Equity Monday: China hates crypto, and the Vision Fund’s vision lives on

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

Our live show is this week! And we’re very excited about it! Details here, and you can register here. It’s free, of course, so swing by and hang with us.

Back on theme, we had a lot to get through this morning, so inside the show you can find the following and more:

  • The Chinese cryptocurrency clampdown is a big damn deal: With lots of the nation’s mining capacity heading offline, there’s a scramble to relocate rigs and generally figure out what a crypto market sans China might look like.
  • In the wake of the news, the value of cryptocurrencies fell. As did shares of Coinbase this morning in pre-market trading.
  • Facebook’s Clubhouse rival is out. The American social giant follows Spotify into the live-audio market. You have to give it to modern software companies, who thought that they could be both leading tech shops and Kinko’s clones at the same time?
  • Revolut is unprofitable as hell but increasingly less so. That could be good news for fintech as a whole.
  • Amber Group raised $100 million; Forto raised $240 million.

See you this Thursday at the live show!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#audio, #china, #clubhouse, #coinbase, #crypto, #cryptocurrencies, #equity-monday, #equity-podcast, #facebook, #fintech, #forto, #fundings-exits, #neobank, #revolut, #spotify, #startups, #stock-market, #vision-fund

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Ledger raises $380 million for its crypto hardware wallet

French startup Ledger has raised a $380 million Series C funding round led by 10T Holdings. Following today’s funding round, the company has reached a valuation of $1.5 billion.

Other investors in the funding round include existing investors Cathay Innovation, Draper Associates, Draper Dragon, Draper Esprit, DCG, Korelya Capital and Wicklow Capital. Some new investors are joining the round, such as Tekne Capital, Uphold Ventures, Felix Capital, Inherent, Financière Agache and iAngels Technologies.

Ledger’s main product is a hardware wallet to manage your crypto assets. They are shaped like USB keys and feature a tiny screen to confirm transactions on the device. The reason why that screen is important is that your private keys never leave your Ledger device.

In other words, if you want to store large amount of cryptocurrencies, you don’t want to leave them on an exchange account. If someone manages to sign in, they could withdraw all your crypto assets. With a hardware wallet, you remain in control of your crypto assets.

The company first launched the Ledger Nano S. You have to connect the device to a computer using a USB cable. More recently, with the Ledger Nano X, you can send and receive assets from your phone as the Nano X works over Bluetooth. Ledger also provides an enterprise solution for companies that want to add cryptocurrencies to their balance sheet.

Overall, Ledger has sold over 3 million hardware wallets. Every month, 1.5 million people use Ledger Live, the company’s software solution to manage your crypto assets. The company even says that it currently secures around 15% of all cryptocurrency assets globally.

It hasn’t been a smooth ride as the company has been around for seven years. After the crypto boom of 2018, interests for hardware wallets faded away. Moreover, as the company secures expensive assets, it has also suffered from a serious data breach — 272,000 customers have been affected.

With today’s funding round, the company plans to launch new products, add more DeFi features to Ledger Live and support the growth of the crypto ecosystem in general.

#blockchain, #crypto, #cryptocurrency, #europe, #fundings-exits, #hardware-wallet, #ledger, #ledger-wallet, #startups, #wallet

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Frst and Fabric Ventures announce fellowship program for crypto entrepreneurs

VC funds Frst and Fabric Ventures are teaming up to create Le Crypto Fellowship. With this program, the two firms want to find the next 10 crypto entrepreneurs in France. And they think they might foster the most promising crypto startups if they don’t have any preconceived idea and team yet.

As Pierre Entremont from Frst writes in a Medium post, there are a lot of opportunities if you want to build the next crypto success, but few entrepreneurs are actively looking at this space.

“Nearly all crypto developers and entrepreneurs are already rich and therefore don’t step up their ambition,” he writes.

Blockchain development and DeFi projects are nearly always open source. Learning resources are available for free around the web. So it’s not that hard to get started and build a prototype, but you have to get started. Frst and Fabric Ventures think they can create the right framework to incentivize the next generation of entrepreneurs.

If you get accepted into the program, the two VC firms will hand you €100,000 in exchange for 7% of your company. Basically, this should cover one year of salary for one person in France with a salary of €50,000, €21,000 in employer contributions and €29,000 in expenses. You can be based in another country as long as it’s in the same timezone and you incorporate your company in France.

This way, you get to play around and think about an ambitious idea without feeling any financial pressure. You’ll join a Discord channel with other fellows and you’ll attend weekly Zoom meetings during the first few months. After that, Fabric Ventures and Frst partners will schedule regular office hours with you to check in on your progress.

If you end up creating a proper company and taking your idea to the next level, the fellowship may later ask to invest an additional €700,000 for a 20% stake in the company.

Candidates can apply until June 15. Le Crypto Fellowship isn’t looking for people who already have an idea or are only available part-time. But if you want to join as a team of 2 or 3, you can. Instead of €100,000, you’ll get €200,000 or €300,000. Working as a team will probably help you remain motivated over the long haul.

This isn’t the first startup mentoring program. The Thiel Fellowship is arguably the most well-known one. But Le Crypto Fellowship doesn’t limit itself to college dropouts and has a different focus. It’s going to be interesting to see if it pans out and if the VC firms will have a second, a third and a fourth batch down the road.

#blockchain, #crypto, #cryptocurrency, #europe, #fabric-ventures, #fellowship, #frst, #le-crypto-fellowship, #startups

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This crypto surveillance startup — ‘We’re bomb sniffing dogs’ — just raised Series A funding

Solidus Labs, a company that says its surveillance and risk-monitoring software can detect manipulation across cryptocurrency trading platforms, is today announcing $20 million in Series A funding led by Evolution Equity Partners, with participation from Hanaco Ventures, Avon Ventures, 645 Ventures, the cryptocurrencies derivative exchange FTX,  and also a sprinkling of government officials, including former CFTC commissioner Chris Giancarlo and former SEC commissioner Troy Paredes.

It’s pretty great timing, given the various signals coming from the U.S. government just last week that it’s intent on improving its crypto monitoring efforts — such as the U.S. Treasury’s call for stricter cryptocurrency compliance with the IRS.

Of course, Solidus didn’t spring into existence last week. Rather, Solidus was founded in 2017 by several former Goldman Sachs employees who worked on the firm’s electronic trading desk for equities. At the time, Bitcoin was only becoming buzzier, but while the engineers anticipated different use cases for the cryptocurrency, they also recognized that a lack of compliance tools would be a barrier to its adoption by bigger financial institution, so they left to build these.

Fast forward and today Solidus employs 30 people, has raised $23.75 million altogether, and is the process of doubling its head count to address growing demand. We talked with Solidus’s New York-based cofounder and CEO Asaf Meir — who was himself one of those former Goldman engineers — about the company late last week. Excerpts from chat follow, edited lightly for length.

TC: Who are your customers?

AM: We work with exchanges, broker dealers, OTC desks, liquidity providers, and regulators — anyone who is exposed to the risk of buying and selling cryptocurrencies crypto assets or digital assets, whatever you want to call them.

TC: What are you promising to uncover for them?

AM: What we detect, largely speaking, is volume and price manipulation, and that has to do with wash trading, spoofing, layering, pump and dumps, and an additional growing library of crypto native alerts that truly only exist in our unique market.

We had a 400% increase in inbound demand over 2020 driven largely by two factors, I think. One is regulatory scrutiny. Globally, regulators have gone off to market participants, letting them know that they have to ask for permission not forgiveness. The second reason — which I like better — is the drastic institutional increase in appetite toward exposure for this asset class. Every institution, the first question they ask any executing platform is: ‘What are your risk mitigation tools? How do you make sure there is market integrity?’

TC: We talked a couple of months ago, and you mentioned having a growing pipeline of customers, like the trading platform Bittrex in Seattle. Is demand coming primarily from the U.S.?

AM: We have demand in Asia and in Europe, as well, so we will be our opening offices there, too.

TC: Is your former employer Goldman a customer?

AM: I can’t comment on that, but I would say there isn’t a bank right now that isn’t thinking about how they’re going to get exposure to crypto assets, and in order to do that in a safe, compliant and robust way, they have to employ crypto-specific solutions.

Right now, there’s the new frontier —  the clients we’re currently working with, which are these crypto-pure exchanges, broker dealers. liquidity providers, and even traditional financial institutions that are coming into crypto and opening a crypto operation or a crypto desk. Then there’s the new new frontier; your NFTs, stablecoins, indexes, lending platforms, decentralized protocols and God knows what [else] all of a sudden reaching out to us, telling us they want to do the right thing, to ensure the users on their platform are well-protected, and that trading activities are audited, and [to enlist us] to prevent any manipulation.

TC: How does your subscription service work and who is building the tech?

AM: We consume private data from our clients — all their training data —  and we then put it in our detection models, which we ultimately surface through insights and alerts on our dashboard, which they have access to.

As for who is building it, we have a lot of fintech engineers who are coming from Goldman and Morgan Stanley and Citi and bringing that traditional knowledge of large trading systems at scale; we also have incredible data scientists out of Israel whose expertise is in anomaly detection, which they are applying to financial crime, working with us.

TC: What do these crimes look like?

AM: When we started out, there was much more wholesale manipulation happening whether through wash trading or pump-and-dumps — things that are more easy to perform. What we’re seeing today are extremely sophisticated manipulation schemes where bad actors are able to exploit different executing platforms. We’re quite literally surfacing new alerts that if you were to use a legacy, rule-based system you wouldn’t be able to [surface] because you’re not really sure what you’re looking for. We oftentimes have an alert that we haven’t named yet; we just know that this type of behavior is considered manipulative in nature and that our client should be looking into it.

