Monthly Archives: January 2021

News: Nerdy, a tutoring marketplace startup, is going public via SPAC

• January 29, 2021
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A gig economy-powered consumer edtech platform is heading to the New York Stock Exchange. Edtech startup Nerdy, which owns the popular tutoring business Varsity Tutors, is seeking to become a public company through a special purpose acquisition vehicle, otherwise known as a SPAC. Nerdy will merge with TPG Pace Tech Opportunities (NYSE: PACE), a publicly

A gig economy-powered consumer edtech platform is heading to the New York Stock Exchange.

Edtech startup Nerdy, which owns the popular tutoring business Varsity Tutors, is seeking to become a public company through a special purpose acquisition vehicle, otherwise known as a SPAC.

Nerdy will merge with TPG Pace Tech Opportunities (NYSE: PACE), a publicly traded SPAC since 2015. The transaction is expected to close in the second quarter of this year.

The deal will value Nerdy at $1.7 billion. Through the transaction, the business plans to raise up to $750 million in cash, including $150 million in PIPE financing aggregated by Franklin Templeton, Healthcare of Ontario Pension Plan, Koch Industries and Learn Capital.

Nerdy’s flagship business, Varsity Tutors, is a two-sided marketplace that matches tutors to students in large, small or 1:1 group environments. The learning platform covers more than 3,000 subjects. Like other edtech companies, Varsity Tutors uses artificial intelligence and data analytics to better match experts to learners. Additionally, in August, Varsity Tutors launched a homeschooling offering meant to replace traditional school. It onboarded 120 full-time educators, who came from public schools and charter schools, with competitive salaries.

Financial performance

TechCrunch reviewed the Nerdy-SPAC investor presentation, which can be read here.

Nerdy is among consumer edtech businesses that saw rapid growth and opportunity due to the demands of remote learning brought about by the coronavirus pandemic. In the second half of 2020, Nerdy’s annualized revenue surpassed $120 million. In the last quarter of 2020, the company saw its online revenue grow 87%, online paid active learners grow 59% and paid online sessions grow 169%, compared to the same time period last year, the business reports.

Drilling into its realized results instead of its more-favorable annualized performance from its third and fourth quarters of 2020, Nerdy saw estimated revenues of $106 million in the year, up just 16% from its 2019 result.

That growth rate is slower than what it managed in 2019, some 26% growth, and is around half of what it anticipates for 2021, namely 31% growth. But Nerdy has even stronger projections for 2022, a year in which it expects to drive revenues of $198 million, up 43% from its 2021 expectation of $138 million.

Whether the company can hit those goals remains to be seen; SPAC-led debuts allow for the company being taken public in the transaction to forecast more than companies that follow traditional IPO paths are allowed.

The company’s growth also failed to stem its losses. Nerdy is not yet profitable. Its 2020 estimates list an anticipated net loss of $23 million, which is more than it lost in 2019 but less than its 2018 deficit. Based on last year’s growth, Nerdy estimates that its net loss will slim to $8 million in 2021, and will achieve profitability by 2023.

How did Nerdy fail to reduce its losses last year as its revenues expanded? The company’s costs showed modest gains and losses, apart from its sales and marketing line item. That particular realm of expense rose from $38 million in 2019 to an estimated $44 million in 2020.

In contrast, while Nerdy’s net losses were largely static in 2020, its estimated net margin did improve from -24% in 2019 to an estimated -22% in 2020. It has a ways to go to reach the black, though its financials do indicate that the company thinks that net income is only a few years away.

To reach profitability, Nerdy anticipates it will require 2023 revenues of $267 million, growth from 2022 of 35% and gross margins five points stronger than its 67% result it estimated it reached last year.

A closer look at Nerdy’s business brings up a common question amid the SPAC boom: Is the reverse-merger being used to bring companies with lackluster near-term growth stories to the public market that otherwise couldn’t have? So far, a number of edtech startups have taken the SPAC route, including Skillsoft, Meten International and now Nerdy.

