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Yesterday — December 4th 2020Your RSS feeds

Enter new markets and embrace a distributed workforce to grow during a pandemic

By Walter Thompson
Sarah Cole Contributor
Sarah Cole is a senior associate in Taylor Wessing's Silicon Valley office. She advises mostly North American technology and life sciences companies on their investments into the UK and Europe, including on European launches, cross-border M&A, venture capital and other growth company investment work.
Mark Barron Contributor
Mark Barron is the head of Taylor Wessing's market-leading technology and life sciences inward investment team, and advises North American companies on how to translate their domestic success to new jurisdictions and cultures and to thrive as global businesses.

Many companies will not see the uncertainty of a global pandemic as the perfect moment to go international, but for others (particularly in healthcare, online communications, and workplace mobility) the market is stronger than ever and companies are having to respond quickly internationally to both service existing clients and take advantage of the growth in demand.

We and our team at Taylor Wessing advise 50 to 75 venture-backed North American companies each year on setting up in Europe or Asia. We’ve helped companies such as TaskRabbit, Lime, Glossier, InVision and many others translate their domestic success to new jurisdictions and cultures and to thrive as global businesses.

This is a practical guide to international expansion with the challenges of the current time in mind. It’s a quick-read providing some practical tips and sharing best practices from peer companies to help you come out of the pandemic with a strong international presence. A great deal of this advice is evergreen and will serve you well whatever the circumstances may be.

In particular, we’ll cover the rise (and risks) of distributed workforces — a way for CEOs to hire the best talent anywhere in the world. This has taken on new significance with the boom in remote working as one of several options for CEOs looking for strategic growth during and after COVID.

Is this the right time to expand overseas?

Ten years ago, the timing question was much simpler. Founders would first of all focus on developing a product and winning over their domestic market, funded through their Series A and B rounds, and then go on to raise their Series C round, which investors would expect to be used to push into new markets.

Since then, with the age of the smartphone in full swing and international direct ordering ubiquitous, opportunities to sell into new markets appeared far earlier in a company’s growth and there is no longer a canned strategy for timing your international expansion.

The current circumstances have exaggerated this trend. There are many challenges in traditional sectors, but also many new market opportunities quickly appearing in healthcare and other technology sectors with founders wanting to move quickly into new markets.

Although it may be tempting to just get a few sales people on the ground to go for it, we would still recommend laying some groundwork and making some key decisions before diving in. For example: ensuring management can give sufficient time and attention to the new market; tweaking your product to comply with local regulations; reworking your sales approach.

If you are early-stage, tread carefully. Our belief is that the Series B round is still the earliest a founder or board should consider international expansion.

If you are early-stage, tread carefully. Our belief is that the Series B round is still the earliest a founder or board should consider international expansion. The companies we’ve worked with who have moved earlier than the B round will generally end up realizing it’s too early. They’ll end up pressing pause, or making a full strategic exit, tail between legs.

International expansion is a matter of focus, as well as financial resources. Once you’re selling into a new market, everyone in the business needs to be thinking internationally, including the CEO, CFO, general counsel, the board, engineers and staff. It can stretch everyone before there are the necessary resources in place to cope.

Decision made: How do you get going quickly?

Even in the best of times our advice would be to not experiment or push the boundaries when it comes to your international strategy, do that elsewhere in your business. You should follow the path most travelled at this stage. This is especially true in the current climate. If you’re thinking of doing something new, something your peers haven’t done before, we should have a conversation first.

Whichever market you’ve chosen, there are some universal first steps (although they might vary slightly between jurisdictions). For example:

  • If you have a permanent establishment for tax purposes (i.e., the local tax authorities consider you established enough to be paying income tax and corporation tax), work on the basis that you’ll need to incorporate a company or register a local branch.
  • Consider flexible options when it comes to taking on people (more on this below). Remember that in all cases local employment contracts will be needed (subject to the use of PEOs – see below).
  • Perhaps most importantly, local agreements transferring IP ownership will be needed (see next chapter).
  • There will also be some local filings (e.g., tax, corporate, payroll) where you will need a local service provider such as an accountant and payroll provider.

Common international expansion traps … and how to avoid them

Before yesterdayYour RSS feeds

Europe will push to work with the US on tech governance, post-Trump

By Natasha Lomas

The European Union said today that it wants to work with US counterparts on a common approach to tech governance — including pushing to standardize rules for applications of technologies like AI and pushing big tech to be more responsible for what their platforms amplify.

EU lawmakers are anticipating rebooted transatlantic relations under the incoming administration of president-elect Joe Biden .

The Commission has published a new EU-US agenda with the aim of encouraging what it bills as “global cooperation — based on our common values, interests and global influence” in a number of areas, from tackling the coronavirus pandemic to addressing climate change and furthering a Western geopolitical agenda.

Trade and tech policy is another major priority for the hoped for reboot of transatlantic relations, starting with an EU-US Summit in the first half of 2021.

Relations have of course been strained during the Trump era as the sitting US president has threatened the bloc with trade tariffs, berated European nations for not spending enough on defence to fulfil their Nato commitments and heavily implied he’d be a lot happier if the EU didn’t exist at all (including loudly supporting brexit).

The Commission agenda conveys a clear message that the bloc’s lawmakers are hopeful of a lot more joint working — toward common goals and interests — once the Biden administration takes office early next year.

Global AI standards?

On the tech front the Commission’s push is for alignment on governance.

“The EU and the US need to join forces as tech-allies to shape technologies, their use and their regulatory environment,” the Commission writes in the agenda. “Using our combined influence, a transatlantic technology space should form the backbone of a wider coalition of like-minded democracies with a shared vision on tech governance and a shared commitment to defend it.”

Among the proposals it’s floating is a “Transatlantic AI Agreement” — which it envisages as setting “a blueprint for regional and global standards aligned with our values”.

While the EU is working on a pan-EU framework to set rules for the use of “high risk” AIs, some US cities and states have already moved to ban the use of specific applications of artificial intelligence — such as facial recognition. So there’s potential to align on some high level principles or standards.

(Or, as the EU puts it: “We need to start acting together on AI — based on our shared belief in a human-centric approach and dealing with issues such as facial recognition.”)

 

“Our shared values of human dignity, individual rights and democratic principles make us natural partners to harness rapid technological change and face the challenges of rival systems of digital governance. This gives us an unprecedented window of opportunity to set a joint EU-US tech agenda,” the Commission also writes, suggesting there’s a growing convergence of views on tech governance.

Talks on tackling big tech

Here it also sees opportunity for the EU and the US to align on tackling big tech — saying it wants to open discussions on setting rules to tackle the societal and market impacts of platform giants.

“There is a growing consensus on both sides of the Atlantic that online platforms and Big Tech raise issues which threaten our societies and democracies, notably through harmful market behaviours, illegal content or algorithm-fuelled propagation of hate speech and disinformation,” it writes.

“The need for global cooperation on technology goes beyond the hardware or software. It is also about our values, our societies and our democracies,” the Commission adds. “In this spirit, the EU will propose a new transatlantic dialogue on the responsibility of online platforms, which would set the blueprint for other democracies facing the same challenges. We should also work closer together to further strengthen cooperation between competent authorities for antitrust enforcement in digital markets.”

The Commission is on the cusp of unveiling its own blueprint for regulating big tech — with a Digital Services Act and Digital Markets Act due to be presented later this month.

Commissioners have said the legislative packages will set clear conditions on digital players, such as for the handling and reporting of illegal content, as well as setting binding transparency and fairness requirements.

They will also introduce a new regime of ex ante rules for so-called gatekeeper platforms that wield significant market power (aka big tech) — with such players set to be subject to a list of dos and don’ts, which could include bans on certain types of self-preferencing and limits on their use of third party data, with the aim of ensuring a level playing field in the future.

The bloc has also been considering beefing up antitrust powers for intervening in digital markets.

Given how advanced EU lawmakers are on proposals to regulate big tech vs US counterparts there’s arguably only a small window of opportunity for the latter to influence the shape of EU rules on (mostly US) big tech.

But the Commission evidently takes the view that rebooted relations, post-Trump, present an opportunity for it to influence US policy — by encouraging European-style platform rules to cross the pond.

It’s fond of claiming the EU’s data protection framework (GDPR) has set a global example that’s influenced lawmakers around the world. So its intent now looks to be to double down — and push to export a European approach to regulating big tech back where most of these giants are based (even as the bloc’s other institutions are still debating and amending the EU proposals).