TC: Can you elaborate a bit more about these new anomalies?

AM: I’m conflicted about how much can we share of our clients’ private data. But one thing we’re seeing is [a surge in] account extraction attacks, which is when through different ways, bad actors are able to gain access to an account’s funds and are able in a sophisticated way to trade out of the exchange or broker dealer or custodian. That’s happening in different social engineering-related ways, but we’re able, through account deviation and account profiling, to alert the exchange or broker dealer or financial institution we’re working with to avoid that.

We’re about detection and prevention, not about tracing [what went wrong and where] after the fact. And we can do that regardless of knowing even personal identifiable information about that account. It’s not about the name or the IP address; it’s all about the attributes of trading. In fact, if we have an exchange in Hong Kong that’s experiencing a pump-and-dump on a certain coin pair, we can preemptively warn the rest of our client base so they can take steps to prepare and protect themselves.

TC: On the prevention front, could you also stop that activity on the Hong Kong exchange? Are you empowered by your clients to step in if you detect something anomalous?

AM: We’re bomb sniffing dogs, so we’re not coming to disable the bot. We know how to take the data and point out manipulation, but it’s then up to the financial institution to handle the case.

Pictured above: Seated left to right is CTO Praveen Kumar and CEO Asaf Meir. Standing is COO Chen Arad.

#645-ventures, #analytics, #asaf-meir, #blockchain, #chainalysis, #crypto, #elementus, #evolution-equity-partners, #ftx, #hanaco-ventures, #recent-funding, #solidus-labs, #startups, #surveillance, #tc, #venture-capital

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Equity Monday: Crypto’s awful weekend, Apple v. Epic, and funding rounds galore

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

After a somewhat quiet weekend, things are kicking off in rapid-fire fashion this week. Here’s what you need to know:

  • The cryptocurrency selloff that was in full-swing on Friday continued over the weekend. Though bitcoin and ether managed to recoup some of their losses since they set new local minima, the value of popular cryptos is vastly depressed compared to recent highs.
  • Looking ahead, it’s the final day of arguments at the Epic Games vs. Apple trial. And we’re seeing a smaller company try to crack some of the hold that a major tech incumbent enjoys over a huge piece of the digital economy. So, if you like startups, you might want to put aside your Apple fandom for a minute.
  • More than a few funding rounds are cracking off this morning, including neat rounds from African fintech Mono, India-and-UAE-based Zeta, Emitwise raising $3.2 million, and Aurora Solar raising $250 million.

With a busy funding market and a yet-busy IPO cycle, it should be yet another busy week. Strap in!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#africa, #apple, #aurora-solar, #bitcoin, #coinbase, #crypto, #cryptocurrency, #emitwise, #epic-games, #equity, #equity-podcast, #ethereum, #fundings-exits, #india, #mono, #startups, #trial, #uae, #zeta

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Don’t tweet about $ASS

I am not a smart man.

Earlier today I tweeted about $ASS, a cryptocurrency named after a dog. In this case, Australian Shepherds. And after doing that obviously stupid thing, my Twitter feed became chock-full of ass-related imagery, memes, and $ASS coin stans breathing on me.

It’s all very annoying as I run Tweetdeck on a work laptop which is now very, well, dicey a proposition given what I’m being sent.

$ASS is short for Australian Safe Shepherd, by the by. It’s a cryptocurrency that, much like Dogecoin, is a joke.

A joke that its own website doesn’t take too seriously. For example, if you navigate to AssFinance, you will find a very detailed look at $ASS’s technical underpinnings, and plans for the future:

I found this hilarious. So I tweeted about it. And then everyone in the $ASS world began to assault my Twitter. Pro-tip: This is not a good way to get taken seriously. But as $ASS is not trying to be taken seriously, does that even matter?

The coin is effectively a limid pump, a cryptocurrency designed to get early adopters to spread the word about it, and then hold. It built its economics around just those goals:

But enough of all that. Why do we give a shit about $ASS? A few reasons:

  • This sort of financial stupidity is funny, but some regular folks are going to get burned.
  • The $ASS pump is indicative of the level of speculation present in the cryptocurrency world today, which is likely to the credibility detriment of more serious projects. And helps explain how bitcoin has managed the price appreciation it has in recent quarters.
  • $ASS coin is up 1794.3% in the last 14 days, per CoinGecko. This is likely key to its current charm; people love free money and past gains make for an attractive lie to oneself concerning future returns.

As a concept, $ASS fits neatly into my budding view that as current generations of people in their 20s and 30s are desperate for a firmer foothold on a middle-class life than today’s wage-weak, healthcare-deficient, and labor-unfriendly economy is willing to provide, moon-shots on speculative bullshit have outsized appeal compared to other times in American history when it was easier to afford a house.

And while it’s hard to be serious about a butt dog-themed bit of Internet money, $ASS is, well, very 2021. And who are we to pretend to be better than covering a shitcoin? Even if only to mock it.

Bloomberg has more on $ASS if you want a more serious take about an unserious project.

#crypto, #fundings-exits, #startups

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Equity Monday: Elon Musk Elon Musk’s the crypto markets, while Indian startups raise huge rounds

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

There was lots to get through today, so, in order, here’s the rundown:

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#apollo, #att, #crypto, #cryptocurrency, #elon-musk, #equity, #equity-monday, #houm, #india, #moglix, #pine-labs, #real-estate, #san-francisco, #sequoia, #tc, #twitter, #verizon, #vise, #y-combinator

0

Hundreds of SPAC’s waiting in the woods

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

The fully-vaxxed and officially fully-immune took over the podcast this week, with Natasha and Danny co-hosting the show while the inimitable Alex is out from Shot #2. Grace and Chris, as always, were behind the scenes making sure we sound pretty and don’t fall down too many punny board game rabbit holes after vacation.

Here’s the rundown of what we got into:

And that’s where we break! Follow the podcast on Twitter, be kind to your humans, and be the kindest to yourself. Back sooner than you can raise a $25 million pre-seed round for an audio app for Dogecoin lovers.

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#better-com, #bitcoin, #blind, #caplight, #crypto, #elon-musk, #equity, #equity-podcast, #ethereum, #fintech, #midwest, #morressier, #real-estate, #sixty8-capital, #softbank, #spac, #tc, #the-last-gameboard

0

Equity Monday: Dogecoin is passé, but student notes are big business

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

This weekend was all about memecoins. And I am sorry about that. But Equity doesn’t run the world, sadly, it merely notes what is going on:

  • Dogecoin dropped during Elon Musk’s SNL appearance. Which was somewhat ironic. Also there’s another memecoin that is skyrocketing.
  • Palantir, DoorDash, Airbnb, Alibaba will report earnings this week, amongst others.
  • Clubhouse is finally coming to Android. In the United States. By invite. So, if that’s you, congrats, welcome to the app.
  • A major cyberattack and ransom situation in the United States is a data point, yet again, that we’re woefully unprepared for cyber risk.
  • StuDocu raised $50 million which was cool, while Gojek raised another $300 million, which was the very opposite of surprising.
  • This week’s Extra Crunch Live is going to be really good. I will see you there!

It is going to be a busy week! Already since we recorded this show there’s more drama from Box, and more. Strap in!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#airbnb, #alibaba, #android, #clubhouse, #crypto, #cryptocurrency, #cyberattack, #dogecoin, #doordash, #elon-musk, #equity, #equity-monday, #equity-podcast, #gojek, #india, #palantir, #pipeline, #snl, #startups, #studocu, #tc

0

Paxos raises $300 million to build a cryptocurrency infrastructure giant

Paxos has raised a $300 million Series D funding round led by Oak HC/FT. With today’s funding the round, the company is now valued at $2.4 billion. The company has been building infrastructure and white-label services for enterprise clients that want to offer cryptocurrency products to their own customers.

In particular, Paxos has partnered with PayPal for its cryptocurrency features. Since October 2020, PayPal customers have been able to buy, hold and sell a handful of crypto assets — Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Venmo, a PayPal subsidiary, added the same cryptocurrency features just a few days ago.

Investors in today’s funding round include Declaration Partners, PayPal Ventures, Mithril Capital, Senator Investment Group, Liberty City Ventures and WestCap.

Paxos offers different products, such crypto trading and settlement, custody and the ability to issue tokens. It focuses on big enterprise clients, such as Revolut, Crédit Suisse, Société Générale and StoneX.

The company tries to be as compliant as possible. And it plans to remain committed to regulation across several geographies and verticals.

For instance, Paxos plans to launch the Paxos National Trust Bank and to apply for a Clearing Agency registration with the SEC in the U.S. In Singapore, the company is applying for a Major Payment Institution license. Paxos thinks that this regulation edge will foster partnerships with more enterprise clients looking for safe cryptocurrency opportunities.

Paxos has also launched its own stablecoin called Paxos Standard (PAX). Stablecoins are crypto assets like BTC or ETH. But the value of PAX is indexed on USD. At any point in time, one PAX is worth one USD. Other popular stablecoins include Tether and USDC.

The company also lets you issue your own branded stablecoin. For instance, Binance has worked with Paxos to issue BUSD on its platform. As expected, one BUSD is also worth one USD.

Paxos is also well known for PAX Gold, a digital asset that is backed by physical gold. It’s an alternative to gold ETFs that should be more efficient as it lives on the Ethereum blockchain.

Finally, Paxos has its own cryptocurrency exchange called itBit. According to CoinMarketCap, itBit only features a handful of trading trading pairs. It isn’t meant to be a consumer-facing exchange but it powers Paxos’ other products.

