Monthly Archives: May 2021

News: Peloton apologizes, agrees to treadmill recall

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Peloton today announced that it will be cooperating with the U.S. Consumer Product Safety Commission (CPSC), agreeing to two voluntary treadmill recalls for the Tread+ and Tread versions of its home treadmill system. Those who have purchased the systems can contact the connected fitness company for a refund. The company has also agreed to stop

Peloton today announced that it will be cooperating with the U.S. Consumer Product Safety Commission (CPSC), agreeing to two voluntary treadmill recalls for the Tread+ and Tread versions of its home treadmill system.

Those who have purchased the systems can contact the connected fitness company for a refund. The company has also agreed to stop selling and distributing both models in the U.S. Last month, CEO John Foley said the company was “troubled” by the CPSC’s decision to go public with its findings, calling them “inaccurate and misleading.” Today’s news finds the executive offering a much more contrite statement.

“The decision to recall both products was the right thing to do for Peloton’s Members and their families,” Foley says. “I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+.  We should have engaged more productively with them from the outset. For that, I apologize. Today’s announcement reflects our recognition that, by working closely with the CPSC, we can increase safety awareness for our Members.”

The voluntary recalls are a response to on-going safety concerns around the fitness equipment. The CPSC cites more 70 incidents in total, including the death of a young child. According to the commission, “a six-year-old child recently died after being pulled under the rear of the treadmill. In addition, Peloton has received 72 reports of adult users, children, pets and/or objects being pulled under the rear of the treadmill, including 29 reports of injuries to children such as second- and third-degree abrasions, broken bones, and lacerations.”

CPSC acting chairman Robert S. Adler said in a statement, “I am pleased that the U.S. Consumer Product Safety Commission and Peloton have come to an agreement to protect users of the Peloton Tread+ and Tread products. The agreement, which the Commission voted this morning to accept, requires Peloton to immediately stop selling and distributing both the Tread+ and Tread products in the United States and refund the full purchase price to consumers who wish to return their treadmills. The agreement between CPSC and Peloton is the result of weeks of intense negotiation and effort, culminating in a cooperative agreement that I believe serves the best interests of Peloton and of consumers.”

The recall includes some 125,000 Tread+ (the older system, renamed with the arrival of a new budget device) and 1,050 Tread models in the U.S., along with an additional 5,400 in Canada. The warning issued alongside the Tread+ recalls states, “Adult users, children, pets and objects can be pulled underneath the rear of the treadmill, posing a risk of injury or death,” while the Tread’s notes, “The touchscreen on the treadmill can detach and fall, posing a risk of injury to consumers.” 

Consumers will have until November 6, 2022 for a full refund. After that, the company will only issue an undetermined partial refund.

The company’s initial pushback owed, in part, to the fact that home fitness equipment has long been known to present safety concerns — particularly with small children and pets present. It seems likely that we’ll hear more on Peloton’s stance during tomorrow’s earnings call. The company had a banner 2020, due to the pandemic, but shares have dropped 8% on the news. Today also saw some key security concerns with its platform go public earlier today.

News: 4 strategies for building a digital health unicorn

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The influx of capital to healthcare shouldn’t be surprising; the pandemic made it clear that digital health is the future. But building a healthcare unicorn requires founders who are long on vision.

It’s an entrepreneur’s market in digital health today, with startups raising record-breaking funding at soaring valuations and debuting on public markets to eager investors.

According to CB Insights, as of March 3, 2021, there are 51 healthcare unicorns — “startups” — worth $1 billion or more around the world. Global venture capital funding, including private equity and corporate VC, into digital health was the highest ever in the first quarter 2021 at $7.2 billion, according to Mercom Capital Group.

The massive influx of capital to healthcare should not be surprising; the pandemic has made it starkly clear that digital health is the future of healthcare. To that end, we should anticipate additional healthcare exits worth more than $1 billion in the near term. Which again, is great for entrepreneurs — as long as they understand how hard it is to build a unicorn in healthcare. Today, becoming a unicorn requires founders who are long on vision and operational experience.

Company founders most often turn to veteran investors for help with grand-slam strategies to create the next healthcare unicorn. That’s why many of them seek counsel from the Merck Global Health Innovation Fund: Because we have the experience, resources, successful track record and networks to build real scale in digital health.