Next-gen mobile security

Another common challenge the document points to is next-gen mobile connectivity. This has been a particular soapbox of Trump’s in recent years, with the ALL-CAPS loving president frequently taking to Twitter to threaten and bully allies into taking a tough line on allowing Chinese vendors as suppliers for next-gen mobile infrastructure, arguing they pose too great a national security risk.

“We are facing common challenges in managing the digital transition of our economies and societies. These include critical infrastructure, such as 5G, 6G or cybersecurity assets, which are essential for our security, sovereignty and prosperity — but also data, technologies and the role of online platforms,” the Commission writes, easing into the issue.

EU lawmakers go on to say they will put forward proposals “for secure 5G infrastructure across the globe and open a dialogue on 6G” — as part of what they hope will be “wider cooperation on digital supply chain security done through objective risk-based assessments”.

Instead of a blanket ban on Huawei as a 5G supplier the Commission opted to endorse a package of “mitigating measures” — via a 5G toolbox — at the start of this year, which includes requirements for carriers to beef up network security and risk profile assessments of suppliers.

So it looks to be hoping the US can be convinced in the value of a joint approach to standardizing these sorts of security assessments — aka, ‘no more nasty surprises’ — as a strategy to reduce the shocks and uncertainty that have hit digital supply chains during Trump’s presidency.

Increased cooperation around cybersecurity is another area where the EU says it will be pressing US counterparts — floating the idea of joint EU-US restrictions against attributed attackers from third countries in the future. (A proposal which, should it be taken up, could see coordinated sanctions against Russia, which has previously been identified by US and European intelligence agencies running malware attacks targeted at COVID-19 vaccine R&D, for example.)

Easing EU-US data flows

A trickier area for the tech side of the Commission’s plan to reboot transatlantic relations is EU-US data flows.

That’s because Europe’s top court torpedoed the Commission’s US adequacy finding this summer — stripping the country of a privileged status of ‘essential equivalence’ in data protection standards.

Without that there’s huge legal uncertainty and risk for US businesses that want to take EU citizens’ data out of the region for processing. And recent guidance from EU regulators on how to lawfully secure data transfers makes it clear that in some instances there simply won’t be any extra measures or contractual caveats which will fix the risk entirely.

The solution may in fact be data localization in the EU. (Something the Commission’s Data Governance Act proposal, unveiled last week, appeared to confirm by allowing for Member States to set conditions for reuse of the most sensitive types of data — such as prohibiting transfers to third countries.)

“We must also openly discuss diverging views on data governance and see how these can be overcome constructively,” the Commission writes on this thorny issue, adding: “The EU and the US should intensify their cooperation at bilateral and multilateral level to promote regulatory convergence and facilitate free data flow with trust on the basis of high standards and safeguards.”

Commissioners have warned before that there’s no quick fix for the EU-US data transfer issue — but a longer term solution would be a convergence of standards in the areas of privacy and data protection.

And, again, that’s an area where US states have been taking action. But the Commission’s agenda pushing for “regulatory convergence” to ease data flows sums to trying to convince US counterparts of the economic case for reforming Section 702 of FISA…

Digital tax and tech-trade cooperation

Digital tax reform is also inexorably on the EU agenda since no agreement has been possibly under Trump on this stickiest of tech policy issues.

It writes that both the EU and the US should “strongly commit to the timely conclusion of discussions on a global solution within the context of OECD and G20” — saying this is vital to create “a fair and modern economy, which provides market-based rewards for the best innovative ideas”.

“Fair taxation in the digital economy requires innovative solutions on both sides of the Atlantic,” it adds. 

Another proposal the EU is floating is to establish a EU-US Trade and Technology Council — to “jointly maximise opportunities for market-driven transatlantic collaboration, strengthen our technological and industrial leadership and expand bilateral trade and investment”.

It envisages the body focusing on reducing trade barriers; developing compatible standards and regulatory approaches for new technologies; ensuring critical supply chain security; deepening research collaboration and promoting innovation and fair competition — saying there should also be “a new common focus on protecting critical technologies”.

“We need closer cooperation on issues such as investment screening, Intellectual Property rights, forced transfers of technology, and export controls,” it adds.

The Commission announced its own Intellectual Property Action Plan last week, alongside the Data Governance Act proposal — which included support for SMEs to file patents. It also said it will consider whether reform the framework for filing standards essential patents, encouraging industry to engage in forums aimed at reducing litigation in the meanwhile.

Union Labs believes uniting VC and corporate expertise can help startups solve ‘hard tech’ problems

By Jonathan Shieber

Chris Kim and Nate Williams formed Union Labs with the conviction that investors and companies aren’t collaborating closely enough to ensure the success of the startups they back.

Kim is the former co-founder and chief technology officer at the automatic lock company August. He first met Williams when the company was attempting to create a consortium of stakeholders for the Internet of Things market.

Nate loved the go-to-market side when he came on board. He led the charge for us getting into retail,” Kim said. 

Later, when August was acquired in 2017, the two men continued to work together after Williams took a role as an entrepreneur in residence at Kleiner Perkins. Kim would assist in due diligence as the two continued to refine the thesis that they’d worked on at August — that uniting stakeholders was a critical component of success for new technology companies.

That thesis became the organizing principle for their Union Labs fund, which has raised $29 million of a targeted $50 million fund. 

“We’re starting to see this bifurcation between really, really hard deep tech firms versus other firms that might [have] one out of five of their deals being deep tech. Chris and I saw a lane for ‘applied’ deeptech,” said Williams.

This lane runs through the early-stage technology firms that need guidance from operators at hardware companies rather than the software-as-a-service experts that Williams and Kim said populate most venture capital firms. “Educating a SaaS partnership about ‘hard tech’ is super hard,” said Williams.

In addition to Williams and Kim, Union Labs has two directors: Thomas Lee, who spent years working at Enphase Energy, and Annie Le, a former chief operating officer at Pryze.

One example of the kinds of startups that the new Union Labs fund is hoping to back is Strella Biotechnology, a company that has developed sensors to monitor the ethylene gas emitted by produce to determine the freshness of fruits and vegetables.

Union Labs is targeting 20 investments with the first fund, including 15 direct investments and another three-to-five companies that it intends to incubate.

The other public investments in the company’s portfolio include the car rental optimization service Carnect and a toolkit for home safety called Encircle Labs (that’s not revealing too much about its business).

A fourth portfolio company, that has yet to publicly reveal its services, is working on solving problems in field service management related to training.

While these issues have presented challenges for industry, with the exception of the sensor business, none of them could be considered “hard tech” from a hardware perspective… and indeed, many of them resemble the software-as-a-service businesses that many firms are writing checks to support.

For its part, Union Labs is writing pre-seed and seed-stage checks with an average size of $890,000 for an 11% ownership stake. Williams says the firm will invest anywhere from $500,000 to $1.5 million.

For startups, one selling point for the firm is the connection it still maintains with the Internet of Things consortium Williams helped to establish for August Homes. Through the consortium Williams has been able to pull together corporate backers in telecommunications, utilities, consumer electronics and insurance, along with Kleiner Perkins and GV (which Williams said are investors).

“One of the things we’ve seen is the rise of corporate venture capital firms,” said Williams. And both Kim and Williams want their firm to act as a hybrid, between corporate venture capital and a traditional venture firm. 

Time will tell if they can turn their mission into something more than a marketing message.

Moderna claims 94% efficacy for COVID-19 vaccine, will ask FDA for emergency use authorization today

By Darrell Etherington

Drugmaker Moderna has completed its initial efficacy analysis of its COVID-19 vaccine from the drug’s Phase 3 clinical study, and determined that it was 94.1% effective in preventing people from contracting COVID-19 across 196 confirmed cases from among 30,000 participants in the study. Moderna also found that it was 100% effective in preventing severe cases (such as those that would require hospitalization) and says it hasn’t found any significant safety concerns during the trial. On the basis of these results, the company will file an application for emergency use authorization (EUA) with the U.S. Food and Drug Administration (FDA) on Monday.

Seeking an EUA is the next step towards actually beginning to distribute and administer Moderna’s COVID-19 vaccine, and if granted the authorization, it will be able to provide it to high-risk individuals in settings where it could help prevent more deaths, such as with front-line healthcare workers, ahead of receiving a full and final regulatory approval from the U.S. healthcare monitoring agency. Moderna will also seek conditional approval from the European Medicines Agency, which will enable similar use ing the EU.