#blockchain, #crypto, #cryptocurrency, #fundings-exits, #paxos, #startups

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ZenGo raises $20 million for its secure crypto wallet app

ZenGo, a mobile app to manage your cryptocurrencies, has raised a $20 million Series A funding round led by Insight Partners. ZenGo is a non-custodial wallet, which means that the company doesn’t manage your crypto assets for you — you remain in control.

Other investors include Distributed Global and Austin Rief Ventures. Existing investors Benson Oak, Samsung Next, Elron, Collider Ventures, FJ Labs and others also participated in today’s funding round.

What makes ZenGo different from other wallet apps is that the company is trying to build something that is more secure than your average crypto wallet while remaining simple to use and understand. It competes with other non-custodial wallets, such as Coinbase Wallet (not Coinbase.com), Argent, etc.

In particular, ZenGo is based on multiparty computation (MPC). When you first create your wallet, ZenGo generates multiple secrets that are stored and encrypted in different ways. It means that the company can’t access your tokens directly and you can recover your wallet if you lose your phone.

Other crypto companies focused on infrastructure and enterprise clients have also opted for MPC as their security model. Fireblocks, a company that has recently raised $133 million, is one example.

But ZenGo is building a consumer app. In 2020, the company has processed over $100 million in crypto transactions from 100,000 users. ZenGo has reached the same milestone in the first three months of 2021 and added another 100,000 users.

You can browse DeFi projects through ZenGo and access savings pools. The startup takes a cut on these investments.

With today’s funding round, ZenGo plans to expand with the same philosophy in mind. You can expect support for more chains and assets, more partnerships and options to buy cryptocurrencies and convert them to fiat money, etc.

The company recently announced plans to launch a debit card. This way, users will be able to convert their crypto assets and then spend them wherever Visa cards are accepted. In other words, ZenGo is building a crypto super app with a focus on security.

Image Credits: ZenGo

#apps, #blockchain, #crypto, #crypto-wallet, #cryptocurrency, #mobile, #mpc, #non-custodial-wallet, #tc, #zengo

0

Equity Monday: Clubhouse, UiPath, and the crypto flash crash

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

First, our news roundup from last week was probably the most fun I’ve had in a few months, so make sure to catch up on that if you haven’t. That said, here’s a rundown of what we got into on the show this morning:

  • The new Clubhouse round has us thinking about what is a good venture-style bet, and what isn’t. At least you can’t fault the Clubhouse crew for not having conviction.
  • UiPath raised its IPO range, as expected.
  • There’s an Apple event this week, which caused us to wonder why more startups aren’t competing with the giant.
  • Cryptos have recovered from the flash crash, which had us thinking.
  • Druva raised $147 million as TechCrunch will report later today, and Razorpay raised even more capital at a newly refreshed valuation.
  • Finally, DoNotPay had some news, but it’s corporate ethos proved even more interesting.

The week is here, everyone! It’s Monday! We can do this!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#apple, #bitcoin, #clubhouse, #crypto, #donotpay, #druva, #equity, #equity-podcast, #fundings-exits, #razorpay, #startups, #uipath

0

Do you need a SPAC therapist?

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. It was yet another busy week, but that just means we had a great time putting the show together and recording it. Honestly we have a lot of fun this week, and we hope that you crack a smile while we dig through the latest as a team.

Ready? Here’s the rundown:

  • The Coinbase direct listing! Here’s our notes on its S-1, its direct listing reference price, and its results. And we even wrote about the impact that it might have on other startup verticals!
  • Grab’s impending SPAC! As it turns out Natasha loves SPACs now, and even Danny and Alex had very little to say that was rude about this one.
  • Degreed became a unicorn, proving yet again that education for the enterprise is a booming sub-sector.
  • Outschool also became an edtech unicorn, thanks to a new round led by Coatue and everyone’s rich cousin, Tiger Global. The conversation soon devolved into how Tiger Global is impacting the broader VC ecosystem, thanks to a fantastic analysis piece that you have to read here. 
  • Papa raised $60 million, also from Tiger Global. What do you call tech aimed at old folks? Don’t call it elder tech, we have a brand new phrase in store. Let’s see if it catches on.
  • AI chips! Danny talks the team through grokking Groq, so that we can talk about TPUs without losing our minds. He’s a good egg.
  • And, finally, Slice raised more money. Not from Tiger Global. We have good things to say about it.

And that is our show! We are back on Monday morning!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#ai, #chips, #coinbase, #crypto, #degreed, #edtech, #equity, #equity-podcast, #fintech, #fundings-exits, #grab, #groq, #ipo, #outschool, #slice, #smb, #spac, #startups, #tc, #unicorn

0

Signal tests payments in the UK using MobileCoin

Encrypted chat app Signal is adding payments to the services it provides, a long-expected move and one the company is taking its time on. A U.K.-only beta program will allow users to trade the cryptocurrency MobileCoin quickly, easily, and most importantly, privately.

If you’re in the U.K., or have some way to appear to be, you’ll notice a new Signal Payments feature in the app when you update. All you need to do to use it is link a MobileCoin wallet after you buy some on the cryptocurrency exchange FTX, the only one that lists it right now.

Once you link up, you’ll be able to instantly send MOB to anyone else with a linked wallet, pretty much as easily as you’d send a chat. (No word on when the beta will expand to other countries or currencies.)

Just as Signal doesn’t have any kind of access to the messages you send or calls you make, your payments are totally private. MobileCoin, which Signal has been working with for a couple years now, was built from the ground up for speed and privacy, using a zero-knowledge proof system and other innovations to make it as easy as Venmo but as secure as… well, Signal. You can read more about their approach in this paper (PDF).

MobileCoin just snagged a little over $11M in funding last month as rumors swirled that this integration was nearing readiness. Further whispers propelled the value of MOB into the stratosphere as well, nice for those holding it but not for people who want to use it to pay someone back for a meal. All of a sudden you’ve given your friend a Benjamin (or perhaps now, in the UK, a Turing) for no good reason, or that the sandwich has depreciated precipitously since lunchtime.

There’s no reason you have to hold the currency, of course, but swapping it for stable or fiat currencies every time seems a chore. Speaking to Wired, Signal co-founder Moxie Marlinspike envisioned an automatic trade-out system, though he is rarely so free with information like that if it is something under active development.

While there is some risk that getting involved with cryptocurrency, with the field’s mixed reputation, may dilute or pollute the goodwill Signal has developed as a secure and disinterested service provider, the team there seems to think it’s inevitable. After all, if popular payment services are being monitored the same way your email and social media are, perhaps we ought to nip this one in the bud and go end-to-end encrypted as quickly as possible.

#crypto, #cryptocurrency, #e2e, #mobile, #mobilecoin, #payments, #privacy, #signal, #signal-payments, #startups, #tc

0

Coinbase to direct list on April 14th, provide financial update on April 6th

Today Coinbase, an American cryptocurrency trading platform and software company, said that it will begin to trade via a direct listing on April 14th. In a separate release the company also said that it will provide a financial update on April 6th, after the close of trading.

Coinbase’s impending public debut comes at an interesting market moment. As some tech companies delay their offerings over demand concerns, Coinbase is pushing ahead with its flotation perhaps in part because it will not price its debut in the traditional sense; direct listings forgo raising capital at a specific price point, and instead merely begin to trade, albeit with a reference price attached.

That Coinbase will release new numbers before beginning to trade is at once interesting and pedestrian. It’s interesting as TechCrunch cannot recall a private company looking to go public holding a similar event. And, Coinbase deciding to share “first quarter 2021 estimated results” and “provide a financial outlook for 2021” is also in part a common move, as many companies provide updated financials in their S-1 documents if time passes from when they first file to when they actually trade.

We’ll be tuned into that call, as the numbers shared will impact not only how Coinbase trades when it does float, but will also provide insight into how active consumer trading is writ large, and particularly in the cryptocurrency space; more than one startup in the market today depends on trading incomes to generate top-line, so seeing new numbers from Coinbase will be welcome.

The company will trade under the ticker symbol “COIN.”

#bitcoin, #coinbase, #crypto, #crypto-economy, #cryptocurrencies, #cryptocurrency, #digital-currencies, #financial-technology, #fundings-exits, #software, #startups

0

NFTs don’t need crypto, but crypto needs NFTs

Spending millions for a digital work of art that could be screenshotted feels similar to traipsing around a strip of concrete as a tourist activity. The optics don’t make immediate sense — there’s hardly any appeal in something as accessible as a Google image or street.

That’s my best bet at explaining at least some of the confusion around the explosive rise of NFTs, or nonfungible tokens. The token, minted on the blockchain, can give digital assets a unique signifier. In other words, anyone could screenshot a piece of art, but only one of us will own the true, original piece of art. This context is part of the reason why Beeple, a digital artist, had his artwork sold for $69 million just a few days ago.

The reason this topic is coming up in a Startups Weekly newsletter is because of the impact it could have on the cryptocurrency movement, of which there is a growing tide of early-stage and late-stage startups. The popularization of NFTs, as I argued in Equity this week, could be what makes cryptocurrency finally palpable to the average human — beside the average bitcoin hoarder. Platforms that sell NFTs usually need you to use cryptocurrency (usually Ethereum) to purchase anything. Mix that with the fact that humans have an innate desire to own, protect and immortalize their assets, and you might have the perfect storm. Beeple, a digital artist, made $69 million for his work, and this isn’t just a big financing event, it’s a signal that crypto enthusiasts and crypto assets are getting to an inescapable spot in public dialogue.

Ownership as a way for a decentralized network to become mainstream is its own meta conversation, and I’ll be clear that the blockchain and NFTs have a long way to go before they are truly equitable, accessible and hit their stride. But, it’s hard to not to let your mind wander about the opportunities here.

