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New guidance on SBA loans means most startups are still excluded from $349 billion stimulus

By Jonathan Shieber

Under new guidance issued by the Small Business Administration it seems non-profits and faith-based groups can apply for the Paycheck Protection Program loans designed to keep small business afloat during the COVID-19 epidemic, but most venture-backed companies are still not covered.

Late Friday night, the Treasury Department updated its rules regarding the “affiliation” of private entities to include religious organizations but keep in place the same rules that would deny most startups from receiving loans.

(b) If you are a faith-based organization, *no affiliation rules apply to you,* because the SBA just said so. Out of nowhere. At like 10pm on a Friday night.

It doesn't matter if you have a zillion employees; as long as any 1 entity has <500 employees, it can get a #PPPloan.
4/ pic.twitter.com/V0x3Vx6G7x

— Doug Rand (@doug_rand) April 4, 2020

The NVCA and other organizations had pushed Treasury Secretary Steve Mnuchin to clarify the rules regarding startups and their potential eligibility for loans last week. And House Republican leader Kevin McCarthy even told Axios that startups would be covered under the revised regulations.

Apparently that didn’t happen, as Mark Suster, the managing partner of Los Angeles-based Upfront Ventures, noted in a tweet.

2/ There are rumors that the PPP Loan program may still fix the Affiliate Rule next week. Until fixed, it's nearly impossible for most VC-backed startups to apply because it would require huge legal lift to amend all of the charters of these companies to change control provisions

— Mark Suster (@msuster) April 4, 2020

At its essence, the issue for startups seems to be centered on the board rights that venture investors have when they take an equity stake in a company. For startups with investors on the board of directors, the decision-making powers that those investors hold means the startup is affiliated with other companies that the partner’s venture firm has invested in — which could mean that they’re considered an entity with more than 500 employees.

“[If] there’s a startup that’s going gangbusters right now, they shouldn’t apply for a PPP loan,” wrote Doug Rand, the co-founder of Seattle-based startup Boundless Immigration, and a former Assistant Director for Entrepreneurship in the Office of Science and Technology Policy during the Obama administration, in a direct message. “But most startups are getting killed because, you know, the economy is mostly dead.”

The $2 trillion CARES Act passed by Congress and signed by President Trump was designed to help companies that are adversely affected by the economic fallout resulting from the COVID-19 outbreak in the US and their employees — whether those businesses are directly affected because their employees can’t leave home to do their jobs or indirectly, because demand for goods and services has flatlined.

While some tech startups have seen demand for their products actually rise during these quarantined days, many companies have watched as their businesses have gone from one to zero.

The sense frustration among investors across the country is palpable. As the Birmingham-based investor, Matt Hottle, wrote, “After 4 days of trying to help 7 small businesses navigate the SBA PPP program, the program went to shit on launch. I’m contemplating how many small businesses, counting on this money, are probably locked out. I feel like I/ we failed them.”

After 4 days of trying to help 7 small businesses navigate the @SBAgov PPP program, the program went to shit on launch. I’m contemplating how many small businesses, counting on this money, are probably locked out. I feel like I/ we failed them.

— Matt Hottle (@MattRedhawk) April 4, 2020

And although the rules around whether or not many startups are eligible remain unclear, it’s probably wise for companies to file an application, because, as the program is currently structured, the $349 billion in loans are going to be issued on a first-come, first-served basis, as Suster flagged in his tweets on the subject.

General Catalyst is advising its companies that are also backed by SBIC investors to apply for the loans, because that trumps any other rules regarding affiliation, according to an interview with Holly Maloney Burbeck, a managing director at the firm.

And there’s already concerns that the money could run out. In a tweet, the President announced that he would request more money from Congress “if the allocated money runs out.”

I will immediately ask Congress for more money to support small businesses under the #PPPloan if the allocated money runs out. So far, way ahead of schedule. @BankofAmerica & community banks are rocking! @SBAgov @USTreasury

— Donald J. Trump (@realDonaldTrump) April 4, 2020

“Congress saw fit to allow Darden to get a forgivable small business loan—actually a taxpayer-funded grant—for like every Olive Garden in America. But Congress somehow neglected to provide comparable rescue measures for actual small businesses that have committed the sin of convincing investors that they have the potential to employ a huge number of people if they can only survive,” Rand wrote in a direct message. “The Trump administration has full authority to ride to the rescue, and they did… but only for large religious organizations.”

GM and Honda are co-developing two new electric vehicles due to arrive in 2024

By Kirsten Korosec

GM and Honda will jointly develop two new electric vehicles slated for 2024, the latest move by the two automakers to deepen their existing partnership.

Under the plan, the automakers will focus on their respective areas of expertise. Honda will design the exterior and interiors of the new electric vehicles; GM will contribute its new electric vehicle architecture and Ultium batteries. This new architecture, which GM unveiled last month to showcase its own EV plans, is capable of 19 different battery and drive-unit configurations. The architecture includes large-format pouch battery cells manufactured as part of a joint venture between LG Chem and GM.

The vehicles, which will have a Honda nameplate, will incorporate GM’s OnStar safety and security services. GM’s hands-free advanced driver assistance technology, known as Super Cruise, will also be available in the new vehicles.

The vehicles will be produced at GM plants in North America. Sales are expected to begin in the 2024 model year in Honda’s U.S. and Canadian markets.

The aim is to pull the strengths of both companies to unlock economies of scale around electric vehicles, according to Rick Schostek, executive vice president of American Honda Motor Co., who added that the two companies are already in discussions about further extending the partnership.

GM and Honda have worked together on projects before. The two automakers partnered on hydrogen fuel cells and electric vehicle batteries, and are both invested in autonomous vehicle company Cruise .

The automakers formed a joint venture in 2017 to produce hydrogen fuel cell systems. A year later, the companies announced an agreement for Honda to use battery cells and modules from GM in electric vehicles built for the North American market.

GM acquired Cruise in 2016; Honda later committed $2.75 billion as part of an exclusive agreement with GM and its self-driving technology subsidiary Cruise to develop and produce a new kind of autonomous vehicle. Cruise Origin, an electric, self-driving and shared vehicle and the first product of that arrangement, was revealed January 21.