During the pandemic, lots of investors jumped in to invest in digital health for the first time. But we’ve been investing for more than a decade. Two of our portfolio companies, Preventice Solutions and Livongo, exited last year as unicorns, rounding out the $6.2 billion in digital health market value MGHIF has exited over the last two years. And we are expecting two more unicorn exits in 2021. But we’re not stopping there; we’ll be investing our $500 million fund in drone-supported supply chain technologies, telehealth, AI, digital pathology, remote clinical trials and Internet of Medical Things (IoMT).

Given our success, here are four instrumental strategies to building a unicorn in digital health that we know work.

Raise the “right amount” of capital to build the right company

We often ask entrepreneurs: Would you rather own 20% of a $50 million company or 5% of a $1 billion company? To most, the answer is obvious. In our experience, too many entrepreneurs worry about dilution and never raise the right amount of capital.

It’s well known that companies with rapidly growing revenues are valued at a premium — but it’s important to remember that this is hard to do in healthcare. Getting to scale takes time because healthcare is so complicated and involves so many stakeholders.

News: The morality and efficacy of going public earlier

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Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. For this week’s deep dive Natasha and Alex and Chris dug into the world of the IPO. Not just the numbers and the metrics and the calculations of valuations at diluted, and non-diluted share counts. No. We wanted to talk about the

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

For this week’s deep dive Natasha and Alex and Chris dug into the world of the IPO. Not just the numbers and the metrics and the calculations of valuations at diluted, and non-diluted share counts. No. We wanted to talk about the morality and efficacy of going public.

So to round out our conversation we enlisted Steve Cakebread, the CFO of Yext and Garth Mitchell, the CFO of Latch. Cakebread is known for being aboard the Salesforce, Pandora, and Yext’s IPOs. Mitchell has sat on both sides of the table during the IPO process, and is currently helming the money equations as Latch approaches the public markets via a SPAC.

For more context, Yext, a company that first launched at a Techcrunch event back in 2009, provides data tooling and search software to businesses, while Latch builds software and hardware for rental-focused buildings. Yext is public. Latch will be in a few months.

Back to our topic, we asked Cakebread to talk about his thesis on why going public earlier than later can help a company’s maturity process and can help provide greater returns to the general public. The CFO has written a rather good book about the IPO process more generally and what it means for a company’s internal processes, but his morality notes especially stood out because its an argument far less noisy than the POP critics. Baked beans comes up, somehow!

We also asked Mitchell to talk about Latch’s choice to go public, and what opportunities and challenges the SPAC route brings for the company. Of course, there’s a SPAC joke in there (or two), but we get into broader “what’s next” debates about if more companies will start to leave the private world, venture capital’s role in this whole mess, and the financial lift of going to the public market.

Hope you enjoyed the show, and get excited: Equity is going to have more guests on from time to time, and we welcome any suggestions you want to throw at us. 

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

News: Dear Sophie: Can I transfer my H-1B to a startup I founded?

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I’d like to establish my own company while maintaining my current, secure job. Can I keep working on the H-1B, found my own company, and then have my startup sponsor me for an H-1B or another visa?

Here’s another edition of “Dear Sophie,” the advice column that answers immigration-related questions about working at technology companies.

“Your questions are vital to the spread of knowledge that allows people all over the world to rise above borders and pursue their dreams,” says Sophie Alcorn, a Silicon Valley immigration attorney. “Whether you’re in people ops, a founder or seeking a job in Silicon Valley, I would love to answer your questions in my next column.”

Extra Crunch members receive access to weekly “Dear Sophie” columns; use promo code ALCORN to purchase a one- or two-year subscription for 50% off.

Dear Sophie,

I’ve been working for a large tech company on an H-1B visa for about a year and a half. I’d like to establish my own company while maintaining my current, secure job.

Can I keep working on the H-1B, found my own company, and then have my startup sponsor me for an H-1B or another visa?

— Scrappy in Santa Clara

Hi Scrappy,

You need to be very careful while navigating this process because there are many different legal requirements that you need to pay careful attention to so you comply with U.S. immigration laws. But yes, it is possible for you to own a portion of a business on H-1B, and it is possible for a founder to obtain an H-1B transfer to work at the startup.

