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Microsoft Azure announces its first region in Austria

By Frederic Lardinois

Microsoft today announced its plans to launch a new data center region in Austria, its first in the country. With nearby Azure regions in Switzerland, Germany, France and a planned new region in northern Italy, this part of Europe now has its fair share of Azure coverage. Microsoft also noted that it plans to launch a new ‘Center of Digital Excellence’ to Austria to “to modernize Austria’s IT infrastructure, public governmental services and industry innovation.”

In total, Azure now features 65 cloud regions — though that number includes some that aren’t online yet. As its competitors like to point out, not all of them feature multiple availability zones yet, but the company plans to change that. Until then, the fact that there’s usually another nearby region can often make up for that.

Image Credits: Microsoft

Talking about availability zones, in addition to announcing this new data center region, Microsoft also today announced plans to expand its cloud in Brazil, with new availability zones to enable high-availability workloads launching in the existing Brazil South region in 2021. Currently, this region only supports Azure workloads but will add support for Microsoft 365, Dynamics 365 and Power Platform over the course of the next few months.

This announcement is part of a large commitment to building out its presence in Brazil. Microsoft is also partnering with the Ministry of Economy “to help job matching for up to 25 million workers and is offering free digital skilling with the capacity to train up to 5.5 million people” and to use its AI to protect the rainforest. That last part may sound a bit naive, but the specific plan here is to use AI to predict likely deforestation zones based on data from satellite images.

Leading a $15 million round, Prosus Ventures makes the challenger bank Klar its first bet in Mexico

By Jonathan Shieber

Klar, a new online bank based in Mexico City, has become the first big bet that Prosus Ventures (the firm formerly known as Naspers Ventures) is taking in Latin America outside of Brazil.

Founded by Stefan Moller, a former consultant at Bain & Co. who advised large banks, Klar blends Moller’s work experience in Mexico with his connections to the German banking world and the tech team at Berlin -based n26, to create a challenger bank offering deposit and credit services for Mexican customers.

The Mexican market is woefully underserved when it comes to the finance industry, according to Moller. Only 10% of Mexican adults have a credit card, something Moller said is the cheapest consumer lending instrument around.

That’s why Klar launched last year with both credit and debit services. The company has 200,000 banking customers and roughly 27,000 of those customers have taken out loans through the bank. A typical loan is roughly $110, according to Moller, and each loan comes with a 68% annual percentage rate. 

If that sounds usurious, that’s because it is — at least by U.S. standards. In the U.S. a typical credit card will run somewhere between 16% and 24%, according to data from WalletHub. In Mexico, Moller said the typical interest rate is 70% (no wonder only 10% of adults have credit cards).

Still, the opportunity to expand credit and debit services made sense to Prosus, which led the company’s Series A round alongside investors including the International Finance Corporation and former investors Quona capital, who led Klar´s SEED round, Mouro Capital (formerly Santander Innoventures) and aCrew.

Banafsheh Fathieh, the Prosus Ventures principal who led the investment for the firm, said that the commitment to Klar will likely be the first of many investments that her firm makes in the region — both in fintech and likely in Mexico’s tech ecosystem more broadly.

Prosus is famous for making early bets on emerging technology companies in developing markets. Perhaps most famously the firm’s parent company was an early investor in Tencent — a multi-million dollar bet that has generated billions in returns.

Before this investment, Prosus had confined its work in the Latin American region to investments in Brazilian technology companies like Creditas and Movile .

“Prosus Ventures partners with entrepreneurs that are solving big societal problems with technology, in a uniquely local way. We invest in sectors of the economy where technology can lead to meaningful change in the lives of consumers. Klar has identified a massive need in the Mexican financial market and brings a unique solution through their credit and debit offering,” said Banafsheh Fathieh from Prosus Ventures, in a statement. “In less than a year, the team has shown an ability to build a world-class digital bank for the masses, one focused on financial access and inclusion. We are very excited to partner with them on that mission.”

Late-stage deals made Q3 2020 a standout VC quarter for US-based startups

By Alex Wilhelm

Remember back in March when the VC game was done for the year, checkbooks were snapping shut and startup layoffs led the headlines? So much for all that. Q3’s venture capital numbers are in and they are anything but weak.

In retrospect, the Q2 VC slowdown looks more like a short-lived recharge ahead of a big push in Q3 than anything existential. We can see this today through the lens of data concerning what happened after June concluded and we moved into Q3.

According to data from PitchBook (data source) and CBInsights (data source), there was a lot to like about the third quarter if you were a U.S.-based startup.


The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.


I want to dig into the data and pull out most important data points for you. We’ll get you informed and out the door in around 900 words.

If you want a more global look at the venture capital world in Q3, don’t worry. We’re doing that tomorrow right here at The Exchange. Ready? This should be both fun and informative. Let’s go!

A massive third quarter

To get a clear look at the U.S. venture capital market, we’ll start from the top down. So, the biggest numbers first, followed by increasingly narrow slices of data so we can drill down into smaller startups.

First, the top-line numbers:

  • How much money was raised by U.S.-based startups in Q3 2020? $36.5 billion, according to CBInsights, $37.8 billion according to PitchBook. Those numbers are effectively the same for purposes. CBInsights calls the number a seven-quarter high, up 22% from the Q3 2019 number and 30% from the Q2 2020 result. PitchBook agrees that Q3 2020 was strong, but has its count just under Q2 2020’s own.
  • How many deals was that money spread between? CBInsights counts 1,461 VC deals in Q3 2020 for U.S.-based startups. Per its numbers, that figure is up 1% from Q2 2020 and down 11% from Q3 2019. PitchBook, in contrast, counts 2,990 total deals, inclusive of rounds that it expects to be added as information about the quarter fills in. That tally “held steady” compared to Q3 2019, per the company.

What to make of all this information? Simple: Q3 2020 U.S.-based startup venture capital dollar volume was very strong, with deal counts coming in slightly weaker.

This means that we saw fewer, larger deals in the quarter on average, right? Let’s see:

Crypto-driven marketplace Zora raises $2M to build a sustainable creator economy

By Matthew Panzarino

Dee Goens and Jacob Horne have both the exact and precisely opposite background that you’d expect to see from two people building a way for creators to build a sustainable economy for their followers to participate in. Coinbase, crypto-hack projects at university, KPMG, Merrill Lynch. But where’s the art?

“Believe it or not, I used to have dreams of being a rapper,” laughs Goens. “There’s a SoundcCloud out there somewhere. With that passion you explore the inner workings of the music industry. I would excitedly ask industry friends about the advance and 360 deal models only to realize they were completely broken.”

And, while many may be well-intentioned, these deal structures often exploit artistry. In many cases taking the majority of an artist’s ownership. “I grew curious why artists were unable to resource themselves from their community in an impactful way — but instead, were forced to seek out potentially predatory relationships. To me, this was bullshit.”

Horne says that he’d always wanted to create a fashion brand. 

“I always thought a fashion brand would be something I’d do after crypto,” he tells me. “I love crypto but it felt overly focused on just finance and felt like it was missing something. Then I started to play with the idea of combining these two passions and starting Saint Fame.”

While at Coinbase, Horne hacked on Saint Fame, a side project that leveraged some of the ideas on display in Zora. It was a marketplace that allowed people to sell and trade items with cryptocurrency, buying intermediate variable-value tokens redeemable for future goods. 

“I realized that culture itself was shaped and built upon an old financial system that is systemically skewed against artists and communities,” says Horne. “The operating system of ownership was built in the 1600s with the Dutch East India Trading Company and early Nation States. Like what the fuck is up with that?” 

We have the internet now, we can literally create and share information to billions of people all at once, and the ownership system is the same as when people had to get on a boat for six months to send a letter. It’s time for an upgrade. Any community on the internet should be able to come together, with capital, and work towards any shared vision. That starts with empowering creators and artists to create and own the culture they’re creating. In the long term this moves to internet communities taking on societal endeavors.”

The answer that they’re working on is called Zora. It’s a marketplace with two main components but one philosophy: sustainable economics for creators. 

All too often creators are involved in reaping the rewards for their work only once, but the secondary economy continues to generate value out of their reach. Think of an artist, as an example, that creates a piece and sells it for market value. That’s great, but thereafter, every ounce of work that the artist puts into future work, into building a name and a brand and a community for themselves puts additional value into that piece. The artist never sees a dime from that, relying instead on the value of future releases to pay dividends on the work. 