It’s more than a screenshot, it’s about the potential of pixels having more meaning than they ever did before. And it’s more than a strip of concrete, it’s the Hollywood Walk of Fame. Finding exclusive aspects of accessible things in our lives is compelling to a consumer and could be great for creators.

In the rest of this newsletter, we’ll discuss Coupang’s competitive industrial edge, a startup hoping to be the Nasdaq for revenue and Google’s brains fighting Google itself. As always, you can follow me on Twitter @nmasc_ for my thoughts throughout the week and tech news.

The Amazon of South Korea goes public

Coupang, which some describe as the Amazon of South Korea, priced and started trading this week on the public markets. At one point on Thursday, the company was valued at $92 billion.

Here’s what to know: When Coupang first launched, it found that South Korea had an absence of third-party logistics companies similar to UPS or FedEx in the United States. Now, it wasn’t without competition, but it did have an opportunity to build an end-to-end logistics company that is now worth a boatload of money.

Other IPO news:

Image Credits: Bryce Durbin/TechCrunch

The Nasdaq for Revenue

Pipe has a compelling narrative: It’s anti-VC, doesn’t like naming its rounds and says its goal is to be the Nasdaq for revenue. The goal since it started was to give SaaS companies a way to get their revenue upfront by connecting them to investors that would pay a rate for the annual value of those contracts. It turns monthly recurring revenue into annual recurring revenue.

Here’s what to know: The startup raised $50 million in a financing event this week. In the first quarter of 2021, tens of millions of dollars were traded through its platform, reports TechCrunch’s Mary Ann Azevedo.

Image Credits: Bryce Durbin

Can you beat Google with Google’s brains?

In our main Equity show this week, the trio discussed a slew of news that naturally lended itself over to a piece we wrote months ago, Meet the anti-antitrust startup club.

(By the way, if you want a huge discount for Extra Crunch, just use our code, EQUITY, when you sign up to access great articles like this one and most of our analytical work).

Here’s what to know: Neeva, built by a team of ex-Googlers including the guy who built Google’s advertising engine, is one startup to watch. There’s a lot to chew and we do it best during the episode, so take a listen and figure out if you’re team Natasha and Danny, or team Alex.

Other news bits:

distorted logos including Roblox, Google, AWS, YouTube, Slack, Spotify

Image Credits: TechCrunch

‘Blaming the intern’ won’t save your startup from cybersecurity liability

As SolarWinds is showcasing, a company can be liable for the mistakes of its employees via a legal term called “vicarious liability.”

Cybersecurity writer Chandu Gopalakrishnan explains what it means for you and what you can do to stay on the right side of the law.

Around TechCrunch

A few house-keeping things this week:

Across the week

Seen on TechCrunch

Zapier buys no-code-focused Makerpad in its first acquisition

Eye, Robot

Sequoia Capital puts millions of dollars into Gather, a virtual HQ platform

Seen on ExtraCrunch

There have never been more $100 million fintech rounds than right now

What I wish I’d known about venture capital when I was a founder

White-label voice assistants will win the battle for podcast discovery

4 ways startups will drive GPT-3 adoption in 2021

#bitcoin, #crypto, #crypto-economy, #nft, #startups, #startups-weekly, #tc

0

Can you beat Google with Google’s brains?

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

Natasha and Danny and Alex and Grace were all here to chat through the week’s biggest tech happenings. Like every week, we had to leave a lot of great stuff on the cutting-room floor. But, we did get to touch on a bunch of news that we feel really matters.

Also we do wind up talking about a few Extra Crunch pieces, which is where our deeper analysis on news items lives. If the paywall is a bother, you can get access while saving 50% with the code “EQUITY.”

Here’s what we got into:

  • Crypto-art and the NFT boom continue. Check out what Beeple just did. Danny has an opinion on the matter.
  • The Roblox direct-listing does very little actually solve the IPO pricing issue. That said, well done Bloxburg.
  • We talked about the Coursera S-1, which gave us the first financial peek into an education company revitalized by the pandemic.
  • The numbers needed context, so our follow up coverage gives readers 5 takeaways from the Coursera IPO.
  • Language learning has a market, and it’s big. We talked about Preply’s $35 million raise and why tutoring marketplaces make sense.
  • Dropbox is buying DocSend, which makes pretty good sense. Even if the exit price won’t matter much for bigger funds. We’re still witnessing Dropbox and Box add more features to their product via acquisitions. Let’s see how it impacts their revenue growth.
  • Zapier buys Makerpad. We struggled to pronounce Zapier, but did have some notes on the deal and what it might mean for the no-code space.
  • Sticking the acquisition theme, PayPal bought Curv. If you were looking for more evidence that big companies are taking crypto seriously, well, here it is.
  • And to close we nerded out about Neeva. Can a Google-competitor take on Google if it was founded by ex-Googlers?

The show is back Monday morning. Stay cool!

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

#beeple, #coupang, #coursera, #crypto, #curv, #docsend, #dropbox, #equity, #equity-podcast, #fundings-exits, #google, #makerpad, #neeva, #nft, #paypal, #preply, #roblox, #startups, #tc, #zapier

0

Chinese beauty app Meitu bought $40 million worth of cryptocurrency

Following in the footsteps of Tesla, Chinese app maker Meitu has joined the ranks of cryptocurrency investment.

In the early 2010s, Meitu reached such dominance in the portrait touch-up space that its eponymous flagship app became a verb for “photo beautifying” in China. But in recent years, as smartphones became to offer built-in filters, photo editors like Meitu are struggling to hold their lead. Meitu’s stock shrank from HK$18 apiece in 2017 to less than HK$3 today.

As the company turns 13 years old and seeks alternative growth, it sets its eyes on cryptocurrency.

Meitu purchased 15,000 units of Ether and 379.1214267 units of Bitcoin worth around $22.1 million and $17.9 million respectively on March 5 in open market transactions, the company disclosed Sunday. The purchase is the first tranche of the firm’s investment plan to buy up to $100 million worth of cryptocurrency, which is financed by its cash reserves.

In recent times, Meitu chairman Cai Wensheng has been an outspoken advocate of blockchain technologies. Though China has banned initial coin offerings and crypto trading exchanges, Cai said in 2018 that he personally bought about 10,000 bitcoins.

His support for cryptocurrencies is manifested in Meitu’s latest investment move. In the disclosure, the company states:

“The Board takes the view that blockchain technology has the potential to disrupt both existing financial and technology industries, similar to the manner in which mobile internet has disrupted the PC internet and many other offline industries. The Board believes that the blockchain industry is still in its early stage, analogous to the mobile internet industry in circa 2005.”

It continues: “Against this backdrop, the Board believes cryptocurrencies have ample room for appreciation in value and by allocating part of its treasury in cryptocurrencies can also serve as a diversification to holding cash treasury management.”

Meitu further explains that the Bitcoin investment is part of its “asset allocation” plan while its bet on Ether will aid its general blockchain endeavor, wherein it’s considering baking blockchain into its various overseas businesses, including Ethereum-based dApps. It’s also looking to invest in overseas blockchain projects “that can be synergistic to its large user base.”

As of June 2020, Meitu claimed nearly 300 million monthly active users on its suite of apps released across the globe.

#bitcoin, #blockchain, #crypto, #cryptocurrency, #ether, #ethereum, #meitu

0

The explosive (and inclusive) potential of NFTs in the creative world

Digital collectibles are having a very large moment. Just last month, a piece of digital art by Beeple sold for $6.6 million on online art marketplace Nifty Gateway. Meanwhile, Linkin Park’s Mike Shinoda recently sold clips of a song via online marketplace Zora. Over on Dapper Labs’ NBA Top Shot, more than 200,000 people recently waited hours for the chance to buy one of just 10,631 packs of digital NBA moments.

Those marketplaces, along with others, are where people go to buy digital assets, or, non-fungible tokens (NFTs) that live on the blockchain. This whole world of NFTs is super new to me (I’ve only been using Top Shot for a couple of weeks now) so I caught up with a couple of NFT creators to break it down for me, as well as share some insights on where they think the space is going, and it’s overall potential.

“The way I like to explain NFTs, they are digital assets with true ownership and provenance,” Ronin the Collector told TechCrunch. “You can track their origin and they can only be owned by one person.”

Many people, myself included, at some point wonder why someone would pay for a short video clip of, for example, Stephen Curry making a three-pointer when you download it to your computer for free.

“Humans inherently, whether we will like to admit it or not, want to own things,” Ronin said. “And I think that that’s part of the human experience is owning things. When you own things, it’s a connection, and it’s like you have reason for being and there’s something unique about ownership. And I think that at the end of the day, yeah, you can you can watch it all you want. But can you sell it?”

With that clip as an NFT, you can. As an example, one user bought a LeBron James dunk for $208,000 a couple of weeks ago, according to CryptoSlam. Last month, Top Shot reached nearly $50 million in marketplace transactions. Then, over a 24-hour period last week, Top Shot saw more than $37 million in sales, according to Cryptoslam.

As to why they’re blowing up right now, Ronin attributes it to a couple of things: the pandemic that’s forced everyone behind a computer screen and an easy entry point. Top Shot, for example, makes it super easy for plebeians like me to sign up and you don’t need to have a crypto wallet. You can just use your credit card. The same goes for Nifty Gateway.

But Top Shot and Nifty are outliers, Ronin said. For the majority of NFT platforms, you need to have an Ethereum wallet. As Cooper Turley, crypto strategy lead at Audius, wrote on TC, “this means collectors need to purchase ETH from an exchange like Coinbase and send it to a non-custodial address that consists of a long string of numbers and letters to get started.”

That sounds like a whole thing that I, for one, am not ready to dive into. In general, barriers to access continue to be a problem in the NFTs space, Ronin said.