Take a listen to a recent podcast episode in which I discuss having two H-1B jobs — or concurrent H-1Bs. Concurrent H-1Bs enable your second employer — in this case, your startup — to avoid having to go through the H-1B lottery process because you have already gone through that process with your current employer.

Consult with experienced attorneys

Be kind to your attorneys — you will need their support to navigate this process! Before you embark on creating your startup, you should review and discuss your employment contract and NDA with an employment lawyer.

Big companies often require employees to obtain their consent prior to forming a startup. You should also consult with an experienced immigration attorney when considering embarking on this path and determining how to structure your startup. The H-1B has specific requirements that you and your startup must meet to qualify.

Employer-employee requirement

As you probably already know, the H-1B visa allows you to work for a specific employer in a specific job at a specific location. That means you cannot work for or at your startup under your current H-1B. Therefore, we often advise clients not to found any startup as a sole proprietorship. There will probably need to be a corporation or a limited liability company.

You may be advised to find a co-founder or two. One of the key requirements for the H-1B that you need to keep in mind is your startup and you must have an employer-employee relationship. That means someone at your startup, such as a co-founder, must have the ability to hire you, supervise you, hold you accountable for poor job performance, and fire you, according to the terms and conditions of the H-1B.

Also, you may need to work with a corporate attorney to draft certain bylaws, and it can be helpful if you personally own less than 50 percent of your startup. All of these things depend on the specific details of your situation, so definitely talk to experienced attorneys to guide you through, step by step!

Image Credits: Joanna Buniak / Sophie Alcorn (opens in a new window)

Salary requirement

Your position and your startup must meet other requirements for an H-1B. To qualify for an H-1B, the future position must meet the definition of a “specialty occupation.” That means your position requires theoretical and practical application of highly specialized knowledge.

It also means you must have at least a bachelor’s degree or equivalent experience in a field that’s directly related to the position.

Moreover, your startup must be able to pay you the prevailing wage for the position and for the location where your startup or the position is based. Prevailing wages, which are determined by the U.S. Department of Labor, are broken down into four levels based on experience, with Level I being an entry-level position and Level IV being the most experienced.

Before filing an H-1B petition on your behalf to U.S. Citizenship and Immigration Services (USCIS), your startup’s immigration attorney will have to first submit a Labor Condition Application (LCA) for certification by the Labor Department of Labor. An LCA seeks to ensure that the wages and working conditions of American workers are not negatively impacted by an H-1B position.

Equity in a company and stock options are not considered wages in the H-1B context. Therefore, your startup will need to show that it can afford to pay you the prevailing wage as well as support business operations.

If you’re pre-revenue, this can be shown by a business plan plus your bank statements showing your runway from an initial investment. The amounts required depend on the details of your company’s situation.

Other things to keep in mind

There are no restrictions on the number of hours an individual on an H-1B must work. An H-1B position can be full-time or part-time or involve working just a few hours a week. Take a listen to my podcast on best practices for submitting a strong H-1B petition.

Concurrent H-1B employment can last as long as the original H-1B with your large tech employer. If you want to remain permanently in the United States, you or one of the companies sponsoring your H-1B should apply for a green card at least a year before your sixth year on the H-1B. (If you apply for a green card before your sixth year on an H-1B, the sponsoring employer can continue to extend your H-1B beyond six years until you receive your green card so you don’t have to leave the United States to apply at a U.S. embassy in your home country).

If you want to apply for a green card on your own, consider the EB-1A green card for individuals with extraordinary ability or the EB-2 NIW (National Interest Waiver) for individuals with exceptional ability.

Other employment-based green cards, such as the EB-2 green card for professionals holding advanced degrees and EB-3 for skilled workers and professionals, require an employer to sponsor you as well as the PERM process, which can be challenging if you own substantial equity in the company.

Check with your current employer to find out if the company is willing to sponsor you for a green card. Depending on the timing, you might be able to bypass a second H-1B completely, avoiding the employer-employee relationship restrictions with your startup venture.

The work permit that comes in the I-485 adjustment of status process is unrestricted as to the type of employment in which you can engage!