Image Credits: Zora

That’s basically the way it has always worked. I have a little background in this as I used to exhibit and was involved in running a gallery and my father is a fine artist. If he sells a painting today for $300, gets a lot better, more popular and more valued over time, the owner of that painting may re-sell it for hundreds or thousands more. He will never see a dime of that. And God forbid that an artist like him gets too locked into the gallery system, which slices off enormous chunks of the value of a piece for a square of wall space and the marketing cachet of a curator or storefront. 

The same story can be told across the recording industry, fashion, sports and even social media. Lots of middle-people and lots of vigs to pay. And, unsurprisingly, the same creators of color that drive so much of The Culture are the biggest losers, hands down. 

The primary Zora product is a market that allows creators or artists to launch products and then continue to participate in their second market value. 

Here’s how the Zora team explains it:

On Zora, creators have the ability to set two prices: start price and max price. As community members buy and sell a token, it moves the price up or down. This makes the price dynamic as it opens price discovery on the items by the market. When people buy the token it moves the price closer to its maximum. When they sell, it moves closer to its minimum. 

For an excited community like Jeff [Staple’s], this new dynamic price can cause a quick increase in the value of his sneakers. As a creator, they capture the value from selling on a price curve as well as getting a take on trading fees from the market which they now own. What used to trade on StockX is now about to trade on a creator owned market.

There have been some early successes. Designer and marketer Jeff Staple launched a run of 30 Coca-Cola x Staple SB Dunk customs by Reverseland and their value is trending up around 234% since release. A Benji Taylor x Kevin Doan vinyl figure is up 210%

I have seen some other stabs at this. When he was still at StockX, founder Josh Luber launched their Initial Product Offerings, a Blind Dutch Auction system that allowed the market to set a price for an item, with some of the cut of pricing above market going back to the manufacturer or brand making the offering. The focus there was brands versus individual creators (though they did launch with a Ben Baller slide). Allowing brands to tap into second market value for limited goods is a lot less of a revolution play, but the thesis is similar. I thought that was a good idea then, and I like it even better when it’s being used to democratize rather than maximize returns. 

Side note: I love that this team is messing around with interesting ideas like dogfooding their own marketplace with the value of being in their own TestFlight group. I’m sort of like, is that allowed, but at the same time it’s dope and I’ve never seen anything like it. 

Zora was founded in May of 2020 (right in the middle of this current panny-palooza). The team is Goens (Creators and Community), Horne (Product), Slava Kim (Design), Dai Hovey (Engineering), Ethan Daya (Engineering) and Tyson Battistella (Engineering). 

Zora has raised a $2 million seed round led by Kindred Ventures, with participation from Trevor McFedries of Brud, Alice Lloyd George, Jeff Staple, Coinbase Ventures and others.

Tokenized community

But this idea that physical goods or even digitally packaged works have to exist as finite containers of value is not a given either. Goens and Horne are pushing to challenge that too with the first big new product for Zora: community tokens. Built on Ethereum, the $RAC token is the first of its kind from Zora. André Allen Anjos, stage name RAC, is a Portuguese-American musician and producer who makes remixes that stream on the web, original music and has had commercial work featured in major brand ads. 

Though he is popular and has a following in the tens of thousands, RAC is not a social media superpower. The token distribution and subsequent activity in trades and sales is purely driven by the buy-in that his fans feel. This is a key learning for a lot of players in this new economy: raw numbers are the social media equivalent of a billboard that people drive by. It may get you eyeballs, but it doesn’t guarantee action. The modern creator is living in a house with their fans, offering them access and interacting via Discord and Snap and comments. 

Image Credits: Zora

But those houses are all other people’s houses, which leads into the reason that Zora is launching a token.

The token drop serves multiple purposes: 

  • It unites fans across multiple silos. Whether they’re on Intsa, TikTok, Spotify or Snapchat, they can all earn tokens. That token serves as a unifying community unit of value that they all understand and pivot around. It’s a way to own a finite binary “atom” of an artist’s digital being.
  • It creates a pool of value that an artist can own and distribute themselves. Currently you cannot buy $RAC directly. You can only earn it. Some of that is retroactive for loyal supporters. If, for instance, you followed RAC on Bandcamp dating back to 2009, you’ll get some of a pool of 25,000 RAC. Bought a bit of RAC merch? You get some credit in tokens too. Future RAC distributions will be given to Patron supporters, merch purchasers, etc.
  • The value stays in the artist’s universe, rather than being spun out into currency. It serves as a way for the artist to incentivize, reward and energize their followers. RAC fans who buy his mixtape get tokens, and they can redeem them for purchases of further merch. 
  • It allows more flexibility for creators whose work doesn’t fall so neatly into package-able categories. Performance art, activism, bite-sized entertainment. These are not easy to “drop” for money. But if you have a circulating token that grows in value as you grow your audience, there is definitely something there. 

The future of Zora most immediately involves spinning up a self-service version of the marketplace, allowing creators and entrepreneurs to launch their products without a direct partnership and onboarding. There are many, many uncertainties here and the team has a lot of challenges ahead on the traction and messaging front. But as mentioned, some early releases have shown promise, and the philosophy is sound and much needed. As the creator universe/passion economy/whatever you call it depends on how old you are/fandom merchant wave rises, there is definitely an opportunity to rethink how the value of their contributions are assigned and whether there is a way to turn the long-term labor of building a community into long-term value. 

The last traded price of RAC’s tape, BOY, by the way? $3,713, up 18,465%. 

Merging Airbnb and the traditional hotel model, Mexico City’s Casai raises $23 million to grow in Latin America

By Jonathan Shieber

With travel and tourism rising across Latin America, Casai, a startup combining Airbnb single unit rentals with hotel room amenities, has raised $23 million to expand its business across Latin America.

The company, which initially was as hit hard by regional responses to the COVID-19 pandemic as other businesses in the hospitality industry has recovered to reach nearly 90 percent of total capacity on the 200 units it manages around Mexico City.

The company was co-founded by chief executive Nico Barawid, a former head of international expansion at Nova Credit and consultant with BCG, and chief operating officer María del Carmen Herrerías Salazar, who previously worked at one of Mexico’s largest hotel operators, Grupo Presidente.

The two met two years ago at a barbecue in Mexico City and began speaking about ways to update the hospitality industry taking the best of Airbnb’s short term rental model of individual units and pairing it with the quality control and standards that guests expect from a hotel chain.

“I wanted to define a product from a consumer angle,” said Barawid. “I wanted this to exist.”

Before the SARS-Cov-2 outbreak Casai’s units were primarily booked through travel partners like HotelTonight or Expedia. Now the company has a direct brisk direct booking business thanks to the work of its chief technology officer, a former engineer at Google named Andres Martinez.

The company’s new financing was led by Andreessen Horowitz and included additional commitments from the firm’s Cultural Leadership Fund, Kaszek Ventures, Monashees Capital, Global Founders Capital, Liquid 2 Ventures, and individual investors including the founders of Nova Credit, Loft, Kavak and Runa.

Casai also managed to nab a debt facility of up to $25 million from TriplePoint Capital, bringing its total cash haul to $48 million in equity and debt.

Image Credit: Casai

The big round is in part thanks to the company’s compelling value proposition, which offers guest not only places to stay equipped with a proprietary smart hardware hub and the Casai app, but also a Google Home, smart lights, and Chromecast-kitted televisions, but also a lounge where guests can stay ahead of their check-in or after check-out.

And while the company’s vision is focused on Latin America now, its management team definitely sees the opportunity to create a global brand and business.

The founding team also includes a chief revenue officer, Alberto Ramos, who worked at McKinsey and a chief growth officer, Daniel Hermann, who previously worked at the travel and lifestyle company, Selina. The head of design, Alexa Backal, used to work at GAIA Design, and its vice president of experience, Cristina Crespo, formerly ran WeWork’s international design studio.

“To successfully execute on this opportunity, a team needs to bring together expertise from consumer technology, design, hospitality, real estate and financial services to develop world-class operations needed to deliver on a first-class experience,” said Angela Strange, a general partner at Andreessen Horowitz, who’s taking a seat on the Casai board. “It was obvious when I met Nico and Maricarmen that they are operationally laser-focused and have uniquely blended expertise across verticals, with unique views on the consumer experience.”