After edtech had a strong 2020, sector investors say to expect more exits as startups cross the $100 million ARR mark. Deborah Quazzo, managing partner of GSV, told TechCrunch in December that “what’s happening in edtech is that capital markets are liquidating.” The ability to move fluidly between privately held and publicly held companies is a characteristic of tech sectors with deep capital markets, which is different from edtech’s “old days, where the options to exit were very narrow.”

News: Internet of Cars: A driver-side primer on IoT implementation

• January 29, 2021
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How can we ensure that all of the new data from our smart cars will be handled in a secure and private way?

Billions of devices are currently connected to the Internet of Things (IoT), and researchers are predicting tremendous growth in the coming decade.

One of the most exciting, challenging and potentially lucrative areas of the IoT is the automotive sector. The car is a major component of most people’s daily lives, and a “smart” car could do a lot to save people time and money.

At the same time, the “Internet of Cars” carries with it dystopian visions of increased ad noise and security threats. It’s worth considering for a moment what these scenarios look like — good and bad — and how consumers can educate themselves to ensure that the cars of the future are driving in the right direction.

The promises and problems of connected cars

Imagine if your car was able to call your mechanic when the engine was showing signs of trouble. Imagine if the mechanic could read a data report from your engine and order the required parts ahead of time. Imagine if the data on those parts could be aggregated to warn of the need for any mass recalls? What if your car could communicate with other cars around it in a traffic jam, and the cars could all work together to space out and ease congestion?

What if your car could pay automatically at parking garages and drive-throughs? Anyone that owns a car is familiar with all these pain points, and the prospect of a new system that erases these spots of friction would be a welcome development.

But how can we ensure that all of this new data from our smart cars will be handled in a secure and private way? It seems likely, as car manufacturers work quickly to bring their products online, that tech giants will be the first partners to help implement the Internet of Cars. This might be cause for concern amongst consumers who are growing tired of their data being sold or hacked. The big tech companies aren’t inherently evil, but their basic business models are structured in such a way that consumer privacy and security are not the main priorities.

It’s not hard to imagine how the Internet of Cars could move in a much darker direction: Advertisements with real-time location data updating constantly on your windshield, personal data such as your driving habits stored on central servers, and a myriad of new vulnerabilities for hackers to exploit. How do we bring cars online so that friction in our lives is smoothed down without introducing a unique set of new problems?

Data security must be the foundation of the IoC

Of course Big Tech companies will be eager to offer connectivity for drivers, but it’s most likely going to come at the price of giving personal data over to Big Tech servers. This brings with it, as always, two major problems. The first is that centralized data represents a honeypot for hackers. No matter the strength of the security system, hackers realize that once they break through, they have access to the whole pot. The second problem is that the value of all that data is simply too lucrative for the owner to ignore. The data will always be sold, regardless of all the lip service promising to make it anonymous.

The IoT represents a new layer of IT integration in our lives; it will be at least as much of a game-changer as the internet was originally. Even with the advancement of the mobile internet brought about by smartphones, internet implementations have, until now, basically been carried out through clunky interfaces like screens, keyboards and mouses. The IoT is going to bring a new level of sophistication to how and where we interface online, but this also means a new level of intrusion into our physical reality. In the case of cars, we can be rightly wary that this new development might be problematic, but it doesn’t have to be.

Distributed ledger technology (DLT) represents a path forward for the Internet of Cars, because it builds data security and privacy into the foundations of any connected devices. Any model of DLT includes some basic concepts such that data is carried on a decentralized network of computers and servers. It also means that data is stored permanently, and that new entries of any data are subject to a mathematical verification. DLT is a fundamentally different way to handle massive amounts of data. DLTs have proven to be extremely resilient to attacks, and the data on these networks is nearly impossible to collect and sell.

Picking the right tool for the job

There are millions of internet-connected cars already on the road, albeit mostly with crude subscription services for music and weather apps. With further advances, connection will be much more encompassing, with the average connected car having up to 200 sensors installed, each recording a point of data, minute by minute. The numbers quickly become staggering, and in emergency situations, the need for data agility is apparent. Picture driving on a highway in medium traffic.