Pinterest CEO and a team of leading scientists launch a self-reporting COVID-19 tracking app

By Darrell Etherington

There have been a few scattered efforts to leverage crowd-sourced self-reporting of symptoms as a way to potentially predict and chart the progress of COVID-19 across the U.S., and around the world. A new effort looks like the most comprehensive, well-organized and credibly backed yet, however – and it’s been developed in part by Pinterest co-founder and CEO Ben Silbermann.

Silbermann and a team from Pinterest enlisted the help of high school friend, and CRISPR gene-editing pioneer / MIT and Harvard Broad Institute member Dr. Feng Zhang to build what Silbermann termed in a press release a “bridge between citizens and scientists.” The result is the ‘How We Feel’ app that Silbermann developed along with input from Zhang, and a long list of well-regarded public health, computer science, therapeutics, social sincere and medical professors from Harvard, Stanford, MIT, Weill Cornell and more.

How We Feel is a mobile app available for both iOS and Android, which is free to download, and which is designed to make it very easy to self-report whether or not they feel well – and if they’re feeling unwell, what symptoms they’re experiencing. It also asks for information about whether or not you’ve been tested for COVID-19, and whether you’re self-isolation, and for how long. The amount of interaction required is purposely streamlined to make it easy for anyone to contribute daily, and to do so in a minute or less.

The app doesn’t ask for or collect info including name, phone numb or email information. It includes an up-front request that users agree to donate their information, and the data collected will be aggregated and then shared with researchers, public health professionals and doctors, including those who are signed on as collaborators with the project, as well as others (and the project is encouraging collaborators to reach out if interested). Part of the team working on the project are experts in the field of ‘differential privacy,’ and a goal of the endeavor is to ensure that people’s information is used responsibly.

The How We Feel app is, as mentioned, one of a number of similar efforts out there, but this approach has a number of advantages when compared to existing projects. First, it’s a mobile app, whereas some rely on web-based portals that are less convenient for the average consumer, especially when you want continued use over time. Second, they’re motivating use through positive means – Silbermann and his wife Divya will be providing a donated meal to non-profit feeding America for every time a person downloads and uses the app for the first time, up to a maximum of 10 million meals. Finally, it’s already designed in partnership with, and backed by, world-class academic institutions and researchers, and seems best-positioned to be able to get the information it gathers to the greatest number of those in a position to help.

How We Feel is organized as an entirely independent, non-profit organization, and it’s hoping to expand its availability and scientific collaboration globally. It’s an ambitious project, but also one that could be critically important in supplementing testing efforts and other means of tracking the progress and course of the spread of SARS-CoV-2 and COVID-19. While self-reported information on its own is far fro a 100 percent accurate or reliable source, taken in aggregate at scale, it could be a very effective leading indicator of new or emerging viral hotspots, or provide scientific researches with other valuable insights when used in combination with other signals.

OrbitFab secures National Science Foundation funding to propel its satellite refueling tech to space

By Darrell Etherington

On-orbit satellite refueling technology is closer than ever to a practical reality, which could help immensely with the cost and sustainability of orbital businesses. Startup OrbitFab, a 2019 TechCrunch Battlefield finalist, is one of the companies working to make orbital refueling a reality, and it just secured a new contract from the National Science Foundation’s early-stage deep tech R&D initiative America’s Seed Fund to further its goals.

The contract is specifically for development of a solution that provides rendezvous and docking capabilities in space, managing the end-to-end process of connecting two spacecraft and transferring fuel from one to the other. OrbitFab last October at Disrupt unveiled its connector hardware for making this possible, which it now refers to as its Rapidly Attachable Fluid Transfer Interface (RAFTI). RAFTI is designed as a replacement for existing valves used in satellites for fueling and draining propellant from spacecraft, but would seek to establish a new standard that provides easy interoperability both with ground fueling and with in-space refueling (or fuel transfer from one satellite to another, depending on what’s needed).

Already, OrbitFab has managed to fly twice to the International Space Station (ISS), and last year it became the first-ever private company to supply the orbital lab with water. It’s not resting on its laurels, and this new contract will help it prepare a technology demonstration of the docking process its RAFTI facilitates in its own test facilities this summer.

Longer-term, this is just phase one of a multi-par funding agreement with the NSF. Phase one includes $250,000 to make that first demo, and then ultimately that will lead to an inaugural trial of a fuel sale operation in space, which OrbitFab CMO Jeremy Schiel says should happen “within two years.”

“This will involve 2 satellites, our tanker, and a customer satellite, in a low LEO [low Earth orbit] docking, exchanging fuel, and decoupling, and repeating this process as many times as we can to demonstrate our capability,” he wrote via email.

There have been a number of technical projects and demonstrations around orbital refueling, and some of the largest companies in the industry are working on the challenge. But OrbitFab’s approach is aiming for simplicity, and ease of execution, along with a common standard that can be leveraged across a wide range of satellites large and small, from a range of companies. Already, OrbitFab says it’s working with a group of 30 different campaigns and organizations on making RAFTI a broadly adopted interface.

If successful, OrbitFab could underpin a future orbital commercial operating environment in which fuel isn’t nearly as much a concern when it comes to launch costs, with on-orbit roving gas stations addressing demand for spacecraft once they reach space, and paying a price for propellant that’s defrayed by common, bulk shipments instead of broken up piecemeal.

TuSimple partners with supplier ZF to mass produce self-driving truck tech

By Kirsten Korosec

Self-driving truck startup TuSimple is partnering with automotive supplier ZF to develop and produce autonomous vehicle technology, such as sensors, on a commercial scale.

The partnership, slated to begin in April, will cover China, Europe and North America. The two companies will co-develop sensors needed in autonomous vehicle technology such as cameras, lidar, radar and a central compute. As part of the partnership, ZF will contribute engineering support to validate and integrate TuSimple’s autonomous system into the vehicle.

TuSimple launched in 2015 and has operations in China, San Diego and Tucson, Ariz. The company has been working on a “full-stack solution,” an industry term that means developing and bringing together all of the technological pieces required for autonomous driving. TuSimple is developing a Level 4 system, a designation by the SAE that means the vehicle takes over all of the driving in certain conditions.

TuSimple has managed to scale up its operations and attract investors even as other companies in the nascent autonomous vehicle technology industry have faltered. The company has raised nearly $300 million to date from investors such as Sina, UPS and Tier 1 supplier Mando Corporation. It’s now making about 20 autonomous trips between Arizona and Texas each week with a fleet of more than 40 autonomous trucks. All of the trucks have a human safety operator behind the wheel.