Hoping to be LatAm’s top digital bank for SMBs, Xepelin launches a lending and revenue management service

By Jonathan Shieber

There’s another entrant in the startup race to provide financial services to Latin America’s small and medium-sized businesses.

Financial services have been a huge opportunity for startups coming out of Brazil, Colombia and Mexico in recent years, and now Xepelin, a new company from Chile, is looking to join the fray.

Xepelin’s founders, Sebastian Kreis and Guillermo Molina Carvallo, launched their company with the vision of creating a new kind of online bank for Latin America’s small businesses.

Sebastian Kreis, chief executive officer, Xepelin. Image Credits: Xepelin

The company’s pitch to business owners depends on a variation of the lending tool known as factoring, where small businesses can take out loans based on the income they’re expecting to receive. In Latin America, where small businesses have limited avenues to traditional loans, according to Kreis, factoring represents a novel solution.

Xepelin already has a multimillion dollar credit line on the books in addition to a small round of initial financing and the company will be using both the credit line to bring customers in and the equity infusion to continue developing revenue management and resource planning tools for its customers.

Starting in Chile and Mexico, where the two founders have a long history in the financial services world, the company expects to become a player across the continent in line with the growth of private debt services for small businesses.

Other startups, like Portal Finance and Marco Financial are also targeting the lending markets. Like Xepelin, the two companies have secured multiple lines of credit to support their businesses.

Kreis estimates that debt financing in Latin America could grow to 70 times its current size given changes to the regulatory environment and increasing demand for digital financial services over the next decade.

In the first stage we developed the new standard for SMBs’ working capital financing in LatAm, focusing on our client’s user experience, financial needs (not only transactions) and the way they manage their working capital. Xepelin gives SMBs access to capital in an easy and efficient way.

Mexico is a good indicator of the potential size of the market, according to Kreis. There only 300,000 businesses — out of more than 6 million registered companies — have sales and account executives offering revenue management and credit lines.

These money managers have a portfolio of 300 companies that they work with, while midmarket companies may work with as many as 1,000 to 5,000 small businesses.

So far, Xepelin has raised $3.5 million in early-stage funding from investors including Oskar Hjertonsson, Manutara Ventures, Ignacio Canals, Gonzalo Rojas, FJ Labs, Diego Fleischmann, and Daniel Undurraga. The most recent capital infusion, a $2.5 million round led by Impact Ideas VC closed earlier this month.

 

If data is labor, can collective bargaining limit big tech?

By Walter Thompson
Erik Rind Contributor
Erik Rind is the CEO of ImagineBC and an expert in understanding the largely untapped potential that blockchain and AI technologies bring forward in order to help secure user’s data.
Matt Prewitt Contributor
Matt Prewitt is president of RadicalxChange Foundation. He is also an attorney and a blockchain industry advisor.

There are plenty of reasons to doubt that the House Judiciary Committee’s antitrust report will mark a turning point in the digital economy. In the end, it lacked true bipartisan support. Yet we can still marvel at the extent of left-right agreement over its central finding: The big tech companies wield troublingly great power over American society.

The bigger worry is whether the solutions on the table cut to the heart of the problem. One wonders whether empowered antitrust agencies can solve the problem before them — and whether they can keep the public behind them. For the proposition that many Facebooks would be better than one simply doesn’t resonate.

There are good reasons why not. Despite all their harms, we know that whatever benefits these platforms provide are largely a result of their titanic scale. We are as uneasy with the platforms’ exercises of their vast power over suppliers and users, as we are with their forbearance; yet it is precisely because of their enormous scale that we use their services. So if regulators broke up the networks, consumers would simply flock toward whatever platforms had the most scale, pushing the industry toward reconsolidation.

Does this mean that the platforms do not have too much power, that they are not harming society? No. It simply means they are infrastructure. In other words, we don’t need these technology platforms to be more fragmented, we need them to belong to us. We need democratic, rather than strictly market processes, to determine how they wield their power.

When you notice that an institution is infrastructure, the usual reaction is to suggest nationalization or regulation. But today, we have good reasons to suspect our political system is not up to this task. Even if an ideal government could competently tackle a problem as complex as managing the 21st century’s digital infrastructure, ours probably cannot.

This appears to leave us in a lose-lose situation and explains the current mood of resignation. But there is another option that we seem to have forgotten about. Labor organization has long afforded control to a broad array of otherwise-powerless stakeholders over the operation of powerful business enterprises. Why is this not on the table?

A growing army of academics, technologists, and commentators are warming to the proposition that “data is labor.” In short, this is the idea that the vast data streams we all produce through our contact with the digital world are a legitimate sort of work-product — over which we ought to have much more meaningful rights than the laws now afford. Collective bargaining plays a central role in this picture. Because the reason that the markets are now failing (to the benefit of the Silicon Valley giants) is that we are all trying to negotiate only for ourselves, when in fact the very nature of data is that it always touches and implicates the interests of many people.

This may seem like a complicated or intractable problem, but leading thinkers are already working on legal and technical solutions.

So in some sense, the scale of the tech giants may indeed not be such a bad thing — the problem, instead, is the power that scale gives them. But what if Facebook had to do business with large coalitions representing ordinary peoples’ data interests — presumably paying large sums, or admitting these representatives into its governance — in order to get the right to exploit its users’ data? That would put power back where it belongs, without undermining the inherent benefits of large platforms. It just might be a future we can believe in.

So what is the way forward? The answer to this question is enabling collective bargaining through data unions. Data unions would become the necessary counterpart to big tech’s information acquiring transitions. By requiring the big tech companies to deal with data unions authorized to negotiate on behalf of their memberships, both of the problems that have allowed these giant tech companies to amass the power to corrupt society are solved.

Labor unions did not gain true traction until the passage of the National Labor Relations Act of 1935. Perhaps, rather than burning our political capital on breaking up the tech giants through a slow and potentially Sisyphean process, we should focus on creating a 21st century version of this groundbreaking legislation — legislation to protect the data rights of all citizens and provide a responsible legal framework for data unions to represent public interests from the bottom up.

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.

Bringing micromobility to Africa

By Megan Rose Dickey

When you look at maps of micromobility across the world, it appears there’s not a ton of activity throughout Africa. Well, that’s because there’s not, Gura Ride founder and CEO Tony Adesina said at TC Sessions: Mobility.

In Africa, there are “very few” micromobility operators, Adesina said. “Almost non-existent.”

That’s why launching bike and scooter share in Africa, and specifically Rwanda was strategic, he said. In Kigali, there are many bike lanes and cycling is quite popular in Rwanda, Adesina said. But bikeshare and scooters are “completely new to them.”

Gura Ride has been in operation for the last couple of years and says people are generally receptive to the idea. Still, it hasn’t attracted the same type of market activity as other places.

“Africa is quite unique,” Adesina said. “I don’t think it’s somewhere where you can bring an existing model, maybe that worked in the States or the UK and just dump in a country like South Africa or Rwanda. You have to understand the culture and the people you’re dealing with. It takes quite some time. You have to study the terrain and make sure the model you run in the U.S. or the U.K. can actually fit. Another thing is price. The buying power is not as heavy as you have in the States. So the numbers have to make sense and you have to make sure that the market you’re going into can meet your projected goals.”

That’s partly why Voi, which has gained a stronghold across Europe, has yet to launch in Africa. Voi CEO Fredrik Hjelm noted how the cost of supply and operations is pretty much the same wherever it operates, so in markets where there is less willingness among riders to pay higher costs, it makes it “very, very difficult to operate profitably,” he said.

Once Voi can bring down the costs of operations, it will be easier to launch in more markets and operate profitably there, Hjelm said.

“So there is definitely a time where we will be able to make markets with lower willingness to pay, such as Africa, profitable, when we go there,” he said.

What’s key to micromobility becoming more mainstream in Africa is infrastructure, Adesina said.

“I think the biggest issue [in Kigali] is that the roads are quite narrow, so how do you share the road so you don’t have a lot of hit and runs,” he said.

On the other hand, micromobility is thriving so much in Europe because of the infrastructure, Hjelm said. So, infrastructure can really make or break the industry.