If someone’s tire blows out half a mile ahead, this information could be quickly conveyed to surrounding cars, warning of the potential for emergency braking. Any DLT solution would have to include a very nimble verification process for all these new packets of information to be brought into and carried by the network.

Additionally, because of the computational complexity involved, almost all DLTs today charge a fee for each new transaction brought into the network. In fact, the fee is an integral part of the structure of many of these computational models. This is obviously not going to be workable in a system like urban traffic that would be generating billions of “transactions” every day. The truth is that decentralized data networks were never designed to handle these kinds of massive use-case scenarios. Blockchain, for example, is very elegant at censorship-resistance in a network, and this has proven valuable in certain financial use cases.

But a DLT that expects a little money every time a car’s air conditioning reports its output is simply unusable for that application. Any DLT that’s going to give us a high level of security and real-time connectivity will also have to be feeless.

Security, speed and ease of adaptability through a no-fee structure are the three critical points for any network backing up the Internet of Cars. DLTs are clearly the most secure option, but they must also provide scalability and a feeless structure.

The example of being able to pay automatically for a parking garage visit might seem like a trite convenience. In actuality, if we can implement these types of small transactions properly from the beginning, then the hurdles we will jump in solving the complexity and volume of the car traffic data environment will go a long way to creating a safe, consumer-friendly Internet of Things in general.

When thinking about a completely connected physical environment, the alternatives to scalable, fee-less DLT are frankly scary.

News: Firehawk Aerospace extends seed funding to $2.5 million with $1.2 million from Harlow Capital

• January 29, 2021
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Rocket fuel technology startup Firehawk Aerospace has added $1.2 million to its existing seed financing, bringing the full amount invested in the round to $2.5 million. The new tranche comes from Harlow Capital Management, a Dallas-based firm run by Colby Harlow, who will join Firehawk’s board of directors as part of the deal. Firewhawk, which

Rocket fuel technology startup Firehawk Aerospace has added $1.2 million to its existing seed financing, bringing the full amount invested in the round to $2.5 million. The new tranche comes from Harlow Capital Management, a Dallas-based firm run by Colby Harlow, who will join Firehawk’s board of directors as part of the deal.

Firewhawk, which was a finalist in our first-ever all-virtual Startup Battlefield at TC Disrupt last September, has developed a new kind of hybrid rocket fuel that greatly enhances rocket launch safety, cost and transportation using additive manufacturing (basically, the grown-up version of 3D printing). Hybrid rocket fuel (which combines aspects of both liquid and solid propellants used previously) isn’t new, but past technology has been unable to compete on cost and efficacy relative to existing nonhybrid alternatives.

The startup’s Chief Scientist Ron Jones was able to get around these limitations with two new approaches: Using a fuel with a hard polymer structure and producing it using additive manufacturing instead of casting via molds with a liquid that hardens.

Firehawk now intends to use its seed funding to test its technology in operational conditions and at the kind of scale required for commercialization, and to build out its partnerships and client list. The startup also intends to grow its R&D and manufacturing operations in both Texas and Oklahoma.

News: Okta SaaS report finds Office 365 wins the cloud — sort of

• January 29, 2021
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Each year Okta processes millions of SaaS logons via its authentication system. It kindly aggregates that data to find the most popular apps and publishes an annual report. This year it found that the most popular tool by far was Microsoft Office 365. It’s worth noting that while app usage popularity varied by region, Office

Each year Okta processes millions of SaaS logons via its authentication system. It kindly aggregates that data to find the most popular apps and publishes an annual report. This year it found that the most popular tool by far was Microsoft Office 365.

It’s worth noting that while app usage popularity varied by region, Office 365 was number one with a bullet across the board, whether globally or when the report broke it down by geographic area. That wasn’t true of any other product in this report, so Office 365 has extensive usage across the world (at least among companies that use Okta).

But as with everything cloud, it’s not a simple matter to say that because lots of people signed onto Office 365, Microsoft is the clear winner in a broader sense. In reality, the cloud is a complex marketplace, and just because people use one tool doesn’t preclude them from using tools that compete directly with it.