Moderna’s vaccine is an mRNA vaccine, which provides genetic instructions to a person’s body that prompts them to create their own powerful antibodies to block the receptor sites that allows COVID-19 to infect a patient. It’s a relatively new therapeutic approach for human use, but has the potential to provide potentially even more resistance to COVID-19 than do natural antibodies, and without the risk associated with introducing any actual virus, active or otherwise, to an inoculated individual in order to prompt their immune response.

In mid-November, Moderna announced that its COVID-19 vaccine showed 94.5% efficacy in its preliminary results. This final analysis of that same data hews very close to the original, which is promising news for anyone hoping for an effective solution to be available soon. This data has yet to be peer reviewed, though Moderna says that it will now be submitting data from the Phase 3 study to a scientific publication specifically for that purpose.

Moderna’s vaccine candidate is part of the U.S’s Operation Warp Speed program to expedite the development, production and distribution of a COVID-19 vaccine, initiated earlier this year as a response to the unprecedented global pandemic. Other vaccines, including one created by Pfizer working with partner BioNTech, as well as an Oxford University/AstraZeneca-developed candidate, are also far along in their Phase 3 testing and readying for emergency approval and use. Pfizer has already applied with the FDA for its own EUA, while the Oxford vaccine likely won’t be taking that step in the U.S. until it completes another round of final testing after discovering an error in the dosage of its first trial – which led to surprising efficacy results.

5 top investors in Dutch startups discuss trends, hopes and 2020 opportunities

By Mike Butcher

The Netherlands’ ecosystem has been flourishing; more than $85 million was invested in regional startups in 2019 alone. The nation’s proximity to the U.K., Belgium, France and Germany makes Amsterdam a natural gateway to those markets. Long ago the savvy Dutch realized this, and built up Schiphol to become the world’s twelfth-busiest airport. Indeed, Amsterdam’s logistical and social connectedness is ranked number one in DHL’s Global Connectedness Index.

Plenty of good funding rounds, a highly skilled workforce and a strong entrepreneurial culture have given Amsterdam a booming startup ecosystem. And Brexit is helping: The Dutch are highly proficient in English and Dutch law is similar to English law, which means U.K.-based tech founders are welcomed with open arms.

In 2020, the venture industry continued to invest in startups, despite the COVID-19 crisis. According to a study by KPMG and and NL Times, startups raised $591.2 million in the third quarter, more than double the $252.4 million raised in the quarter before.

For obvious reasons, this year has seen more cash go into companies that were able to adapt to the pandemic. KPMG found that while the total amount of investment increased in the past six months, the number of overall investments decreased. New startups pulled in fewer investments, KPMG sees this trend continuing and likely leading to consolidation amongst startups in similar sectors.

According to a report by Dealroom.co and StartupAmsterdam, there are 1,661 tech companies in Amsterdam, while the city ranked fifteenth in Startup Genome’s 2019 report “Global Startup Ecosystem Report,” moving up four places since 2017. The median seed round is $500,000 (above the global average of $494,000) and a median Series A round for a startup is $2.4 million. The average salary for a software engineer is around €54,000.

Amsterdam has tech industry “schools” such as Growth Tribe, The Talent Institute and THNK for educational courses, as well as accelerators like Rockstart, Startupbootcamp and Fashion for Good. Co-working is well-catered for with TQ, Startup Village and B.Amsterdam, and workers can cycle everywhere in minutes.

While taxes are high, entrepreneurs won’t find the staggering income inequality so often seen in cities like San Francisco and New York. In Amsterdam, rich people take public transport, not private buses.

During COVID-19, the Dutch government has also announced support packages such as tax deferrals, temporary employment bridging schemes and other initiatives. It also launched a national program, TechLeap.NL, to boost the ecosystem with more international investor visibility. StartupDelta, a Dutch startup lobby group, keeps the pressure on the politicians.

The Netherlands’ most famous unicorns include Booking.com, Adyen, Virtuagym, MessageBird, Swapfiets, Backbase, Picnic and Takeaway, among several others.

Adyen launched in 2006, and in June 2018, it was listed as one of Europe’s largest tech IPOs with a value of €7 billion. Booking.com started in 1996 and was later acquired by Priceline Group (now called Booking Holdings) in 2005. Elastic, the provider of subscription-based data search software used by Dell, Netflix, The New York Times and others, was another gangbuster IPO in 2018.

For this survey, we interviewed the following Amsterdam-focused investors:

• Janneke Niessen, partner, CapitalT VC

• Stefan van Duin, partner, Borski Fund

• Nick Kalliagkopoulos, partner, Prime Ventures

• Bas Godska, founder, Acrobator Ventures

• Renaat Berckmoes, partner, Fortino

Janneke Niessen, partner, CapitalT VC

What trends are you most excited about investing in, generally?
Digital health, education, B2B SaaS.

What’s your latest, most exciting investment?
Wizenoze.

Are there startups that you wish you would see in the industry but don’t? What are some overlooked opportunities right now?
More overlooked founders than opportunities.

What are you looking for in your next investment, in general?
A great team.

Which areas are either oversaturated or would be too hard to compete in at this point for a new startup? What other types of products/services are you wary or concerned about?
Delivery, taxis, scooters.

How much are you focused on investing in your local ecosystem versus other startup hubs (or everywhere) in general? More than 50%? Less?
Less.

Which industries in your city and region seem well-positioned to thrive, or not, long term? What are companies you are excited about (your portfolio or not), which founders?
NL seems well-positioned for fintech, deep tech. I am really excited about Tracy Chou and Diane Janknegt, two incredible founders.

How should investors in other cities think about the overall investment climate and opportunities in your city?
Very positive. Lots of innovation, great infrastructure, good talent.
Do you expect to see a surge in more founders coming from geographies outside major cities in the years to come, with startup hubs losing people due to the pandemic and lingering concerns, plus the attraction of remote work?
I think startups have always been there, investors just don’t tend to look at them. I think the opportunity is more that they now will.

Which industry segments that you invest in look weaker or more exposed to potential shifts in consumer and business behavior because of COVID-19? What are the opportunities startups may be able to tap into during these unprecedented times?
None. We look at digital health, education and SaaS and they all thrive in this climate. Of course an economic crisis will have an impact on spending in general.

How has COVID-19 impacted your investment strategy? What are the biggest worries of the founders in your portfolio? What is your advice to startups in your portfolio right now?
It has confirmed our approach. We have a data-driven approach to teams, which is great when people cannot meet.

Are you seeing “green shoots” regarding revenue growth, retention or other momentum in your portfolio as they adapt to the pandemic?
We invest so early that companies are growing regardless.

What is a moment that has given you hope in the last month or so? This can be professional, personal or a mix of the two.
When I explained to my little boy what racism is and he answered: Mummy that is just really weird. That gives me hope that the generations after us might do better.

Stefan van Duin, partner, Borski Fund

Brexit’s data compliance burden could cost UK firms up to £1.6BN, says think tank

By Natasha Lomas

An analysis of the total cost to UK businesses if the country fails to gain an adequacy agreement from the European Commission once it leaves the bloc at the end of the year — creating barriers to inbound data flows from the EU — suggests the price in pure compliance terms could be between £1BN and £1.6BN.

The assessment of the economic impacts if the UK is deemed a third country under EU data rules has been carried out by the New Economics Foundation (NEF) think tank and UCL’s European Institute research hub — with the researchers  conducting interviews with over 60 legal professionals, data protection officers, business representatives, and academics, from the UK and EU.

They are estimating that the average compliance cost for an affected micro business will be £3,000; or £10,000 for a small business; £19,555 for a medium business; and £162,790 for a large business.

“This extra cost stems from the additional compliance obligations – such as setting up standard contractual clauses (SCCs) – on companies that want to continue transferring data from the EU to the UK,” they write in the report. “We believe our modelling is a relatively conservative estimate as it is underpinned by moderate assumptions about the firm-level cost and number of companies affected.”

An adequacy agreement refers to a status that can be conferred on a country outside the European Economic Area (as the UK will be once the Brexit transition is over) — if the EU’s executive deems the levels of data protection in the country are essentially equivalent to what’s provided by European law.

The UK has said it wants to gain an adequacy agreement with the EU as it works on implementing the 2016 referendum vote to leave the bloc. But there are doubts over its chances of obtaining the coveted status — not least because of surveillance powers enshrined in UK law since the 2013 Snowden disclosures (which revealed the extent of Western governments’ snooping on digital data flows).

Broad powers that sanction UK state agencies’ digital surveillance have faced a number of legal challenges under UK and EU law.

The government has also signalled an intention to ‘liberalize’ domestic data laws as it leaves the EU — writing in a national data strategy published in September that it wants to ensure data is not “inappropriately constrained” by regulations “so that it can be used to its full potential”.