The partnership is an important milestone for TuSimple as the startup prepares to bring autonomous-ready trucks to market, TuSimple chief product officer Chuck Price said in a statement. The plan is for TuSimple to combine its self-driving software with ZF’s ability to build automotive grade products.

The partnership doesn’t remove every barrier for TuSimple. Moving from development to deployment takes millions of dollars of investment. If a company can move from testing to commercial deployment, it must still navigate daily operations efficiently in the aim of becoming profitable.

ULA successfully launches first US Space Force payload

By Darrell Etherington

The United Launch Alliance (ULA) has completed its 134th successful launch, continuing its perfect track record with a mission today for the U.S. Space Force. This is the first ever dedicated mission for the Space Force, a new branch of the U.S. armed forces dedicated to the defense and protection of America’s strategic assets in space.

The payload today was the sixth Advanced Extremely High Frequency (AEHF) satellite that has been deployed for U.S. defense customers, though the original five that are already in orbit which launched over the course of the past decade were obviously sent up before Space Force was officially formed. The purpose of all the satellites is the same, however – providing strategic, reliable and secure communications for U.S. armed forces on Earth across land, sea and air.

While the launch did end up going smoothly on Thursday, it ran into an issue during the countdown to its original planned liftoff time that caused the countdown to be reset. That was due to a fault with a part of the launch system called the ‘ground hydraulics accumulator,’ according to ULA CEO Tory Bruno on Twitter. Since ULA’s launch window today extended to 4:57 PM EDT, the company was able to resolve the issue and reset for take-off, which took place without any problems at TK TK.

The actual satellite deployment will occur roughly five hours after liftoff, and ULA won’t be airing that since they typically don’t with any national defense-related missions. That’s still a critical component for overall mission success, beyond the successful launch itself, so we’ll update you when that is confirmed to have gone as planned.

ULA also addressed how and why it was able to get this launch off as planned despite the global COVID-19 crisis. The company clarified that its missions are considered “critical to security and national defense,” and that it is following all applicable guidance from the CDC, as well as from state and local health agencies, about keeping its facilities and personnel safe, secure and healthy in light of the coronavirus pandemic. ULA’s work is officially designated “part of the nation’s essential, critical infrastructure,” which means that it’s not subject to the same restrictions as other private businesses.

Major automakers Toyota, Honda, FCA extend factory closures

By Kirsten Korosec

Toyota, Honda and Fiat Chrysler Automobiles will not reopen North American factories at the end of the month as planned as the COVID-19 disease spreads and dampens demand for new cars, trucks and SUVs.

FCA said Thursday that plants across the U.S. and Canada, as well as headquarters operations and construction projects, are intended to remain closed until April 14, dependent upon the various states’ stay-in-place orders and the readiness of each facility to return to production.

FCA’s Mopar Parts Distribution centers, which have been deemed essential to keeping first responders and commercial vehicles on the road, will continue to operate with paid volunteers. The status of production for FCA’s Mexico operations will be subject to a separate announcement, the company said in a statement emailed Thursday.

Meanwhile, Ford, Toyota and Honda also announced plans to extend closures. Ford will also said it will extend its closure until April 7.

Honda also said will keep all of its automobile, engine and transmission plants in the U.S. and Canada closed into the first week of April. Operations will resume on April 7, Honda said.

“This extension is in response to the continued steep decline in market demand across the automotive industry due to the impact of the COVID-19 pandemic on the economy, resulting in the inability of consumers in many markets to purchase new vehicles,” Honda said in an emailed statement. “As the market impact of the fast-changing COVID-19 situation continues to evolve, Honda will evaluate conditions and make additional adjustments as necessary. In undertaking this production adjustment, Honda is continuing to manage its business carefully through a measured approach to sales that aligns production with market demand.”

Toyota said its manufacturing facilities will remain closed through April 17 and will resume production on April 20. Toyota has numerous factories in North America, including Alabama, Indiana, Kentucky, Missouri, Tennessee, Texas and Baja California, Mexico and Guanajuato, Mexico.

Toyota said its service parts depots and vehicle logistics centers will continue to operate.

Earlier this month, major automakers suspended productions at factories across the U.S., Mexico and Canada. Most had planned to restart March 31. Now as that date gets closer, a number of automakers are pushing back plans to restart production.

COVID-19, the disease caused by coronavirus, has caused upheaval across every major industry as governments issue stay-at-home orders or directives for nonessential businesses to close in an effort to slow the spread of the pandemic. Closures first hit China, where the first cases of COVID-19 popped up three months. Those factories are now coming back online as plants in Europe and North America shut down temporarily.

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

By Jonathan Shieber

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

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

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

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

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

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

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

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

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

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

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

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

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

Los Angeles-based Bev is no different.

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

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

(Photo by PAU BARRENA/AFP via Getty Images)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Watch ULA’s first dedicated rocket launch for the U.S. Space Force live

By Darrell Etherington

The United Launch Alliance (ULA) has a mission today, launching a specialized secure communications satellite for the U.S. Space Force. That’s the new space-focused arm of the U.S. military that was officially formed last year, in response to what the administration has characterized as a growing need to ensure America’s assets in space are properly defended.

The launch today is set to take off from Cape Canaveral in Florida, with a lift-off time set for 2:57 PM EDT (11:57 AM PDT). The rocket carrying the satellite is an Atlas V, and the mission looks good to proceed as of Thursday morning in terms of both weather and systems checks.

This is the sixth Advanced Extremely High Frequency (AEHF) satellite being launched for the military, but the previous five have all been deployed under the U.S. Air Force because the Space Force only came into existence officially last year. The first five satellites were launched between 2010 and 2019, and together, all six will form a constellation that provides secure communications capabilities for military operations across air, land and sea.

This will be the 83rd launch of an Atlas V rocket, and the 11th in this particular configuration. The ULA, a joint venture formed by Boeing and Lockheed Martin, currently has a 100 percent mission success rate, with a total of 133 launches under its belt.

Delivery Hero urges users to go cashless, no contact for food deliveries

By Natasha Lomas

Delivery Hero has switched to cash-less, non-contact for deliveries in areas it defines as “high risk” for the transmission of the SARS-CoV-2 virus to reduce personal contact between couriers and customers during the coronavirus pandemic. But it’s encouraging all customers to make the switch.