“The infrastructure is better than anywhere else,” Hjlem said. “Culturally also, we’re much more used to bikes to mopeds to vespas to scooters — to all kinds of alternatives to cars. So I think that fundamentally, Europe is the world’s most attractive market.”

Final week to score $50 student passes to TC Sessions: Mobility 2020

By Alexandra Ames

Class is about to be in session, students. If you’re passionate about mobility and transportation tech and hungry to learn from the visionaries, makers and investors who are building the future today, don’t miss out on TC Sessions: Mobility 2020 on October 6-7.

We support you, the next generation of mobility tech leaders, so take advantage of our $50 student pass — a $145 savings. But don’t delay. The price increases on October 5.

TC Sessions: Mobility 2020 offers two days packed with 1:1 interviews and panel discussions with the people at the top of game — the leaders, movers and shakers who continue to push beyond what seems possible. You won’t just hear from them, you’ll engage with them during a series of Q&A breakout sessions.

Whether you’re focused on micromobility, connected data, EVs or regulatory trends, you’ll find it — and much more — across the main stage, breakout sessions and sponsored sessions. Here’s a taste of what to expect. Be sure to study the event agenda and start strategizing your schedule now.

Driving the Mobility Revolution with Connected Car Data: Bret Scott, Wejo VP, discusses the future of mobility and how connected car data impacts the world of autonomous, electric and shared cars.

Software is Revolutionizing the Driver Experience and Driving Mass Electrification: Software in EVs enables a shift from buying a car to investing in an experience. ChargePoint CEO, Pasquale Romano discusses how it’s driving adoption, revolutionizing behavior and keeping up with demand.

Uber’s City Footprint: Uber touches many aspects of the transportation ecosystem — autonomous vehicles, food delivery, trucking and traditional ride-hailing. Director of Policy, Cities & Transportation, Shin-pei Tsay discusses Uber’s place in cities and how she navigates various regulatory frameworks.

This virtual conference draws a global audience and thousands of attendees. Talk about the perfect place to build your network — an essential part of any successful career. Find that dream internship or exciting employment opportunities and explore more than 40 early-stage mobility startups in the expo area.

Take advantage of CrunchMatch, our free AI-enhanced networking platform. It’s an easy-to-use tool to find and connect with the people who can help you advance your startup aspirations. Stay focused and organized as you schedule 1:1 meetings, meet founders, pitch investors, discuss your resume and otherwise impress the pants off influential people.

Class is in session on October 6-7. Join your community, dazzle the experts and build a firm foundation for your future at TC Sessions: Mobility 2020. Purchase your student pass before the price increases on October 5 and save a chunk of cash.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.

Businesses reducing trash and plastic consumption are beginning to look like treasure to some VCs

By Jonathan Shieber

Zuleyka Strasner didn’t set out to become an advocate for zero-waste consumption.

The former manager of partner operations at Felicis Ventures had initially pursued a career in politics in the UK before a move to San Francisco with her husband. It was on their honeymoon on a small island in the Caribbean that Strasner says she first saw the ways in which plastic use destroyed the environment.

That experience turned the onetime political operative into a zero-waste crusader — a transformation that culminated in the creation of Zero Grocery, a subscription-based grocery delivery service that sells all of its goods in zero-waste packaging.

Strasner returned from Corn Island with a purpose to reduce her plastic use and found inspiration in the social media posts and work of women like Anamarie Shreves, the founder of Fort NegritaLauren Singer, who became known for her TedX Teen talk on living waste free and launched Package Free; and Bea Johnson, who became a social media celebrity for her work reducing consumption and living waste-free.

Following in the zero-waste footsteps of others eventually led Strasner from her home in Redwood City, Calif. to San Francisco’s Rainbow Grocery, a food co-op dedicated to sustainable business practices. That 45 minute drive and hour spent in a store juggling jars, bottles, and shakers to perform basic shopping tasks convinced Strasner that there had to be a better way to shop zero-waste — especially for busy parents, professionals, and singles.

So she built one.

“I may have had no team and no money, but I had data. I spent 6 months alpha testing the early version of Zero. I was working from my apartment (cue cliché) getting real sign-ups, servicing real customers and doing a lot of growth hacking,” Strasner wrote in a post on Medium about the company’s early fundraising efforts. “It was really janky, but going between research reports, market data and the data I was collecting from real-people, I had something tangible to put under investors noses to back up how Zero looks at scale.”

Living through COVID-19 is a literal trash heap 

Strasner’s push to create alternatives to single-use plastic in grocery delivery comes as the use of single use plastics skyrockets and grocery delivery services surge — putting her new company in the enviable position of solving an obvious problem that’s becoming more apparent to everyone.

An August study from the investment bank Jefferies on single-use plastic identified the surge in plastic use and laid the blame at the feet of the pandemic.

“Bans and taxes have been rolled back, physical and chemical recycling activity has decreased, and virus concerns may have reduced consumers’ desire to minimize consumption of single-use plastics,” said the report, entitled “Drowning in Plastics,” which was quoted in Fortune.

While much of the use in home delivery and consumer goods has been offset by reductions in the use of plastics in manufacturing as industries slowed down production, the reopening of international economies means that there’s the potential for renewed industrial use even as consumers renew their love affair with plastic.

Companies like Strasner’s present a way forward for consumers willing to pay a premium for the waste reduction — and she’s not alone.

Changing the supply chain for food and consumer packaged goods 

Lauren Singer was already two years into operating her (profitable and cash-flow positive since “day one”) Brooklyn-based and e-commerce stores when she raised $4.5 million for her plastic free and zero-waste wares last September.

The image of the years worth of waste she claimed to be able to fit into a single jar had made her a viral sensation on Instagram and she’d managed to turn that post, and her celebrity, into a business. She wasn’t alone. Bea Johnson, another star of the zero-waste movement wrote the book on going zero waste and has turned that into a business of her own.

At Package Free, products range from a line of plastic-free and zero-waste lifestyle products like bamboo toothbrushes and mason jars, to natural tooth powder alongside natural pacifiers, and a dog shampoo bar. The company’s packaging is composed of 100% up-cycled post-consumer box with paper wrapping and paper tape, according to the company.

Meanwhile, another New York-based startup, Fresh Bowl, raised $2.1 million in January to bring zero-waste packaging and circular economic principles to the bowl business. The company, founded by Zach Lawless, Chloe Vichot and Paul Christophe, uses vending machines around New York that could hold roughly 220 prepared meals with a five-day shelf-life. Those meals were distributed in reusable containers that customers could return for a refund of a deposit.

Before the pandemic hit in the early months of the company’s financing each of its machines were on track to bring in $75,000 in revenue — and roughly 85% of the company’s containers were being returned for re-use according to a January interview with chief executive officer Zach Lawless.

Roughly 40% of landfilled material is food or food packaging, Lawless said. “For consumers it’s hard to make that trade-off between convenience and sustainability,” he said. Companies like Fresh Bowl and Strasner’s Zero Grocery are each trying to make that tradeoff a little easier.

Designing a zero-waste delivery service

Zero Grocery currently counts around 850 unique items in stock and expects to be over 1,000 items at the end of the year — and all delivered in reusable or compostable packaging, according to Strasner.

“Our aim is to not create anything that would go into the landfill and really limit what would need to be recycled. For the products that are single use… they are banded toilet rolls and they’re wrapped in a single sheet of paper. It’s all compostable,” said Strasner. 

Zero Grocery’s current operations are confined to the Bay Area, but the company has seen its growth triple when the pandemic hit in March and then grow twenty times over the ensuing months, according to Strasner. And unlike companies like Singer’s and Lawless’, Strasner didn’t have the luxury of reaching out to a handful of investors for a small cap table.

“I have continuously raised throughout this period to get to this moment in time. Initially i believed that we would have a more typical round structure, maybe myself misunderstanding that I’m an atypical founder,” Strasner said. As a Black, trans, woman, the path to “yes” from investors involved over 250 pitches and an undue amount of “no’s”. 

An early champion was Charles Hudson, the founder of Precursor Ventures, who helped lead a seed round for the company back in 2019. Hudson’s investment allowed the company to launch its first service, an exclusive, á la carte, home delivery service. It was basically Strasner wheeling a cart brimming with produce, grains and compostable items into customers’ homes and filling their own jars.