As a case in point, consider that the report found that 36% of Microsoft 365 customers were also using Google Workspace (formerly known as G Suite), which offers a similar set of office productivity tools. Further, Okta found that 42% of Office 365 customers were using Zoom and 32% were using Slack.

This is pretty remarkable when you consider that Office 365 bundles Teams with similar functionality for free. What’s more, so does Google with Google Hangouts, so people use the tool they want when they want, and sometimes it seems they use competing versions of the same tool. The report also found that of those Office 365 users, 44% are using Salesforce, 41% AWS, 15% Smartsheet and 14% Tableau (which is owned by Salesforce). Microsoft has products in all those categories.

Microsoft is clearly a big company with a lot of products, but the report blows a hole in the idea that because people like Office 365, they are going to be big fans of other Microsoft products, or that they can count on any kind of brand loyalty across the range of products or even exclusivity within the same product category.

All of this, and much of the other data in this report makes tremendously interesting reading as far as it goes. It’s not a definitive window on the state of SaaS. It’s a definitive reading on the state of Okta customers’ use of SaaS, on the Okta Integration Network (OIN), a point the company readily acknowledges in the report’s methodology section.

“As you read this report, keep in mind that this data is representative of Okta’s customers, the applications and integrations we connect to through the OIN, and the ways in which users access these tools through our service,” the report stated.

But it is a way to look at the state of SaaS taking advantage of the 9400 Okta customers using the network and the 6500 integrations to the world’s most popular SaaS tools. That gives the company a unique view into the world of SaaS. What you can conclude is that the cloud is complicated, and it’s not a zero sum game by any means. In fact, being a winner in one area is not a guarantee of winning across the board.

News: Rising African venture investment powers fintech, cleantech bets in 2020

• January 29, 2021
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To dig into African venture capital results, we’re looking at a report concerning 2020 data from Briter Bridges, a research group that focuses on the continent’s private capital market.

As a turbulent week in the capital world, we’re taking a look at something a bit slower-moving: venture capital trends in Africa during 2020.

The Exchange has long explored quarterly and yearly data regarding the North American, European and Asian venture capital markets, along with data on particular startup categories. From today, we’ll also provide regular examinations of what’s happening in Africa.

As an aside, we’re sorry The Exchange didn’t come out yesterday. The world went mad and we had to tend to breaking news. We’re back! 

To dig into African venture capital results, we’re looking at a report concerning 2020 data from Briter Bridges, a research group that focuses on the continent’s private capital market. The Exchange also interviewed report author and Briter director Dario Giuliani about the collected data.

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

What emerges is a generally growing venture capital scene, but one that had mixed results in 2020 compared to 2019. However, if we control for an outsized investment or two, things smooth out rather nicely.

Let’s check the top-line figures, get insight from Giuliani concerning where the capital is flowing most rapidly, and wrap with a look at which startup categories are seeing the most investment in Africa today.

Africa’s 2020 venture capital results

During my time at Crunchbase News, I helped lead a team that generated acre-feet of reporting on the global and domestic venture capital markets. It’s difficult work that involves making decisions on what counts, what doesn’t and how to handle rounds that have not been disclosed publicly.

Over time, I’ve also become comfortable with venture data from PitchBook and CB Insights as well, and am now adding the Briter dataset to the trusted cohort.

During my chat with Giuliani, it became clear that his team is doing the hard and valuable work of carefully collating and sorting information. I say all of that simply to let you know that we now have a regular source for trustworthy information (compiled in concert with seventy different investing groups) on Africa that we’ll use regularly to keep tabs on the continent. This is a win.