“By introducing contactless delivery, we can ensure that our service is safe and convenient for customers, riders and restaurants,” said CEO, Niklas Östberg, in a press release. “We now encourage customers to pay without cash everywhere, and decide when and how they want their order to be delivered. These are options designed to reduce interpersonal contact and make our customer journey even more secure.”

It has also implemented no-contact drop-offs in high risk areas and is asking restaurants to sanitize packages to further shrink the risk of spreading the virus.

While there is no evidence that people have become infected by eating food contaminated with the microscopic agent — SARS-CoV-2 is a respiratory virus; the primary transition route for infection appears to be via close contact with an infected person, when you might be more likely to breathe in tiny droplets that contain the virus, such as those expelled when someone coughs or sneezes — there could be a small risk posed by contaminated food packaging.

If, for example, an infected person, who had coughed into their hand, then touched a package which they gave to an uninfected person — who then touched their face without first washing their hands. Studies suggest the virus that causes COVID-19 can remain infectious for between several hours or days on certain surfaces.

To shrink the risk of such a scenario, Delivery Hero said it’s working closely with restaurant partners to ensure “the highest hygiene standards”.

The risk of infection via contaminated surfaces is reduced by everyone observing good hand hygiene — i.e. washing hands regularly and directly after touching things others may have touched — and by not touching their own face with unclean hands.

“Official health authorities around the world agree that there is a very limited chance of contracting COVID-19 through food,” said Delivery Hero today. “Neither the European Centre for Disease Prevention and Control (ECDC), nor the U.S. Food and Drug Administration (FDA), have any reports of Coronavirus COVID-19 transmitted via food or food packaging. However, we are working closely with our restaurant partners to ensure that they continue to operate in a secure kitchen environment and carry out food preparation and packaging according to the highest hygiene standards.”

The company is also providing riders in “high risk” zones with hand sanitisers, masks and other safety materials — “where and when it is locally and culturally accepted”.

The Berlin -based takeaway platform operates across 44 markets in Europe, Asia, LatAm and the Middle East, operating under a variety of brand names.

We’ve asked which areas it’s defining as “high risk”.

In recent weeks a number of US and European food delivery startups have turned on a contactless delivery option to shrink the risks around COVID-19 during the epidemic. Delivery Hero said it started taking precautionary measures “as soon as the situation started to evolve in January”.

The company is using its rider app to communicate updates and “instruct on hygiene requirements, especially for pick-up and drop-off”. “By having direct access to new information, our riders can make informed decisions when on the road,” it added.

While many startups face a demand crunch during the epidemic as people dial back some of their regular activities, the opposite looks to be true for food delivery — as large-scale quarantine measures mean many people are eating more meals at home. Food delivery is also being actively being encouraged by some governments, such as the UK, as a convenient lever to keep more citizens locked down at home where they can’t spread the virus or increase their chance of exposure.

Delivery Hero said it’s responded to growing demand by implementing free delivery options in the majority of its markets — “to make online ordering accessible to as many people as possible”, as it puts it.

It said “several” of these options are “focused on when ordering from restaurants nearby” — in what looks like an attempt to streamline demand for restaurants and delivery workers by incentivizing local food orders.

In another support step for restaurants it’s offering more frequent payment cycles for some partners — “according to local need”. “For new restaurants joining our platform, we aim to onboard as fast as possible, in order to support them in maintaining order levels as well as provide more choice for our customers,” it added.

Zooming out, Delivery Hero said it’s closely liaising with local governments — and continuing to follow official health and safety guidelines provided in its different markets. And it gave examples of how some of its different brands are working on relief efforts related to COVID-19 around the world.

“Our brand HungerStation in Saudi Arabia is partnering with the Saudi Ministry of Health and Saudi Food & Drug Authority to provide hand sanitizers for people in need,” it said. “In the Czech Republic, our brand Damejidlo has also been selected as one of the Red Cross’ official partners, bringing food to senior citizens. As a part of a broader initiative to support their communities, our Latin American brand PedidosYa is giving up to 1,000 free lunches per day to people who are at the forefront of fighting the virus, such as employees in the health sector.”

Another area the company is ramping up to meet demand for food delivery in the time of the coronavirus is grocery store onboarding. Currently, customers across 21 markets in the MENA region, Asia-Pacific and Latin America can order groceries from supermarkets via the company’s local delivery apps, in addition to takeout meals.

“We have seen an increase in demand from our global customer community and to meet the growing need, we have accelerated the onboarding of grocery stores,” Delivery Hero said. “We have also increased delivery through our cloud stores, another way to secure that our customers have access to everyday necessities.”

It’s not clear what — if any — financial provision the company is making to support delivery riders who do not have a contract that includes sick pay.

We’ve asked and will update this report with any response.

“During these turbulent times, our immediate efforts go into securing the wellbeing of all Delivery Hero customers, riders and employees,” the company said. “We are monitoring the development of COVID-19 minute by minute and will implement further measures as necessary. Our thoughts are with everyone who has been affected by the spread of the virus and to all who go the extra mile to keep our communities safe, healthy and fed.”

Kry launches free service for doctors to do video consultations during COVID-19 crisis

By Natasha Lomas

Swedish telehealth startup Kry has launched a tool for healthcare professionals to conduct remote consultations during the coronavirus pandemic. Calls for EU citizens to self isolate to reduce the spread of COVID-19 is driving major demand for video appointments, it said.

The platform — Care Connect by Kry — is launching in Europe, with ten languages supported initially, but will shortly be opening up worldwide. CEO and co-founder, Johannes Schildt, told us it’ll be launching in North America within a matter of “days”. 

Last week US regulators relaxed rules around the use of telehealth platforms for delivering a broader range of healthcare services — opening up the market for remote consultations during the coronavirus crisis.

“We are working extremely hard at all levels because this is time critical,” said Schildt. “We want to get this out there as soon as we possibly can. Today we’re launching it in Europe, we’re aiming to have it available within days in the US and Canada.”

The web-based platform for healthcare professionals to carry out encrypted video consultations does not require a Kry account. Instead doctors sign up (and in) with an email address and are able to send a one-time SMS link to a patient’s mobile phone number — which the patient then clicks on to begin a video consultation with the doctor from their smartphone.

Kry says the clinician’s email will never be shared with the patient. 

