A look inside Google’s first store, opening in NYC’s Chelsea neighborhood tomorrow

There have been plenty of pop-ups over the years, but tomorrow Google’s first store opens in NYC’s Chelsea neighborhood. The brick and mortar model finds the company joining peers like Apple, Microsoft, Samsung and even Amazon, all of whom have a retail presence in Manhattan, including several just around the corner from Google’s new digs.

The new space, which opens tomorrow morning at 10 a.m. local time, fills 5,000 square feet of selling space in Google’s big, pricey West Side real estate investment. The retail location was previously occupied by a Post Office and Starbucks, which vacated the premises once their leases expired under their new corporate landlord.

Image Credits: Photos courtesy of Google and Paul Warchol

The store’s layout is designed to be experiential, highlighting the company’s growing hardware portfolio along with select third-party partners. Essentially it’s a way for the company to get Pixel phones, Home offerings, Stadia, WearOS and the newest addition to the hardware portfolio, Fitbit devices, in front of tourists and locals.

“We really used the pop-ups over the last several years to get a better sense of what are customer expectations for what we can uniquely deliver at Google,” VP Jason Rosenthal said during a press preview week. We’ve taken learnings from our 2016, 2017, 2018 and 2019 pop-ups and really fed that learning into what we’re opening[…] in Chelsea.”

Due to pandemic restrictions, the preview was virtual. And while it’s open to the public this week, the company will be maintaining the standard safety precautions, as the city deals with (knock on wood) the tail end of the pandemic.

And while COVID-19 almost certainly slowed the planned opening, Google promises that things will be in full force starting tomorrow. This follows several weeks of piloting, wherein the store’s 50 or so staffers were put through their paces, while the company put the finishing touches on the experience. Prior to this, Google built a full-size store mockup in a hangar space in Mountain View to test out ideas.

Image Credits: Google and Paul Warchol

In addition to product screens and dioramas lining the 17-foot windows, the company filled the store with “sandboxes” — effectively scenarios like a living room, not dissimilar to what you might find in a large furniture store — albeit better lit. There’s also a gaming area for playing Stadia and a soundproof spot for testing out various Home/Nest products.

Like Apple’s Store, customers can bring in for repair broken devices like Pixels. The company says it’s growing the number of devices that can be repaired on-site, while certain issues, like a broken screen, should be able to be fixed same day.

It seems likely that the store is a pilot in and of itself, with further plans to open additional locations in the U.S. and, perhaps, international markets where the company sells hardware. For now, however, Google won’t discuss the subject beyond tomorrow’s opening in Chelsea.

#ecommerce, #google, #google-store, #hardware, #new-york, #new-york-city, #retail

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The IAB is also facing another major privacy law challenge in Europe — where complaints against a widely used framework it designed for websites to obtain Internet users’ consent to being tracked for ads online led to scrutiny by Belgium’s data protection agency.

Last year its investigatory division found that the IAB Europe’s Transparency and Consent Framework (TCF) fails to meet the required standards of data protection under the GDPR.

The case went in front of the litigation chamber last week. A verdict — and any enforcement action by the Belgian DPA over the IAB Europe’s TCF — remains pending.

#adtech, #advertising-tech, #amazon, #articles, #att, #computing, #data-protection, #europe, #european-court-of-justice, #european-union, #facebook, #general-data-protection-regulation, #germany, #hamburg, #information-commissioners-office, #ireland, #johnny-ryan, #new-york, #online-advertising, #privacy, #real-time-bidding, #techcrunch, #terms-of-service, #twitter, #united-kingdom, #verizon, #world-wide-web

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NY can’t force ISPs to offer $15 low-income broadband plans, judge rules

Man's hand holding stack of US currency with some bills flying away.

Enlarge (credit: Getty Images | PM Images)

On Friday, the broadband industry won a court order that prohibits New York from enforcing a state law that would require ISPs to sell $15-per-month broadband plans to low-income households.

Lobby groups for ISPs sued New York to block the law that was scheduled to take effect on June 15 and received a preliminary injunction today from US District Court for the Eastern District of New York. The state law is preempted by federal law, US District Judge Denis Hurley wrote in the order. While the case will continue, Hurley found that the industry is likely to succeed in its lawsuit.

The Affordable Broadband Act (ABA) would require ISPs to offer “all qualifying low-income households at least two Internet access plans: (i) download speeds of at least 25 megabits-per-second at no more than $15-per-month, or (ii) download speeds of at least 200 megabits-per-second at no more than $20-per-month,” the ruling noted. The low-income qualifications specified by the law cover about 7 million New Yorkers in 2.7 million households, over one-third of all households in the state. The law allows exceptions to the minimum-speed requirement “where such download speed is not reasonably practicable.”

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#broadband, #new-york, #policy

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Fintech giant Klarna raises $639M at a $45.6B valuation amid ‘massive momentum’ in the US

Just over three months after its last funding round, European fintech giant Klarna is announcing today that it has raised another $639 million at a staggering post-money valuation of $45.6 billion.

Rumors swirled in recent weeks that Klarna had raised more money at a valuation north of $40 billion. But the Swedish buy now, pay later behemoth and upstart bank declined to comment until now.

SoftBank’s Vision Fund 2 led the latest round, which also included participation from existing investors Adit Ventures, Honeycomb Asset Management and WestCap Group. The new valuation represents a 47.3% increase over Klarna’s post-money valuation of $31 billion in early March, when it raised $1 billion, and a 330% increase over its $10.6 billion valuation at the time of its $650 million raise last September. Previous backers include Sequoia Capital, SilverLake, Dragoneer and Ant Group, among others.

The latest financing cements 16-year-old Klarna’s position as the highest-valued private fintech in Europe.

In an exclusive interview with TechCrunch, Klarna CEO and founder Sebastian Siemiatkowski said the company has seen explosive growth in the U.S. and plans to use its new capital in part to continue to grow there and globally.

In particular, over the past year, the fintech has seen “massive momentum” in the country, with more than 18 million American consumers now using Klarna, he said. That’s up from 10 million at the end of last year’s third quarter, and up 118% year over year. Klara is now live with 24 of the top 100 U.S. retailers, which it says is “more than any of its competitors.”

Overall, Klarna is live in 20 markets, has more than 90 million global active users and more than 2 million transactions a day conducted on its platform. The company’s momentum can be seen in its impressive financial results. In the first quarter, Klarna notched $18.1 billion in volume compared to $9.9 billion in the prior year first quarter. In all of 2020, it processed $53 billion in volume. To put that into context; Affirm’s financial report in May projected it would process $8.04 billion in volume for the entire fiscal year of 2021 and Afterpay is projecting $16 billion in volume for its entire fiscal year. 

March 2021 also represented a record month for global shopping volume with $6.9 billion of purchases made through the Klarna platform.

Meanwhile, in 2020, Klara hit over a billion in revenue. While the company was profitable for its first 14 years of life, it has not been profitable the last two, according to Siemiatkowski, and that’s been by design.

“We’ve scaled up so massively in investments in our growth and technology, but running on a loss is very odd for us,” he told TechCrunch. “We will get back to profitability soon.”

Klarna has entered six new markets this year alone, including New Zealand and France, where it just launched this week. It is planning to expand into a number of new markets this year. The company has about 4,000 employees with several hundred in the U.S. in markets such as New York and Los Angeles. It also has offices in Stockholm, London, Manchester, Berlin, Madrid and Amsterdam. 

While Klarna is partnered with over 250,000 retailers around the world (including Macy’s, Ikea, Nike, Saks), its buy now, pay later feature is also available direct to consumers via its shopping app. This means that consumers can use Klarna’s app to pay immediately or later, as well as manage spending and view available balances. They can also do things like initiate refunds, track deliveries and get price-drop notifications.

“Our shopping browser allows users to use Klarna everywhere,” Siemiatkowski said. “No one else is offering that, and are rather limited to integrating with merchants.”

Image Credits: Klarna

Other things the company plans to do with its new capital is focus on acquisitions, particularly acqui-hires, according to Siemiatkowski. According to Crunchbase, the company has made nine known acquisitions over time — most recently picking up Los Gatos-based content creation services provider Toplooks.ai.

“We’re the market leader in this space and we want to find new partners that want to support us in this,” Siemiatkowski told TechCrunch. “That gives us better prerequisites to be successful going forward. Now we have more cash and money available to invest further in the long term.”

Klarna has long been rumored to be going public via a direct listing. Siemiatkowski said that the company in many ways already acts like a public company in that it offers stock to all its employees, and reports financials — giving the impression that the company is not in a hurry to go the public route.

“We report quarterly to national authorities and are a fully regulated bank so do all the things you expect to see from public companies such as risk control and compliance,” he told TechCrunch. “We’re reaching a point for it to be a natural evolution for the company to IPO. But we’re not preparing to IPO anytime soon.”

At the time of its last funding round, Klarna announced its GiveOne initiative to support planet health. With this round, the company is again giving 1% of the equity raised back to the planet.

Naturally, its investors are bullish on what the company is doing and its market position. Yanni Pipilis, managing partner for SoftBank Investment Advisers, said the company’s growth isfounded on a deep understanding of how the purchasing behaviors of consumers are changing,” an evolution SoftBank believes is only accelerating. 

Eric Munson, founder and CIO of Adit Ventures, said his firm believes the “best is yet to come as Klarna multiplies their addressable market through global expansion.” 

For Siemiatkowski, what Klarna is trying to achieve is to compete with the $1 trillion-plus credit card industry.

We really see right now all the signs are there. True competition is coming to this space, this decade,” he said. “This is an opportunity to genuinely disrupt the retail banking space.”

 

#amsterdam, #ant-group, #apps, #bank, #berlin, #bnpl, #buy-now-pay-later, #europe, #finance, #fintech, #france, #funding, #fundings-exits, #ikea, #klarna, #london, #los-angeles, #macys, #madrid, #manchester, #market-leader, #money, #new-york, #new-zealand, #nike, #payments, #recent-funding, #sebastian-siemiatkowski, #sequoia-capital, #softbank-investment-advisers, #softbank-vision-fund-2, #stockholm, #united-states, #venture-capital

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Fashion wholesale marketplace Joor opens China office

Joor, an online marketplace that connects fashion brands and retailers around the world, has opened its first China office in downtown Shanghai as it eyes growth in the region.

The 11-year-old New York-based company works as a virtual showroom for brands, which traditionally would meet with their retail partners in physical venues to showcase the latest collections. With Joor, showrooms become live videos, a feature that has no doubt proven useful during COVID-19.

The company also gives brands a set of data tools to analyze their sales that can inform future productions. For buyers, the benefits are similar — they are able to see which brand or product is trending and make better forecasts.

The expansion into China follows a robust year for Joor in APAC and the opening of its offices in Melbourne and Tokyo. Joor’s wholesale volume ordered by retailers in the region grew 139% year-over-year in 2021, and wholesale volume for APAC-based brands was up 419%, the company said in an announcement.

“The establishment of JOOR Shanghai will allow us to provide frictionless wholesale management to the range of fine brands and retailers across the country,” said Joor’s CEO Kristin Savilia in a statement. “It builds on our existing leadership position in North America and Europe, and we expect continued expansion across the Asia-Pacific region.”