So, what does the data say? We have to parse it some, as historically Briter has collated mega-deals — which it counts as investments of $90 million or more — and M&A in the same bucket. So, tracking just the dollar volume of African deals smaller than $90 million gives us the following set of results:

News: Cadeera is doing AI visual search for home decor

• January 29, 2021
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In recent years we’ve seen a whole bunch of visual/style fashion-focused search engines cropping up, tailored to helping people find the perfect threads to buy online by applying computer vision and other AI technologies to perform smarter-than-keywords visual search which can easily match and surface specific shapes and styles. Startups like Donde Search, Glisten and

In recent years we’ve seen a whole bunch of visual/style fashion-focused search engines cropping up, tailored to helping people find the perfect threads to buy online by applying computer vision and other AI technologies to perform smarter-than-keywords visual search which can easily match and surface specific shapes and styles. Startups like Donde Search, Glisten and Stye.ai to name a few.

Early stage London-based Cadeera, which is in the midst of raising a seed round, wants to apply a similar AI visual search approach but for interior decor. All through the pandemic it’s been working on a prototype with the aim of making ecommerce discovery of taste-driven items like sofas, armchairs and coffee tables a whole lot more inspirational.

Founder and CEO Sebastian Spiegler, an early (former) SwiftKey employee with a PhD in machine learning and natural language processing, walked TechCrunch through a demo of the current prototype.

The software offers a multi-step UX geared towards first identifying a person’s decor style preferences — which it does by getting them to give a verdict on a number of look book images of rooms staged in different interior decor styles (via a Tinder-style swipe left or right).

It then uses these taste signals to start suggesting specific items to buy (e.g. armchairs, sofas etc) that fit the styles they’ve liked. The user can continue to influence selections by asking to see other similar items (‘more like this’), or see less similar items to broaden the range of stuff they’re shown — injecting a little serendipity into their search. 

The platform also lets users search by uploading an image — with Cadeera then parsing its database to surface similar looking items which are available for sale.

It has an AR component on its product map, too — which will eventually also let users visualize a potential purchase in situ in their home. Voice search will also be supported.

“Keyword search is fundamentally broken,” argues Spiegler. “Image you’re refurbishing or renovating your home and you say I’m looking for something, I’ve seen it somewhere, I only know when I see it, and I don’t really know what I want yet — so the [challenge we’re addressing is this] whole process of figuring out what you want.” 

“The mission is understanding personal preferences. If you don’t know yourself what you’re looking for we’re basically helping you with visual clues and with personalization and with inspiration pieces — which can be content, images and then at some point community as well — to figure out what you want. And for the retailer it helps them to understand what their clients want.”

“It increases trust, you’re more sure about your purchases, you’re less likely to return something — which is a huge cost to retailers. And, at the same time, you may also buy more because you more easily find things you can buy,” he adds.

Ecommerce has had a massive boost from the pandemic which continues to drive shopping online. But the flip side of that is bricks-and-mortar retailers have been hit hard.

The situation may be especially difficult for furniture retailers that may well have been operating showrooms before COVID-19 — relying upon customers being able to browse in-person to drive discovery and sales — so they are likely to be looking for smart tools that can help them transition to and/or increase online sales.

And sector-specific visual search engines do seem likely to see uplift as part of the wider pandemic-driven ecommerce shift.

“The reason why I want to start with interior design/home decor and furniture is that it’s a clearly underserved market. There’s no-one out there, in my view, that has cracked the way to search and find things more easily,” Spiegler tells TechCrunch. “In fashion there are quite a few companies out there. And I feel like we can master furniture and home decor and then move into other sectors. But for me the opportunity is here.”

“We can take a lot of the ideas from the fashion sector and apply it to furniture,” he adds. “I feel like there’s a huge gap — and no-one has looked at it sufficiently.”

The size of the opportunity Cadeera is targeting is a $10BN-$20BN market globally, per Spiegler. 

The startup’s initial business model is b2b — with the plan being to start selling its SaaS to ecommerce retailers to integrate the visual search tools directly into their own websites.

Spiegler says they’re working with a “big” UK-based vintage platform — and aiming to get something launched to the market within the next six to nine months with one to two customers. 

They will also — as a next order of business — offer apps for ecommerce platforms such as WooCommerce, BigCommerce and Shopify to integrate a set of their search tools. (Larger retailers will get more customization of the platform, though.)