“Projects are just now starting to pay attention to the user experience,” he said. “And just barely in time. One of the best rooms I’ve been on Clubhouse was one that talked about how basically, with the whole world watching, how do we not mess this up. So I think when you have a product like Top Shot, which is easy to get into, easy to sign up for, and easy to purchase. You have to use a credit card, you don’t need crypto and throw in the mix that everyone’s online and then Beeple sells $3 million worth of digital art, and all of a sudden, people want to pay attention. So I think that was the catalyst.”


But an even more expansive and interesting arena for NFTs than Top Shot is the world of NFT art. Ameer Carter, an artist that is also known as Sirsu, got into NFTs last summer thanks to a friend, he told TechCrunch. Pretty much immediately, he said, he realized the transformative nature of the technology.

“We literally have creative immortality,” he told me he realized at the time.

But the art world has historically been inhospitable to Black folks and people of color, and especially in the world of NFTs, Carter said. The traditional art scene, Carter said, is elitist. And while Carter himself is a classically trained artist, he hasn’t been able to make his way into the traditional art world, he said.

“And it’s not because of lack of trying,” he said.

Carter said he’s had a number of conversations with art curators who all love his work, but they’ve told him it’s not “something that they could build a whole curriculum around and intellectualize,” he said. What NFTs do is enable artists like Carter to create and share their art in a way that hadn’t previously been afforded to them.

“And this is a much more open and accessible platform, and environment for them to do so,” Carter said. “And so my goal is to help really give them that type of visibility and empower them to be creatives. My mission is to remove the starving artists stigma. I don’t believe that creativity is cheap. I believe that it is rich. And it enriches and it gives us the reasons why we live in the first place.”

However, Carter said he’s begun to notice white folks taking credit for things Black artists have already done.

“There’s this push and pull between folks who are really about the provenance of the blockchain versus folks who are wanting to predispose themselves as first because they have more visibility,” Carter said.

He pointed to Black artists like Connie Digital, Harrison First and others who were some of the first people to institute social tokens for their fans on the blockchain.

“They were some of the first to deploy and sell albums as NFTs, EPs as NFTs, singular songs,” Carter said. “And now we have Blau that came out and people were saying he’s the first to sell an album. And it’s like, well, that’s not true, technically. But what works and has continued to work is because there’s a lot of hoopla and a lot of money around that sale, that becomes the formative thing as being first because it’s the one that’s made the most noise. And I find it interesting because of the fact that we can literally go back tangibly, and there’s verifiable hash proof that it wasn’t the case.”

These are the types of phenomena pushing Carter to become an NFT archivist of sorts, he said.

“I’m not necessarily a historian, but I think the more and more I get involved in this space, the more and more I feel that pressing role of being an archivist,” he said. “So that culturally, we aren’t erased, even in a space that’s supposed to be decentralized and supposed to be something that works for everyone.”

That’s partly why Carter is building The Well to archive the work of Black artists, like Blacksneakers, for example. The Well will also be a platform for Black artists to mint their NFTs in a place that feels safe, supportive and not exploitative, he said.

On current platforms, Carter said it feels like white artists generally get more promotions on the site, as well as on social media, than Black artists.

“They deserve to have that kind of artists’ growth and development,” Carter said. “Yet it is afforded to a lot of other artists that don’t look like them.”

Carter said he recognizes it’s not the responsibility of platforms like Nifty Gateway, SuperRare and others to provide opportunities to Black artists, but that they do have the ability to put Black artists in a better position to receive opportunities.

That’s partly what Carter hopes to achieve with The Well Protocol. The Well, which Carter plans to launch on Juneteenth, aims to create an inclusive platform and ecosystem for NFT artists, collectors and curators. Carter said he wants artists to not have to feel like they have to constantly leverage Twitter to showcase their work. Instead, they’ll have the full backing of an ecosystem pumping up their work.

“Everywhere else, you look at other artists and they have write-ups, and they have news coverage and things of that nature,” Carter said. “And [Black artists] don’t have a lot of those avenues to compete. You know, I’m in the business of building true equity for us, so part and parcel to that is developing the tools and the ecosystem for us to thrive.”

No longer should art just be for the rich, Carter said.

“We have the ability to completely dismantle that,” he said. “So we have to be very, very, very careful about that and make a concerted effort to make that thing work, but we can’t do it when we have folks entering the space with money erasing folks who were already here. We can’t have that where platforms are not allowing the positioning of artists to grow. You know, we can’t have that when we have folks by and large, fear mongering and trying to get other artists to not be a part of this system.”

It’s also important, he said, for NFTs to not solely be seen as collectible, investable objects.

“Everyone’s getting into the game like it’s a money grab,” he said. “It’s not. It’s playing with artists lives and careers here.”


For those who aren’t yet in on NFTs, there’s still time, Ronin said. Even with the increased attention on NFTs, Ronin says it’s still early days.

“Honestly, I don’t even think we’ve got a full foot into early adoption yet,” he said. “I don’t think you come out of early adoption until we’ve got a solid experience across the board. I think we’re still in alpha.”

That’s partly because Ronin believes the things people will be able to do in five or ten years with this technology will pale in comparison to what’s happening today. For example, Ronin said he spoke with an artist who is experimenting with an NFT experience that will transcend VR, AR and XR.

“And I’m so excited that she chose to work with me and bring me in on this, and use me as kind of an advisor,” he said. “And she can change the world with this technology.”

That’s really what’s so exciting about NFTs for Ronin — the notion that the technology can change your life, and the world, he said.

“And it is a space in which you should feel free to come into and dream big and then figure out how to make those dreams happen,” he said. “You can use AR, VR, mobile, you know, the internet — you can use all these aspects and create an NFT experience that transcends space, transcends time, transcends our life. So it’s a super powerful technology. And I think that people should really pay attention.”

Down the road, Ronin also envisions having connected blockchains “where you can take an NFT from, you know, Bitcoin to Ethereum to WAX to Flow,” he said. “I really think that it’s why this this is that important.”

For Carter, he hopes his work at The Well will help to set a precedent for inclusivity and access in the NFT space. It’s worth mentioning that Carter is also working on the Mint Fund to help minimize the barriers to entry for artists looking to mint their first NFTs. Minting an NFT can be expensive to the tune of $50-$250 depending on how busy the Ethereum network is, and Mint Fund will pay those fees for new artists, making the on-ramp into the world smoother.

“If we don’t do this the right way with the right type of community-driven thinking, then we will lose,” he said. “And it’s not going to look good, it’s going to be ugly. And it’s going to again perpetuate the rich getting richer and the poor getting poorer…We have to find the best ways to redistribute wealth at any given point in time within this economy, within this system. If we do not know how to do that, we are fucked. At least in my opinion.”

There are also conversations in the space around the ecological impact of minting NFTs, which requires a good amount of energy to do. Carter described the existence of two camps: the camp arguing minting NFTs are very ecologically damaging and the ones saying it’s not the fault of minters and you can’t blame them “for minting on a system that is already going to process these transactions, whether they mint or not.”

For Carter, he thinks the first camp could be right, but says there’s just a lot of yelling at this point.

“I think that collectively, us as minters should not feel so fucked up that we can’t do anything anymore,” he said.

Carter also pointed to the energy required to print and ship a bunch of his work.

“To sell one piece of art that I’ve minted versus the energy expenditure and the emissions it takes for me to sell, let’s say 1,000 prints at $20,” he said. “To now shop those to 1,000 different places and for those things to then be transported to 1,000 different homes. Like, maybe they’re comparable, maybe they’re not. I’m not too interested in doing the math at this point.”

Ultimately, Carter thinks there needs to be better access to renewable energy sources and more innovative hardware in the space.

“And the production of creating that innovative hardware also has to be coming from renewable energy sources, like the entire framework should be working to be carbon negative,” he said. “As carbon neutral to carbon negative as possible. And not just the minting side but the mining side. And, you know, the manufacturing side. It’s a cyclical issue.”

#blockchain, #crypto, #nba-topshot, #nfts, #tc

0

What the NFT? VC David Pakman dumbs down the digital collectibles frenzy and why it’s taking off now

Non-fungible tokens have been around for two years, but these NFTs, one-of-one digital items on the Ethereum and other blockchains, are suddenly becoming a more popular way to collect visual art, primarily, whether it’s an animated cat or an NBA clip or virtual furniture.

“Suddenly” is hardly an overstatement. According to the outlet Cointelegraph, during the second half of last year, $9 million worth of NFT goods sold to buyers; during one 24-hour window earlier this week, $60 million worth of digital goods were sold.

What’s going on? A thorough New York Times piece on the trend earlier this week likely fueled new interest, along with a separate piece in Esquire about the artist Beeple, a Wisconsin dad whose digital drawings, which he has created every single day for the last 13 years, began selling like hotcakes in December. If you need evidence of a tipping point (and it is ample right now), consider that the work of Beeple, whose real name is Mike Winkelmann, was just made available through Christie’s. It’s the venerable auction house’s first sale of exclusively digital work.

To better understand the market and why it’s blowing up in real time, we talked this week with David Pakman, a former internet entrepreneur who joined the venture firm Venrock a dozen years ago and began tracking Bitcoin soon after, even mining the cryptocurrency at his Bay Area home beginning in 2015. (“People would come over and see racks of computers, and it was like, ‘It’s sort of hard to explain.’”)

Perhaps it’s no surprise that he also became convinced early on of the promise of NFTs, persuading Venrock to lead the $15 million Series A round for a young startup, Dapper Labs, when its primary offering was CryptoKitties, limited-edition digital cats that can be bought and bred with cryptocurrency.