Joor’s marketplace boasts more than 12,500 brands and over 325,000 retailers around the world to date. The company has raised over $35 million in funding, according to its disclosed rounds. Its investors include venture capital firms Battery Ventures and Canaan Partners as well as the 71-year-old Japanese trading house Itochu.

#asia, #asia-pacific, #battery-ventures, #canaan-partners, #china, #ecommerce, #itochu, #joor, #melbourne, #new-york, #online-marketplace, #shanghai, #tokyo

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In-person work is back, and New Stand just raised $40M to help ease the transition

As more people return to the office over the next few months, companies will have to work harder than ever to make sure the environment is comfortable and inviting.

One company that is out to ease the pain of millions of employees leaving the comfy confines of their homes and losing the convenience of conducting meetings in nice tops and sweatpants has just raised new funding to help it advance on its goals.

New York-based New Stand announced it has raised $40 million in a Series B funding round led by Brookfield Property Group, one of the largest commercial real estate owners in the United States. Existing backers Maywic, Fantail Ventures and Raga Partners also participated in the financing, which brings the company’s total raised to just over $56 million since its 2015 inception.  

New Stand is a clever take on the “newsstand” concept. The startup has built a modern-looking smart vending physical product that can be set up in all sorts of different spots –– from office lobbies to floors of companies within an office building to hotels to college campuses to airports. The company’s first location was at the Union Square subway station in New York City. Over time, New Stand has combined that physical presence with an app that is designed to give people convenience in getting basics (think snacks, books and personal care items such as umbrellas or pain relievers, for example) as well as access to “location-based media.”

On top of that, it wants to partner with companies to offer its platform as a way to communicate internal news in a more fun and engaging manner. The company is making a big push in the office vertical with the launch of its New Stand at Work, a workplace amenity.

So it’s not entirely surprising that Brookfield, one of the biggest commercial landlords in the country, would want to back a company that aims to make tenants and their employees happier.

TechCrunch talked with co-founder and CEO Andrew Deitchman about the new raise and plans for the capital. He earnestly describes New Stand as a “day improvement company” that aims to make people’s days easier and more interesting.

“And we do it by making sure we have basic stuff that people need, but also curating things that we think they would like,” he said. “We have little shops or touch points that are like convenience stores, and we combine that with an app that introduces people to content, and also allows them to interact in other ways to accumulate points and rewards.”

“So what New Stand really is building is a media and technology company, using convenience points as a means of accessing people’s lives and making their days a little bit better,” Deitchman added.

New Stand is working to evolve from being primarily a consumer business to an enterprise one.

“We can take care of basic needs but also engage people in a deeper relationship,” Deitchman said. “If you’re an employer who wants to relate to an employee or if you are a landlord who wants to relate better to your tenants, we can help make that happen.”

The company is planning to use its new capital primarily toward expanding into new spaces, office and otherwise. Currently, it’s in about 20 locations. 

It’s also planning to create “new engaging services and formats” and “grow and densify its distribution.”

In line with its investment, Brookfield Properties said it plans to “further activate” its properties in New York and, ultimately beyond, with New Stand’s offering.

Ben Brown, managing partner and head of the U.S. office in Brookfield’s Real Estate group, notes that prior to this investment, Brookfield had already partnered with New Stand at its flagship property, Brookfield Place New York — both as an amenity for its tenants and as an offering in its own office space for employees.

“On both fronts, New Stand has provided an elevated experience with tangible benefits,” he told TechCrunch. “As one of the largest — if not the largest — commercial real estate owners in the country and world, we have a particular interest in investing in enterprises we ourselves use, see the value in, and can help scale over time.”

Brown said the combination of New Stand’s physical assets and media platform has given Brookfield the opportunity to boost engagement with its tenants’ employees as well as its own, something “all landlords are trying to do.”

“Helping the world’s leading companies attract, retain and motivate their workforces has long been job one for us, and that has only intensified today as firms increasingly look for ways to have the office compete with the home,” he added.

#apps, #ben-brown, #brookfield, #brookfield-asset-management, #brookfield-property-group, #funding, #fundings-exits, #media-platform, #new-stand, #new-york, #new-york-city, #real-estate, #recent-funding, #startup, #startups, #tc, #technology, #united-states, #venture-capital

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Zocdoc says ‘programming errors’ exposed access to patients’ data

Zocdoc says it has fixed a bug that allowed current and former staff at doctor’s offices and dental practices to access patient data because their user accounts weren’t properly decommissioned.

The New York-based company revealed the issue in a letter to the California attorney general’s office, which requires companies with more than 500 residents of the state affected by a security lapse or breach to disclose the incident.

Zocdoc, which lets prospective patients book appointments with doctors and dentists, said that it gives each medical or dental practice usernames and passwords for its staff to access appointments made through Zocdoc, but that “programming errors” — essentially a software bug in Zocdoc’s own systems — “allowed some past or current practice staff members to access the provider portal after their usernames and passwords were intended to be removed, deleted or otherwise limited.”

The letter confirmed that patient data stored in Zocdoc’s portal could have been accessed, including a patient’s name, email address, phone number, and the times and dates of their appointments, but also other data that may have been shared with the practice — such as insurance details, Social Security numbers and details of the patient’s medical history.

But Zocdoc said payment card numbers, radiological or diagnostic reports, and medical records were not taken, since it does not store this data.

In an email, Zocdoc spokesperson Sandra Glading said that the company discovered the bug in August 2020, but “due to the complexity of the code, it took a significant amount of investigation to determine which, if any, practices and users were affected and how.” The company said it provided notice to the California’s attorney general’s office “as soon as was practicable.”

Zocdoc said it has “detailed logs that can detect exploitation of any data, including any potential exploitation of this vulnerability,” and that after a review of those logs and other investigative work, “we have no indication, at this time, that any personal information was misused in any way.”

Around 6 million users access Zocdoc a month, the company said.

If this incident sounds vaguely familiar, it’s because this was a near-identical security issue to one Zocdoc reported in 2016. A letter filed at the time cited similar “programming errors” that allowed staff at medical providers to improperly access patient data.

#computer-security, #data-security, #new-york, #password, #security, #zocdoc

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Nigeria’s Mono raises millions to power the internet economy in Africa

In February, Nigerian fintech startup Mono announced its acceptance into Y Combinator and, at the time, it wanted to build the Plaid for Africa. Three months later, the startup has a different mission: to power the internet economy in Africa and has closed $2 million in seed investment towards that goal.

The investment comes nine months after the company raised $500,000 in pre-seed last September and two months after receiving $125,000 from YC. Mono’s total investment moves up to $2.625 million, and investors in this new round include Entrée Capital (one of the investors in Kuda’s seed round), Kuda co-founder and CEO Babs Ogundeyi; Gbenga Oyebode, partner at TCVP; and Eric Idiahi, co-founder and partner at Verod Capital. New York but Africa-based VC Lateral Capital also invested after taking part in Mono’s pre-seed.

In a region where more than half of the population is either unbanked or underbanked, open finance players like Mono are trying to improve financial inclusion and connectivity on the continent. Open finance thrives on the notion that access to a financial ecosystem via open APIs and new routes to move money, access financial information and make borrowing decisions reduces the barriers and costs of entry for the underbanked

Launched in August 2020, the company streamlines various financial data in a single API for companies and third-party developers. Mono allows them to retrieve information like account statements, real-time balance, historical transactions, income, expense and account owner identification with users’ consent.

When we covered the company early in the year, it had already secured partnerships with more than 16 financial institutions in Nigeria. In addition to having a little over a hundred businesses like Carbon, Aella Credit, Credpal, Renmoney, Autochek, and Inflow Finance access customers bank account for bank statements, identity data, and balances, Mono has also connected over 100,000 financial accounts for its partners and analysed over 66 million financial transactions so far.

Mono has done impressively well in a short period. While it appears to have figured out product-market fit, CEO Abdul Hassan is quick to remind everyone that the burgeoning API fintech space is just an entry point to its pursuit of being a data company — a case he also made in February.

“The way I see it, our market is not that big. Compare the payments market now with 2016, when Paystack and Flutterwave just started. The payments space in 2016 was very small and the number of people using cards online was very small,” said Hassan, who co-founded the company with Prakhar Singh. “It’s the same thing for us right now. That’s why our focus isn’t only on open banking but data. We’re thinking of how we can power the internet economy with data that isn’t necessarily financial data. For instance, think about open data for telcos. Imagine where you can move your data from one telco to another instead of getting a new SIM card and making a fresh registration. That’s where I see the market going, at least for us at Mono.” 

Abdul Hassan (CEO) and Prakhar Singh (CTO)

He adds that the company is taking an approach of building a product one step at a time until it can fully diversify from financial data offerings, including connecting with payment gateways (Paystack and Flutterwave) and other fintechs like wealth management startups Piggyvest and Cowrywise.

“When you’re able to connect to all the systems, a lot of use cases will come up. The first step is how can we connect to all available data and open it up for businesses and developers,” he continued.

Therefore, Mono will use the funding to reinforce its current financial and identity data offerings and launch new products for diverse business verticals. Also, a long-overdue pan-African expansion to Ghana and Kenya is top priority. The last time I spoke with Hassan, the end of Q1 looked feasible to get into at least one of the two markets but it didn’t turn out that way. But the wait seems to be over as the company said it’d be going live in Ghana next month with a handful of existing customers from Nigeria and new ones in Ghana. Some of these partners include five banks (GTBank, Fidelity Bank and three unannounced banks) and the mobile money service arm of MTN Ghana.

“Our expansion is mostly inspired by our customers looking to expand to other markets, same with some of our products. We work with our customers to give them the right tools to build new experiences for their customers,” Hassan stated

Mono

Image Credits: Mono

Mono is one of the three API fintech companies to have raised a seed investment this year. Last month, another Nigerian fintech Okra closed $3.5 million while Stitch, a South African API fintech, launched with $4 million in February. Back to back investments like this show that investors are incredibly optimistic about the market. Avil Eyal, managing partner and co-founder of Entrée Capital, one of such investors, had this to say.

“We are very excited to be working with Abdul, Prakhar and the entire Mono team as they continue to build out the rails for African banking to enable the delivery of financial services to hundreds of millions of people across the African continent.”

#africa, #banking, #finance, #financial-services, #financial-technology, #flutterwave, #funding, #internet-economy, #money, #mono, #new-york, #open-banking, #startups, #tc

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Ohio’s 53% vaccination surge tied to $1M lottery; NY and MD announce lotteries

Maryland Governor Larry Hogan stands next to a person dressed as a lottery ball during a press conference on May 20 announcing the state's VaxCash promotion.

Enlarge / Maryland Governor Larry Hogan stands next to a person dressed as a lottery ball during a press conference on May 20 announcing the state’s VaxCash promotion. (credit: Patrick Siebert)

The governors of New York and Maryland on Thursday each announced big cash lotteries to entice their residents to get vaccinated against COVID-19. The announcements came as westward-neighbor Ohio celebrated the success of its “Vax-a-Million” lottery campaign, which helped boost week-to-week vaccination numbers 53 percent.