On the question of whether Cadeera might develop a b2c offer by launching a direct consumer app itself, Spiegler admits that is an “end goal”.

“This is the million dollar question — my end-goal, my target is building a consumer app. Building a central place where all your shopping preferences are stored — kind of a mix of Instagram where you see inspiration and Pinterest where you can keep what you looked at and then get relevant recommendations,” he says.

“This is basically the idea of a product search engine we want to build. But what I’m showing you are the steps to get there… and we hopefully end in the place where we have a community, we have a b2c app. But the way I look at it is we start through b2b and then at some point switch the direction and open it up by providing a single entry point for the consumer.”

But, for now, the b2b route means Cadeera can work closely with retailers in the meanwhile — increasing its understanding of retail market dynamics and getting access to key data needed power its platform, such as style look books and item databases.

“What we end up with is a large inventory data-set/database, a design knowledge base and imagery and style meta information. And on top of that we do object detection, object recognition, recommendation, so the whole shebang in AI — for the purpose of personalization, exploration, search and suggestion/recommendation,” he goes on, sketching the various tech components involved.

“On the other side we provide an API so you can integrate into use as well. And if you need we can also provide with a responsive UX/UI.”

“Beyond all of that we are creating an interesting data asset where we understand what the user wants — so we have user profiles, and in the future those user profiles can be cross-platform. So if you purchase something at one ecommerce site or one retailer you can then go to another retailer and we can make relevant recommendations based on what you purchased somewhere else,” he adds. “So your whole purchasing history, your style preferences and interaction data will allow you to get the most relevant recommendations.”

While the usual tech giant suspects still dominate general markets for search (Google) and ecommerce (Amazon), Cadeera isn’t concerned about competition from the biggest global platforms — given they are not focused on tailoring tools for a specific furniture/home decor niche.

He also points out that Amazon continues to do a very poor job on recommendations on its own site, despite having heaps of data.

“I’ve been asking — and I’ve been asked as well — so many times why is Amazon doing such a poor job on recommendations and in search. The true answer is I don’t know! They have probably the best data set… but the recommendations are poor,” he says. “What we’re doing here is trying to reinvent a whole product. Search should work… and the inspiration part, for things that are more opaque, is something important that is missing with anything I’ve seen so far.”

And while Facebook did acquire a home decor-focused visual search service (called GrokStyle) back in 2019, Spiegler suggests it’s most likely to integrate their tech (which included AR for visualization) into its own marketplace — whereas he’s convinced most retailers will want to be able to remain independent of the Facebook walled garden.

“GrokStyle will become part of Facebook marketplace but if you’re a retailer the big question is how much do you want to integrate into Facebook, how much do you want to be dependent on Facebook? And I think that’s a big question for a lot of retailers. Do you want to dependent on Google? Do you want to be dependent on Amazon? Do you want to be dependent on Facebook?” he says. “My guess is no. Because you basically want to stay as far away as possible because they’re going to eat up your lunch.”   

News: SEC issues statement on past week’s turbulent market activity prompted by Reddit-fueled GameStop run

• January 29, 2021
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The U.S. Securities and Exchange Commission (SEC) has issued an official statement on the tumult of the past week in the public stock market. It’s a relatively brief statement, and doesn’t mention any of the key players by name (aka GameStop, Reddit, Robinhood and others), but it does say acknowledge that “extreme stock price volatility

The U.S. Securities and Exchange Commission (SEC) has issued an official statement on the tumult of the past week in the public stock market. It’s a relatively brief statement, and doesn’t mention any of the key players by name (aka GameStop, Reddit, Robinhood and others), but it does say acknowledge that “extreme stock price volatility has the potential to expose investors to rapid and severe losses” which could “undermine market confidence,” and basically says the Commission is watching closely to ensure that it doesn’t.

The SEC statement does specify that it believes the “core market infrastructure” remains intact despite the heavy trading volumes of the past week, which were prompted primarily by activity organized by retail investors acting in concert through organization on r/WallStreetBets, a subreddit dedicated to day trading. These retail investors resolved to collectively purchase and hold GME stocks (and subsequently, shares in other companies like movie theater chain AMC) in a bid to sweat out hedge funds with significant short positions in the same.