While the concept baffled some at the time, Pakman has long seen the day when Dapper’s offerings will be far more extensive, and indeed, a recent Dapper deal with the NBA to sell collectible highlight clips has already attracted so much interest in Dapper that it is reportedly right now raising $250 million in new funding at a post-money valuation of $2 billion. While Pakman declined to confirm or correct that figure, but he did answer our other questions in a chat that’s been edited here for length and clarity.

TC: David, dumb things down for us. Why is the world so gung-ho about NFTs right now?

DP: One of the biggest problems with crypto — the reason it scares so many people — is it uses all these really esoteric terms to explain very basic concepts, so let’s just keep it really simple. About 40% of humans collect things — baseball cards, shoes, artwork, wine. And there’s a whole bunch of psychological reasons why. Some people have a need to complete a set. Some people do it for investment reasons. Some people want an heirloom to pass down. But we could only collect things in the real world because digital collectibles were too easy to copy.

Then the blockchain came around and [it allowed us to] make digital collectibles immutable, with a record of who owns what that you can’t really copy. You can screenshot it, but you don’t really own the digital collectible, and you won’t be able to do anything with that screenshot. You won’t be able to to sell it or trade it. The proof is in the blockchain. So I was a believer that crypto-based collectibles could be really big and actually could be the thing that takes crypto mainstream and gets the normals into participating in crypto — and that’s exactly what’s happening now.

TC: You mentioned a lot of reasons that people collect items, but one you didn’t mention is status. Assuming that’s your motivation, how do you show off what you’ve amassed online? 

DP: You’re right that one of the other reasons why we collect is to show it off status, but I would actually argue it’s much easier to show off our collections in the digital world. If I’m a car collector, the only way you’re going to see my cars is to come over to the garage. Only a certain number of people can do that. But online, we can display our digital collections. NBA Top Shop, for example, makes it very easy for you to show off your moments. Everyone has a page and there’s an app that’s coming and you can just show it off to anyone in your app, and you can post it to your social networks. And it’s actually really easy to show off how big or exciting your collection is.

TC: It was back in October that Dapper rolled out these video moments, which you buy almost like a Pokemon set in that you’re buying a pack and know you’ll get something “good” but don’t know what. But while almost half it sales have come in through the last week. Why?

DP: There’s only about maybe 30,000 or 40,000 people playing right now. It’s growing 50% or 100% a day. But the growth has been completely organic. The game is actually still in beta, so we haven’t been doing any marketing other than posting some stuff on Twitter. There hasn’t been attempt to market this and get a lot of players [talking about it] because we’re still working the bugs out, and there are a lot of bugs still to be worked out.

But a couple NBA players have seen this and gotten excited about their own moments [on social media]. And there’s maybe a little bit of machismo going on where, ‘Hey, I want my moment to trade for a higher price.’ But I also think it’s the normals who are playing this. All you need to play is a credit card, and something like 65% of the people playing have never owned or traded in crypto before. So I think the thesis that crypto collectibles could be the thing that brings mainstream users into crypto is playing out before our eyes.

TC: How does Dapper get paid?

DP: We get 5% of secondary sales and 100% minus the cost of the transaction on primary sales. Of course, we have a relationship with the NBA, which collects some of that, too. But that’s the basic economics of how the system works.

TC: Does the NBA have a minimum that it has to be paid every year, and then above and beyond that it receives a cut of the action?

DP: I don’t think the company has gone public with the exact economic terms of their relationships with the NBA and the Players Association. But obviously the NBA is the IP owner, and the teams and the players have economic participation in this, which is good, because they’re the ones that are creating the intellectual property here.

But a lot of the appreciation of these moments — if you get one in a pack and you sell it for a higher price — 95% of that appreciation goes to the owner. So it’s very similar to baseball cards, but now IP owners can participate through the life of the product in the downstream economic activity of their intellectual property, which I think is super appealing whether you’re the NBA or someone like Disney, who’s been in the IP licensing business for decades.

And it’s not just major IP where this NFT space is happening. It’s individual creators, musicians, digital artists who could create a piece of digital art, make only five copies of it, and auction it off. They too can collect a little bit each time their works sell in the future.

TC: Regarding NBA Top Shot specifically, prices range massively in terms of what people are paying for the same limited-edition clip. Why?

DP: There are two reasons. One is that like scarce items, lower numbers are worth more than higher numbers, so if there’s a very particular LeBron moment, and they made 500 [copies] of them, and I own number one, and you own number 399, the marketplace is ascribing a higher value to the lower numbers, which is very typical of limited-edition collector pieces. It’s sort of a funny concept. But it is a very human concept.

The other thing is that over time there has been more and more demand to get into this game, so people are willing to pay higher and higher prices. That’s why there’s been a lot of price appreciation for these moments over time.

TC: You mentioned that some of the esoteric language around crypto scares people, but so does the fact that 20% of the world’s bitcoin is permanently inaccessible to its owners, including because of forgotten passwords. Is that a risk with these digital items, which you are essentially storing in a digital locker or wallet?

DP: It’s a complex topic,  but I will say that Dapper has tried to build this in a way where that won’t happen, where there’s effectively some type of password recovery process for people who are storing their moments in Dapper’s wallet.

You will be able to take your moments away from Dapper’s account and put it into other accounts, where you may be on your own in terms of password recovery.

TC: Why is it a complex topic?

DP: There are people who believe that even though centralized account storage is convenient for users, it’s somehow can be distrustful — that the company could de-platform you or turn your account off. And in the crypto world, there’s almost a religious ferocity about making sure that no one can de-platform you, that the things that you buy — your cryptocurrencies or your NFTs. Long term, Dapper supports that. You’ll be able to take your moments anywhere you want. But today, our customers don’t have to worry about that I-lost-my-password-and-I’ll-never-get-my-moments-again problem.

#andreessen-horowitz, #crypto, #cryptocurrency, #cryptokitties, #dapper-labs, #david-pakman, #gv, #samsung-next, #secondaries, #startups, #tc, #venrock, #venture-capital, #virtual-reality

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Coinbase files to go public in a key listing for the cryptocurrency category

This morning Coinbase, an American cryptocurrency exchange, released an S-1 filing ahead of its direct listing. The company’s public debut has been hotly anticipated thanks to recent activity amongst bitcoin and other blockchain-based assets, the company’s controversial political positions, and its spiking valuation on private exchanges.

Coinbase’s financials show a company that grew rapidly from 2019 to 2020. More than that, the company also crossed the threshold into unadjusted profitability; it’s common amongst quickly-growing tech companies to lean more heavily on adjusted profit and other more flattering metrics.

In 2019 Coinbase $30.4 million against $533.7 million in revenue. In 2020 the company’s net income rose to $127.5 million against $1.28 billion in revenue.

The crypto unicorn grew just over 139% in 2020, a massive improvement on its 2019 results. The company’s scale and growth help us understand why some investors are bidding its value up to as much as $100 billion on the private markets.

Coinbase has highly variable revenues. The company posted revenues of $190.6 million in Q1 2020, a number that dipped to $186.4 million in the second quarter. Then Coinbase’s topline accelerated in Q3 2020 to $315.4 million, and $585.1 million in the final quarter of 2020.

It’s easy to see why Coinbase is moving forward with its direct listing now; the company just posted an excellent quarter.

In that outsized fourth-quarter period, Coinbase generated operating income of $226.6 million, and net income of $176.8 million. Those represent high-quality profitability improvements from preceding periods, and provide Coinbase with attractive end-of-year profit margins.

The cryptocurrency exchange generates the vast majority of its revenues from transaction revenues, as anticipated. Coinbase also has a comparatively modest “subscription and services” revenue category, which was worth around $20.7 million in Q4 2020 revenues.

Finally, Coinbase swun from operating cash flow negative in 2019 to incredibly cash-flow positive in 2020. However, the $3.0 billion in positive operating cash flow that Coinbase generated last year includes “$2.7 billion related to cash from the change in custodial funds due to customers,” diminishing the number to a more understandable scale.

This is a first look, but Coinbase is a quickly growing, profitable unicorn that looks more than ready for its direct listing. The question ahead of investors is merely how to value Coinbase’s revenue growth as it does track with broader market interest in cryptocurrencies, a historically fluid quantity.

#bitcoin, #coinbase, #crypto, #cryptocurrency, #direct-listing, #exit, #fundings-exits, #public-markets, #startups, #tc

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Equity Tuesday: Everyone’s raising money, and Wrike exits yet again

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday Tuesday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here — and make sure to check out last week’s two episodes, covering all the news sans ecommerce, and then all the ecommerce news.

We’re here on a Tuesday due to an American holiday, but that short break did not mean that the world’s news volume slowed down in the slightest. Here’s the rundown:

And that’s that for today, we are back in short order on Thursday afternoon!

Equity drops every Monday at 7:00 a.m. PST and Thursday afternoon as fast as we can get it out, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

#auto1-group, #crypto, #cryptocurrency, #darwinbox, #equity-podcast, #github, #leocare, #personio, #tc, #whatsapp, #wrike

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Bitcoin advocates revolt against the Trump administration’s frantic crypto regulations

Bitcoin fans across the country are rallying against a common enemy, the Treasury’s Financial Crimes Enforcement Network (FinCEN).

US Treasury Secretary Steven Mnuchin, one of President Donald Trump’s closest associates, has been working overtime since Thanksgiving to push several crypto regulations through before the Biden administration takes over on January 20, 2021.

FinCEN statements list the usual reasons for financial regulations, an effort to curtail terror financing, sanctions evasion and black market activity related to drugs and weapons, without any mention of new evidence justifying the unusual urgency.