Wishing you the best on your journey,

Sophie

Have a question for Sophie? Ask it here. We reserve the right to edit your submission for clarity and/or space.

The information provided in “Dear Sophie” is general information and not legal advice. For more information on the limitations of “Dear Sophie,” please view our full disclaimer. You can contact Sophie directly at Alcorn Immigration Law.

Sophie’s podcast, Immigration Law for Tech Startups, is available on all major platforms. If you’d like to be a guest, she’s accepting applications!

News: Timescale grabs $40M Series B as it goes all in on cloud version of time series database

• May 5, 2021
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Timescale, makers of the open source TimescaleDB time series database, announced a $40 million Series B financing round today. The investment comes just over two years after it got a $15 million Series A. Redpoint Ventures led today’s round with help from existing investors Benchmark, New Enterprise Associates, Icon Ventures and Two Sigma Ventures. The

Timescale, makers of the open source TimescaleDB time series database, announced a $40 million Series B financing round today. The investment comes just over two years after it got a $15 million Series A.

Redpoint Ventures led today’s round with help from existing investors Benchmark, New Enterprise Associates, Icon Ventures and Two Sigma Ventures. The company reports it has now raised approximately $70 million.

TimescaleDB lets users measure data across a time dimension, so anything that would change over time. “What we found is we need a purpose-built database for it to handle scalability, reliability and performance, and we like to think of ourselves as the category-defining relational database for time series,” CEO and co-founder Ajay Kulkarni explained.

He says that the choice to build their database on top of Postgres when it launched 4 years ago was a key decision. “There are a few different databases that are designed for time series, but we’re the only one where developers get the purpose-built time series database plus a complete Postgres database all in one…,” he said.

While the company has an open source version, last year it decided rather than selling an enterprise version (as it had been), it was going to include all of that functionality in the free version of the product and place a bet entirely on the cloud for revenue.

“We decided that we’re going to make a bold bet on the cloud. We think cloud is where the future of database adoption is, and so in the last year, […] we made all of our enterprise features free. If you want to test it yourself, you get the whole thing, but if you want a managed service, then we’re available to run it for you,” he said.

The community approach is working to attract users, with over 2 million monthly active databases, some of which the company is betting will convert to the cloud service over time. Timescale is based in New York City, but it’s a truly remote organization with 60 employees spread across 20 countries and every continent except Antarctica.

He says that as a global company, it creates new dimensions of diversity and different ways of thinking about it. “I think one thing that is actually kind of an interesting challenge for us is what does D&I mean in a totally global org. A lot of people focus on diversity and inclusion within the U.S., but we think we’re doing better than most tech companies in terms of racial diversity, gender diversity,” he said.

And being remote first isn’t going to change even when we get past the pandemic. “I think it may not work for every business, but I think like being remote first has been a real good thing for us,” he said.

News: Facebook’s hand-picked ‘oversight’ panel upholds Trump ban — for now

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Facebook’s content decision review body, a quasi-external panel that’s been likened to a ‘Supreme Court of Facebook’ but isn’t staffed by sitting judges, can’t be truly independent of the tech giant which funds it, has no legal legitimacy or democratic accountability, and goes by the much duller official title ‘Oversight Board’ (aka the FOB) —

Facebook’s content decision review body, a quasi-external panel that’s been likened to a ‘Supreme Court of Facebook’ but isn’t staffed by sitting judges, can’t be truly independent of the tech giant which funds it, has no legal legitimacy or democratic accountability, and goes by the much duller official title ‘Oversight Board’ (aka the FOB) — has just made the biggest call of its short life…

Facebook’s hand-picked ‘oversight’ panel has voted against reinstating former U.S. president Donald Trump’s Facebook account.

However it has sought to row the company back from an ‘indefinite’ ban — finding fault with its decision to impose an indefinite restriction, rather than issue a more standard penalty (such as a penalty strike or permanent account closure).

In a press release announcing its decision the board writes:

“Given the seriousness of the violations and the ongoing risk of violence, Facebook was justified in suspending Mr. Trump’s accounts on January 6 and extending that suspension on January 7.

However, it was not appropriate for Facebook to impose an ‘indefinite’ suspension.

It is not permissible for Facebook to keep a user off the platform for an undefined period, with no criteria for when or whether the account will be restored.”