The ensuing high volume of trading activity from individual retail investors led to various actions from platforms that provide free trading to these individuals, including Robinhood, Webull, Public and M1. Robinhood initially cited “protecting” its users as the reason for limits imposed, but later revealed that a lack of funding to cover trade clearances likely caused the temporary measures, since it tapped $500 million to $600 million in credit facility and raised $1 billion in funding overnight.

The SEC’s statement includes a callout that seems specifically directed at entities like Robinhood, and it’s fair to interpret it as a warning:

In addition, we will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws. Market participants should be careful to avoid such activity. Likewise, issuers must ensure compliance with the federal securities laws for any contemplated offers or sales of their own securities.

Robinhood has already had run-ins with the financial regulator for unrelated business practices. Meanwhile, lawmakers from both the House and the Senate, as well as NY AG Letitia James have all expressed their intent to review the event and all surrounding activities, which likely involves the role trading platforms like Robinhood played in the week’s events.

News: Robinhood raises $1B after trading halts to keep its platform running

• January 29, 2021
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After a turbulent week for the stock market and halts to the trading of certain speculative securities including GameStop (GME) and AMC, consumer investing app Robinhood has raised new capital. The new funds total more than $1 billion, with the company telling TechCrunch that they were raised from its existing investor base. The New York

After a turbulent week for the stock market and halts to the trading of certain speculative securities including GameStop (GME) and AMC, consumer investing app Robinhood has raised new capital. The new funds total more than $1 billion, with the company telling TechCrunch that they were raised from its existing investor base.

The New York Times reports that the company raised the new equity capital after tapping its credit lines for $500 to $600 million; the company did not answer a question from TechCrunch regarding its credit lines.

The reported drawdown matches reporting from yesterday indicating that Robinhood had accessed nine-figures of capital to ensure it had enough funds on hand to meet regulatory minimums and other requirements related to its users’ trading activity.

Individual retail investors, along with institutional capital, have attacked short positions in some stocks in recent weeks, leading to a tug-of-war between bullish investors and bearish wagers; the resulting tumult led to surging volume for volatile stocks, leading to Robinhood needing more capital to keep its gears turning.

In a post discussing its decision yesterday to restrict trading on select securities, Robinhood wrote that it has “many financial requirements, including SEC net capital obligations and clearinghouse deposits,” adding that “some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment.”

The unicorn consumer fintech company halted trading in stocks like GameStop that had become the center of the trading storm yesterday, leading to frenetic accusations from incensed users that something nefarious was afoot. Later in the day the clearing house entity powering trading for other consumer trading services also halted service for a similar set of stocks.

Robinhood told users that it would allow trading to begin in some fashion today in shares it had previously restricted.

It does not appear that the current trading scrap will abate soon. Shares of GameStop, the most famous so-called “meme stock” in the current trading war, is up just under 94% this morning in pre-market trading, implying that many investors are willing to continue pushing its value higher in hopes of breaking short bets laid by other investors.

One result of the current climate is a boom in demand for trading apps. Today on the US iOS App Store, Robinhood is ranked first; Webull, a rival service is second; Reddit, a hub for trading gossip mostly via r/WallStreetBets is third; Coinbase a popular crypto trading service is fourth in line. Square’s Cash App, which allows for share purchases is ranked seventh, Fidelity’s iOS app comes in tenth place, and TD Ameritrade is 16th. Finally, E*Trade’s own app is ranked 18th. That’s a good showing for fintech, both startup and incumbent alike.

No one knows what comes next, how the trades play out, and if the present-day surge in retail interesting in stock trading will persist. What does seem clear, however, is that today is going to be very silly.