Zero Grocery chief executive Zuleyka Strasner on an early delivery run for her company. Image Credit: Zero Grocery

Ultimately untenable, the first service gave Strasner a view into the ways in which grocery delivery worked, and allowed her to create the second version of the service.

That was more like a latter day milkman service, where the company would deliver next-day, door-to-door delivery of over 100 zero-waste products. These were pre-packaged goods that the company just dropped off and then had customers return (a similar thesis to Fresh Bowl’s retail strategy).

That was around November 2019, when the company launched publicly across the Bay Area with our new offering. The initial traction allowed Strasner to raise another $500,000 from existing investors and new firms like Chingona Ventures and Cleo Capital.

“At that point we had sixty members on the platform and had done four figures of revenue of that month,” Strasner said.

Then COVID-19 hit the Bay Area and sales started soaring. To meet the needs of a strained supply chain — since the company doesn’t use any third-party services for delivery and involves a heavy bit of sanitization of containers so they can be re-used — Zero Grocery raised another $700,00 from Incite.org, Gaingels, Arlan Hamilton and MaC Ventures.

As Strasner wrote in a Medium post:

When COVID-19 hit the US, our team was among the first companies to go into lockdown. By late February, only essential personnel were on the warehouse floor for order preparation and delivery in head-to-toe PPE. Soon after that, the Bay Area went into full shelter-in-place.

Much like other companies in the grocery delivery space, our demand skyrocketed. To keep up, we grew our team in half the time we anticipated and launched features that were half-baked. Customer experience is tantamount, and our underdog team fought tooth-and-nail to preserve that despite long hours, little sleep, and no time for planning. We abandoned our notions of roles and split up the responsibilities of customer service, order packing, feature development, and more.

Strasner’s experiences as an immigrant, Black, trans founder mean that she thinks about sustainability not just in environmental terms, but also social sustainability. That’s why she works with the staffing service R3 Score to provide opportunities for people who had criminal records. The service provides a risk analysis for employers of job applicants who have a criminal record, to give employers a better sense of their viability as an employee.,

As she told Fast Company, “This is a highly capable, untapped labor force who is ready to work and is actively looking for opportunities… This is not merely a COVID stopgap measure for us; it’s something we’re incorporating into our business for the long-term.”

More money, fewer problems? 

Zero Grocery now counts many thousands of customers on its service and has just raised another $3 million, led by the investment firm 1984, to grow the business. The company charges $25 for a membership that includes free deliveries and collects empty containers. Non-members pay a $7.99 delivery free for groceries priced competitively with Whole Foods and other higher end grocery options.

Right now, Zero Grocery occupies the as the only fully zero-waste online grocery store in the U.S., and its numbers are growing quickly.

But that kind of success can breed competition, and there are certainly no shortage of would-be competitors waiting in the wings.

Already some of the largest consumer packaged goods companies in the U.S. have rolled out a version of zero-waste delivery services for their products. These are companies like Procter & Gamble and Froneri, the owner of ice cream brand Haagen Dazs (and others). In April, their reusable, no-waste delivery service Loop launched nationwide to provide customers across the country with recyclable and reusable packaged containers.

The commercialization of new kinds of packaging technologies from companies like NotPla, Varden, and Vericool mean that compostable material packaging could become a wider solution to the waste dilemma.

Still, these solutions to packaging waste come with their own issues, like the sustainability of the supply chain used to make them and the carbon footprint of the manufacturing processes. In instances like these reducing the need to manufacture new material is likely the most sustainable option.

And, in many cases, companies like Zero Grocer help their vendors do a lot of the work to reduce the footprint of their own supply chains.

“A lot of work is to enable them to exist within a plastic free supply chain using our technology,” said Strasner of the work she’d done with vendors. 

“I started Zero to make zero-waste grocery shopping effortless and empower people to protect the planet while shopping conveniently,” she said. That’s a notion everyone can treasure. 

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

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

Caroline Brochado and Sophia Bendz on the boom in Europe’s early- and growth-stage startups

By Mike Butcher

As part of Disrupt 2020 we wanted to look at the contrasting positions of both early and later-stage investing in Europe. Who better to unpack this subject than two highly experienced operators in these fields?

After a career at Spotify and then as a VC at Atomico, Sophia Bendz has rapidly gained a reputation in Europe as a keen early-stage investor. She recently left Atomico to pursue her early and seed-stage passion with Cherry Ventures. Bendz is a prolific angel investor, with a total of over 44 deals in the last 9 years. Her angel investments include as AidenAI, Tictail, Joints Academy, Omnius, LifeX, Eastnine, Manual, Headvig, Simple Feast, and Sana Labs. She is known for being a champion of the femtech space, and her angel investments in that space include Clue, Grace Health, Daye, O School, and Boost Thyroid.

Carolina Brochado, the former Atomico partner and most recently a partner at SoftBank Vision Fund’s London office, recently joined EQT Ventures to help launch EQT’s Growth fund, which is positioned between Ventures and Private Equity. Brochado led investments in a number of promising companies at Atomico,  including logistics company OnTruck, health tech company Hinge Health and restaurant supply chain app Rekki.

After establishing that these two knew each other while at Atomico, I asked Bendz why she headed back into the seed stage arena.

“I’m a trained marketeer and storyteller by heart… What makes me excited is new markets opportunities, people, culture, teams. So with that, in combination with my angel investing, I think I’m better suited to be in the earlier stages of investing. When I was investing before joining Atomico, I said to myself, I want to learn from the best, I want to see how it’s done how you structure the process and how you think about the bigger investments.”

Brochado says the European ‘cat is out of the bag’ as it were:

When I first moved to Europe in 2012 and first joined Atomico, after having been at a very small startup, there was still a massive gap in funding and Europe versus the US. I think you know the European secret is no longer a secret, and you have incredible funds being started at that early stage seed and series A, and because I was here in 2012, I’ve seen the amazing pipeline of growth companies that are coming up the curve, how the momentum of those companies is accelerating and how the market cap of those businesses are growing. And so I just became super excited about helping those businesses scale… I just you now felt like bridging that gap in between ass really exciting and.

One of the perennial topics that come up time and time again is whether or not founders should go with VC partners who have previously been operators, versus those with a finance background.

“Looking back, my years at Spotify, we had great investors, but there were not many of them that had the experience of scaling a big company,” Bendz said. “So, I’m happy to give [a startup] more than just the check in a way that I would have wished I had a sounding board when I was 25 and tackling that challenge at Spotify.”

Brochado concurred: “Having operators in the room is just is an incredible gift I think to a fund and at certain levels, having people that understand you know different forms of financing and different structures can also be incredibly helpful to founders who may not necessarily have that background. So I think that the funds that do it best have that diversity.”

Bendz is passionate about investing in female founders and femtech: “It’s such a massive business opportunity that is completely untapped. We’ve seen it many times when you have a female investment partner [that] the pipeline opens up and you get more deal flow from female founders…. So I think we have a lot of work to do. I think it’s definitely improved a lot in the last couple of years but not enough… That is one of the drivers for why I put my money where my mouth is and invest in lifting the founders, but also because there are incredibly interesting business opportunities… There are so many opportunities and products or services that we will see being developed. When we have a more equal society, and more women, both building their own companies, coding and also investing… I can’t wait to see what that world will look like.”

Brochado’s view is that “even beyond founders… the best managers today are putting a lot of focus on this and I think what’s exciting is, I think we’re past the point where you have to explain to people why diversity matters.”

Is there a post-Series A chasm?

Bendz thinks: “We have more big funds in Europe [now]. We have a really solid ground here in Europe of a, b and c investors.”

Brochado said: “it’s definitely getting better. You don’t hear as many founders say that to do my Series B or my Series C I have to move to the Valley as you used to. But there’s a lot of room still for growth investors in Europe. I think Series B is the hardest round actually because, at seed or series A, you can raise on very early traction or the quality of the management team. At Series B the price goes up but the risk doesn’t necessarily go down as much. And so I think that’s where you really need investors who are sector or thematic focused, who can come with conviction and also some knowledge around the company to really propel that company forward.”

Did they both see European entrepreneurs still making silly mistakes, or has the ecosystem mastered?

Brochado thinks ten years ago was it was hard for European founders as a lot of the talent to scale companies was still in the US. “What you’ve seen is a lot of big companies grow up in Europe, a lot of people come back from the US, and so I think that pool of talent now is larger, which is very helpful. I don’t think it’s yet at the scale of where the US is. But it gives us, you know as investors, a great window of opportunity to help get some of that talent for our portfolio companies.”