“We have been doing this for a long time but now it’s more important than ever that you have as many as possible of the current consultations now happening in physical locations are moved to digital,” said Schildt. “It’s for all clinicians, for anyone that’s run their own practice — to enable them to move their consultations to video in an easy way.”

He said Kry has seen demand for its commercial video-chat-with-a-doctor roughly doubling in recent weeks as Europeans seek alternatives for accessing primary care during the coronavirus crisis.   

“We’ve seen a big increase in demand… from patients. But a lot of that is also not driven by COVID-19 specific things — it’s everything else,” he told TechCrunch. “Obviously you have a new virus that is spreading but you also have a lack of access to GP practices and traditional healthcare — because a lot of traditional primary care is closing down. So you still have a lot of people that have urinary track infections, eye infections, skin conditions and other things that we can help with.

“So we see a big uplift in all symptoms. What’s also very encouraging to see is that we see a big uplift in older patients… understanding the benefits of digital healthcare. Usually when we’re launching in new markets the first cohort is the young and slightly more tech savvy population.”

Schildt said Kry is recruiting clinicians “all across Europe” to cope with increased demand. 

“We’re getting a lot of senior, retired clinicians,” he told us. “We’re unlocking a lot of underused talent so we now have a lot of retired doctors joining and helping out. And they should obviously not be in an intensive care unit or at the primary healthcare center where they risk getting the disease because they are old and might be fragile but they’re usually very, very senior doctors. 

“We’re also getting a lot of doctors who are on parental leave or part time sick leave and so on. So it’s a massive exercise for us now across all our European markets.”

The 2015-founded startup has served up some 1.6 million digital doctors appointments across Europe at this stage. It said it will offer training to doctors signing up to Care Connect on how to carry out remote consultations — given many may be doing so for the first time.

While the intent with Care Connect is to support heavily burdened public healthcare services during the coronavirus pandemic, there’s clearly scope for Kry to turn the platform into an additional revenue-generating service in future — once some of the doctors it onboards now for free have become comfortable using it.

Although Schildt emphasizes that’s not why they’ve scrambled to get the product out there right now. 

“We’re building this because we feel a huge responsibility to help out,” he said. “I think that everybody has a responsibility to help out. And what we can do of course in the market that we’re in we are working super hard on all levels and we’re working very closely with different governments in the markets that we’re in — but this is also a way for us to help out in the markets where we currently don’t have our own medical staff.

“So this is a solution that could be helpful in Spain, Italy, and in other markets around the globe.”

Kry has more products to help fight COVID-19 in the pipeline — and has already launched a symptom-checker for the disease within its existing apps for patients (aka Kry, or Livi) in all its European markets. It’s also doing some home-monitoring partnerships for patients who are in quarantine, per Schildt.

He won’t be drawn on what else it’s working on — noting it’s “working very closely with some of the European governments”. “In some of those cases they have specifically asked us not to be specific about what we’re doing,” he said. 

Asked about how else it’s using symptom data generated by use of its services, he said it’s sharing aggregated data with existing paying customers, such as the UK’s National Health Service (NHS).

He also told us European governments are keen to get access to data that might help them track how the coronavirus is spreading.

“Obviously this is really interesting data — at an aggregated level — as we can see where you have symptoms starting to spread. And obviously as a big partner to some of the largest payers of healthcare in the world — [e.g.] European governments — we are monitoring this very closely together with them,” said Schildt.

“We can see in real time, more or less, where you have different symptoms that are trending — and we already, before you had the big COVID-19 outbreak, you could see that viral infections and upper respiratory infections started to trend in a bit unusual way compared to last year. And that data we’re also sharing with our main [healthcare customers, including the UK’s NHS] to help their staff understand demand.”

Volvo’s Polestar begins production of the all-electric Polestar 2 in China

By Kirsten Korosec

Polestar has started production of its all-electric Polestar 2 vehicle at a plant in China amid the COVID-19 pandemic that has upended the automotive industry and triggered a wave of factory closures throughout the world.

The start of Polestar 2 production is a milestone for Volvo Car Group’s standalone electric performance brand  — and not just because it began in the midst of global upheaval caused by COVID-19, a disease that stems from the coronavirus. It’s also the first all-electric car under a brand that was relaunched just three years ago with a new mission.

Polestar was once a high-performance brand under Volvo Cars. In 2017, the company was recast as an electric performance brand aimed at producing exciting and fun-to-drive electric vehicles — a niche that Tesla was the first to fill and has dominated ever since. Polestar is jointly owned by Volvo Car Group and Zhejiang Geely Holding of China. Volvo was acquired by Geely in 2010.

COVID-19 has affected how Polestar and its parent company operate. Factory closures began in China, where the disease first swept through the population. Now Chinese factories are reopening as the epicenter of COVID-19 moves to Europe and North America. Most automakers have suspended production in Europe and North America.

Polestar CEO Thomas Ingenlath said the company started production under these challenging circumstances with a strong focus on the health and safety of its workers. He added that the Luqiao, China factory is an example of how Polestar has leveraged the expertise of its parent companies.

Extra precautions have been taken because of the outbreak, including frequent disinfecting of work spaces and requiring workers to wear masks and undergo regular temperature screenings, according to the company. Polestar has said that none of its workers in China tested positive for COVID-19 as a result of its efforts.

COVID-19 has also affected Polestar’s timeline. Polestar will only sell its vehicles online and will offer customers subscriptions to the vehicle. It previously revealed plans to open “Polestar Spaces,” a showroom where customers can interact with the product and schedule test drives. These spaces will be standalone facilities and not within existing Volvo retailer showrooms. Polestar had planned to have 60 of these spaces open by 2020, including in Oslo, Los Angeles and Shanghai.

COVID-19 has delayed the opening of the showrooms. The company will have some pop-up stores opening as soon as that situation improves, so people can go see the cars and learn more while the permanent showrooms are still under construction, TechCrunch has learned.

It’s not clear just how many Polestar 2 vehicles will be produced; Polestar has told TechCrunch that it is in the “tens of thousands” of cars per calendar year. Those numbers will also depend on demand for the Polestar 2 and other models that are built in the same factory.

Polestar 2 EV

Image Credits: Screenshot/Polestar

Polestar also isn’t providing the exact number of reservations until it begins deliveries, which are supposed to start this summer in Europe, followed by China and North America. It was confirmed to TechCrunch that reservations are in the “five digits.”