These include a FinCEN proposal that would require exchanges to store records involving transactions over $3,000 sent to any personal wallets, plus report users to FinCEN for cumulative transactions worth more than $10,000 in a single day. For comparison, banks are required to flag cash withdrawals over $10,000, not transactions within the banking system itself, and banks are not required to keep tabs on where the customer spends the cash taken out of the system.

Plus, a complementary FinCEN statement proposed requiring Americans to report crypto holdings worth more than $10,000 at any foreign service provider. Although the details of this second initiative are still vague, it’s clear the Treasury wants to make special note of the know-your-customer information for anyone dealing with thousands of dollars worth of bitcoin.

The Electronic Frontier Foundation called this a “push for more financial surveillance” without any need for warrants or suspicion. (Bitcoin users already need to report their holdings in their taxes, just like any other asset.) As such, over 65,615 crypto advocates submitted critical statements to FinCEN, including companies like Fidelity and Square. Square’s statement said the company “would be required to collect unreliable data about people [recipients] who have not opted into our service or signed up as our customers.”

The Washington D.C. nonprofit Coin Center issued a statement saying this proposal would also limit American access to decentralized services, where users may not know their counterparty or network operators. Peter Van Valkenburgh, Coin Center’s research director, told TechCrunch the proposal is highly unusual because it only allowed for 15 days of comments, instead of the standard 60-day period, for a rule that would impose more data collection requirements on crypto companies than other financial institutions.

“It requires the exchange to collect, retain and report extra information that they don’t have to for a cash transaction, like the name and physical address of a counterparty,” he said. “It’s on a timeline to complete this process, as far as we know right now, before the new administration. That means the rule would be final. The new administration could issue a new rule, and overturn that past rule, but that’s a much more difficult process.”

Incoming Senator Cynthia Lummis, sworn in the first week of January, tweeted it was “ridiculous” for the Treasury to have this unusually short comment period. Likewise, nine members of Congress issued a letter warning this hasty rulemaking over the winter holidays undermined the legitimacy of the process.

These proposals aren’t just sudden, they’re also so vague that they appear poorly researched. Both Square Crypto developer Matt Corallo and MIT Media Lab director Neha Narula issued public statements saying the FinCEN proposals confused basic technical concepts about how bitcoin addresses work. This would make such regulations difficult to implement, burdening American companies with prohibitively high compliance precautions.

“Political motivations are always hard to discern, but public rumors have consistently indicated this is a personal push by Mnuchin, not further up or down,” Corallo said. “We’ll learn a lot about what the next few years look like based on what [incoming Secretary Janet] Yellen says and what new leadership at FinCEN looks like. There are a lot of things Yellen could decide, but it would be hard for her to do a worse job of building useful and practical regulations than Mnuchin’s last-minute attempts here.”

Van Valkenburgh said his nonprofit, and other crypto industry organizations like it, are prepared to challenge the ruling in court if the Trump administration fails to follow the legislative process. Namely, the Treasury is required to read and consider all of the public comments submitted by January 7, 2021, the arbitrary date set by the rulemakers themselves.

“They technically then have the power to issue the final rule, saying they considered all the comments,” he said. “But if it’s obvious that they didn’t consider all the comments, which I feel like it would be if the final rule came out any time before the new administration comes in, it would be very easy to argue in court that the requirement to read and consider all the comments has not been met.”

As it stands, Van Valkenburgh said it appears the outgoing administration intends to “saddle” the incoming administration with “chaos.”

#bitcoin, #column, #crypto, #fincen, #tc

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PayPal details its digital wallet plans for 2021, including crypto, Honey integration and more

PayPal this week laid out its vision for the future of its digital wallet platform and its PayPal and Venmo apps. During its third-quarter earnings on Monday, the company said it plans to roll out substantial changes to its mobile apps over the next year to integrate a range of new features including enhanced direct deposit, check cashing, budgeting tools, bill pay, crypto support, subscription management, buy now/pay later functionality, and all of Honey’s shopping tools.

While PayPal had spoken in the past about bringing Honey’s capabilities into PayPal, CEO Dan Schulman detailed the integrations PayPal has in store for the deal-finding platform it bought last year for $4 billion, as well as a time table for both this and the other app updates it has in store.

The Honey acquisition had brought 17 million monthly active users to PayPal. These users turned to Honey’s browser extension and mobile app to find the best savings on items they want to buy, track prices and more.

But today, the Honey experience still remains separate from PayPal itself. That’s something the company wants to change next year.

According to Schulman, the company’s apps will be updated to include Honey’s shopping tools like its Wish List feature that allows you to track items you want to buy, price monitoring tools that alert you to savings and price drops, plus its deals, coupons and rewards. These tools will become part of PayPal’s checkout solution itself.

That means the company will be able to track the customer from the initial deal-hunting phase where they’re indicating their interest in a certain product, target them with savings and offers, then guide them through its checkout experience all in one place.

PayPal will also provide “anonymous demand data” to merchants based on consumer engagement with Honey’s tools to help them drive sales, the company said.

What’s more, PayPal put timeline on the Honey integrations and the other updates it plans to roll out over the course of the next year.

Bill Pay will start to roll out this month, PayPal said, with a large redesign of the digital wallet experience expected for the first half of 2021. Much of the new functionality will be arriving in the second quarter and the second half of the year, with a goal of having the majority of the changes rolled out by the end of next year.

This also includes PayPal’s plans for cryptocurrencies, announced at the end of October. The company aims to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first, initially in the U.S.

Speaking to investors during the earnings call, Schulman also noted when PayPal plans to bring crypto to more users and geographies. He said the ability to buy, sell and hold cryptocurrencies will first arrive in the U.S., then will roll out to international markets and the Venmo app in the first half of next year. (Currently, PayPal is offering U.S. users to join a waitlist for the new crypto features in-app).

Image Credits: PayPal

This change will allow PayPal’s users to shop using cryptocurrencies across the company’s 28 million merchants without requiring additional integrations on merchants’ part. The company explained this is due to how it will handle the settlement process, where users will be able to instantaneously transfer crypto into fiat currency at a set rate when checking out with PayPal merchants.

PayPal also recently joined the “buy now, pay later” race with its new “Pay in 4” installment program that lets consumers split purchases into 4 payments. This debuted in France ahead of its late August U.S. launch and has since rolled out to the U.K. (as Pay in 3). This too, will become more integrated into the company’s apps in the months ahead.

Venmo — which the company expects to reach $900 million in revenues next year — will see the expansion of business profiles, and will gain crypto capabilities, more basic financial tools and shopping tools, as well as a revamp of the “Pay with Venmo” checkout experience.

Schulman referred to the company’s plans to overhaul its Venmo and PayPal apps as a “fundamental transformation,” due to how much new functionality they will include as the changes roll out over the next year as well as the new user experience — basically, a redesign — that will allow people to move easily from one experience to the next instead of having to change apps or use a desktop browser, for example.

PayPal’s earnings hadn’t excited Wall St. investors this week, sending the stock down on its lack of 2021 guidance. But the year ahead for PayPal’s digital wallet apps looks to be an interesting one.

 

#apps, #crypto, #e-commerce, #ecommerce, #finance, #honey, #mobile, #online-shopping, #paypal, #shopping, #venmo

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Twitter hack probe leads to call for cybersecurity rules for social media giants

An investigation into this summer’s Twitter hack by the New York State Department of Financial Services (NYSDFS) has ended with a stinging rebuke for how easily Twitter let itself be duped by a “simple” social engineering technique — and with a wider call for key social media platforms to be regulated on security.

In the report, the NYSDFS points, by way of contrasting example, to how quickly regulated cryptocurrency companies acted to prevent the Twitter hackers scamming even more people — arguing this demonstrates that tech innovation and regulation aren’t mutually exclusive.

Its point is that the biggest social media platforms have huge societal power (with all the associated consumer risk) but no regulated responsibilities to protect users.

The report concludes this is a problem U.S. lawmakers need to get on and tackle stat — recommending that an oversight council be established (to “designate systemically important social media companies”) and an “appropriate” regulator appointed to ‘monitor and supervise’ the security practices of mainstream social media platforms.

“Social media companies have evolved into an indispensable means of communications: more than half of Americans use social media to get news, and connect with colleagues, family, and friends. This evolution calls for a regulatory regime that reflects social media as critical infrastructure,” the NYSDFS writes, before going on to point out there is still “no dedicated state or federal regulator empowered to ensure adequate cybersecurity practices to prevent fraud, disinformation, and other systemic threats to social media giants”.

“The Twitter Hack demonstrates, more than anything, the risk to society when systemically important institutions are left to regulate themselves,” it adds. “Protecting systemically important social media against misuse is crucial for all of us — consumers, voters, government, and industry. The time for government action is now.”

We’ve reached out to Twitter for comment on the report

Among the key findings from the Department’s investigation are that the hackers broke into Twitter’s systems by calling employees and claiming to be from Twitter’s IT department — through which simple social engineering method they were able to trick four employees into handing over their log-in credentials. From there they were able to access the Twitter accounts of high profile politicians, celebrities, and entrepreneurs, including Barack Obama, Kim Kardashian West, Jeff Bezos, Elon Musk, and a number of cryptocurrency companies — using the hijacked accounts to tweet out a crypto scam to millions of users.

Twitter has previously confirmed that a “phone spear phishing” attack was used to gain credentials.

Per the report, the hackers’ “double your bitcoin” scam messages, which contained links to make a payment in bitcoins, enabled them to steal more than $118,000 worth of bitcoins from Twitter users.

Although a considerably larger sum was prevented from being stolen as a result of swift action taken by regulated crypto companies — namely: Coinbase, Square, Gemini Trust Company and Bitstamp — who the Department said blocked scores of attempted transfers by the fraudsters.