The lotteries appear to be part of a growing trend of states and officials offering cash prizes or other incentives to combat slumping vaccination rates. The country’s seven-day average for daily vaccinations has dropped to around 1.8 million, down from a peak of nearly 3.4 million in mid-April.

In a White House COVID-19 press briefing Friday, Senior White House Advisor Andy Slavitt said that, based on the data the administration has seen, the lotteries “appear to be working.”

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#covid-19, #incentives, #infectious-disease, #lottery, #maryland, #new-york, #ohio, #pandemic, #public-health, #science, #vaccination

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Privacy.com rebrands to Lithic, raises $43M for virtual payment cards

When Privacy.com was founded in 2014, the company’s focus was to let anyone generate virtual and disposable payment card numbers for free.

The goal was to allow those users to keep users’ actual credit card numbers safe while allowing the option to cut off companies from their bank accounts. In an age of near-constant data breaches and credit card skimmers targeting unsuspecting websites, Privacy.com has made it harder for hackers to get anyone’s real credit card details.

The concept has appealed to many. At the time of its $10.2 million Series A last July, Privacy.com said it had issued 5 million virtual card numbers. Today, that number has more than doubled, to over 10 million, according to CEO and co-founder Bo Jiang.

“We set out to create the safest and fastest way to pay online. Our mobile app and web browser extension lets you generate a virtual card for every purchase you want to make online,” Jiang explained. “That can be especially convenient for things like managing subscriptions or making sure your kid doesn’t spend $1,000 on Fortnite skins.”

Over the years, the New York-based company realized the value in the technology it had developed to issue the virtual and disposable payment cards. So after beta testing for a year, Privacy.com launched its new Card Issuing API in 2020 to give corporate customers the ability to create payment cards for their customers, optimize back-office operations or simplify disbursements.

The early growth of the new card issuing platform, dubbed Lithic, has prompted the startup to shift its business strategy — and rebrand.

In the process of building out its consumer product, Privacy.com ended up building a lot of infrastructure around programmatically creating cards.

“If you think about the anatomy of credit/debit card transactions there’s a number of modern processors such as Stripe, Adyen, Braintree and Checkout,” Jiang told TechCrunch. “On the flip side, we’re focused on card creation and issuing, and the APIs for actually creating cards. That side has lagged the card acquiring side by five to seven years…We’ve built a lot to support card creation for ourselves, and realized tons of other developers need this to create cards.”

As part of its new strategy, Privacy.com announced today that it has changed its name to Lithic and raised $43 million in Series B funding led by Bessemer Venture Partners to double down on its card issuing platform and new B2B focus. Index Ventures, Tusk Venture Partners, Rainfall Ventures, Teamworthy Ventures and Walkabout Ventures also participated in the financing, which brings Lithic’s total raised to date to $61 million.

Image Credits: Lithic CEO and co-founder Bo Jiang / Lithic

Privacy.com, the company’s consumer product, will continue to operate as a separate brand powered by the Lithic card issuing platform.

Put simply, Lithic was designed to make it simple for developers to programmatically create virtual and physical payment cards. Jiang is encouraged by the platform’s early success, noting that enterprise issuing volumes tripled in the last four months. It competes with the likes of larger fintech players such as Marqeta and Galileo, although Jiang notes that Lithic’s target customer is more of an early-stage startup than a large, established company.

“Marqeta, for example, goes after enterprise and is less focused on developers and making their infrastructure accessible. And, Galileo too,” he told TechCrunch. “When you compare us to them, because we’re a younger company, we have the benefit of building a much more modern infrastructure. That allows us to bring costs down but also to be more nimble to the needs of startups.”

The benefits touted by Lithic’s “self-serve” platform include being able to “instantly” issue a card and “accessible building blocks,” or what the company describes as focused functionality so developers can include only the features they want.

Another benefit? An opportunity for a new revenue stream. Developers earn back a percentage of interchange revenue generated by the merchant, according to Lithic. “What we’ve noticed is a lot of folks have really big ambitions to build more of a stack in-house. We offer a path for folks by bringing more of a payments piece of the world that they can build for scale,” he said. “As a result of all these things, we end up not competing head to head with Marqeta, for example, on a ton of deals.”

The company charges a fee per card for Lithic API customers (it’s free for Privacy.com). And it makes money on interchange fees with both offerings.

For Charles Birnbaum, partner at Bessemer Venture Partners, the shift from B2C to B2B is a smart strategy. He believes Lithic is building a critical piece of the embedded fintech and payments infrastructure stack.

“We have been big fans of the Privacy.com team and product since the beginning, but once we started to see such strong organic growth across the fintech landscape for their new card processing developer platform the past year, we just had to find a way to partner with the team for this next phase of growth,” he said.

Index Ventures partner Mark Goldberg notes that as every business becomes a fintech, there’s been an “explosion” in demand for online payments and card issuance.

“Lithic has stood out to us as being the developer-friendly solution here — it’s fast, powerful and insanely easy to get up-and-running,” he said. “We’ve heard from customers that Lithic can power a launch in the same amount of time it takes an incumbent issuer to return a phone call.”

Lithic plans to use its new capital to expand the tools and tech it offers to developers to issue and manage virtual cards as well as enhance its Privacy.com offering.

#adyen, #api, #bessemer-venture-partners, #charles-birnbaum, #credit-card, #debit-card, #finance, #financial-services, #fintech, #funding, #index-ventures, #mark-goldberg, #marqeta, #money, #new-york, #online-payments, #payment-card, #payments, #payments-infrastructure, #privacy-com, #recent-funding, #smart-card, #startup, #startups, #stripe, #tc, #teamworthy-ventures, #tusk-venture-partners

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White Star Capital launches new $50M crypto/blockchain fund backed by Bpifrance, Ubisoft

White Star Capital, better known as a VC which, in its time, has backed the likes of Digg, launchrock, Meero, Summly, and Tier, among others, is moving into the hot world of crypto and blockchain with a new $50M Digital Asset Fund.

The special-vehicle fund will specialize in investing in crypto-networks and blockchain-enabled businesses and was previously going to be $30 million before raising more backing. Both Bpifrance and Ubisoft are among those institutions backing the new fund.

The fund will be run by New York-based General Partner Sep Alavi and supported by Principals Thomas Klocanas in New York and Sanjay Zimmerman in Toronto. The will deploy between $500,000 and $3.0 million in initial investments into 15-20 companies with a focus on North America and Europe.

Alavi said: “We are hyper-focused on this space and we expect to see further innovative use cases such as crypto credit, DeFi, NFTs, metaverses and more manifesting at an accelerated pace… With this fund, We are actively investing in crypto protocols, infrastructure, privacy, financial, gaming, and social use cases.”

The fund has already made six investments including; dfuse, Multis, Paraswap, Rally, Safello, a European crypto brokerage that went public on the Nasdaq First North stock exchange on May 12, and Ledn, a global digital asset savings, and credit platform.

Yoann Caujolle, managing director of Bpifrance said: “It’s critical that emerging crypto and blockchain-enabled startups receive investment from firms and professionals who have the experience and knowledge to help drive their businesses forward,” said “We’re pleased to partner with the Digital Asset Fund team for bringing their support and vision into the French and European blockchain and digital asset ecosystem.”

Over a call, Alavi told me: “White Star is investing across three funds, obviously our fund one, fund two, and in this new specialized Digital Asset Fund. Historically we’ve invested in enterprise and consumer businesses, we’ve not done any, any blockchain, but for two years ago we’ve been looking at this sector. And we believe that this merits its own dedicated vehicle. I’ve been personally been investing in blockchain the blockchain ecosystem since 2015 and bring your five-plus years of domain expertise and then I was able to build a team around this new fund.”

“We are, we’re looking at the three main verticals in this sector. The protocol layer, the infrastructure layer, and the application layer. That’s the kind of high-level thesis. The protocol layer is where we invest in tokens, because it’s important to mention that the fund will also hold tokens as investments as well as equity. On top of that, we’re pretty much agnostic and opportunistic. We see great use cases in decentralized finance. We see some great use cases in the NFT space and have made investments there as well. As long as we’re true to those three verticals that I mentioned, we will capture great value there.”

#articles, #blockchain, #bpifrance, #cryptocurrencies, #decentralized-finance, #europe, #finance, #new-york, #north-america, #partner, #tc, #technology, #toronto, #ubisoft, #white-star-capital

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Advanced tax strategies for startup founders

As an entrepreneur, you started your business to create value, both in what you deliver to your customers and what you build for yourself. You have a lot going on, but if building personal wealth matters to you, the assets you’re creating deserve your attention.

You can implement numerous advanced planning strategies to minimize capital gains tax, reduce future estate tax and increase asset protection from creditors and lawsuits. Capital gains tax can reduce your gains by up to 35%, and estate taxes can cost up to 50% on assets you leave to your heirs. Careful planning can minimize your exposure and actually save you millions.

Smart founders and early employees should closely examine their equity ownership, even in the early stages of their company’s life cycle. Different strategies should be used at different times and for different reasons. The following are a few key considerations when determining what, if any, advanced strategies you might consider:

  1. Your company’s life cycle — early, mid or late stage.
  2. The value of your shares — what they are worth now, what you expect them to be worth in the future and when.
  3. Your own circumstances and goals — what you need now, and what you may need in the future.

Some additional items to consider include issues related to qualified small business stock (QSBS), gift and estate taxes, state and local income taxes, liquidity, asset protection, and whether you and your family will retain control and manage the assets over time.

Smart founders and early employees should closely examine their equity ownership, even in the early stages of their company’s life cycle.

Here are some advanced equity planning strategies that you can implement at different stages of your company life cycle to reduce tax and optimize wealth for you and your family.

Irrevocable nongrantor trust

QSBS allows you to exclude tax on $10 million of capital gains (tax of up to 35%) upon an exit/sale. This is a benefit every individual and some trusts have. There is significant opportunity to multiply the QSBS tax exclusion well beyond $10 million.

The founder can gift QSBS eligible stock to an irrevocable nongrantor trust, let’s say for the benefit of a child, so that the trust will qualify for its own $10 million exclusion. The founder owning the shares would be the grantor in this case. Typically, these trusts are set up for children or unborn children. It is important to note that the founder/grantor will have to gift the shares to accomplish this, because gifted shares will retain the QSBS eligibility. If the shares are sold into the trust, the shares lose QSBS status.

QSBS tax strategy

Image Credits: Peyton Carr

In addition to the savings on federal taxes, founders may also save on state taxes. State tax can be avoided if the trust is structured properly and set up in a tax-exempt state like Delaware or Nevada. Otherwise, even if the trust is subject to state tax, some states, like New York, conform and follow the federal tax treatment of the QSBS rules, while others, like California, do not. For example, if you are a New York state resident, you will also avoid the 8.82% state tax, which amounts to another $2.6 million in tax savings if applied to the example above.

This brings the total tax savings to almost $10 million, which is material in the context of a $40 million gain. Notably, California does not conform, but California residents can still capture the state tax savings if their trust is structured properly and in a state like Delaware or Nevada.

Currently, each person has a limited lifetime gift tax exemption, and any gifted amount beyond this will generate up to a 40% gift tax that has to be paid. Because of this, there is a trade-off between gifting the shares early while the company valuation is low and using less of your gift tax exemption versus gifting the shares later and using more of the lifetime gift exemption.