But any moves to denude the UK’s data protection standards risk an ‘inadequate’ finding by the Commission.

Europe’s top court, meanwhile, has set a clear line that governments cannot use national security to bypass general principles of EU law, such as proportionality and respect for privacy.

Another major — and highly pertinent — ruling by the CJEU this summer invalidated an adequacy status the Commission had previously conferred on the US, striking down the EU-US Privacy Shield transatlantic data transfer mechanism. It does not bode well for the UK’s chances of adequacy.

The court also made it clear that the most used alternative for international transfers (a legal tool called Standard Contractual Clauses, aka SCCs) must face proactive scrutiny from EU regulators when data is flowing to third countries where citizens’ information could be at risk.

The thousands of companies that had been relying on Privacy Shield to rubberstamp their EU to US data flows are now scrambling for alternatives on a case by case basis — with vastly inflated legal risk, complexity and administration requirements.

The same may be true in very short order for scores of UK-based data controllers that want to continue being able to receive inbound data flows from users in the EU after the end of the Brexit transition.

Earlier this month the European Data Protection Board (EDPB) put out 38 pages of guidance for those trying to navigate new legal uncertainty around SCCs — in which it warned there may be situations where no supplementary measures will suffice to ensure adequate protection for a specific transfer.

The solution in such a case might require relocation of the data processing to a site within the EU, the EDPB said.

“Although the UK has high standards of data protection via the Data Protection Act 2018, which enacted the General Data Protection Regulation (GDPR) in UK law, an EU adequacy decision is not guaranteed,” the NEF/UCL report warns. “Potential EU concerns with UK national security, surveillance and human rights frameworks, as well as a future trade deal with the US, render adequacy uncertain. Furthermore, EUUK data flows are at the whim of the wider Brexit process and negotiations.”

Per their analysis, if the UK does not get an adequacy decision it will face an increased risk of GDPR fines due to increased compliance requirements.

The General Data Protection Regulation sanctions financial penalties for violations of the framework that can scale up to 4% of an entity’s global annual turnover or €20M, whichever is greater.

The report also predicts a reduction in EU-UK trade, especially digital trade; reduced investment (both domestic and international); and the relocation of business functions, infrastructure, and personnel outside the UK.

The researchers argue that more research is needed to support a wider macroeconomic assessment of the value of data flows and adequacy decisions — saying there’s a paucity of research on “the value of data flows and adequacy decisions in general” — before adding: “EU-UK data flows are a crucial enabler for thousands of businesses. These flows underpin core business operations and activities which add significant value. This is not just a digital tech sector issue – the whole economy relies on data flows.”

The report makes a number of recommendations — including urging the UK government to make “relevant data and modelling tools” available to support empirical research on the social and economic impacts of data protection, digital trade, and the value of data flows to help shape better public policy and debate.

It also calls for the government to set aside funds for struggling UK SMEs to help them with the costs of complying with Brexit’s legal data burden.

“Our report concludes that no adequacy decision has the potential to be a contributing factor which undermines the competitiveness of key UK services and digital technology sectors, which have performed extremely strongly in recent years. Although we do not want to exaggerate the impacts — and no adequacy decision is far from economic armageddon — this outcome would not be ideal,” they add.

You can read the full report here.

Calling Dublin VCs: Be featured in The Great TechCrunch Survey of European VC

By Mike Butcher

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our survey of VCs in Dublin will capture how the city is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled out the survey already, there is no need to do it again).

We’d like to know how Ireland’s startup scene is evolving, how the tech sector is being impacted by COVID-19 and, generally, how your thinking will evolve from here. Obviously, most VCs are in Dublin, but we don’t want to miss out on those based elsewhere.

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

For example, here is the recent survey of London.

You are not in Dublin, but would like to take part? That’s fine! Any European VC investor can STILL fill out the survey, as we probably will be putting a call out to your city next anyway! And we will use the data for future surveys on vertical topics.

The survey is covering almost every country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

Renewable power represents almost 90% of total global power capacity added in 2020

By Jonathan Shieber

Bucking the slowdown in most of the power sector caused by responses to the COVID-19 pandemic, renewable energy actually grew in 2020, and will represent about 90% of the total power capacity added for the year, according to the International Energy Agency.

A surge in new projects from China and the US led the charge for renewable power, which will account for almost 200 gigawatts of additional power generating capacity around the world, according to the  IEA’s Renewables 2020.

Big additions came from hydropower, solar and wind. Wind and solar power generating assets are expected to jump by 30% in both China and the US as developers take advantage of incentives that are set to expire.

The agency predicts that India and the European Union will also jump in and add an additional 10% of renewable capacity — marking the fastest period of growth for the industry since 2015.

These supply additions are in part due to the commissioning of projects delayed by the COVID-19 pandemic, which disrupted supply chains and put a stop to construction.

“Renewable power is defying the difficulties caused by the pandemic, showing robust growth while others fuels struggle,” said Dr Fatih Birol, the IEA Executive Director, in a statement. “The resilience and positive prospects of the sector are clearly reflected by continued strong appetite from investors – and the future looks even brighter with new capacity additions on course to set fresh records this year and next.”

Throughout the first ten months of the year, China, India, and the EU have boosted auctioned renewable power capacity by 15% over the year ago period. Meanwhile, shares of publicly traded renewable equipment manufacturers and project developers have been outperforming most stock indices and the overall energy sector, the agency noted.

Much of this success, the agency noted, will require continued political support to work. Expiring incentives could reduce demand, but if governments provide some certainty around the continuation of subsidy programs, solar and wind additions could jump by another 25% by 2022.  With the right policy, solar photovoltaic installations could reach a record 150 gigawatts by 2022, which would be a 40% increase in just about three years.

“Renewables are resilient to the Covid crisis but not to policy uncertainties,” said Dr Birol, in a statement. “Governments can tackle these issues to help bring about a sustainable recovery and accelerate clean energy transitions. In the United States, for instance, if the proposed clean electricity policies of the next US administration are implemented, they could lead to a much more rapid deployment of solar PV and wind, contributing to a faster [decarbonization] of the power sector.”

If the agency’s predictions hold, renewable energy could become the largest source of electricity worldwide by 2025, according to Dr. Birol.

“By that time, renewables are expected to supply one-third of the world’s electricity – and their total capacity will be twice the size of the entire power capacity of China today,” Birol said in a statement.

What’s all this about Europe wanting crypto backdoors?

By Natasha Lomas

A press report emerged over the weekend claiming European lawmakers who are worried about terrorism are speeding towards a ban on end-to-end encryption. Spoiler: It’s a little more nuanced than that. Read on for our break down of what’s actually going on… 

Is Europe about to ban E2E Encryption?

No.

A report in the Austrian press yesterday appeared to suggest a ban incoming on end-to-end encryption which the headline linked to a recent terror attack in the country. In fact there have been discussions ongoing between Member States on the topic of encryption — and whether/how to regulate it — for several years now.

The report is based on a draft resolution of the Council of the European Union (CoEU), dated November 6. Per the draft document a final text, which could incorporate further amendments, is due to be presented to the Council on November 19 for adoption.

The CoEU decision-making body is comprised of representatives of Member States’ governments. It’s responsible for setting the political direction for the bloc however it’s the European Commission which is responsible for drafting legislation. So this is not in any way ‘draft EU legislation’.

One Commission insider we spoke to who’s involved in cyber security strategy couched the resolution as a “political gesture” — and most likely an empty one.

What does the CoEU draft resolution actually say? 

It starts by asserting the EU’s full support for “the development, implementation and use of strong encryption” — which would be a very odd position to hold if you also intended to ban E2EE.

Then it discusses “challenges” to public security that flow from criminals having easy access to the same technologies that are used to protect vital civic infrastructure — suggesting criminals can use E2EE to make “lawful” access to their communications “extremely challenging” or “practically impossible”.

This is of course a very familiar discussion in security circles — regularly fuelled by the ‘Five Eyes’ nations’ push for greater surveillance powers — and one which recurs repeatedly in relation to the technology industry owing to developments in communications tech. But note the CoEU does not say access to encrypted data is actually impossible.

Instead the resolution moves on to call for discussion of how to ensure the powers of competent security and criminal justice authorities can be preserved — while ensuring full respect for due legal process and EU rights and freedoms such as (notably the right to respect for private life and communications; and the right to the protection of personal data).

