community to its platform. Other big tech companies are outspending Pinterest, whose new Creator Fund of $500K falls short of the $1 million per day Snap paid creators or the $100 million fund for YouTube Shorts creators, TikTok’s $200 million fund or the deals Instagram has been making to lure Reels creators. These platforms, as well as a host of startups, are also giving creators a way to directly monetize their efforts through features like tips, donations, subscriptions and more.

What Pinterest may have in its favor, though, is its reach. The company claims 475 million users, which makes it a destination some creators may not want to overlook in their bid for growth, and later, e-commerce.

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