The reason to wait is that it takes time, energy and money to set up these trusts, so ideally, you are using your lifetime gift exemption and trust creation costs to capture a benefit that will be realized. However, not every company has a successful exit, so it is sometimes better to wait until there is a certain degree of confidence that the benefit will be realized.

Parent-seeded trust

One way for the founder to plan for future generations while minimizing estate taxes and high state taxes is through a parent-seeded trust. This trust is created by the founder’s parents, with the founder as the beneficiary. Then the founder can sell the shares to this trust — it doesn’t involve the use of any lifetime gift exemption and eliminates any gift tax, but it also disqualifies the ability to claim QSBS.

The benefit is that all the future appreciation of the asset is transferred out of the founder’s and the parent’s estate and is not subject to potential estate taxes in the future. The trust can be located in a tax-exempt state such as Delaware or Nevada to also eliminate home state-level taxes. This can translate up to 10% in state-level tax savings. The trustee, an individual selected by the founder, can make distributions to the founder as a beneficiary if desired.

Further, this trust can be used for the benefit of multiple generations. Distributions can be made at the discretion of the trustee, and this skips the estate tax liability as assets are passed from generation to generation.

Grantor retained annuity trust (GRAT)

This strategy enables the founder to minimize their estate tax exposure by transferring wealth outside of their estate, specifically without using any lifetime gift exemption or being subject to gift tax. It’s particularly helpful when an individual has used up all their lifetime gift tax exemption. This is a powerful strategy for very large “unicorn” positions to reduce a founder’s future gift/estate tax exposure.

For the GRAT, the founder (grantor) transfers assets into the GRAT and gets back a stream of annuity payments. The IRS 7520 rate, currently very low, is a factor in calculating these annuity payments. If the assets transferred into the trust grow faster than the IRS 7520 rate, there will be an excess remainder amount in GRAT after all the annuity payments are paid back to the founder (grantor).

This remainder amount will be excluded from the founder’s estate and can transfer to beneficiaries or remain in the trust estate tax-free. Over time, this remainder amount can be multiples of the initial contributed value. If you have company stock that you expect will pop in value, it can be very beneficial to transfer those shares into a GRAT and have the pop occur inside the trust.

This way, you can transfer all the upside gift and estate tax-free out of your estate and to your beneficiaries. Additionally, because this trust is structured as a grantor trust, the founder can pay the taxes incurred by the trust, making the strategy even more powerful.

One thing to note is that the grantor must survive the GRAT’s term for the strategy to work. If the grantor dies before the end of the term, the strategy unravels and some or all the assets remain in his estate as if the strategy never existed.

Intentionally defective grantor trust (IDGT)

This is similar to the GRAT in that it also enables the founder to minimize their estate tax exposure by transferring wealth outside of their estate, but has some key differences. The grantor must “seed” the trust by gifting 10% of the asset value intended to be transferred, so this approach requires the use of some lifetime gift exemption or gift tax.

The remaining 90% of the value to be transferred is sold to the trust in exchange for a promissory note. This sale is not taxable for income tax or QSBS purposes. The main benefits are that instead of receiving annuity payments back, which requires larger payments, the grantor transfers assets into the trust and can receive an interest-only note. The payments received are far lower because it is interest-only (rather than an annuity).

IDGT Estate tax savings

Image Credits: Peyton Carr

Another key distinction is that the IDGT strategy has more flexibility than the GRAT and can be generation-skipping.

If the goal is to avoid generation-skipping transfer tax (GSTT), the IDGT is superior to the GRAT, because assets are measured for GSTT purposes when they are contributed to the trust prior to appreciation rather than being measured at the end of the term for a GRAT after the assets have appreciated.

The bottom line

Depending on a founder’s situation and goals, we may use some combination of the above strategies or others altogether. Many of these strategies are most effective when planning in advance; waiting until after the fact will limit the benefits you can extract.

When considering strategies for protecting wealth and minimizing taxes as it relates to your company stock, there’s a lot to take into account — the above is only a summary. We recommend you seek proper counsel and choose wealth transfer and tax savings strategies based on your unique situation and individual appetite for complexity.

#california, #capital-gains-tax, #column, #delaware, #estate-tax, #nevada, #new-york, #startups, #tax, #tax-laws, #tc

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Worksome pulls $13M into its high skill freelancer talent platform

More money for the now very buzzy business of reshaping how people work: Worksome is announcing it recently closed a $13 million Series A funding round for its “freelance talent platform” — after racking up 10x growth in revenue since January 2020, just before the COVID-19 pandemic sparked a remote working boom.

The 2017 founded startup, which has a couple of ex-Googlers in its leadership team, has built a platform to connect freelancers looking for professional roles with employers needing tools to find and manage freelancer talent.

It says it’s seeing traction with large enterprise customers that have traditionally used Managed Service Providers (MSPs) to manage and pay external workforces — and views employment agency giants like Randstad, Adecco and Manpower as ripe targets for disruption.

“Most multinational enterprises manage flexible workers using legacy MSPs,” says CEO and co-founder Morten Petersen (one of the Xooglers). “These largely analogue businesses manage complex compliance and processes around hiring and managing freelance workforces with handheld processes and outdated technology that is not built for managing fluid workforces. Worksome tackles this industry head on with a better, faster and simpler solution to manage large freelancer and contractor workforces.”

Worksome focuses on helping medium/large companies — who are working with at least 20+ freelancers at a time — fill vacancies within teams rather than helping companies outsource projects, per Petersen, who suggests the latter is the focus for the majority of freelancer platforms.

“Worksome helps [companies] onboard people who will provide necessary skills and will be integral to longer-term business operations. It makes matches between companies and skilled freelancers, which the businesses go on to trust, form relationships with and come back to time and time again,” he goes on.

“When companies hire dozens or hundreds of freelancers at one time, processes can get very complicated,” he adds, arguing that on compliance and payments Worksome “takes on a much greater responsibility than other freelancing platforms to make big hires easier”.

The startup also says it’s concerned with looking out for (and looking after) its freelancer talent pool — saying it wants to create “a world of meaningful work” on its platform, and ensure freelancers are paid fairly and competitively. (And also that they are paid faster than they otherwise might be, given it takes care of their payroll so they don’t have to chase payments from employers.)

The business started life in Copenhagen — and its Series A has a distinctly Nordic flavor, with investment coming from the Danish business angel and investor on the local version of the Dragons’ Den TV program Løvens Hule; the former Minister for Higher Education and Science, Tommy Ahlers; and family home manufacturer Lind & Risør.

It had raised just under $6M prior to thus round, per Crunchbase, and also counts some (unnamed) Google executives among its earlier investors.

Freelancer platforms (and marketplaces) aren’t new, of course. There are also an increasing number of players in this space — buoyed by a new flush of VC dollars chasing the ‘future of work’, whatever hybrid home-office flexible shape that might take. So Worksome is by no means alone in offering tech tools to streamline the interface between freelancers and businesses.

A few others that spring to mind include Lystable (now Kalo), Malt, Fiverr — or, for techie job matching specifically, the likes of HackerRank — plus, on the blue collar work side, Jobandtalent. There’s also a growing number of startups focusing on helping freelancer teams specifically (e.g. Collective), so there’s a trend towards increasing specialism.

Worksome says it differentiates vs other players (legacy and startups) by combining services like tax compliance, background and ID checks and handling payroll and other admin with an AI powered platform that matches talent to projects.

Although it’s not the only startup offering to do the back-office admin/payroll piece, either, nor the only one using AI to match skilled professionals to projects. But it claims it’s going further than rival ‘freelancer-as-a-service’ platforms — saying it wants to “address the entire value chain” (aka: “everything from the hiring of freelance talent to onboarding and payment”).

Worksome has 550 active clients (i.e. employers in the market for freelancer talent) at this stage; and has accepted 30,000 freelancers into its marketplace so far.

Its current talent pool can take on work across 12 categories, and collectively offers more than 39,000 unique skills, per Petersen.

The biggest categories of freelancer talent on the platform are in Software and IT; Design and Creative Work; Finance and Management Consulting; plus “a long tail of niche skills” within engineering and pharmaceuticals.

While its largest customers are found in the creative industries, tech and IT, pharma and consumer goods. And its biggest markets are the U.K. and U.S.

“We are currently trailing at +20,000 yearly placements,” says Petersen, adding: “The average yearly spend per client is $300,000.”

Worksome says the Series A funding will go on stoking growth by investing in marketing. It also plans to spend on product dev and on building out its team globally (it also has offices in London and New York).

Over the past 12 months the startup doubled the size of its team to 50 — and wants to do so again within 12 months so it can ramp up its enterprise client base in the U.S., U.K. and euro-zone.

“Yes, there are a lot of freelancer platforms out there but a lot of these don’t appreciate that hiring is only the tip of the iceberg when it comes to reducing the friction in working with freelancers,” argues Petersen. “Of the time that goes into hiring, managing and paying freelancers, 75% is currently spent on admin such as timesheet approvals, invoicing and compliance checks, leaving only a tiny fraction of time to actually finding talent.”

Worksome woos employers with a “one-click-hire” offer — touting its ability to find and hire freelancers “within seconds”.

If hiring a stranger in seconds sounds ill-advised, Worksome greases this external employment transaction by taking care of vetting the freelancers itself (including carrying out background checks; and using proprietary technology to asses freelancers’ skills and suitability for its marketplace).

“We have a two-step vetting process to ensure that we only allow the best freelance talent onto the Worksome platform,” Petersen tells TechCrunch. “For step one, an inhouse-built robot assesses our freelancer applicants. It analyses their skillset, social media profiles, profile completeness and hourly or daily rate, as well as their CV and work history, to decide whether each person is a good fit for Worksome.

“For step two, our team of talent specialists manually review and decline or approve the freelancers that pass through step one with a score of 85% or more. We have just approved our 30,000th freelancer and will be able to both scale and improve our vetting procedure as we grow.”

A majority of freelancer applicants fail Worksome’s proprietary vetting processes. This is clear because it says it has received 80,000 applicants so far — but only approved 30,000.

That raises interesting questions about how it’s making decisions on who is (and isn’t) an ‘appropriate fit’ for its talent marketplace.

It says its candidate assessing “robot” looks at “whether freelancers can demonstrate the skillset, matching work history, industry experience and profile depth” deemed necessary to meet its quality criteria — giving the example that it would not accept a freelancer who says they can lead complex IT infrastructure projects if they do not have evidence of relevant work, education and skills.

On the AI freelancer-to-project matching side, Worksome says its technology aims to match freelancers “who have the highest likelihood of completing a job with high satisfaction, based on their work-history, and performance and skills used on previous jobs”.

“This creates a feedback loop that… ensure that both clients and freelancers are matched with great people and great work,” is its circular suggestion when we ask about this.

But it also emphasizes that its AI is not making hiring decisions on its own — and is only ever supporting humans in making a choice. (An interesting caveat since existing EU data protection rules, under Article 22 of the GDPR, provide for a right for individuals to object to automated decision making if significant decisions are being taken without meaningful human interaction.) 