News: Johnson & Johnson’s COVID-19 vaccine is 85% effective against severe cases, and 66% effective overall per trial data

• January 29, 2021
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Another COVID-19 vaccine is almost ready to begin being distributed – a single-shot inoculation made by Johnson & Johnson’s Janssen pharmaceutical subsidiary. The company just released an efficacy report based on data from its Phase 3 trial, which found that the new vaccine is 66% effective overall in preventing moderate to severe incarnations of COVID-19

Another COVID-19 vaccine is almost ready to begin being distributed – a single-shot inoculation made by Johnson & Johnson’s Janssen pharmaceutical subsidiary. The company just released an efficacy report based on data from its Phase 3 trial, which found that the new vaccine is 66% effective overall in preventing moderate to severe incarnations of COVID-19 in those who received the jab, and 85% effective in preventing sever disease.

Those numbers aren’t as impressive as the reported figures for the Moderna and Pfizer/BioNTech vaccines that are already being distributed via emergency FDA approval, both of which reported 90+% efficacy. But Johnson & Johnson’s vaccine is a single shot rather than a two-course treatment, which should make it much easier to distribute much more quickly. The vaccine also showed 100% efficacy in preventing hospitalization or death among participants in the trial, 28 days after vaccination, which is a key measure when considering the broader impact of COVID-19 on healthcare resources, and efficacy varied by region, with the jab proving 72% effective in the U.S. across moderate and severe cases vs. 66% globally.

It’s also important to note that Johnson & Johnson’s Phase 3 trial is happening amid the emergence of new strains of the virus, including much more contagious versions like the UK and South African variants. At the time that both Moderna and BioNTech released their trial data, these variants hadn’t yet emerged or been confirmed by pandemic researchers.

Johnson & Johnson’s vaccine uses a modified version of a common cold virus to deliver DNA that provides a person’s body with instructions on building a replica of the spike protein that SARS-CoV-2 uses to attach to cells. The modified adenovirus can’t replicate in human cells, however, meaning it won’t lead to illness – only an immune response that can later be employed to combat contracting the virus that leads to COVID-19. This adenovirus method is much more proven in terms of use in human patients vs. the mRNA method that the other vaccines currently in use employ.

All of which is to say, despite headline numbers that appear to fall short relative to the data we’ve seen from Moderna and Pfizer, this Johnson & Johnson report is actually very encouraging. The company says it expects to file a request for an Emergency Use Approval (EUA) from the FDA in February, which could see it begin to be distributed next month, adding yet another weapon in the arsenal to combat the global pandemic.

News: Uber’s Autocab acquisition gets eyed by UK competition watchdog

• January 29, 2021
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Uber’s plan to acquire Autocab, a maker of SaaS for booking and dispatch software for the taxi and private hire vehicle industry which also operates a global trip marketplace for taxis and PHVs (iGo), is being looked at by the UK’s competition watchdog — which announced the launch of an inquiry today. The deadline for

Uber’s plan to acquire Autocab, a maker of SaaS for booking and dispatch software for the taxi and private hire vehicle industry which also operates a global trip marketplace for taxis and PHVs (iGo), is being looked at by the UK’s competition watchdog — which announced the launch of an inquiry today.

The deadline for a decision by the Competition and Markets Authority (CMA) on whether to refer the merger for an in-depth investigation is March 26.

Uber announced its intention to acquire UK-based Autocab last August.

Competition considerations could arise if Uber, a provider of ride-hailing services that competes with traditional taxis and private hire vehicle firms for customers, were to shutter Autocab’s alternative trip booking marketplace or close it in selective markets where its own ride-hailing service operates, for example.

Although, at the time it announced the acquisition, Uber said it planned to support Autocab’s expansion of SaaS and iGo internationally. The move also looks intended to create more opportunities for Uber drivers to pick up jobs from outside its own platform, including delivery work, as ride-hailing has faced a demand squeeze during the COVID-19 pandemic. 

Nonetheless, the overlap between Autocab’s iGo marketplace and Uber’s core rides service certainly merits questions being asked about risks to competition.

The CMA has opened an invitation for comment on the merger — with a February 12 deadline for submissions.

“The CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” it writes, adding: “To assist it with this assessment, the CMA invites comments on the transaction from any interested party.”