The impact of COVID-19

Bendz thinks we will “see a much slower Spring, but… I think it has been overall a good exercise for some companies, and I have not seen a slower deal flow. I’ve actually done more Angel deals this Spring than I normally do… Some businesses have definitely accelerated their whole business concept because of COVID. Investments are being made even though we haven’t met the founders. We’re able to do everything remotely so I think the system is kind of adjusting.”

Brocado’s view is that at the growth stage “there’s been a flight to quality. So actually, the really great companies or the companies that are seeing great tailwinds or companies that will still be category-leading once [have] seen a lot of interest. It’s been a very busy summer, which usually it isn’t usually, particularly at the growth stage… I think a lot of money is still in the system, and has flown into technology. And so if you look at how tech in the public markets has performed it’s performed extremely well. And that includes European public companies and within tech.”

Watch the full panel below.

Interswitch to revive its Africa venture fund, CEO confirms

By Jake Bright

Pan-African fintech company Interswitch plans to fire up its corporate venture arm again—according to CEO Mitchell Elegbe—who spoke at TechCrunch Disrupt on Wednesday.

The Nigerian founder didn’t offer much new on the Lagos-based firm’s expected IPO, but he did reveal Interswitch will revive investments in African startups.

Founded by Elegbe in 2002, Interswitch pioneered the infrastructure to digitize Nigeria’s then predominantly cash-based economy. The company now provides much of the rails for Nigeria’s online banking system that serves Africa’s largest economy and population of 200 million people. Interswitch has expanded to offer personal and business payment products in 23 Africa countries.

The fintech firm achieved unicorn status in 2019 after a $200 million equity investment by Visa gave it a $1 billion valuation.

Reviving venture investing

Interswitch, which is well beyond startup phase, launched a $10 million venture arm in 2015 that has been dormant since 2016, after it acquired Vanso—a Nigerian fintech security company.

But Interswitch will soon be back in the business of making startup bets and acquisitions, according to Elegbe. “We’ve just certified a team and the plan is to begin to make those kinds of investments again.”

He offered a glimpse into the new fund’s focus. “This time around we want to make financial investments and also leverage the network that Interswitch has and put that at the disposal of these companies,” Elegbe told TechCrunch.

“We’ll be very selective in the companies we invest in. They should be companies that Interswitch clearly as an entity can add value to. They should be companies that help accelerate growth by the virtue of what we do and the customers that we have,” he said.

Recent venture events in African tech have likely pressed Interswitch to get back in the investing arena. As an ecosystem, VC on the continent has increased (roughly) by a factor of four over last five years, to around $2 billion in 2019. But most of that has come from single-entity investment funds, while corporate venture funding (and tech M&A activity) has remained light. That’s shifted over the last several months and the entire uptick has occurred in African fintech around entities that could be viewed as Interswitch competitors.

In July, Dubai’s Network International acquired Kenya -based payment mobile payment processing company DPO for $288 million. Shortly after the acquisition, DPO’s CEO Eran Feinstein said the company would pursue more African acquisitions on its own. In June, another mobile-money payment processor, MFS Africa, acquired digital finance company Beyonic. And in August, South Africa’s Standard Bank—Africa’s largest by assets and lending—acquired a stake in fintech security firm TradeSafe.

Since the rise of Safaricom’s dominant M-Pesa mobile money product in Kenya, fintech in Africa has become infinitely larger and more competitive. The sector has hundreds of startups and now receives nearly 50% of all VC investment on the continent.

The opportunity investors and founders are chasing is bringing Africa’s large unbanked population and underbanked consumers and SMEs online. Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data, and mobile-based finance platforms have presented the best use-cases to shift that across the region.

Interswitch has established itself as a leader in the Africa’s digital finance race. But it’s hard to envision how it can maintain or extend that role without an active venture arm that invests in and acquires innovative, young fintech startups.

No news on IPO

Elegbe had less to offer on Interswitch’s long-anticipated IPO. Asked if the company still planned to list publicly, he offered up a non-answer answer. “At this point in time we’re focused on growing the business and creating value for our customers and that is the our primary focus.”

When pressed “yes or no” on whether an IPO was still a possibility Elegbe confirmed it was. “We have private equity investors and at some point in the life of the business they want exits.” he said. “When it is time for them to exit there are various options on the table and an IPO is an option.”

There’s been talk of an Interswitch IPO for years. In 2016, Elegbe told TechCrunch a dual-listing on the Lagos and London Stock Exchanges was possible. Then word came through other Interswitch channels that it was delayed due to recession and currency volatility in Nigeria in 2017. In November 2019, a source with knowledge of the situation told TechCrunch on background, “an IPO is still very much in the cards; likely sometime in the first half of 2020.” Then came the Covid-19 crisis and the accompanying global economic slump, which may have delayed Interswitch’s IPO plans yet again.

If and when the company goes public, it would be a major event for Nigerian and African fintech. No VC backed fintech firm on the continent has listed globally. Exits for Interswitch’s investors would likely attract to Nigeria and broader Africa more VC from major funds—many of whom remain on the fence about startup opportunities on the continent.

Focus on Africa

On global product expansion, Interswitch plans to maintain an African focus for now, Elegbe explained. “There are enough opportunities for Interswitch on the continent. We’d like to be in as many African countries as possible…and position Interswitch as the (financial) gateway to the continent,” he said.

Elegbe explained the company would continue to work through alliances with major financial services firms to open up global financial access for its African client base. In August 2019, Interswitch launched a partnership that allows its Verve cardholders to make payments on Discover’s global network.

CEO Mitchell Elegbe concluded his Disrupt session with some perspective on balancing the stigmas and possibilities of doing business in Nigeria. Over recent years the country has shifted to become an unofficial hub for big tech expansion, VC investment, and startup formation in Africa. But Nigeria continues to have a difficult operating environment with regard to infrastructure and is often associated with political corruption and instability in its Northeast region due to the Boko Haram insurgency.

“Nigeria has a very large population and a very large market. We have lots of challenges that need to be solved, but it makes sense to me that lots of money is finding its way to Nigeria because the opportunity is there,” he said.

Elegbe’s advice to tech investors considering the country, “Don’t take a short-termist view. There are good people on the ground doing fantastic work—honest people who want to make impact. You need to  seek those people out.”

TouchWood puts versatile, unobtrusive interfaces inside your desk, table and walls

By Devin Coldewey

Everything we do seems to have an associated app these days, and all day they vie for your attention, pinging and lighting up in their needy ways. TouchWood wants to tone down this exhausting non-stop competition with a quiet, simplified interface built right into the natural material of your desk or wall.

Co-founders Matthew Dworman and Gaurav Asthana were fed up with the idea that making your home or workplace smarter usually meant adding even more stuff: a smart speaker that sits on your desk, a smart watch constantly telling you your step count, a smart fridge that slips advertisements into your morning routine. Not only that but these devices and apps are constantly drawing you away from what you want to do, whether that’s work or trying not to work.

They wanted (they told me) something like the enchanted sword Sting from Lord of the Rings: It’s just a sword 99 percent of the time, but it’s also an orc radar if and when you need it, and even then it just glows. Why doesn’t the digital world similarly only appear when you need it, and in the least obtrusive fashion possible?

Dworman previously worked in high-end furniture design, and with Asthana developed the idea of interacting with tech via “a slab of wood instead of an app,” as the latter put it.

Image Credits: TouchWood

“What we’ve created is a modular tech platform that uses high-intensity LEDs with capacitive touch sensing. This allows us to embed it in essentially opaque material,” Dworman explained. “The wall, countertop, desk, in the home, the office, retail, transportation, we see so many ways to provide information and completely invisible controls.”

The surface would appear completely normal when the display is off, and indeed it is. Mui Labs, which demonstrated at CES its own natural material display, requires a specially perforated wood surface that you probably wouldn’t want to spill coffee on. A TouchWood display is just that: wood — or many other common surface materials.

A TouchWood surface in action. (The lines are an artifact of the camera’s framerate.)

It’s not meant to be a second display, but a friendly overflow for the information avalanche presented to us via our desktops, laptops, and phones… and speakers, watches, coffee makers, robot dogs, and so on.