The document suggests a “better” balance should be created between these competing interests. “The principle of security through encryption and security despite encryption must be upheld in its entirety,” is how it’s phrased.

The specific call is for “governments, industry, research and academia… to work together to strategically create this balance”.

Click to access 783284_fh_st12143-re01en20_783284.pdf

Does the draft resolution call for encryption to be backdoored?

No.

Indeed, the Council of Ministers specifically writes [emphasis ours]: “Competent authorities must be able to access data in a lawful and targeted manner, in full respect of fundamental rights and the data protection regime, while upholding cybersecurity. Technical solutions for gaining access to encrypted data must comply with the principles of legality, transparency, necessity and proportionality.”

So the push here — beyond the overarching political push to be seen to be doing something ‘pro-security’ — is for ways to improve targeted access to data but also that such targeting respect key EU principles that link to fundamental rights (like privacy of communications).

That doesn’t sum to an E2EE ban or backdoor.

But what does the resolution say about the legal framework? 

The Council of Ministers want the Commission to carry out a review of relevant existing regulations with relevance to ensure it’s all pulling in the same direction and therefore contributing to law enforcement being able to operate as efficiently as possible.

There is a mention of “potential technical solutions” at this point — but again the emphasis is on any such law enforcement aids supporting the use of their investigatory powers within domestic frameworks that comply with EU law — and a further emphasis on “upholding fundamental rights and preserving the advantages of encryption”. Security of information is a vital advantage of encryption previously discussed in the document so it’s essentially calling for preserving security without literally spelling that out. 

This portion of the draft document has several strike-throughs so looks most likely to be subject to wording changes. But for a signal of the direction of travel one bit of rewording emphasises the need for transparency should there be joint working with comms services providers on developing any “solutions”. (And a backdoor that everyone is told about obviously wouldn’t be a backdoor.)

Another suggestion in the draft calls for upskilling relevant authorities to boost their technical and operational expertise — aka more cyber training for police.

In a final section joint working to improve relevant co-ordination and expertise across the EU is again highlighted by the CoEU as key to bolstering authorities’ investigative capabilities.

There is also talk of developing “innovative approaches in view of new technologies” — but the conclusion makes a point of stating clearly: “there should be no single prescribed technical solution to provide access to encrypted data”. Aka no golden key/universal backdoor.

So there’s nothing to be worried about then? 

Well, the Commission may feel some pressure over the issue as it works on its new cyber strategy so it could get some political push on specific policy ideas — although we’re unlikely to see anything much on this front before next year. The CoEU isn’t setting out any policy ideas yet. At most it’s asking for help formulating some.

TechCrunch spoke to Dr Lukasz Olejnik, an independent cybersecurity researcher and consultant based in Europe, to get his thoughts on the draft resolution. He agreed there’s no broadside against E2EE in the draft, nor any near-term prospect of legislation flowing from it. Indeed, he suggested the CoEU appears not to know what to do — hence looking to outside experts in academic and industry for help.

“First, there is no talk of backdoors. The message sets things clearly with respect to encryption being important for cybersecurity and privacy,” he told us. “As for the topic of this document, it is a long-term process in the exploratory phase now. Problems and ideas are identified. Nothing will happen immediately.

“It’s not getting even near to banning E2EE. It appears they do not know what to do exactly. So among the ideas is to perhaps set up a ‘high level expert group’ — the document speaks about engaging ‘academia’. This process is sometimes initiated by the Commission to identify ‘recommendations’ which may or may not be used in the policy process. It would then revolve around who would get to be admitted to such a group, and this varies a lot.

“For example the AI group was seen as quite reasonable, while the other dedicated one on disinformation was in fact geared towards the EU media figures rather than researchers or concrete expertise. We do not know where all this will lead.”

Olejnik expressed doubt that the Council could drive legislation on its own in this case, given the complexity involved. “It’s too premature to speak of any legislation,” he said. “Legislative process in the EU can be quite complex to understand but the EU Council would be unable to pull such a complex thing on their own.”

New strategic approach (?): "security despite encryption", the policy term blends two meanings of security, technical and non-technical ad the same time, showing that reversible encryption systems are means to guarantee security. pic.twitter.com/CcEZHVIAzZ

— Lukasz Olejnik (@lukOlejnik) November 8, 2020

But he did highlight the CoEU’s coining of the phrase ‘security despite encryption’ as a noteworthy development — suggesting it’s unclear where this novel framing might lead in policy terms. So, as ever, the security debate around encryption demands a close eye.

“What I find of particular importance is coining the term ‘security despite encryption’. It is both unfortunate and ingenious. But the problem with this technology policy term is that it may consciously blend policy understanding of (physical?) security with technology security, as guaranteed today by encryption. This puts the two in direct opposition,” he said, adding: “Where the fallout would lead is anyone’s guess. I believe this process is far from over.”

But couldn’t there be a push to introduce some kind of ‘lawful intercept mechanism’ across the EU?

There would be huge challenges to such a step given all the EU legal principles and rights that any mechanism would need to respect.

The CoEU’s draft resolution reiterates this multiple times — highlighting the need for security activity to respect fundamental rights like privacy of communications and principles of legality, transparency, necessity and proportionality, for example.

Domestic surveillance laws in several EU Member States have also recently been found falling short in this regard by Europe’s highest court — so there would be a clear path to challenging any security overreach in the courts.

That means that even if some kind of intercept mechanism could be pushed through an EU legislative process, via enough political will to drive it, there’s no doubt it would face fierce legal challenge and the prospect of being unpicked by the courts.

Happy to drag this to the courts (if it would ever happen).. :)

— Max Schrems 🇪🇺🇦🇹 (@maxschrems) November 8, 2020

Asked for a view on the notion put forward in the draft resolution — of seeking a “better” balance between security and privacy — and whether it might be a push towards something like the ‘ghost protocol’ advocated by GCHQ in recent years as an “exceptional access mechanism” (but which critics argue would both undermine user trust and introduce a blanket security risk that’s all but equivalent to a backdoor) — Olejnik told us: “Undermining encryption is a tricky territory because modern technology goes in a direction of more security, not less. In modern security ecosystems it would be hard to imagine a lawful intercept functionality known from the telecommunication infrastructure. For private business it’s also a question of trust. Can the individual users freely move their social interactions online even further? It’s a question measured in billions of dollars.”

Europe urges e-commerce platforms to share data in fight against coronavirus scams

By Natasha Lomas

European lawmakers are pressing major e-commerce and media platforms to share more data with each other as a tool to fight rogue traders who are targeting consumers with coronavirus scams.

After the pandemic spread to the West, internet platforms were flooded with local ads for PPE of unknown and/or dubious quality and other dubious coronavirus offers — even after some of the firms banned such advertising.

The concern here is not only consumers being ripped off but the real risk of harm if people buy a product that does not offer the protection claimed against exposure to the virus or even get sold a bogus coronavirus “cure” when none in fact exists.

In a statement today, Didier Reynders, the EU commissioner for justice, said: “We know from our earlier experience that fraudsters see this pandemic as an opportunity to trick European consumers. We also know that working with the major online platforms is vital to protect consumers from their illegal practices. Today I encouraged the platforms to join forces and engage in a peer-to-peer exchange to further strengthen their response. We need to be even more agile during the second wave currently hitting Europe.”

The Commission said Reynders met with 11 online platforms today — including Amazon, Alibaba/AliExpress, eBay, Facebook, Google, Microsoft/Bing, Rakuten and (TechCrunch’s parent entity) Verizon Media/Yahoo — to discuss new trends and business practices linked to the pandemic and push the tech companies to do more to head off a new wave of COVID-19 scams.

In March this year EU Member States’ consumer protection authorities adopted a common position on the issue. The Commission and a pan-EU network of consumer protection enforcers has been in regular contact with the 11 platforms since then to push for a coordinated response to the threat posed by coronavirus scams.

The Commission claims the action has resulted in the platforms reporting the removal of “hundreds of millions” of illegal offers and ads. It also says they have confirmed what it describes as “a steady decline” in new coronavirus-related listings, without offering more detailed data.

In Europe, tighter regulations over what e-commerce platforms sell are coming down the pipe.

Next month regional lawmakers are set to unveil a package of legislation that will propose updates to existing e-commerce rules and aim to increase their legal responsibilities, including around illegal content and dangerous products.

In a speech last week, Commission EVP Margrethe Vestager, who heads up the bloc’s digital policy, said the Digital Services Act (DSA) will require platforms to take more responsibility for dealing with illegal content and dangerous products, including by standardizing processes for reporting illegal content and dealing with reports and complaints related to content.