Using automation technologies (like AI) to make assessments that determine whether a person gains access to employment opportunities or doesn’t can certainly risk scaled discrimination. So the devil really is in the detail of how these algorithmic assessments are done.

That’s why such uses of technology are set to face close regulatory scrutiny in the European Union — under incoming rules on ‘high risk’ users of artificial intelligence — including the use of AI to match candidates to jobs.

The EU’s current legislative proposals in this area specifically categorize “employment, workers management and access to self-employment” as a high risk use of AI, meaning applications like Worksome are likely to face some of the highest levels of regulatory supervision in the future.

Nonetheless, Worksome is bullish when we ask about the risks associated with using AI as an intermediary for employment opportunities.

“We utilise fairly advanced matching algorithms to very effectively shortlist candidates for a role based solely on objective criteria, rinsed from human bias,” claims Petersen. “Our algorithms don’t take into account gender, ethnicity, name of educational institutions or other aspects that are usually connected to human bias.”

“AI has immense potential in solving major industry challenges such as recruitment bias, low worker mobility and low access to digital skills among small to medium sized businesses. We are firm believers that technology should be utilized to remove human bias’ from any hiring process,” he goes on, adding: “Our tech was built to this very purpose from the beginning, and the new proposed legislation has the potential to serve as a validator for the hard work we’ve put into this.

“The obvious potential downside would be if new legislation would limit innovation by making it harder for startups to experiment with new technologies. As always, legislation like this will impact the Davids more than the Goliaths, even though the intentions may have been the opposite.”

Zooming back out to consider the pandemic-fuelled remote working boom, Worksome confirms that most of the projects for which it supplied freelancers last year were conducted remotely.

“We are currently seeing a slow shift back towards a combination of remote and onsite work and expect this combination to stick amongst most of our clients,” Petersen goes on. “Whenever we are in uncertain economic times, we see a rise in the number of freelancers that companies are using. However, this trend is dwarfed by a much larger overall trend towards flexible work, which drives the real shift in the market. This shift has been accelerated by COVID-19 but has been underway for many years.

“While remote work has unlocked an enormous potential for accessing talent everywhere, 70% of the executives expect to use more temporary workers and contractors onsite than they did before COVID-19, according to a recent McKinsey study. This shows that businesses really value the flexibility in using an on-demand workforce of highly skilled specialists that can interact directly with their own teams.”

Asked whether it’s expecting growth in freelancing to sustain even after we (hopefully) move beyond the pandemic — including if there’s a return to physical offices — Petersen suggests the underlying trend is for businesses to need increased flexibility, regardless of the exact blend of full-time and freelancer staff. So platforms like Worksome are confidently poised to keep growing.

“When you ask business leaders, 90% believe that shifting their talent model to a blend of full-time and freelancers can give a future competitive advantage (Source: BCG),” he says. “We see two major trends driving this sentiment; access to talent, and building an agile and flexible organization. This has become all the more true during the pandemic — a high degree of flexibility is allowing organisations to better navigate both the initial phase of the pandemic as well the current pick up of business activity.

“With the amount of change that we’re currently seeing in the world, and with businesses are constantly re-inventing themselves, the access to highly skilled and flexible talent is absolutely essential — now, in the next 5 years, and beyond.”

#adecco, #artificial-intelligence, #copenhagen, #covid-19, #employment, #enterprise, #europe, #european-union, #fiverr, #flexible-work, #freelance-marketplace, #freelancer, #fundings-exits, #kalo, #labor, #london, #new-york, #personnel, #remote-work, #saas, #telecommuting, #united-kingdom, #united-states, #upwork, #work, #worksome

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StudySmarter books $15M for a global ‘personalized learning’ push

More money for the edtech boom: Munich-based StudySmarter, which makes digital tools to help learners of all ages swat up — styling itself as a ‘lifelong learning platform’ — has closed a $15 million Series A.

The round is led by sector-focused VC fund, Owl Ventures. New York-based Left Lane Capital is co-investing, along with Lars Fjeldsoe-Nielsen (ex WhatsApp, Uber and Dropbox; now GP at Balderton Capital), and existing early stage investor Dieter von Holtzbrinck Ventures (aka DvH Ventures).

The platform, which launched back in 2018 and has amassed a user-base of 1.5M+ learners — with a 50/50 split between higher education students and K12 learners, and with main markets so far in German speaking DACH countries in Europe — uses AI technologies like natural language processing (NLP) to automate the creation of text-based interactive custom courses and track learners’ progress (including by creating a personalized study plan that adjusts as they go along).

StudySmarter claims its data shows that 94% of learners achieve better grades as a result of using its platform.

While NLP is generally most advanced for the English language, the startup says it’s confident its NLP models can be transferred to new languages without requiring new training data — claiming its tech is “scalable in any language”. (Although it concedes its algorithms increase in accuracy for a given language as users upload more content so the software itself is undertaking a learning journey and will necessarily be at a different point on the learning curve depending on the source content.)

Here’s how StudySmarter works: Users input their study goals to get recommendations for relevant revision content that’s been made available to the platform’s community.

They can also contribute content themselves to create custom courses by uploading assets like lecture slides and revisions notes. StudySmarter’s platform can then turn this source material into interactive study aids — like flashcards and revision exercises — and the startup touts the convenience of the approach, saying it enables students to manage all their revision in one place (rather than wrangling multiple learning apps).

In short, it’s both a (revision) content marketplace and a productivity platform for learning — as it helps users create their own study (or lesson) plans, and offers them handy tools like a digital magic marker that automatically turns highlighted text into flashcards, while the resulting “smart” flashcards also apply the principle of spaced repetition learning to help make the studied content stick.

Users can choose to share content they create with other learners in the StudySmarter community (or not). The startup says a quarter (25%) of its users are creators, and that 80% of the content they create is shared. Overall, it says its platform provides access to more than 25 million pieces of shared content currently.

It’s topic agnostic, as you’d expect, so course content covers a diverse range of subjects. We’re told the most popular courses to study are: Economics, Medicine, Law, Computer Science, Engineering and school subjects such as Maths, Physics, Biology and English.

Regardless of how learners use it, the platform uses AI to nudge users towards relevant revision content and topics (and study groups) to keep extending and supporting their learning process — making adaptive, ongoing recommendations for other stuff they should check out.

The ease of creating learning materials on the StudySmarter platform results in a democratization of high-quality educational content, driven by learners themselves,” is the claim.   

As well as user generated content (UGC), StudySmarter’s platform hosts content created by verified educationists and publishers — and there’s an option for users to search only for such verified content, i.e. if they don’t want to dip into the UGC pool.

“In general, there is no single workflow,” says co-founder and CMO Maurice Khudhir. “We created StudySmarter to adapt to different learner types. Some are very active learners and prefer to create content, some only want to search and consume content from other peers/publishers.”

“Our platform focuses on the art of learning itself, rather than being bound by topics, sectors, industries or content types. This means that anyone, regardless of what they’re learning, can use StudySmarter to improve how they learn. We started in higher education as it was the closest, most relevant market to where we were at the time of launch. We more recently expanded to K12, and are currently running our first corporate learning pilot.”

Gamification is a key strategy to encourage engagement and advance learning, with the platform dishing out encouraging words and emoji, plus rewards like badges and achievements based on the individual’s progress. Think of it as akin to Duolingo-style microlearning — but where users get to choose the subject (not just the language) and can feed in source material if they wish.

StudySmarter says it’s taken inspiration from tech darlings like Netflix and Tinder — baking in recommendation algorithms to surface relevant study content for users -(a la Netflix’s ‘watch next’ suggestions), and deploying a Tinder-swipe-style learning UI on mobile so that its “smart flashcards” can to adapt to users’ responses.

“Firstly, we individualise the learning experience by recommending appropriate content to the learner, depending on their demographics, demands and study goals,” explains Khudhir. “For instance, when an economics student uploads a PDF on the topic of marginal cost, StudySmarter will recommend several user-generated courses that cover marginal cost and/or several flashcards on marginal cost as well as e-books on StudySmarter that cover this topic.

“In this way, StudySmarter is similar to Netflix — Netflix will suggest similar TV shows and films depending on what you’ve already watched and StudySmarter will recommend different learning materials depending on the types of content and topics you interact with.

“As well, depending on how the student likes to learn, we also individualise the learning journey through things such as the smart flashcard learning algorithm. This is based on spaced repetition. For example, if a student is testing themselves on microeconomics, the flashcard set will go through different questions and responses and the student can swipe through the flashcards, in a similar way to Tinder. The flashcards’ sequence will adapt after every response.

“The notifications are also personalised — so they will remind the student to learn at particular points in the day, adapted to how the student uses the app.”

There’s also a scan functionality which uses OCR (optical character recognition) technology that lets users upload (paper-based) notes, handouts or books — and a sketch feature lets them carry out further edits, if they want to add more notes and scribbles.

Once ingested into the platform, this scanned (paper-based) content can of course also be used to create digital learning materials — extending the utility of the source material by plugging it into the platform’s creation and tracking capabilities.

“A significant cohort of users access StudySmarter on tablets, and they find this learning flow very useful, especially for our school-age pupils,” he adds.

StudySmarter can also offer educators and publishers detailed learning analytics, per Khudhir — who says its overarching goal is to establish itself as “the leading marketplace for educational content”, i.e. by using the information it gleans on users’ learning goals to directly recommend (relevant) professional content — “making it an extremely effective distribution platform”, as he puts it.

In addition to students, he says the platform is being used by teachers, professors, trainers, and corporate members — ie. to create content to share with their own students, team members, course participants etc, or just to publish publicly. And he notes a bit of a usage spike from teachers in March last year as the pandemic shut down schools in Europe. 

StudySmarter co-founders, back from left to right: Christian Felgenhauer (co-founder & CEO), Till Söhlemann (co-founder); front: Maurice Khudir (co-founder & CMO), Simon Hohentanner (COO & co-founder). Image credits: StudySmarter

What about copyright? Khudir says they follow a three-layered system to minimize infringement risks — firstly by not letting users share or export any professional content hosted on the platform.

Uploaded documents like lecture notes and users’ own comments can be shared within one university course/class in a private learning group. But only UGC (like flashcards, summaries and exercises) can be shared freely with the entire StudySmarter community, if the user wants to.

“It’s important to note that no content is shared without the author’s permission,” he notes. “We also have a contact email for people to raise potential copyright infringements. Thanks to this system, we can say that we never had a single copyright issue with universities, professors or publishers.”

Another potential pitfall around UGC is quality. And, clearly, no student wants to waste their time revising from poor (or just plain wrong) revision notes.

StudySmarter says it’s limiting that risk by tracking how learners engage with shared content on the platform — in order to create quality scores for UGC — monitoring factors like how often such stuff is used for learning; how often the students who study from it answer questions correctly; and by looking the average learning time for a particular flashcard or summary, etc.

“We combine this with an active feedback system from the students to assign each piece of content a dynamic quality score. The higher the score is, the more often it is shown to new users. If the score falls below a certain threshold, the content is removed and is only visible to the original creator,” he goes on, adding: “We track the quality of shared content on the creator level so users who consistently share low-quality content can be banned from sharing more content on the platform.”