“We’re not trying to put a computer in a surface — we want to provide you with a better touchpoint for your existing devices, to enhance their capabilities by taking away some of the information pressure that’s put on them,” said Asthana.

Image Credits: TouchWood

Perhaps you, like me, constantly flick your eyes towards the tabs in your browsers, or the apps arrayed on the bottom of your screen, to see if there’s any change — a new email, a message on Slack, a calendar item. A TouchWood desk would let those notifications take alternative routes, like a glowing circle off where you put your coffee or mouse. Tap it there and get a summary, or go to the content, or swipe it away — but you never have to switch tabs, or go to a different app, or unlock your phone. And when it’s done, the desk is just a piece of wood again.

Dworman sees the transition as natural. “Touchscreens the way we know them have really only been around for 10 or 11 years. But because they’re so ubiquitous we kind of take them for granted,” he said. “When you watch sci-fi films, this tech is still being used 500 years in the future! But it shouldn’t be. In car terms, the iPhone as it is now is like the Model T.”

TouchWood aims to be a platform eventually, but needs to launch a product of its own first. It plans to have a nice sit/stand desk with two large display areas available next year for somewhere in the $2,000 region. Expensive, yes — but you may be surprised what people will happily spend on new furniture, especially something like a major component of a newly important home office.

After proving out the concept with a flagship product, they can start working their way into other niches and working with partners. Embedding an invisible display in a countertop, wall, or of course a restaurant table leads to all kinds of use cases. Here’s hoping TouchWood’s tech leads to a future with slightly fewer screens in it — at least ones we can see.

ZenHub’s new automation tools improve developer hand-offs in GitHub

By Frederic Lardinois

ZenHub, the popular project management solution for GitHub users, today announced the launch of its new features for automating hand-offs between teams. The idea behind Automated Workflows, as it is called, is to remove some of the manual busywork of updating multiple boards across teams when a new patch is ready to go to testing, for example (or when it fails those tests and the development team has to fix it).

As ZenHub founder and CEO Aaron Upright told me, Automated Workflows are only the first step in the company’s journey from not just being the most integrated service on GitHub but also the most automated.

Image Credits: ZenHub

Teams still struggle with the mechanics of agile project management, he noted. “Things like what frameworks to choose. How to organize their projects. You talk to small companies and teams, you talk to large companies — it’s a problem for everyone, where people don’t know if they should be Scrum, or Kanban or how to organize Sprint planning meetings.” What ZenHub wants to do is remove as many of these friction points as possible and automate them for teams.

It’s starting with the hand-off between teams because that’s one of the pain points its customers are struggling with all the time. And since teams tend to have their own projects and workspaces, the ZenHub team had to build a solution that worked across a company’s various boards.

The result is a new tool that is pretty much a drag-and-drop service that automatically creates notifications and moves items between workplaces as they move from QA to production, for example.

“It’s a way to automate work between different workspaces,” explained Upright. “And we’re really excited about this being kind of the first step in our automation journey.”

Over time, Upright expects, the team will be able to use machine learning to understand more about the connections that its users are making between teams. Using that data, its systems may be able to also recommend workflows as well.

The next part of ZenHub’s focus on automation will be a tool for managing the Sprint planning process.

“Already today’s, ZenHub is capturing things like velocity. We’re measuring that on a team by team basis. We understand the priority of issues in our workflow. What we want to be able to do is allow teams to automatically set a Sprint schedule, say, for example, every two weeks. Then, based on the velocity that we know about your team, maybe your team can accomplish 50 story points every two weeks — we want to auto-build that Sprint for you.”

Austin-based EmPath’s employee training and re-skilling service snags seed funding from B Capital

By Jonathan Shieber

By the time Felix Ortiz III left the Army in 2006, the Brooklyn, NY native had spent time taking classes at the City University of New York and St. John’s. Those experiences led him to found ViridisLearning, which aimed to give universities a better way to track student development to help graduates land jobs.

Now he’s taken the learnings of that attempt to reshape education into the corporate world and raised over $1 million in financing from investors including B Capital, the investment firm launched jointly by the Boston Consulting Group and Facebook co-founder Eduardo Saverin, and Subversive Capital.

The goal of Ortiz’s newest startup, EmPath, is to provide corporate employees with a clear picture of their current skills based on the work they’re already doing at a company and give them a roadmap to up-skilling and educational opportunities that could land them a better, higher paying job.

The company has an initial customer in AT&T, which has rolled out its services across its entire organization, according to Ortiz.

From starting out in a shared apartment in Brooklyn’s Sunset Park, Ortiz’s family history took a turn as his father became assistant speaker of the house in New York’s legislature and his mother operated a mental health clinic in the city.

When Ortiz enlisted in the Army at 17, he continued to pursue his education, and served as a Judge Advocate General for the Army at Fort Bragg in North Carolina. From there, Ortiz launched his first education venture, a failed startup that attempted to teach skills for renewable energy jobs online. The Green University may no longer exist, but it was the young entrepreneur’s first foray into education.

A road that would continue with ViridisLearning and lead to the launch of EmPath.

Along the way, Ortiz enlisted the help of an experienced developer in the online education space — Adam Blum.

The creator of OpenEd, the largest educational open resource catalog online, which used machine learning to infer skills from the online activity of children, and the founder of Auger.ai, a toolkit to bring machine learning and predictive modeling to skill development, Blum immediately saw the opportunity EmPath presented.

“Inferring skills for employees using their corporate digital footprint and inferring those skills for potential jobs… where you identified skill gaps using inferred skills for courses to suggest remedial resources to plug education gaps,” just makes sense, Blum said. “It was a much more powerful vision.”

Blum still holds an equity stake in Auger.ai, but considers the work he’s doing with EmPath as the company’s chief technology officer to be his full time job now. “Building this out with felix was more exciting in terms of the impact it would have,” Blum said. 

EmPath already is fully deployed with AT&T and will be adding three Fortune 1,000 companies as customers by the end of the month, according to Ortiz.

The young startup also has a powerful and well-connected supporter in Carlos Gutierrez, the former chief executive officer of Kellogg, and the Secretary of Commerce in the George W. Bush White House.

“Lacking a college degree throughout my career, I had to develop my own skills to enable my climb up the corporate ladder. The technology didn’t exist to help guide me, but in today’s world, professionals should not have to upskill blindly,” said former Commerce Secretary and EmPath co-founder Carlos Gutierrez, in a statement. “We created a technology platform that can help transform an organization’s culture by empowering employees and strengthening talent development. This technology was a game changer even before the Covid-19 pandemic, and now that corporate budgets are tighter, it is even more important for companies to accelerate skills development and talent growth.” 

48 hours left to save on TC Sessions: Mobility 2020

By Alexandra Ames

Don’t you just love the feeling you get when crossing a task off your to-do list? It’s exponentially bigger and better when you can save $100 at the same time. Here’s the thing — you have just 48 hours to buy an early-bird pass to TC Sessions: Mobility 2020, save $100 and experience the all-too-elusive bliss of Getting. It. Done.

Want to feel all the feels? Buy your pass before the deadline expires on September 11 at 11:59 p.m. (PT).

Now that you’re all set in the pass department, let’s turn to the events of October 6-7. We have an outstanding agenda focused on the technology, trends and regulatory issues surrounding the current and future state of mobility.

Here are just a few of the many of the brilliant speakers and timely topics you can enjoy (see the entire Mobility 2020 agenda here):

  • The Future of Racing: Formula E driver Lucas Di Grassi is part of a new racing series, in which riders on high-speed electric scooters compete against each other on temporary circuits in cities. Think Formula E, but with electric scooters. The former CEO of Roborace and sustainability ambassador of the EsC, Electric Scooter Championship, will join us to talk about electrification, micromobility and a new kind of motorsport.
  • Investing in Mobility: Reilly Brennan, Amy Gu and Olaf Sakkers will come together to debate the uncertain future of mobility tech and whether VC dollars are enough to push the industry forward.
  • Uber’s City Footprint: Uber’s operations touch upon many aspects of the transportation ecosystem. Whether it’s autonomous vehicles, food delivery, trucking or traditional ride-hailing, these products and services all require Uber to interact with cities and ensure the company is on the good side of cities. That’s where Shin-pei Tsay comes in. Hear from Tsay about how she thinks through Uber’s place in cities and how she navigates various regulatory frameworks.