The Polestar 2, which was first revealed in February 2019, has been positioned by the company to go up against Tesla Model 3. (The company’s first vehicle, the Polestar 1, is a plug-in hybrid with two electrical motors powered by three 34-kilowatt-hour battery packs and a turbo and supercharged gas inline 4 up front.)

But it will likely face off against other competitors launching new EVs in 2020 and 2021, including Volkswagen, GM, Ford and startups Lucid Motors and even adventure-focused Rivian.

Polestar is hoping customers are attracted to the tech and the performance of the fastback, which produces 408 horsepower, 487 pound feet of torque and has a 78 kWh battery pack that delivers an estimated range of 292 miles under Europe’s WLTP.

The Polestar 2’s infotainment system will be powered by Android OS and, as a result, bring into the car embedded Google services such as Google Assistant, Google Maps and the Google Play Store. This shouldn’t be confused with Android Auto, which is a secondary interface that lies on top of an operating system. Android OS is modeled after its open-source mobile operating system that runs on Linux. But instead of running smartphones and tablets, Google modified it so it could be used in cars.

Ford won’t restart North American plants on March 30

By Kirsten Korosec

Ford said Tuesday it won’t restart its factories in the U.S., Canada and Mexico on Monday, March 30 as the automaker had originally planned.

The company, which suspended production at its North American factories due to the continued spread of COVID-19, has decided not to restart operations in light of various governments’ orders to stay and work from home, Kumar Galhotra, Ford’s president of North America said in a statement.

“We are assessing various options and working with union leaders – including the United Auto Workers and Unifor – on the optimal timing for resuming vehicle production, keeping the well-being of our workforce top of mind,” Galhotra added.

Ford’s closures in North America follows a decision to shutter factories in Cologne and Saarlouis in Germany as well as its Craiova facility in Romania. Earlier this week, Ford asked all salaried employees — except those performing business critical roles that can’t be done off site —to work remotely until further notice.

On March 15, the UAW along with GM, Ford and Fiat Chrysler Automobiles formed a coronavirus task force to work on ways to protect worker and lessen the spread of the disease.

GM and FCA also suspended operations last week. Those automakers haven’t said if they will restart production March 30.

Netflix is reducing its traffic on ISPs by 25% in India

By Manish Singh

Netflix said on Tuesday that it is lowering its traffic on network providers by 25% in India for a period of 30 days, following a similar move in Europe in a bid to reduce the congestion on internet pipelines.

The American giant said that despite lowering the strain it puts on internet service providers, it will “maintain the quality” of its service. Amazon Prime Video said it has also started to lower the data consumption that streaming takes up on its platform, while local services Disney’s Hotstar, Times Internet’s MX Player and Zee5 say they are working to enforce similar measures.

Vijay Venkataramanan, Director of Post-Production at Netflix India, offers clarity on how reducing the traffic would impact the quality of video streams.

“Given the crisis, we’ve developed a way to reduce Netflix’s traffic on telecommunications networks by 25% while also maintaining the quality of our service. So consumers should continue to get the quality that comes with their plan – whether it’s Ultra-High, High or Standard Definition. We believe that this will provide significant relief to congested networks and will be deploying it in India for the next 30 days,” Ken Florance, VP Content Delivery of Netflix, said in a statement to TechCrunch.

TechCrunch understands that Netflix, which maintains several different streams for a single title, is removing the highest bandwidth streams as part of this move. For most Netflix subscribers in India, this wouldn’t affect them.

The mobile-only plan that Netflix introduced in India last year is its most popular tier in the country, a person familiar with the matter said. Both mobile-only plan and the basic plan, the immediate advanced tier above it, offer limit streaming in standard definition.

Netflix’s announcement follows a local telecom group’s (Cellular Operators Association of India) appeal to on-demand video streaming services to put less burden on internet pipelines that are facing surge in usage as more people stay and work from home in the wake of coronavirus outbreak.

A report by Bank of America, obtained by TechCrunch, said this week that internet service providers in India were witnessing a 10% surge in the volume of daily traffic and data consumption. The firm analyzed traffic at internet exchanges and spoke with internet service providers to reach that conclusion, it said in the report.

More to follow…

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

By Mike Butcher

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

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

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

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

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

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

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

Latin America roundup: SoftBank adds $1B, Stori raises $10M and Grow Mobility puts on the brakes

By Anna Escher
Sophia Wood Contributor
Sophia Wood is a Venture Partner at Magma Partners. Sophia is also the co-founder of LatAm List, an English-language Latin American tech news source.

After investing nearly $2 billion of its Innovation Fund in Latin America in 2019, SoftBank announced this month that it would add an additional $1 billion into the fund to continue supporting tech startups across the region. While the Japanese investor faces the challenge of raising a second global fund after its Vision Fund, SoftBank is still investing heavily in Latin America. 

One of its early Latin American investments – and the first in Colombia – Ayenda Rooms, is performing particularly well, raising $8.7 million from Kaszek Ventures this month. Ayenda is the local version of Oyo Rooms, one of SoftBank’s biggest bets in India, which has looked to expand into Mexico despite a financial crunch last month. In fact, the fund recently came under scrutiny by the Wall Street Journal for funding similar delivery competitors Uber, Rappi, and Didi, suggesting a conflict of interest. 

Most recently, SoftBank invested $125 million in Mexico’s lender, Alphacredit, and they reportedly plan to continue investing in that niche. The firm currently oversees over 650 companies in Latin America, largely concentrated in Brazil, Argentina, Chile, Colombia, and Mexico, and plans to invest $100-150M in seventeen firms and two VCs by the end of the year. To date, over 50% of SoftBank’s investments have been into Brazil, most of which exist in the fintech sector. 

Mexican neobank Stori raises $10 million Series A

In a self-fulfilling prophecy, Mexico’s neobank market became all the more competitive this month with the addition of a new player: Stori. Within the past few months, both TechCrunch and Business Insider pointed to Mexico’s neobank market as the one to watch in Latin America as startups like Albo, Klar, and Nubank battle for market share. In February, digital bank Stori joined the conversation with a $10 million Series A from Bertelsmann Investments (BI) and Source Code Capital, along with an existing investor, Vision Plus Capital.

This round of funding, led by Chinese investors, is part of a growing trend of foreign funds waking up to the Latin American startup ecosystem, Asian VCs in particular. Tencent has invested in Brazil’s Nubank, which has since expanded to Mexico, and in Argentina’s Uala, which is considering a similar move. SoftBank has investments in the largest lending and credit startups in Brazil and Mexico, as well. 