There are unlikely to be quality issues with verified educator/publisher content. But since it’s professional content, StudySmarter can’t expect to get it purely for free — so it says it “mostly” follows revenue-sharing agreements with these types of contributors.

It is also sharing data on learning trends and to help publishers reach relevant learners, as mentioned above. So the information it can provide education publishers about potential customers is probably the bigger carrot for pulling them in.

“We are very happy to say that the vast majority of our content is not created or shared on StudySmarter for any financial incentive but rather because our platform and technology simply make the creation significantly easier,” says Khudir, adding: “We have not paid a single Euro to any user on StudySmarter to create content and do not intend to do so going forward.” 

It’s still early days for monetization, which he says isn’t front of mind yet — with the team focused on building out the platform’s global reach — but he notes that the model allows for a number of b2b revenue streams, adding that they’ve been doing some early b2b monetization by working with employers and businesses to promote their graduate programs or to support recruitment drives. 

The new funding will be put towards product development and supporting the platform’s global expansion, per Khudir.

“We’ve run successful pilots in the U.K. and U.S. so they’re our primary focus to expand to by Q3 this year. In fact, following a test pilot in the U.K. in December, we became the number one education app within 24 hours (ahead of the likes of Duolingo, Quizlet, Kahoot, and Photomath), which bodes well!” he goes on. 

“Brazil, India and Indonesia are key targets for us due to a wider need for digital education. We’re also looking to launch in France, Nordics, Spain, Russia and many more countries. Due to the fact our platform is content-agnostic, and the technology that underpins it is universal, we’re able to scale effectively in multiple countries and languages. Within the next 12 months, we will be expanding to more than 12 countries and support millions of learners globally.”

StudySmarter’s subject-agnostic, feature-packed, one-stop-shop platform approach sets it apart from what Khudir refers to as “single-feature apps”, i.e. which just help you learn one thing — be that Duolingo (only languages), or apps that focus on teaching a particular skill-set (like Photomath for maths equations, or dedicated learn-to-code apps/courses (and toys)). 

But where the process of learning is concerned, there are lots of ways of going about it, and no one that suits everyone (or every subject), so there’s undoubtedly room for (and value in) a variety of approaches (which may happily operate in parallel). So it seems a safe bet that broad-brush learning platforms aren’t going to replace specialized tools — or (indeed) vice versa.

StudySmarter names the likes of Course Hero, StuDocu, Quizlet and Anki as taking a similar broad approach — while simultaneously claiming they’re not doing it in “quite the same, holistic, end-to-end, all-in-one bespoke platform for learners” way.  

Albeit, some of those edtech rivals are doing it with a lot more capital already raised. So StudySmarter is going to need to work smart and hard to localize and grab students’ attention as it guns for growth far beyond its European base.

 

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HoneyBook raises $155M at $1B+ valuation to help SMBs, freelancers manage their businesses

HoneyBook, which has built out a client experience and financial management platform for service-based small businesses and freelancers, announced today that it has raised $155 million in a Series D round led by Durable Capital Partners LP.

Tiger Global Management, Battery Ventures, Zeev Ventures, 01 Advisors as well as existing backers Norwest Venture Partners and Citi Ventures also participated in the financing, which brings the New York-based company’s valuation to over $1 billion. With the latest round, HoneyBook has now raised $215 million since its 2013 inception. The Series D is a big jump from the $28 million that HoneyBook raised in March 2019. 

When the COVID-19 pandemic hit last year, HoneyBook’s leadership team was concerned about the potential impact on their business and braced themselves for a drop in revenue.

Rather than lay off people, they instead asked everyone to take a pay cut, and that included the executive team, who cut theirs “by double” the rest of the staff.

“I remember it was terrifying. We knew that our customers’ businesses were going to be impacted dramatically, and would impact ours at the same time dramatically,” recalls CEO Oz Alon. “We had to make some hard decisions.”

But the resilience of HoneyBook’s customer base surprised even the company, who ended up reinstating those salaries just a few months later. And, as corporate layoffs driven by the COVID-19 pandemic led to more people deciding to start their own businesses, HoneyBook saw a big surge in demand.

“Our members who saw a hit in demand went out and found demand in another thing,” Oz said. As a result, HoneyBook ended up doubling its number of members on its SaaS platform and tripling its annual recurring revenue (ARR) over the past 12 months. Members booked more than $1 billion in business on the platform in the past nine months alone. 

HoneyBook combines tools like billing, contracts, and client communication on its platform with the goal of helping business owners stay organized. Since its inception, service providers across the U.S. and Canada such as graphic designers, event planners, digital marketers and photographers have booked more than $3 billion in business on its platform. And as the pandemic had more people shift to doing more things online, HoneyBook prepared to help its members adapt by being armed with digital tools.

Image Credits: HoneyBook

“Clients now expect streamlined communication, seamless payments, and the same level of exceptional service online, that they were used to receiving from business owners in person,” Alon said.

Oz and co-founder/wife, Naama, were both small business owners themselves at one time, so they had firsthand insight on the pain points of running a service-based business. 

HoneyBook’s software not only helps SMBs do more business, but helps them “convert potentials to actual clients,” Oz said.

“We help them communicate with potential clients so they can win their business, and then help them manage the relationship so they can keep them,” Naama said.

The company plans to use its new capital toward continued product development and to “dramatically” boost its 103-person headcount across its New York and Tel Aviv offices.

“We’re seeing so much demand for additional services and products, so we definitely want to invest and create better ways for our members to present themselves online,” Alon told TechCrunch. “We’re also seeing demand for financial products and the ability to access capital faster. So that’s just a few of the things we plan to invest in.”

The company also wants to make its platform “more customizable” for different categories and verticals.

Chelsea Stoner, general partner at Battery Ventures, said her firm recognized that the expansive market of productivity tools to serve small businesses and entrepreneurs was “a market of discrete and separate productivity tools.”

HoneyBook, she said, is a true platform for SMBs, “providing a huge array of functionality in one cohesive UX.”

“It unites and connects every task for the solopreneurs, from creating and distributing marketing collateral, to organizing and executing proposals, to sending invoices and collecting payments,” Stoner said. “The company is constantly innovating and iterating in response to its members; we also see a lot of opportunity with payments going forward…And, due to Covid-19 and other factors, the company is sitting on pent-up demand that will accelerate growth even more.”

#advisors, #articles, #battery-ventures, #business, #business-models, #canada, #ceo, #chelsea-stoner, #citi-ventures, #co-founder, #economy, #entrepreneurship, #executive, #funding, #fundings-exits, #general-partner, #honeybook, #new-york, #norwest-venture-partners, #payments, #productivity-tools, #recent-funding, #saas, #small-business, #startups, #tel-aviv, #tiger-global-management, #united-states, #venture-capital, #zeev-ventures

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ISPs sue New York to block law requiring $15 broadband for poor people

A pen and book resting atop a paper copy of a lawsuit.

Enlarge (credit: Getty Images | eccolo74)

Internet service providers today sued New York to block a state law that requires ISPs to sell $15-per-month broadband plans to low-income households.

The lawsuit was filed by lobby groups including USTelecom and CTIA-The Wireless Association, both of which count Verizon and AT&T among their members. Lobby groups for many other ISPs also joined the lawsuit, with plaintiffs including NTCA—The Rural Broadband Association, the Satellite Broadcasting & Communications Association, and the New York State Telecommunications Association. The biggest cable lobby group, NCTA, did not join the lawsuit, but a cable lobby group representing small providers—America’s Communications Association—is one of the plaintiffs suing New York.

New York enacted its cheap-broadband law two weeks ago and called it a “first-in-the-nation requirement for affordable Internet for qualifying low-income families.”

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#broadband, #new-york, #policy

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Alchemy raises $80M at a $505M valuation to be the ‘AWS for blockchain’

Blockchain developer platform Alchemy announced today it has raised $80 million in a Series B round of funding led by Coatue and Addition, Lee Fixel’s new fund. The company previously raised a total of $15.5 million, so the latest financing brings its total raised to $95.5 million since it launched in 2017.

The latest round caught our attention for a few reasons.

First, the company, which describes itself as the backend technology behind the blockchain industry, went from public launch to a $505 million valuation in a matter of just eight months. During that time, Alchemy says it powered over $30 billion in transactions for tens of millions of users all over the world. Second, the startup says it also already powering the majority of the NFT industry.

And finally, its investors in the round include a high-profile mix of institutions and individuals such as DFJ Growth, K5 Global, the Chainsmokers, actor Jared Leto and the Glazer family (owners of the Tampa Bay Buccaneers and Manchester United). They joined existing backers including Yahoo co-founder and former CEO Jerry Yang, Pantera Capital, Coinbase, SignalFire, Samsung, Stanford University, Google chairman and Stanford University President John L. Hennessy, Charles Schwab, LinkedIn co-founder Reid Hoffman and others.

Sources with inside knowledge of Alchemy’s operations tell TechCrunch that the company has already grown its business more than eightfold since it signed the Series B term sheet. They also said Alchemy had over $300 million of investor demand wanting to enter the round and is being inbounded to do another financing at “many times” the current valuation.

TechCrunch talked with Alchemy co-founders Nikil Viswanathan (CEO) and Joe Lau (CTO) about the raise and their passion for the startup’s mission was clear. As is its explosive growth.

“We realized that in order for space to thrive and build to its full potential, we needed to build a developer platform layer for blockchain,” Viswanathan told TechCrunch.

Alchemy’s goal is to be the starting place for developers considering to build a product on top of a blockchain or mainstream blockchain applications. Its developer platform aims to remove the complexity and costs of building infrastructure while improving applications through “necessary” developer tools.

The startup powers a range of transactions across nearly every blockchain vertical, including financial institutions, exchanges, billion-dollar decentralized finance projects and multinational organizations such as UNICEF. It has also quickly become the technology behind every major NFT platform, including Makersplace, OpenSea, Nifty Gateway, SuperRare and CryptoPunks.  

“Every time you open DoorDash, you’re using Amazon’s infrastructure,” Lau said. “Every time you interact with an NFT, you’re using Alchemy. It’s being powered by Alchemy underneath the hood.”

While the pair would not provide hard revenue figures, the company – which operates as a SaaS business – says it increased its revenue by 600% in 2020.

For inside players, Alchemy’s efforts are paving the way for the whole industry. 

“The cryptoeconomy is innovating faster than any technological movement that came before it, and Alchemy has been a key driver of that,” said Coinbase President and COO Emilie Choi. “Alchemy enables developers to build the rich ecosystem of applications necessary for mainstream blockchain adoption.”

Pantera Capital’s Paul Veradittakit describes Alchemy as “the Amazon Web Services (AWS) of the blockchain industry” that is “enabling the vision of a decentralized web.”

“While in Web 2.0, Microsoft, Apple and AWS are three of the most valuable companies in the world because they are the developer platform powering the computer and internet industries, Alchemy is primed to do the same for the blockchain,” he said.

The company believes the comparison to AWS is fair, noting that: “Just as AWS provides the platform that powers Uber, Netflix and much of the technology industry, Alchemy powers infrastructure for many large players in the blockchain industry.”

Alchemy plans to use its new capital to expand its developer platform to new blockchains, fuel global expansion and to open new offices in the U.S. and globally. The startup is based in San Francisco and is planning to open an office in New York.  