“This swift action blocked over 6,000 attempted transfers worth approximately $1.5 million to the Hackers’ bitcoin addresses,” the report notes.

Twitter is also called out for not having a cybersecurity chief in post at the time of the hack — after failing to replace Michael Coates, who left in March. (Last month it announced Rinki Sethi had been hired as CISO).

“Despite being a global social media platform boasting over 330 million average monthly users in 2019, Twitter lacked adequate cybersecurity protection,” the NYSDFS writes. “At the time of the attack, Twitter did not have a chief information security officer, adequate access controls and identity management, and adequate security monitoring — some of the core measures required by the Department’s first-in-the-nation cybersecurity regulation.”

European Union data protection law already bakes in security requirements as part of a comprehensive privacy and security framework (with major penalties possible for security breaches). However an investigation by the Irish DPC of a 2018 Twitter security incident is still yet to conclude after a draft decision failed to gain the backing of the other EU data watchdogs this August — triggering a further delay to the pan-EU regulatory process.

#crypto, #hack, #policy, #regulation, #security, #social, #social-media, #twitter

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Crypto Startup School: A new type of computer drives waves of innovation

Editor’s note: Andreessen Horowitz’s Crypto Startup School brought together 45 participants from around the U.S. and overseas in a seven-week course to learn how to build crypto companies. Andreessen Horowitz is partnering with TechCrunch to release the online version of the course over the next few weeks. 

In week one of a16z’s Crypto Startup School, a16z general partner Chris Dixon discusses “Crypto Networks and Why They Matter,” giving an overview of the crypto space, the transformative implications of its technology, and the potential for crypto networks to lead a new wave of innovation. And in his talk on “Blockchain Primitives: Cryptography and Consensus,” Dan Boneh, a professor in applied cryptography and computer security at Stanford, provides an introduction to the cryptographic foundation of blockchains and how developers can use them to build new types of applications.

Dixon says that crypto is poised to become the next major computing platform. Like mobile phones and the web before it, crypto offers opportunities for entrepreneurs and developers to build new networks and applications, due to the decentralized blockchain technology that underpins it. He describes blockchains as a new type of computer — a virtual computer that runs on a network of physical computers, with encoded guarantees that it will continue to operate as designed. Just as the rise of mobile phones enabled an explosion of innovation on top of that new computing platform, crypto presents an opportunity for the next such “idea maze,” he says. “Our feeling is this is an incredibly rich design space.”

The architecture of crypto enables new possibilities, Dixon says, starting with digital currency but expanding to general computing and community owned and operated networks. In combination with the digital primitive of tokens, which align incentives among network creators and users, this sets the stage for exponential innovation over the next decade that should echo previous eras of tech growth. “When a lot of really smart people who know computer science start thinking about computer science problems and have an economic incentive to do so, those computers tend to get a lot better.”

In the second presentation in week one, Dan Boneh explains the layers of crypto, including the consensus layer, and how Satoshi Nakamoto’s bitcoin whitepaper proposed a system that enables an unlimited number of participants to contribute to a blockchain without authorization and still come to verifiable consensus. He also talks about cryptographic primitives, how mining works, how blocks are added to the blockchain, public and private keys, and zero-knowledge proofs. These unique features provide a fertile ground for open-source developers.

The application layer, Boneh says, is where a lot of the excitement is, with a “thriving ecosystem” of applications running on the blockchain in the area of decentralized finance (DeFi). While technical, Boneh’s presentation is accessible to those who don’t have a background in cryptography or consensus mechanisms.

#a16z, #a16z-crypto-startup-school, #andreessen-horowitz, #chris-dixon, #column, #crypto, #startups, #tc

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FalconX raises $17M to power its crypto trading service

Over the last few weeks all eyes in the crypto world have been glued to the halvening, a nigh-religious moment in the blockchain realm. Every once in a while, the amount of new bitcoin mined — distributed to miners, the folks with fleets of computers powering bitcoin’s database, or blockchain — is cut in half. Why does that matter? It slows the rate at which new bitcoin is introduced to the world as the cryptocurrency marches toward its 21 million coin cap.

That’s to say that, while you weren’t looking, the world of digital tokens and currencies has marched along, maturing to some degree as cryptocurrencies and other blockchain-based services settle into slightly more predictable trading ranges.

The companies working in the crypto space are growing up as well, building out better, more sophisticated tooling for retail and institutional investors alike. FalconX is one such company, and today it announced that it has raised $17 million to date.

The crypto trading service — more on what it does in a moment — is backed by a legion of investors including Fidelity-affiliated Avon Ventures, corporate shop Coinbase Ventures, and a host of more traditional players including Lightspeed, Flybridge, Accel, Fenbushi, and Accomplice. Normally we’d curtail the list of investors to merely the most interesting, but in this case it felt reasonable to include them all, as the sheer number of capital shops that put up money for FalconX details that there is still niche and mainstream venture interest in at least some crypto-focused companies.

FalconX is also a company that anyone can understand, which probably helped. The company’s tech helps provide pricing information for cryptocurrencies, offering what it calls the “best” price for a period of time (seconds). That might sound somewhat simple, but it’s not; the crypto world is made of up a host of exchanges, is awash with fake trading volume and has a history of being pushed around by large accounts. To be able to offer a price, and hold onto it, is material.

The company is currently focused on institutional customers, which the company’s founders Raghu Yarlagadda and Prabhakar Reddy loosely described to TechCrunch as those with $10 million AUM (assets under management) and up. This likely makes KYC (know your customers) rules easier for the startup to follow.

FalconX makes money from trading fees, albeit in two ways. It offers either crypto prices with its fees included or on a fixed-fee model. Notably the firm says that cyrpto-native customers prefer the baked-in approach, while more traditional customers prefer the visible-fee method.

Either way, FalconX’s tech has found an audience. It has executed $7 billion in trading volume in the last 10 months (I asked about the seemingly odd time interval, which the firm explained as its most recent, fully-audited time period; it has seen more total volume during its life.)

That $7 billion volume result is likely why FalconX was able to attract external capital. And the fact that the startup appears to care about treating crypto seriously and not as a way to get around traditional banking regulations.

For example, after FalconX brought up anti-money laundering work during a discussing about regulation, TechCrunch asked the company how far it can look into its transactions to make sure that it isn’t accidentally helping bad folks get money. Yarlagadda responded, saying that “the future of regulation” in his space is “solving some of these problems and showing [them] to the [regulatory] agencies so that they get comfortable about the space.”

How is FalconX going about that? It uses “internal on-chain analytics” as well as third-parties to help get “context [into] which bitcoin addresses, or ethereum addresses, are associated with dark web or terrorist activities” to make sure that its trades are not winding up helping the wrong folks. This isn’t easy; the startup has to look through “six, seven hops” so that it can see if any money that goes through its service is suspect.

That seems pretty good, right? I found it impressive. Even more, after Yarlagadda joked that it’s not cheap to pay for the computing power needed to pull off that work, FalconX told TechCrunch that the expense counts as COGS. Neat!

There’s a fine line when covering anything blockchain-related between producing something that regular folks can understand, and writing something that the crypto-believing world won’t dismiss out of hand as insufficiently nuanced. Summing then, in case I swung too far towards the latter, FalconX built a pricing engine that allows big investors to make trades with more confidence. It gets paid when they trade and is processing lots of volume. That means its revenues are going up. And that’s why it raised more money.

The next question for FalconX is how fast it can scale volume. The faster it can, the more enticing it will prove to investors. And in time, if it does open up to more retail-sized traders, who knows, it could even become a household name.

At least in crypto.

#bitcoin, #crypto, #cryptocurrency, #distributed-ledger, #ethereum, #fundings-exits, #startups, #tc

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Relive the heady days of crypto with the “Crypto Rush” documentary

When Liliana Pertenava decided to go all-in on crypto by investing $2,000 in a mining rig in 2017, she went so far down the crypto rabbit-hole she decided to make a documentary about it. If you’re locked-down and looking for something to watch, you could do worse than sit down and watch “Crypto Rush“, which just went live on Vimeo today (8AM PT / 11AM ET / 4PM BST / 5PM CEST), and is available free for the first 100 TechCrunch readers to grab one of these codes.

Covering blockchain technology, its applications, and the culture that surrounds it, Pertenava’s 90-minute-long documentary led her to meet such characters as a tribe of iconoclasts living in a small cabin in the Swiss Alps, using cheap, hydro-electric energy to mine cryptocurrency while living like monks. She also meets crypto-miner David Carlson in Seattle, Washington, who built the world’s largest crypto-farm, only to later go bankrupt.

It’s also likely to prompt feelings of nostalgia, not just for the heady days of crypto but also the fact people are actually hanging out with each other (OMG).

To that point, stymied by the COVID-19, Pertenava has decided to go through Vimeo to release the movie, so that people can watch it at home. “Also, since it’s a road movie, I hope to feed everyone’s wanderlust while the world is on lockdown,” she says.

A former broadcaster in Russia, Pertenava was intrigued by the decentralized nature of blockchain tech. “I felt a bit like Alice in Wonderland, exploring this strange world and its colorful characters,” said Pertenava. “We live in a world where digital technologies are transforming reality. I wanted to emphasize the stories of people, especially women, taking part in these technological developments.”

Blockchain advocate Toni Lane Casserly, who tragically passed away recently, also features, speaking about the concept of when nations might compete for our citizenship. Her predictions about this are not to be missed.

Made in collaboration with Steven Pape, a director who has worked with James Cameron, the film will be available for streaming worldwide today and 10% of the funds gathered through streaming will be donated to organizations battling COVID-19, and organizations supporting female entrepreneurs.

#blockchain, #crypto, #europe, #tc

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