Stori will use the investment to improve its AI technology as it tries to reach over 100,000 Mexicans through its inclusive digital banking services. The neobank has raised over $17 million from investors since it was founded in 2018.

Grow Mobility pulls out of 14 cities

In January, Rappi and Lime pulled back their operations in Latin America in order to focus on technology over rapid growth. Brazil’s top mobility startup, Grow Mobility (which rose out of a merger between e-scooter companies Grin from Mexico and Yellow from Brazil) also pulled back. The startup, which provides e-scooters and bikes shares across Brazil, took bicycles out of operation and removed its scooters from 14 cities. 

Grow also restructured its operations through layoffs that affected employees across Brazil, although they did not comment on how many people were affected. Grow Mobility’s scooters will now only operate in Rio de Janeiro, Sao Paulo, and Curitiba. 

This pattern of pull-back following explosive growth has become more common among Latin America’s biggest startups, pushing these early stage companies to focus on technological solutions that boost revenue, rather than blitzscaling measures that only buy market share.

Amazon Web Services doubles down on Brazil

Amazon Web Services (AWS) announced it would invest $236 million (R$1 billion) into Sao Paulo over the next two years to strengthen its Latin American infrastructure. This effort may be a part of Amazon’s work to consolidate market share in Latin America’s increasingly competitive e-commerce market, where legacy players like MercadoLibre still dominate. This investment will enable Amazon to expand its Brazilian data centers and improve local service offerings to both private and public partners. 

Amazon also announced that it would build a new distribution center in Pernambuco in the north of Brazil to support sales across the country. Brazil accounts for almost 40% of Latin America’s e-commerce market, making the country vital to Amazon’s positioning in the region.

News and Notes: Weel, Global 66, Yuca, and Memed 

Weel, a Brazilian accounts-receivable management platform, announced an $18.4 million investment from Banco Votorantim, Brazil’s seventh-largest bank, in February 2020. This investment was Banco Votorantim’s second in the startup after a $6 million contribution in 2019. Weel will use the investment to explore expansion across Brazil, as well as exploring Chilean and Mexican markets. 

Chilean international transfer startup Global 66 received $3.25 million in February from UK investor Venrex, to continue its expansion across the region. The startup currently offers rates up to eight times better than existing transfer services, especially for the Latin American region. Global 66 recently opened new offices in Peru and plans to expand to Colombia, Argentina, and Mexico within the next two years. Within just two years of operations, Global 66 has processed transactions for over 25,000 users across 60 cities worldwide.

Yuca, a Brazilian proptech, raised $4.7 million from Monashees, ONEVC, and Creditas to help fight housing crises in Brazil’s largest cities. As Brazil’s cities sprawl – Sao Paulo is one of the largest in the world – Yuca creates central co-living spaces for young people that want to shorten their commutes. Inspired by Chinese startup, Ziroom, Yuca currently manages 18 apartments for 80 students and plans to scale to 500 apartments by the end of the year.

Brazil’s digital prescription startup, Memed, recently raised $4.5 million from DNA Capital and Redpoint eVentures to improve the local prescription system for doctors and patients alike. Today, Memed has over 80,000 registered doctors who have created over 10 million prescriptions worth more than $237 million. Memed’s 100% digital prescriptions are said to improve security and efficiency in Brazil’s complex, bureaucratic healthcare system.

While Brazil is still at the forefront of Latin America’s tech ecosystem, Mexican fintechs are edging up, especially with additional support from international investors. 2020 is off to a strong start, hinting at another potential record-breaking year for Latin American tech investment.

Magma Partners scores $50M to build the a16z of Latin America

By Anna Escher

Magma Partners has more than doubled the size of its investable capital with the close of its latest $50 million fund. The Santiago, Chile-based venture firm founded in 2013 had secured $21 million that made up the outfit’s second fund, which it raised after closing its debut fund with just $2.5 million. The firm’s largest fund to date comes as investment in Latin America has reached a record high

Magma has made 70 deals and its portfolio has seen three exits. General Partner Nathan Lustig tells me that Magma will continue to write $50,000 to $100,000 seed checks, and that its larger investments will range from up to $5 million to $7 million. The firm is targeting a few niches:

  • Fintech and insurtech companies in Latin America and the solutions that provide the cybersecurity, anti-fraud and identity management API layers needed to support them. 
  • SaaS companies with tech and sales teams in Latin America that target a global user base.

The fund won’t touch hardware or biotech and isn’t really looking at anything outside its fintech and insurtech thesis. 

With fund three, Magma has attracted its first institutional investor. IDB Lab, the innovation laboratory of the IDB Group, has approved an investment of $4 million in the fund. This now puts Magma on a more global radar, and, depending on success of fund three, could enable an even larger future fund four. 

Chilean, Colombian and Mexican family offices were the biggest cohort of contributors to the fund, along with angel investors in both Latin America and the U.S.

Magma itself is made up of 15 people across both operations and investing, and the team is spread remotely across Santiago, Bogota, Mexico City and Guadalajara. 

Magma Media and the agency model

While a relatively young firm, Magma has been focused from the start on developing an agency model to support its founders — one that serves as both educator and, in many cases, connector. Latin America suffers from a lack of educational content around company building. That’s why Magma is launching Magma Media, an in-house, media operations unit determined to help its portfolio companies succeed. 

“If you’ve only raised a small round, hiring the wrong person could kill your startup.”

Lustig says that the Magma team is made up of former entrepreneurs, and that the goal of Magma Media is to build from the ground up the services they wish they’d had as founders. Inspired by the Andreessen Horowitz agency model, Magma also offers to its startup founders content marketing, sales, recruiting and PR services. Regarding the importance of content marketing, he notes that “if you have a great product and a great idea but you can’t communicate what you’re doing, no one will buy it.” As for the in-house recruiter who is helping to educate founders on making the right hires, Lustig says, “If you’ve only raised a small round, hiring the wrong person could kill your startup.” These are the kind of company building tips that aren’t as widely circulated in Latin America’s comparatively nascent startup scene as they are in Silicon Valley. 

Magma has been hustling to expand a network of twenty corporations across Latin America — similar to the Andreessen agency model — that will take meetings with their portfolio, given that the lockdown of an early corporate partnership is a big win for a startup. 