“We are going to use the funds to support new chains with our developer platform,” Viswanathan said. “We also expect to 5x the team this year.”

But to be clear, Alchemy prides itself on being lean and mean.

“We just went from 14 to 22 employees,” Lau said. “We have intentionally wanted to keep the team as small as possible.”

The blockchain space has been the subject of increased investor interest as of late.

In March, BlockFi, which describes itself a financial services company for crypto market investors, announced it had closed on a massive $350 million Series D funding that valued it at $3 billion. Also last month, Chainalysis, a blockchain analysis company, revealed the close of $100 million in Series D financing, which doubled its valuation to over $2 billion.

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Kaia Health grabs $75M on surging interest in its virtual therapies for chronic pain and COPD

New York headquartered Kaia Health, which offers AI-assisted digital therapies via a mobile app for chronic pain related to musculoskeletal (MSK) disorders and for Chronic Obstructive Pulmonary Disease (COPD), has raised a $75 million Series C.

The round was led by an unnamed leading growth equity fund with support from existing investors, including Optum Ventures, Eurazeo, 3VC, Balderton Capital, Heartcore Capital, Symphony Ventures (golfer Rory McIlroy’s investment vehicle), and A Round Capital.

The funding fast-follows a $26M Series B closed last summer. The pandemic has accelerated the uptake of telemedicine, generally — and Kaia has, unsurprisingly, seen a particular surge of interest in its virtual treatments.

After all, DIY home working set-ups are unlikely to have done much good for the average information worker’s back in the pandemic-struck year. Kaia’s real-time feedback generating motion coach is also able to offer treatment for neck, hip, knee, shoulder, hand/wrist, and foot/ankle pain.

A digital health solution may have been the only lockdown-friendly option for treating conditions considered ‘elective care’ during COVID-19 — meaning suffers of chronic pain may have faced restrictions on accessing physical healthcare provision like in-person physiotherapy. Kaia says it grew its business book 600% in 2020.

Given the U.S. healthcare sales cycle is heavily focused on January onboarding of new medical benefits by employers — who are key customers for Kaia in the market, where it now has around 50 employer and health plan clients — it’s expecting another big onboarding bump next January. And while it hadn’t been looking to raise again so soon after the Series B, doing so was “a very easy process”, says co-founder and CEO Konstantin Mehl.

“We actually planned to start the raise in the end of this year and then the pandemic happened and of course we had a huge boost because the healthcare system was pretty much shut down for in person elected treatments and chronic diseases are considered to be elected treatments which I think is a bit of a mistake.

“The thing is that the big b2b partners they are really scared that they will have this big backlog of surgical interventions that are very expensive… Pre-pandemic I think 20% of employers in the US were even interested in offering a digital therapy and then that changed to 100% immediately. So that was a big boost,” he goes on. “The other thing is that our market got really hot. We don’t really need the money right now but we met these investors and it was a very easy process.”

Kaia says that globally its digital MSK platform is accessible to 60M patients — which it claims makes it by far the biggest player in the space in terms of covered lives. (Other startups in the space include Hinge Health and Sword Health which are both also focused on MSK; and Physera, a virtual physical therapy provider that was acquired by Omada last year.)

The plan for Kaia’s (unexpectedly rapid) funding boost is “to be much more aggressive in building out our commercial team”, Mehl tells TechCrunch. “We are very proud of being a product focused company but it also gets a bit stupid at the point where you just need to bring the product in front of the relevant customer so we are investing a lot in that and also in computer vision because it’s still our USP.”

Kaia’s digital therapies rely on using computer vision to digitize proven treatments so they can be delivered outside traditional healthcare environments, with the app helping patients perform exercises correctly by themselves.

The user only needs a smartphone or tablet with a camera for the app to do real-time, posture-tracking and provide feedback. No wearables are required. Although Kaia is researching how 3D data from depth-sensing cameras which are now being embedded in higher end mobile devices may further feed the accuracy of its body tracking models.

“We basically can have the same correction functionality in your home that you have can have with a PT [personal trainer],” says Mehl. “We want to invest a lot more in computer vision and build out that team so we can also do that more aggressively now [with the Series C funding] which is cool.”

Kaia has started to use motion-tracking in another way in its patient-facing chronic pain app — as a way to track progress. So as well as asking patients to quantify their pain (which is a subjective measure) it can have an objective biomarker alongside patients’ pain assessments by getting them to do regular tests that track their body movements.

“We started to use motion-tracking besides the correction-tracking functionality also as a biomarker. So we basically can measure your body functionality. Now we can, for example, see which body parts are less flexible and that’s how we can measure the disease progression, instead of asking you how is the pain level today,” he explains. “Pain is the number one cause for work disability and the reason is because your body functionality decreases so if we can measure that correctly then we can also escalate it to the right speciality doctor, for example.”

Kaia can also quantify the progress of COPD patients in a similar way — by tracking them performing a sit-down, stand-up test.

Care for COPD has had a particular imperative during the pandemic as people with the chronic inflammatory lung disease who catch COVID-19 have the highest mortality rate among COVID-19-infected patients, per Mehl.

At the same time, pulmonary rehabilitation centers have been shut down during the pandemic because of the risk of infection to patients. So, once again, Kaia’s app has provided an alternative for suffers of chronic conditions to continue their rehab at home.

In the US Kaia focuses on activation rate as a percentage of the employer population — and Mehl says this stands between 5%-10%, depending on how the app is communicated to potential users. “We also had a company that had 15% of their population active it one year but you always have these outliers,” he adds.

Looking ahead to the coming 12 months, he says he expects to be able to grow revenue 5x-10x as a number of bigger partnerships kick in.

In Germany, where Kaia plans to start prescribing its app (via doctors), he’s hopeful they’ll be able to get 10,000 prescriptions done over the same period, once it has approval to do so under a national reimbursement system.

Plugging Kaia into wider healthcare provision

Integrating into a wider care pathway by being able to loop in healthcare providers where appropriate has been a big recent focus for Kaia.

In February it kicked off a major integration of its patient-facing MSK therapy/pain-management app with a referral system that plugs into services offered by other healthcare providers — using an escalation algorithm and screening and triage system, which it calls Kaia Gateway — to identify patients at risk of needing more invasive or intense treatment than the digital therapies its app can provide. It’s working with a number of premium partners for this referral path (i.e. within an employer or health plan’s ecosystem).

Its partners can provide additional medical services to relevant patients, both general and specialty care solutions, including disease management programs, PT, telemedicine, care navigation, and expert medical opinion services. Partners also get access to detailed treatment history on referred patients from Kaia, including via APIs.

“Besides being just an app-based therapy we want to expand more down the treatment path,” explains Mehl. “And also work with external medical providers — doctors etc — and bring our users at the right point to the right doctor to prevent any deterioration in pain that we cannot treat in the app. I think that brings a lot of trust, also, to the app.

“Because I think what’s happening now is that there’s so many digital therapies popping up everywhere. And one thing that is happening in the beginning when you’re small, like us three years ago, we just offered this app and said we don’t really know what’s happening before or after… Now we really want to integrate.”

“We have some cool partnerships coming up in the U.S. — partner with bigger medical providers that have thousands of medical providers on their payroll,” he goes on. “And then integrate with them so we can optimize the full treatment path. Because then the patients can really feel safe and say hey they don’t keep me in the app-based therapy when they know I should actually see somebody else because it’s not the best care anymore.”

“We have this platform approach but then we saw now it really makes sense to go deeper in these two diseases,” Mehl adds. “We start with our chronic pain approach in the U.S. and say we really want to go down the treatment path. And because the main problem is if people then start to be frustrated in our app and say I need something else and then they get back to this, for example, pain killers, opioids, surgery, cycle, and then they’re back in the system where we actually wanted to help them getting out of it so that’s why we say it’s not really possible to not integrate with healthcare professionals.

“You need to integrate them. If not you cannot always offer best care and then the patients realize at one point this app is not enough — but I also don’t get directed to a medical professional who could offer a new diagnosis or a different prescription. And then your trust is lost.”

“The other point is when you think about different levels of chronification, because we’re so scalable we can catch people much earlier in their chronification journey when the disease is still reversible. And even if our app is still the best treatment it helps to get an additional medical professional involvement to validate a diagnosis — or to just talk with a patient so that they really know that they’re safe here. So just reassuring, motivation and also diagnosis, to really say okay just to be sure we should make this diagnosis just to be sure you are getting best care. So I think that’s a huge product task and operational task for us.”

Kaia is starting by doing case referrals manually in-house — by setting up a medical case review team, staffed by doctors and therapies it employs — aided by a triage system that automatically flags patients for the team to review. But Mehl hopes this process will be increasingly assisted by AI.

“We assume yellow flags from what they told us in the entry test or from their exercise feedback or therapy feedback. Or from the interactions they have with their motivational coaches,” he explains of how the case review system works now. “Then [the case review team] has a look at them and decides if they should see an external medical provider partner and at what time.”

“Over time this should get more and more automated,” he adds. “We hope that we can make this better and better with machine learning over time and show that we can optimize the treatment path much better than just having this manual oversight. And that’s a huge challenge. If you think about what you need to do to get there I think it will define our product roadmap for years… But that’s also where the most value is to increase the quality of care. If not you just have siloed solutions everywhere… and the patient suffers because the treatment path is torn apart and it doesn’t feel like one thing.

“We will always need this clinical oversight. But where we can use machine learning is to help these medical professionals to look at the right patients at the right time. Because they cannot look at everybody all the time so there needs to be some filtering. And I think that filtering — or that triage — that can be really done by machine learning.”

Would Kaia ever consider becoming a healthcare provider itself? Combining a telemedicine service with some digitally delivered treatments is something that Sweden’s Kry, for example, has done — launching online cognitive behavioral therapy (CBT) treatments in its home market back in 2018 while also offering a telehealth platform and running a full healthcare service in some markets.

Mehl suggests not, arguing that telemedicine companies are by necessity generalists, since they are catering to “the top of the funnel”, handling and filtering patients with all sorts of complaints — which he says makes them less suited to focus deeply on catering to specific disease.

While, for Kaia, it’s deeply focused on building tech to treat a few specific diseases — and so, likewise, isn’t best suited to general medical service delivery. Partnering with medical service providers is therefore the obvious choice.

“I think about the patient journey and for the telemedicine companies… they might have some treatment paths integrated but they’re never as good as completely owning one chronic disease as we can be,” he says. “Most of chronic disease patients they just want to start a treatment because they talked with so many doctors. They want to find something that helps them and then at the right moment talk to the right medical professional. So that’s a difference in how telemedicine companies are doing it.

“The other question is how much of the medical provider job of the treatment path do we want to internalize? And we really are a tech company. We’re not very keen on becoming a medical provider. And we see that there are so many amazing medical providers in the landscape here — in different countries — that during COVID-19 had to become more digital, so it’s easy to partner with them, and why would we want to learn how to run a hospital where there are all these people who did it for decades and are really good at it, and we are really good at tech.”

“It’s really cool for the patient in the end. They know they get the best of both worlds and it’s optimized and ideally these offline medical providers get data from us so they can make better decisions — so they can also have a higher quality of decision-making because they have more data than just talking with a patient for two minutes. They can see our complete dashboard and how the patient progressed over time and everything — so the quality of decision-making gets higher.”