A second legislative package that’s also due next month — the Digital Markets Act — will introduce additional rules for a sub-set of platforms considered to hold a dominant market position. This could include requirements that they make data available to rivals, with the aim of fostering competition in digital markets.

MEPs have also pushed for a “know your business customer” principle to be included in the DSA.

Simultaneously, the Commission has been pressing for social media platforms to open up about what it described in June as a coronavirus “infodemic” — in a bid to crack down on COVID-19-related disinformation.

Today the Commission gave an update on actions taken in the month of September by Facebook, Google, Microsoft, Twitter and TikTok to combat coronavirus disinformation — publishing its third set of monitoring reports. Thierry Breton, commissioner for the internal market, said more needs to be done there too.

“Viral spreading of disinformation related to the pandemic puts our citizens’ health and safety at risk. We need even stronger collaboration with online platforms in the coming weeks to fight disinformation effectively,” he said in a statement. 

The platforms are signatories of the EU’s (non-legally binding) Code of Practice on disinformation.

Legally binding transparency rules for platforms on tackling content such as illegal hate speech look set to be part of the DSA package. Though it remains to be seen how the fuzzier issue of “harmful content” (such as disinformation attached to a public health crisis) will be tackled.

A European Democracy Action Plan to address the disinformation issue is also slated before the end of the year.

In a pointed remark accompanying the Commission’s latest monitoring reports today, Vera Jourová, VP for values and transparency, said: “Platforms must step up their efforts to become more transparent and accountable. We need a better framework to help them do the right thing.”

E-bike subscription service Dance closes $17.7M Series A, led by HV Holtzbrinck Ventures

By Mike Butcher

Three months on since the former founders of SoundCloud launched their e-bike subscription service, Dance they are today announcing the close of a $17.7 million (€15 million) Series A funding round led by one of the larger European VCs, HV Holtzbrinck Ventures.

Founded by Eric Quidenus-Wahlforss (ex-Soundcloud), Alexander Ljung (ex-Soundcloud) and Christian Springub (ex-Jimdo), Dance has ambitions to offer its all-inclusive service subscription package into expanded markets across Europe and eventually the US. Dance is currently operating the invite-only pilot of its e-bike subscription in Berlin, with plans for a broader launch, expanded accessibility and availability and new cities next year. 

Rainer Märkle, general partner at HV Holtzbrinck Ventures said in a statement: “The mobility market is seeing a huge shift towards bikes, strongly fueled by the paradigm shift of vehicles going electric. Unfortunately, the majority of e-bikes on the market today have some combination of poor design, high upfront costs, and cumbersome maintenance. We analyzed the overall mobility market, evaluated all means of transport, and crunched the numbers on all types of business models for a few years before we found what we were looking for. Dance is by the far the most viable future of biking, bridging the gap between e-bike ownership and more ‘joyful’ accessibility to go places.”

E-bikes tend to be notoriously expensive to purchase and a hassle to repair. That said, startups like VanMoof and Cowboy have brought an Apple -esque business model to the market which is fast bringing the cost of full ownership down.

Most commuters are put off cycling the average 10 kilometers (6.2 miles) commute but e-bikes make this distance a breeze. Dance sits in that half-way house between owning an expensive bike and having to hunt down a rentable ebike or electric scooter close to your location.

Additionally, the COVID-19 pandemic has brought individual, socially distanced, transport into sharp relief. UK sales of e-bikes have boomed, seeing a 230% surge in demand over the summer. This has happened at the same time as EU governments have put in more than 2300km of bike lanes, with the UK alone pledging £250 million in investment.

Quidenus-Wahlforss said the startup has been “inundated with positive responses from around the world since we announced our invite-only pilot program.”

Dance’s subscription model includes a fully assembled e-bike delivered to a subscriber’s door within 24 hours. This comes with maintenance, theft replacement insurance, a dedicated smartphone app, concierge services, GPS location tracking and unlocking capabilities.

TikTok details how it’s taking further action against hateful ideologies

By Sarah Perez

TikTok said on Wednesday it’s strengthening its enforcement actions against hate speech and hateful ideologies to include “neighboring ideologies,” like white nationalism and others, as well as statements that emerge from those ideologies.

In a blog post, TikTok explained that it regularly evaluates its enforcement processes with the help of global experts to determine when it needed to take action against emerging risks.

While the TikTok Trust & Safety teams were already working to remove neo-Nazism and white supremacy from its platform under existing policies, it’s more recently expanded enforcement will also cover related ideologies, including white nationalism, white genocide theory, as well as “statements that have their origin in these ideologies, and movements such as Identitarianism and male supremacy,” TikTok said.

The announcement was made on TikTok’s European newsroom, and follows TikTok’s recent joining of the European Commission’s Code of Conduct on Countering Illegal Hate Speech Online. However, the guidelines TikTok discussed apply to its global audience.

TikTok had made similar statements on its U.S. newsroom in August, including its plans to take action against other hateful ideologies, including white nationalism and male supremacy, in addition to white supremacy and anti-semitism. A TikTok spokesperson told TechCrunch the new announcement was meant to offer “further details” on that policy.

The company’s new blog post noted how many monitoring organizations have been reporting that anti-semitic sentiment is increasing around the world.

TikTok itself had been recently accused of having a “white supremacy” problem, according to a report from the Anti-Defamation League, which led to the U.S. newsroom announcement earlier this year. The ADL had uncovered dozens of accounts that were using combinations of white supremacist symbols, terms and slogans as screen names or handles, its report said.

It also said it secured a commitment from TikTok to work together to remove such content going forward. At the time of the report, TikTok had claimed to have already removed 1,000 accounts during the year for violating hate speech policies, and said it had taken down hundreds of thousands of videos under those same guidelines. In the U.S. newsroom post, TikTok updated its numbers, saying it had banned more than 1,300 accounts for hateful content or behavior, removed more than 380,000 videos for violation of its hate speech policy, and removed over 64,000 hateful comments.

TikTok offered no update on those figures, or EU-specific data, in today’s post.

The post went on to detail other existing policies in this area. For example, TikTok says it doesn’t permit any content that denies the Holocaust and other violent tragedies — a policy Facebook only recently adopted after years of choosing to favor free speech. TikTok also says it takes action to remove misinformation and hurtful stereotypes about Jewish, Muslim and other communities — including those that spread misinformation about “notable Jewish individuals and families” that are used as proxies to spread antisemitism.

TikTok additionally noted it removes content harmful to the LGBTQ+ community by removing hateful ideas, including content that promotes promotes conversion therapy and the idea that no one is born LGBTQ+.

The company spoke about another area of policy it’s worked to improve, too. Today, TikTok is working to train Trust & Safety enforcement team members as to when it’s appropriate to remove certain language. In the case of language that was previously used to exclude and demean groups, it’s removed. But if those terms are now being reclaimed by impacted communities as terms of empowerment and counter-speech, the speech wouldn’t be taken down.

When content is taken down, TikTok users will be able to ask for a review of the action, TikTok also promised — a level of transparency that isn’t always seen today.

Much of what TikTok announced on Wednesday isn’t a new policy, necessarily, but is meant to address the E.U. audience specifically, where TikTok faces continual scrutiny over its data practices and other policies.

Jam raises $3.5 million to Figma-tize product collaboration

By Lucas Matney

The web of collaboration apps invading remote work toolkits have led to plenty of messy workflows for teams that communicate in a language of desktop screenshots and DMs. Tracing a suggestion or flagging a bug in a company’s website forces engineers or designers to make sense of the mess themselves.  While task management software has given teams a funnel for the clutter, the folks at Jam question why this functionality isn’t just built straight into the product.

Jam co-founders Dani Grant and Mohd Irtefa tell TechCrunch they’ve closed on $3.5 million in seed funding and are ready to launch a public beta of their collaboration platform which builds chat, comments and task management directly onto a website, allowing developers and designers to track issues and make suggestions quickly and simply

The seed round was led by Union Square Ventures, where co-founder Dani Grant previously worked as an analyst. Version One Ventures, BoxGroup and Village Global also participated alongside some noteworthy angels including GitHub CTO Jason Warner, Cloudflare CEO Matthew Prince, Gumroad CEO Sahil Lavingia, and former Robinhood VP Josh Elman.

Like most modern productivity suites, Jam is heavy on integrations so users aren’t forced to upend their toolkits just to add one more product into the mix. The platform supports Slack, Jira, GitHub, Asana, Loom and Figma, with a few more in the immediate pipeline. Data syncs from one platform to the other bidirectionally so information is always fresh, Grant says. It’s all built into a tidy sidebar.