You can also explore more than 40 early-stage mobility startups exhibiting their tech and talent in the digital expo. Want to really strut your stuff? Apply here by September 15 to participate in our first Pitch Night — we’re looking for 10 outstanding early-stage founders to throw down in front of judges on October 5. Five finalists will move on to present live from the Mobility Main stage on October 6 — alongside folks like Boris Sofman of Waymo, Nancy Sun of Ike and Trucks VC’s Reilly Brennan. You’ll gain world-wide exposure to thousands of TC viewers, including investors and press.

The early-bird deal disappears in 48 hours. Buy your TC Sessions: Mobility 2020 pass before September 11 at 11:59 p.m. (PT). Cross off the task, feel the joy, save $100 and do what it takes to drive your business forward.

Is your company interested in sponsoring or exhibiting at TC Sessions: Mobility 2020? Contact our sponsorship sales team by filling out this form.

It’s time to better identify the cost of cybersecurity risks in M&A deals

By Walter Thompson
Rob Gurzeev Contributor
Rob Gurzeev is CEO and co-founder of CyCognito, a company focused on giving CISOs the advantage over attackers.

Over the past decade, a number of high-profile cybersecurity issues have arisen during mega-M&A deals, heightening concerns among corporate executives.

In 2017, Yahoo disclosed three data breaches during its negotiation to sell its internet business to Verizon [Disclosure: Verizon Media is TechCrunch’s parent company]. As a result of the disclosures, Verizon subsequently reduced its purchase price by $350 million, approximately 7% of the purchase price, with the sellers assuming 50% of any future liability arising from the data breaches.

While the consequences of cyber threats were soundly felt by Yahoo’s shareholders and widely covered in the news, it was an extraordinary event that raised eyebrows among M&A practitioners but did not fundamentally transform standard M&A practices. However, given the high potential cost from cyber threats and the high frequency of incidents, acquirers need to find more comprehensive and expedient methods to address these risks.

Today, as conversations accelerate around cybersecurity matters during an M&A process, corporate executives and M&A professionals will point to improved processes and outsourced services for identifying and preventing security issues. Despite the heightened awareness among financial executives and a greater range of outsourced solutions for addressing cybersecurity threats, acquirers continue to report increasing numbers of cybersecurity incidents at acquired targets, often after the target has already been acquired. Despite this, acquirers continue to focus due diligence activities on finance, legal, sales and operations and typically see cybersecurity as an ancillary area.

While past or potential cyber threats are no longer ignored in the due diligence process, the fact that data breaches are still increasing and can cause negative financial impact that will be felt long after the deal has closed highlights a greater need for acquirers to continue to improve their approach and address cyber threats.

The current lack of focus on cybersecurity issues can be partially attributed to the dynamics of the M&A market. Most middle-market companies (which constitute the nominal majority of M&A transactions) will typically be sold in an auction process where an investment bank is engaged by the seller to maximize value by fostering competitive dynamics between interested bidders. In order to increase competitiveness, bankers will typically drive a deal process forward as quickly as possible. Under tight time constraints, buyers are forced to prioritize their due diligence activities or risk falling behind in a deal process.

A typical deal process for a private company will move as follows:

  • Selling company’s investment bankers contact potential buyers, providing a confidential information memorandum (CIM), which contains summary information on a company’s history, operations and historical and projected financial performance. Potential buyers are typically given three to six weeks to review materials before deciding to move forward. Unless there is a previously known cybersecurity issue, a CIM will typically not address potential or current cybersecurity issues.
  • After the initial review period, indications of interest (IOI) are due from all interested bidders, who will be asked to indicate valuation and deal structure (cash, stock, etc.).
  • After IOIs have been submitted, the investment banker will work with the sellers to select top bidders. Key criteria that are evaluated include valuation, as well as other considerations such as timing, certainty of closing and credibility of buyer to complete the transaction.
  • Bidders selected to move forward are typically given four to six weeks after the IOI date to drill deeper into key diligence issues, review information in the seller’s data room, conduct a management presentation or Q&A with the target’s management and perform site visits. This is the first stage when cybersecurity issues could be most efficiently addressed.
  • Letter of Intent is due, when bidders reaffirm valuation and propose exclusivity periods wherein one bidder is selected on an exclusive basis to complete their due diligence and close the deal.
  • Once an LOI is signed, bidders typically have 30-60 days to complete the negotiation of definitive agreements that will outline in detail all terms of an acquisition. At this stage, acquirers have another opportunity to address cybersecurity issues, often using third-party resources, with the benefit of investing significant expenses with the greater certainty provided by the exclusivity period. The degree to which third party resources are directed toward cybersecurity relative to other priorities varies greatly, but generally speaking, cybersecurity is not a high-priority item.
  • Closing occurs concurrent with signing definitive agreements, or in other cases, closing occurs after signing often due to regulatory approvals. In either case, once a deal is signed and all key terms are determined buyers can no longer unilaterally back out of a deal.

In such a process, acquirers must balance internal resources to thoroughly evaluate a target with moving quickly enough to remain competitive. At the same time, the primary decision makers in an M&A transaction will tend to come from finance, legal, strategy or operating backgrounds and rarely will have meaningful IT or cybersecurity experience. With limited time and little background in cybersecurity, M&A teams tend to focus on more urgent transactional areas of the deal process, including negotiating key business terms, business and market trend analysis, accounting, debt financing and internal approvals. With only 2-3 months to evaluate a transaction before signing, cybersecurity typically only receives a limited amount of focus.

When cybersecurity issues are evaluated, they are heavily reliant on disclosures from the seller regarding past issues and internal controls that are in place. Of course, sellers cannot disclose what they do not know, and most organizations are ignorant of attackers who may already be in their networks or significant vulnerabilities that are unknown to them. Unfortunately, this assessment is a one-way conversation that is reliant on truthful and comprehensive disclosures from sellers, lending new meaning to the phrase caveat emptor. For this reason, it’s no coincidence that a recent poll of IT professionals by Forescout showed that 65% of respondents expressed buyer’s remorse due to cybersecurity issues. Only 36% of those polled felt that they had adequate time to evaluate cybersecurity threats.

While most M&A processes do not typically prioritize cybersecurity, M&A processes will often focus squarely on cybersecurity issues when known issues occur during or prior to an M&A process. In the case of Verizon’s acquisition of Yahoo, the disclosure of three major data breaches led to a significant reduction of purchase price, as well as changes in key terms, including stipulations that the seller would bear half the costs of any future liabilities arising from these data breaches. In April 2019, Verizon and the portion of Yahoo that was not acquired would end up splitting a $117 million settlement for the data breach. In a more recent example, Spirit AeroSystems’ acquisition of Asco has been pending since 2018 with a delayed closing largely due to a ransomware attack on Asco. In June 2019, Asco experienced a ransomware attack that forced temporary factory closures, ultimately causing a 25% purchase price reduction of $150 million from the original $604 million.

In both the case of Spirit and Verizon’s acquisitions, cybersecurity issues were largely addressed through valuation and deal structure, which limits financial losses, but does little to prevent future issues for a buyer, including loss of confidence among customers and investors. Similar to Spirit and Verizon’s acquisitions, acquirers will typically utilize structural elements of a deal to limit the economic losses. Various mechanisms and structures — including representations, warranties, indemnifications and asset purchases — can be utilized to effectively transfer the direct economic liabilities of an identifiable cybersecurity issue. However, they cannot compensate for the greater loss that would occur from reputational risk or loss of important trade secrets.

What the Spirit and Verizon examples demonstrate is that there is quantifiable value associated with cybersecurity risk. Acquirers who do not actively assess their M&A targets are potentially introducing a risk into their transaction without a mitigation. Given a limited timeline and the inherently opaque nature of a target’s cybersecurity issues, acquirers would benefit greatly from outsourced solutions that would require no reliance upon, or input from a target.

The scope of such an assessment ideally uncovers previously unknown deficiencies in the target’s security and exposure of business systems and key assets, including data and company secrets or intellectual property. Without such knowledge, acquirers go into deals partially blinded. Of course, industry best practice is to reduce risk. Adding this measure of cybersecurity assessment is an excellent practice today and likely a mandatory requirement in the future.

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