The firm encourages successful Latin American startups to feed back into the ecosystem by adapting agency-like networks similar to a16z and Y Combinator, through which startups leverage a network of pre-vetted services and sign on as each other’s first customers. One Magma company, OmniBank, is already factoring out its financial loan services to a few other companies in its portfolio in efforts to emulate this network model that has seen success in the U.S. 

As for diversity and inclusion, Lustig says that 35% of the Magma portfolio has at least one female founder and that they hope to grow that percentage.

Asian capital is smarter capital in Latin America

Despite Lustig’s admiration for some American models of investment, he observes that “China is eating the U.S.’s lunch in Latin America,” referring to the capital flowing into the region from Asian sources. Didi entered Latin America in 2018 via its $1 billion acquisition of Brazilian ridesharing company 99. Tencent’s $180 million strategic investments into Nubank propelled the Brazilian neobank’s valuation to reach $10 billion. And of course, Tokyo-based SoftBank committed $6 billion to invest in Latin American companies via its Latin American Innovation Fund, fueling Colombia’s Rappi and Brazil’s Creditas with growth-stage investments that have allowed the companies to scale aggressively. 

In fact, while U.S. funds are beginning to wake up to the Latin America opportunity, Lustig believes that Asian capital in Latin America is smarter capital. Some of it has to do with pattern matching. Globally, Southeast Asia and Latin America count similar population sizes of around 640 million, and 18 out of the 25 biggest cities in the world are in either Southeast Asia or Latin America.

Congruent geographic patterns and likeness in population volume means that tech solutions achieved by startups in Southeast Asia could also function in Latin America — warranting heavier investment, especially when considering how much has been invested into Southeast Asia. Lustig estimates that Southeast Asia saw somewhere between $16 billion and $20 billion invested in 2019, and it has a lower GDP than Latin America. 

Lustig highlights online education as just one example of technology that’s more developed in Asia and that could be used to reach rural areas in Latin America that don’t have as much access. Asian e-commerce and mobile payments models are other sectors that Latin American companies can borrow from, he says, stressing that Latin America features a very social culture. It explains why Brazil is one of Facebook’s largest markets, but also, linking social to commerce is a huge opportunity that could show up and generate big returns in Latin America.  

Latin American startups should borrow success from the pioneering agency models invented by Andreessen Horowitz and Y Combinator on their home ground, while pattern matching the tech solutions that worked for startups in geographically analogous Southeast Asia and China.

Asian investors may not share the same racist and xenophobic rhetoric around Latins that exists in the United States, too, says Lustig. Though an American himself, he believes a bias against Latins exists in the U.S. “There are still many very educated people in the U.S. who think that Colombia is Narcos on Netflix.” In his experience, he observes that Asian investors aren’t wired to think like that and are instead focused on the growth fundamentals. 

Put all the pieces together, suggests Lustig, and the opportunity becomes clear. “One of the most exciting parts about investing in Latin America is that if you can actually solve some of these problems, yes you can generate a big return. [Y]ou might also help tens to hundreds of millions of people solve basic problems that people in the U.S. take for granted. So I think the advice for founders is to go out and try to solve the problems that they’re seeing in their day to day,” he says. 

Latin American startups should borrow success from the pioneering agency models invented by Andreessen Horowitz and Y Combinator on their home ground, while pattern matching the tech solutions that worked for startups in geographically analogous Southeast Asia and China. Magma hopes its strategy will prepare Latin American startups for the incoming mega-rounds from Asia that will enable the best companies to enter hypergrowth mode.

Meanwhile, in a note to American investors, Lustig says that the U.S. really needs to up its game in Latin America if it wants to continue to have influence.

Investors in LatAm get bitten by the hotel investment bug as Ayenda raises $8.7 million

By Jonathan Shieber

Some of Latin America’s leading venture capital investors are now backing hotel chains.

In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.

Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.

Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.

The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.

Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.

“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.

Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.

“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.

The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.

Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:

The New York Times  published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.

Whether Oyo, backed by billions from the SoftBank  Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.

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

By Jonathan Shieber

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

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

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

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

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

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

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

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

Is tech socialism really on the rise?

By Walter Thompson
Greg Epstein Contributor
Greg M. Epstein is the Humanist Chaplain at Harvard and MIT, and the author of The New York Times bestselling book "Good Without God." Described as a “godfather to the [humanist] movement” by The New York Times Magazine in recognition of his efforts to build inclusive, inspiring and ethical communities for the nonreligious and allies, Greg was also named “one of the top faith and moral leaders in the United States” by Faithful Internet, a project of the United Church of Christ and the Stanford Law School Center for Internet and Society.

In Part 1 of my conversation with Ben Tarnoff, co-founder of leading tech ethics publication Logic, we covered the history and philosophy of 19th century Luddites and how that relates to what he described in his column for The Guardian as today’s over-computerized world.

I’ve casually called myself a Luddite when expressing general frustration with social media or internet culture, but as it turns out, you can’t intelligently discuss what most people think of as an anti-technology movement without understanding the role of technology in capitalism, and vice versa.

At the end of Part 1, I was badgering Tarnoff to speculate on which technologies ought to be preserved even in a Luddite world, and which ones ought to go the way of the mills the original Luddites destroyed. Arguing for a more nuanced approach to the topic, Tarnoff offered the disability rights movement as an example of the approach he hopes will be taken by an emerging class of tech socialists.

TechCrunch: The Americans with Disability Act has been a very powerful body of legislation that has basically forced us to use our technological might to create physical infrastructure, including elevators, buses, vans, the day-to-day machinery of our lives that allow people who otherwise wouldn’t be able to go places, do things, see things, experience things, to do so. And you’re saying one of the things that we could look at is more technology for that sort of thing, right?

Because I think a lot about how in this society, every single one of us walks around with the insecurity that, “there but for the grace of my health go I.” At any moment I could be injured, I could get sick, I could acquire a disability that’s going to limit my participation in society.

Ben Tarnoff: One of the phrases of the disability rights movement is, “nothing about us without us,” which perfectly encapsulates a more democratic approach to technology. What they’re saying is that if you’re an architect, if you’re an urban planner, if you’re a shopkeeper, whatever it is, you’re making design decisions that have the potential to seriously negatively impact a substantial portion of the population. In substantial ways [you could] restrict their democratic rights. Their access to space.

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