Grant and Irtefa met as product managers at Cloudflare, where they started brainstorming better ways to communicate feedback in a way that felt like “leaving digital sticky notes all over a product,” Grant says. That thinking ultimately pushed the duo to leave their jobs this past May and start building Jam.

The startup, like so many conceived during this period, has a remote founding story. Grant and Irtefa have only spent four days together in-person since the company was started, they raised their seed round remotely and most of the employees have never met each other in-person.

The remote team hopes their software can help other remote teams declutter their workflows and focus on what they’re building.

“On a product team, the product is the first tab everyone opens and closes,” Grant says. “So we’re on top of your product instead of on some other platform”

Jam’s interface

Calling Lisbon VCs: Be featured in The Great TechCrunch Survey of European VC

By Mike Butcher

TechCrunch is embarking on a major new project to survey Europe’s top venture capital investors.

Our upcoming survey of VCs in Lisbon will capture how the city is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

We’d like to know how Lisbon’s startup scene is evolving, how the tech sector is being impacted by COVID-19, and, generally, how your thinking will evolve from here.

Our survey will only be about investors, and only the contributions of VC investors will be included. Multiple partners from the same firm are welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include:

  • Which trends are you most excited by?
  • What startup do you wish someone would create?
  • Where are the overlooked opportunities?
  • What are you looking for in your next investment, in general?
  • How is your local ecosystem going?
  • And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

https://techcrunch.com/extracrunch/investor-surveys/

For example, here is the recent survey of London.

You are not in Lisbon, but would like to take part? Or you are in another part of the country? That’s fine! Any European VC investor can STILL fill out the survey, as we probably will be putting a call out to your city next anyway! And we will use the data for future surveys on vertical topics.

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions, please email mike@techcrunch.com.

Human Capital: Uber engineer explains why he spoke out against Prop 22

By Megan Rose Dickey

Welcome back to Human Capital, where we discuss the latest in labor, diversity and inclusion in tech.

This week’s eyebrow-raising moment came Wednesday when the U.S. Department of Labor essentially accused Microsoft of reverse racism (not a real thing) for committing to hire more Black people at its predominantly white company.

And that wasn’t even the most notable news items of the week. Instead, that award goes to Uber engineer Kurt Nelson and his decision to speak out against his employer and urge folks to vote no on the Uber-sponsored ballot measure in California that aims to keep drivers classified as independent contractors. I caught up with Nelson to hear more about what brought him to the point of speaking out. You can read what he had to say further down in this newsletter.

But first, I have some of my own news to share —  Human Capital is launching in newsletter form on Friday, October 23. Sign up here so you don’t miss out.

Now, to the tea.


Stay Woke


Coinbase loses about 5% of workforce for its stance on social issues

Remember how Coinbase provided an out to employees who no longer wanted to work at the cryptocurrency company as a result of its stance on social issues? Well, Coinbase CEO Brian Armstrong said this week that about 5% of employees (60 people) have decided to take the exit package, but that there will likely be more since “a handful of other conversations” are still happening.

Armstrong noted how some people worried his stance would push out people of color and other underrepresented minorities. But in his blog post, Armstrong said those folks “have not taken the exit package in numbers disproportionate to the overall population.”

Trump’s DOL goes after Microsoft for committing to hire more Black people

Microsoft disclosed this week that the U.S. Department of Labor Office of Federal Contract Compliance Programs contacted the company regarding its racial justice and diversity commitments made in June. Microsoft had committed to double the number of Black people managers, senior individual contributors and senior leaders in its U.S. workforce by 2025. Now, however, the OFCCP says that could be considered as unlawful discrimination in violation of Title VII of the Civil Rights Act. That’s because, according to the letter, Microsoft’s commitment “appears to imply that employment action may be taken based on race.”

“We are clear that the law prohibits us from discriminating on the basis of race,” Microsoft wrote in a blog post. “We also have affirmative obligations as a company that serves the federal government to continue to increase the diversity of our workforce, and we take those obligations very seriously. We have decades of experience and know full well how to appropriately create opportunities for people without taking away opportunities from others. Furthermore, we know that we need to focus on creating more opportunity, including through specific programs designed to cast a wide net for talent for whom we can provide careers with Microsoft.”

This comes shortly after the Trump administration expanded its ban on diversity and anti-racism training to include federal contractors. While this does not fall into the scope of that ban, it’s alarming to see the DOL going after a tech company for trying to increase diversity. However, it does seem that the effects of the ban are making its way into the tech industry.

Joelle Emerson, founder and CEO of diversity training service Paradigm, says she lost her first client as a result of the executive order. While it’s not clear which client it was, many of Paradigm’s clients are tech companies.

We just lost our first client as a result of the executive order on diversity training. I'm sure it won't be our last. Seems it's having exactly its intended impact. I wish I could say I feel proud to be on the right side of history, but I just feel scared.

— Joelle Emerson (@joelle_emerson) October 1, 2020

Crunchbase report sheds light on VC funding to Black and Latinx founders

It’s widely understood that Black and Latinx founders receive not nearly as much funding as their white counterparts. Now, Crunchbase has shed some additional light on the situation. Here are some highlights from its 2020 Diversity Spotlight report.

Image Credits: Crunchbase

  • Since 2015, Black and Latinx founders have raised more than $15 billion, which represents just 2.4% of the total venture capital raised. 
  • In 2020, Black and Latinx founders have raised $2.3 billion, which represents 2.6% of all VC funding through August 31, 2020.
  • Since 2015, the top 10 leading VC firms in the U.S. have invested in around 70 startups founded by Black or Latinx people.
  • Andreessen Horowitz and Founders Fund are the two firms with the highest count of new investments in Black or Latinx-founded companies since 2015.

Gig Work


Uber engineer encourages people to vote no on Uber-backed Prop 22

Going against his employer, Uber engineer Kurt Nelson penned an op-ed on TechCrunch about why he’s voting against Prop 22. Prop 22 is a ballot measure in California that seeks to keep rideshare drivers and delivery workers classified as independent contractors. I caught up with Nelson after he published his op-ed to learn more about what brought him to the point of speaking out against Prop 22. 

“It was a combination of COVID affecting unemployment and health insurance for a bunch of people, getting close to the election and not having seen anyone who is really former Uber or Uber or former any gig companies saying anything,” Nelson told me. 

Plus, Nelson is on his way out from Uber — something that he’s been forthcoming about with his manager. He had already been feeling frustrated about the way Uber handled its rounds of layoffs this year, but the company’s push for Prop 22 was “the final nail in the coffin.”

Uber’s big arguments around why drivers should remain independent contractors is that it’s what drivers want and that it’d be costly to make them employees. Uber has said it also doesn’t see a way to offer flexibility to drivers while also employing them.

“I think it’d be really challenging,” Uber Director of Policy, Cities and Transportation Shin-pei Tsay told me at TC Sessions: Mobility this week. “We would have to start to ensure that there’s coverage to ensure that there’s the necessary number of drivers to meet demand. That would be this forecasting that needs to happen. We would only be able to offer a certain number of jobs to meet that demand because people will be working in set amounts of time. I think there would be quite fewer work opportunities, especially the ones that people really have said that they like.”

But, as Nelson notes, Silicon Valley prides itself on tackling difficult problems. 

“We’re a tech company and we solve hard problems — that’s what we do,” he said.

In response to his op-ed, Nelson said some of his co-workers have reached out to him — some thanking him for saying something. Even prior to his op-ed, Nelson said he was one of the only people who would talk about Prop 22 in any negative way in Uber’s internal Slack channels. And it’s no wonder why, given the atmosphere Uber has created around Prop 22. 

During all-hands meetings, Nelson described how the executive team wears Yes on 22 shirts or has a Yes on 22 Zoom background. Uber has also offered employees free Yes on 22 car decals and shirts, Nelson said.

As for Nelson’s next job, he knows he doesn’t “want to touch the gig economy ever again,” he said. “I know that for a fact. I’m done with the gig economy.”


Union Life


Kickstarter settles with NLRB over firing of union organizer

Kickstarter agreed to pay $36,598.63 in backpay to Taylor Moore, a former Kickstarter employee who was fired last year, Vice reported. Moore was active in organizing the company’s union, which was officially recognized earlier this year. As part of the settlement with the National Labor Relations Board, Kickstarter also agreed to post a notice to employees about the settlement on its intranet and at its physical office whenever they reopen. 