The U.S. overtook Europe as Kaia’s biggest market in recent years so it’s inexorably been focusing a lot of energy on serving its growing number of U.S. customers. The size of the addressable market in the U.S. is also massive, with ~100M chronic pain patients in the country, or around a third of the population.

But Kaia continues to develop its proposition in a number of European markets, including Germany which was where the business started. Mehl says its team in Munich is looking at how to make a recent reimbursement law for app-based health treatments will work for it in practice. It hasn’t yet obtained the necessary reimbursement code for doctors there to start prescribing its tech to their patients but it’s taking steps to change that.

At the same time, Mehl concedes that learning how to make doctors want to prescribe its app is an “open challenge” in the market.

“Some startups started doing it but — at scale — I still think there have to be some learning to be made to really scale it up,” he says of the German app prescriptions, adding that it’s preparing to hand in its application in relation to its COPD app which it will be bringing to market in Europe with a pharma partner.

“We also closed a partnership with a pharma company for Germany, UK and France to distribute our app through the pulmonologists — which is pretty cool. So we’re launching that partnership now,” he adds. “That will be exciting to see where the prescriptions start.”

Mehl professes himself a fan of Germany’s approach to digital healthcare — saying that it makes it easy to obtain a general reimbursement code which then gives the app-maker a year to prove any cost savings and deliver the care they say they do — couching that as a compromise between the “really long” process of getting approval for a medicine and the data-driven needs of startups where founders need to be able to show traction to get investment to build and grow a business in the first place.

“Healthcare’s already tough because you have to do clinical trials and it’s already a bit slower. So a longer approval process makes it even more difficult to launch something useful and I can see the UK, France, the Nordics bringing out some similar legislation to facilitate that,” he adds.

“We expect in other European countries — and in other countries in generally, like Canada, Australia and in Asia too — that they update their regulation to cover digital therapies. And then that will be good because we will know how to get apps prescribed and we know the other way, like in the U.S., [i.e. without needing to go through a doctor first]… And so with our app being so scalable we could easily launch in these countries compared to other companies in the market that are more reliant on one specific healthcare system or on hardware or anything that limits the scalability.”

 

#artificial-intelligence, #balderton-capital, #canada, #chronic-disease, #chronic-pain, #digital-health, #eurazeo, #europe, #fundings-exits, #germany, #health, #healthcare, #heartcore-capital, #kaia-health, #machine-learning, #mobile-devices, #munich, #new-york, #omada, #optum-ventures, #pain, #physera, #physical-therapy, #telehealth, #telemedicine, #united-states

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Brazil’s Loft adds $100M to its accounts, $700M to its valuation in a single month

Nearly exactly one month ago, digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. The round included participation from a mix of new and existing investors such as DST, Tiger Global, Andreessen Horowitz, Fifth Wall and QED, among many others.

At the time, Loft was valued at $2.2 billion, a huge jump from its being just near unicorn territory in January 2020. The round marked one of the largest ever for a Brazilian startup.

Now, today, São Paulo-based Loft has announced an extension to that round with the closing of $100 million in additional funding that values the company at $2.9 billion. This means that the 3-year-old startup has increased its valuation by $700 million in a matter of weeks.

Baillie Gifford led the Series D-2 round, which also included participation from Tarsadia, Flight Deck, Caffeinated and others. Individuals also put money in the extension, including the founders of Better (Zach Frenkel), GoPuff, Instacart, Kavak and Sweetgreen.

Loft has seen great success in its efforts to serve as a “one-stop shop” for Brazilians to help them manage the home buying and selling process. 

Image courtesy of Loft

In 2020, Loft saw the number of listings on its site increase “10 to 15 times,” according to co-founder and co-CEO Mate Pencz. Today, the company actively maintains more than 13,000 property listings in approximately 130 regions across São Paulo and Rio de Janeiro, partnering with more than 30,000 brokers. Not only are more people open to transacting digitally, more people are looking to buy versus rent in the country.

“We did more than 6x YoY growth with many thousands of transactions over the course of 2020,” Pencz told TechCrunch at the time of the company’s last raise. “We’re now growing into the many tens of thousands, and soon hundreds of thousands, of active listings.”

The decision to raise more capital so soon was due to a variety of factors. For one, Loft has received “overwhelming investor interest” even after “a very, very oversubscribed main round,” Pencz said.

“We have seen a continued acceleration in our market share growth, especially in São Paulo and Rio de Janeiro, the two markets we currently operate in,” he added. “We saw an opportunity to grow even faster with additional capital.”

Pencz also pointed out that Baillie Gifford has relatively large minimum check size requirements, which led to the extension being conducted at a higher price and increased the total round size “by quite a bit to be able to accommodate them.”

While the company was less forthcoming about its financials as of late, it told me last year that it had notched “over $150 million in annualized revenues in its first full year of operation” via more than 1,000 transactions.

The company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, according to Pencz, who declined to provide more specifics. He did say those figures are “multiples higher from where they were,” and that Loft has “a very clear horizon to profitability.”

Pencz and Florian Hagenbuch founded Loft in early 2018 and today serve as its co-CEOs. The aim of the platform, in the company’s words, is “bringing Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” The U.S. real estate tech company with the closest model to Loft’s is probably Zillow, according to Pencz.

In the United States, prospective buyers and sellers have the benefit of MLSs, which in the words of the National Association of Realtors, are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. Loft itself spent years and many dollars in creating its own such databases for the Brazilian market. Besides helping people buy and sell homes, it offers services around insurance, renovations and rentals.

In 2020, Loft also entered the mortgage business by acquiring one of the largest mortgage brokerage businesses in Brazil. The startup now ranks among the top-three mortgage originators in the country, according to Pencz. When it comes to helping people apply for mortgages, he likened Loft to U.S.-based Better.com.

This latest financing brings Loft’s total funding raised to an impressive $800 million. Other backers include Brazil’s Canary and a group of high-profile angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger and David Vélez, CEO and founder of Brazilian fintech Nubank. In addition, Loft has also raised more than $100 million in debt financing through a series of publicly listed real estate funds.

Loft plans to use its new capital in part to expand across Brazil and eventually in Latin America and beyond. The company is also planning to explore more M&A opportunities.

This article was updated post-publication to reflect accurate investor information

#andreessen-horowitz, #baillie-gifford, #better-mortgage, #better-com, #brazil, #co-founder, #d1-capital-partners, #david-velez, #dst, #finance, #financial-services, #funding, #fundings-exits, #instacart, #instagram, #joe-lonsdale, #latin-america, #loft, #max-levchin, #mike-krieger, #money, #new-york, #nubank, #palantir, #paypal, #proptech, #real-estate, #real-estate-tech, #recent-funding, #sao-paulo, #startup, #startups, #tc, #tiger-global, #united-states, #venture-capital, #zillow

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Forget the piggy bank, Till Financial’s kids’ spend management app gets Gates’ backing

Today’s children and teens want more power and control over their spending.

And while there are a number of financial services and apps out there aimed at helping this demographic save and invest money (Greenlight being among the most popular and well-known), one startup is coming at the space from another angle: helping younger people also better manage their spend.

Till Financial describes itself as a collaborative family financial tool that aims to empower kids to become smarter spenders. The New York-based company’s banking platform is designed to encourage “open and honest” discussions between parents and their kids. And it has just raised $5 million to help it advance on that goal.

A slew of investors put money in the round, including Elysian Park Ventures, Melinda Gates’ venture fund Pivotal Ventures with Magnify Ventures, Afore Capital, Luge Capital, Alpine Meridian Ventures, The Gramercy Fund, SM Ventures (the family office of the founders/CEOs of Stadium Goods) and Lightspeed Venture Partners’ Scout Fund. Also participating were angel investors such as the founders of fintech Petal, the founders of alcohol marketplace Drizly, the president of Transactis, and the president of 1800Flowers.

Part of Till’s goal is to help kids “learn by doing” and gain confidence in spending decisions. It arms them with a bank account, digital and physical debit card and goal-based savings. For example, say a teen wants to buy an iPad, they can set up an account that they can save toward that iPad and give family members (such as grandparents, for example) the opportunity to pitch in the same amount, or more. They can also set up recurring payments for things like Netflix or Spotify subscriptions so they can get a taste of what it’s like to pay regular bills.

“Parents and the current banking options miss the point when they just focus on savings. We need to first prepare kids to be Smarter Spenders, supported by savings and investing,” said Taylor Burton, who founded the company with Tom Pincince. “On Till, kids learn to spend with intention and purpose, while parents gain confidence and trust based on transparency and accountability.”

To Pincince, the market is clearly underserved.

“The legacy banks really don’t care about this young person and the early digital players are really missing the mark,” he said. 

And despite the plethora of apps targeting the demographic, Pincince believes there’s plenty of room for the right players.

“The reality is you’re talking about a swath of kids under the age of 18 and over the age of eight that is the single largest unbanked population,” he said. “We’re not fighting to be the top of your son’s wallet. We’re fighting to be the first product into that wallet.”

Indeed, it’s a big market — the average middle-class family in the U.S. spends $284,570 per child by the time they turn 18.

The platform is free to all families and, early on, attracted the attention of Peggy Mangot, operating partner/COO of PayPal Ventures. She invested personally in Till in its pre-seed rounds. Prior to PayPal, Mangot ran development of Greenhouse, Well Fargo’s fee-free mobile banking app that aimed to help younger users build responsible spending habits.

Mangot has three kids and recalls that when they were shopping online, she’d give them her credit card. Or, if they were going to the corner store or meeting with friends, she’d give them cash.

“But that way, the money is meaningless to them. They didn’t really know how to understand what things cost and there was no sense of ownership,” she said. “It was just me handing over cash or a card.”

What attracted her the most about Till, Mangot said, was the team’s approach to treat younger people “with respect and agency.”

She also believes that by helping children and teens understand important financial lessons at a younger age, the world will ultimately be full of more responsible adults.

“By putting these tools in the hands of these young people early, they’ll have years and years of experience before they’re more independent and have to manage their paycheck and bills,” Mangot told TechCrunch. “Once you have mass adoption, it’s going to create a much more financially literate, confident and in control set of young adults than we’ve ever had.”

Besides making money on interchange fees, Till aims to earn revenue by partnering with merchants to offer rewards to users. It also plans to earn referral fees by referring the teens to other financial institutions when they get older and have different needs.

“It’s not our intention to be your son or daughter’s forever bank. It’s our intention to be the first bank,” Pincince said. “So, they hit the age of maturity, we’re actually giving them a high-five off of our platform and introducing them to maybe their first college loan or their first credit card.”

#afore-capital, #bank, #banking, #debit-card, #drizly, #ebay, #finance, #financial-services, #fintech, #funding, #fundings-exits, #ipad, #lightspeed-venture-partners, #luge-capital, #melinda-gates, #mobile-banking, #mobile-payments, #netflix, #new-york, #online-payments, #paypal, #pivotal-ventures, #recent-funding, #spotify, #stadium-goods, #startup, #startups, #tc, #till-financial, #tom-pincince, #united-states, #up, #venture-capital

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