In September 2019, Kickstarter fired two people who were actively organizing a union. About a year later, the Labor Board found merit that Kickstarter unlawfully fired a union organizer.

NLRB files complaint against Google contractor HCL America

It’s been about a year since 80 Google contractors voted to form a union with U.S. Steelworkers. But those contractors, who are officially employed by HCL America, have not been able to engage in collective bargaining, according to a new complaint from the National Labor Relations Board, obtained by Vice.

The complaint states HCL has failed to bargain with the union and has even transferred the work of members of the bargaining unit to non-union members based in Poland. The NLRB alleges HCL has done that “because employees formed, joined and assisted the Union and engaged in concerted activities, and to discourage employees from engaging in these activities.”


News bites


Spin workers just ratified their first union contract

By Megan Rose Dickey

A group of 40 Spin workers has just successfully ratified their first union contract. This comes after this group of shift leads, maintenance specialists, operations specialists, community ambassadors, and scooter deployers and collectors joined Teamsters Local 665 toward the end of last year.

“This new contract gives us job security and immediate money up front, with guaranteed increases each year going forward. We also got holiday pay and vacation, which we didn’t have before we organized,” Spin worker Shamar Bell said in a statement. “All this means a lot during the pandemic. We know our union will have our back if our boss or the city government tries to make changes. I can say for sure, we’re proud to be Teamsters.”

As part of the three-year agreement, Spin workers will get annual pay raises of more than 3% each year, six paid holidays (compared to zero holidays), vacation days based on years of employment (compared to no vacation days), five sick days a year, a $1,200 per employee ratification bonus, benefits accrual for part-time workers and other benefits.

“Since this is the first ever group of union e-scooter workers at Spin, we worked to build this contract from scratch,” Local 665 Secretary-Treasurer Tony Delorio said in a statement. “We are proud of this agreement and excited to continue our representation of workers with Spin.”

Developing…

With a Warby Parker playbook, SISU raises funding from Greycroft to face off against cosmetic clinics

By Mike Butcher

With so many people getting botox and filler treatments to their faces these days (or are they, during the pandemic?), it’s probably no wonder that venture capital has decided to look at the space. In the same way that the small and scattered market of spectacle/optometrist shops were disrupted by startups like Warby Parker, so the extremely variable experience of back-street cosmetic clinics are ripe for targeting.

Step in SISU, a chain of cosmetic clinics created by a serial tech entrepreneur who will apply tech startup methodology to this relatively untapped world.

SISU has now raised a $5.5 million Series A led by Greycroft and Bullpen Capital. Mana Ventures and the Gaingels Syndicate also participated in the round, alongside angel investors, including Liam Casey, founder and CEO of PCH, and Dan and Linda Kiely, the co-founders of Voxpro.

The funds will be used to go into the U.S. cosmetic clinics market and standardize “facial feature” pricing for things like lips, chin, under-eye, cheeks and brow. It will also offer treatments such as anti-wrinkle injections, dermal and facial fillers, laser and teeth whitening. There is even going to be a “face as a service.” — so that would be FaaS.

According to SISU, botox consumers are charged per unit, and often sold the maximum number of units, regardless of the results. SISU will set a price for what you want done and that’s it. A website will have “instant online evaluations,” and digital bookings.

The company will launch an e-commerce platform in the U.S. and 20 medical-retail clinics are planned for the East Coast. It already has eight now in Ireland.

Dubbed by its founders as the “One Medical for aesthetic treatments,” SISU is led by Dr. James Cotter, Dr. Brian Cotter and Irish entrepreneur Pat Phelan, who previously made his name in the telecoms market. Phelan founded both Trustev, which exited to TransUnion in 2015 for $44 million, and Cubic Telecom, which exited in 2012.

They are tapping into a big market. The “medical aesthetics” market is projected to reach $14.5 billion by 2023, according to some estimates.

Calling VCs in Rome and Milan: Be featured in The Great TechCrunch Survey of European VC

By Mike Butcher

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our <a href=”https://forms.gle/k4Ji2Ch7zdrn7o2p6”>survey of VCs in Rome and Milan will capture how the cities are faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled the survey out already, there is no need to do it again).

We’d like to know how the startup scenes are evolving in the cities, how the tech sector is being impacted by COVID-19, and, generally, how your thinking will evolve from here.

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

For example, here is the recent survey of London.

You are not in Rome and Milan, but would like to take part? Or you are in another part of the country? That’s fine! Any European VC investor can STILL fill out the survey, as we will be putting a call out to your city next anyway!

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

Privacy data management innovations reduce risk, create new revenue channels

By Walter Thompson
Mark Settle Contributor
Mark Settle is a seven-time CIO, three-time CIO 100 award winner and two-time book author. His most recent book is "Truth from the Valley: A Practical Primer on IT Management for the Next Decade."
Tomer Y. Avni Contributor
Tomer Y. Avni is an MBA/MS student at the Harvard Business School and the Harvard School of Engineering and Applied Sciences.

Privacy data mismanagement is a lurking liability within every commercial enterprise. The very definition of privacy data is evolving over time and has been broadened to include information concerning an individual’s health, wealth, college grades, geolocation and web surfing behaviors. Regulations are proliferating at state, national and international levels that seek to define privacy data and establish controls governing its maintenance and use.

Existing regulations are relatively new and are being translated into operational business practices through a series of judicial challenges that are currently in progress, adding to the confusion regarding proper data handling procedures. In this confusing and sometimes chaotic environment, the privacy risks faced by almost every corporation are frequently ambiguous, constantly changing and continually expanding.

Conventional information security (infosec) tools are designed to prevent the inadvertent loss or intentional theft of sensitive information. They are not sufficient to prevent the mismanagement of privacy data. Privacy safeguards not only need to prevent loss or theft but they must also prevent the inappropriate exposure or unauthorized usage of such data, even when no loss or breach has occurred. A new generation of infosec tools is needed to address the unique risks associated with the management of privacy data.

The first wave of innovation

A variety of privacy-focused security tools emerged over the past few years, triggered in part by the introduction of GDPR (General Data Protection Regulation) within the European Union in 2018. New capabilities introduced by this first wave of innovation were focused in the following three areas:

Data discovery, classification and cataloging. Modern enterprises collect a wide variety of personal information from customers, business partners and employees at different times for different purposes with different IT systems. This data is frequently disseminated throughout a company’s application portfolio via APIs, collaboration tools, automation bots and wholesale replication. Maintaining an accurate catalog of the location of such data is a major challenge and a perpetual activity. BigID, DataGuise and Integris Software have gained prominence as popular solutions for data discovery. Collibra and Alation are leaders in providing complementary capabilities for data cataloging.

Consent management. Individuals are commonly presented with privacy statements describing the intended use and safeguards that will be employed in handling the personal data they supply to corporations. They consent to these statements — either explicitly or implicitly — at the time such data is initially collected. Osano, Transcend.io and DataGrail.io specialize in the management of consent agreements and the enforcement of their terms. These tools enable individuals to exercise their consensual data rights, such as the right to view, edit or delete personal information they’ve provided in the past.

Calling Helsinki VCs: Be featured in The Great TechCrunch Survey of European VC

By Mike Butcher

TechCrunch is embarking on a major new project to survey the venture capital investors of Europe, and their cities.

Our survey of VCs in Helsinki will capture how the city is faring, and what changes are being wrought amongst investors by the coronavirus pandemic. (Please note, if you have filled out the survey already, there is no need to do it again).

We’d like to know how Helsinki’s startup scene is evolving, how the tech sector is being impacted by COVID-19 and, generally, how your thinking will evolve from here.

Our survey will only be about investors, and only the contributions of VC investors will be included. More than one partner is welcome to fill out the survey.

The shortlist of questions will require only brief responses, but the more you can add, the better.

You can fill out the survey here.

Obviously, investors who contribute will be featured in the final surveys, with links to their companies and profiles.

What kinds of things do we want to know? Questions include: Which trends are you most excited by? What startup do you wish someone would create? Where are the overlooked opportunities? What are you looking for in your next investment, in general? How is your local ecosystem going? And how has COVID-19 impacted your investment strategy?

This survey is part of a broader series of surveys we’re doing to help founders find the right investors.

For example, here is the recent survey of London.

You are not in Helsinki, but would like to take part? European VC investors can STILL fill out the survey, as we will be putting a call out to your city next anyway!

The survey is covering almost every European country on the continent of Europe (not just EU members, btw), so just look for your country and city on the survey and please participate (if you’re a venture capital investor).

Thank you for participating. If you have questions you can email mike@techcrunch.com

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