The board wants Facebook to revision its decision on Trump’s account within six months — and “decide the appropriate penalty”. So it appears to have succeeded in… kicking the can down the road.

The FOB is due to hold a press conference to discuss its decision shortly so stay tuned for updates.

This story is developing… refresh for updates…

It’s certainly been a very quiet five months on mainstream social media since Trump had his social media ALL CAPS megaphone unceremoniously shut down in the wake of his supporters’ violent storming of the capital.

For more on the background to Trump’s deplatforming do make time for this excellent explainer by TechCrunch’s Taylor Hatmaker. But the short version is that Trump finally appeared to have torched the last of his social media rule-breaking chances after he succeeded in fomenting an actual insurrection on U.S. soil on January 6. Doing so with the help of the massive, mainstream social media platforms whose community standards don’t, as a rule, give a thumbs up to violent insurrection…

News: “Knowledge-as-a-service” platform Lynk announces collaboration with UBS

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Lynk announced today that its “knowledge-as-a-service” platform will be integrated into UBS’ investment process. The collaboration means the banking giant’s research analysts and institutional clients, including hedge funds, private equity firms and sovereign wealth funds, will have access to Lynk’s database of 840,000 experts around the world. Founded in 2015, Lynk has raised a total

Lynk announced today that its “knowledge-as-a-service” platform will be integrated into UBS’ investment process. The collaboration means the banking giant’s research analysts and institutional clients, including hedge funds, private equity firms and sovereign wealth funds, will have access to Lynk’s database of 840,000 experts around the world.

Founded in 2015, Lynk has raised a total of $30 million in funding, including a $24 million round announced in January that was led by Brewer Lane Ventures and MassMutual Ventures, with participation from the Alibaba Entrepreneurs Fund. The startup has offices in New York, Hong Kong, Singapore, Mumbai, Shanghai and Toronto, and serves about 200 enterprise clients, including Fortune 500 corporations, investment firms and government agencies.

UBS’s global research analysts now have access to Lynk’s database of experts, while UBS Global Markets will introduce the startup’s solutions to its institutional clients.

Lynk’s technology uses machine learning algorithms to match clients with experts in its database. Lynk’s experts cover a wide range of industries and sectors and include C-suite executives, independent consultants, lawyers, engineers, financial analysts and scientists. The platform also has collaboration tools, so teams can automatically transcribe question-and-answer sessions, search transcripts and share notes.

“Our platform capabilities, the scope and depth of our network and our customer service that’s paired with technology is really quite synergistic with how UBS is looking at their business,” Lynk co-founder and chief executive officer Peggy Choi told TechCrunch. “They have demonstrated a very strong innovation track record in the equity research space, so this is a great extension to their suite of offerings.”

During the pandemic, Lynk’s clients in the investment sector have used it to perform research and due diligence on potential investments remotely, which Choi expects to continue even after travel picks up again.

“Relying on on-the-ground experts, working with them to verify assumptions and develop convictions before making an investment is a must,” said Choi. “We’re really seeing a structural change and that is also what UBS is hearing from its customers.”

In press statement, UBS Global Head of Research Dan Dowd said, “We are proud of our innovation track record and are highly focused on helping investors get to the crux of key investment debates as rapidly as possible. Showcasing Lynk’s technology and expertise has the potential to substantially accelerate the investment processes of our clients.”

News: This startup wants to bring clarity to the complex world of IVF

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About 180 million people globally suffer from infertility. In the United States, one in eight families have trouble conceiving. The statistics are only getting worse, as male infertility and miscarriages continue to increase. Alife Health, a San Francisco-based startup founded by Paxton Maeder-York, thinks it can help. The startup wants to use artificial intelligence to

About 180 million people globally suffer from infertility. In the United States, one in eight families have trouble conceiving. The statistics are only getting worse, as male infertility and miscarriages continue to increase.

Alife Health, a San Francisco-based startup founded by Paxton Maeder-York, thinks it can help. The startup wants to use artificial intelligence to increase fertility outcomes. Specifically, it wants to optimize in vitro fertilization, a fertility treatment that requires a series of expensive and emotionally-taxing procedures with varied success rates.

Founded last year, the startup just raised a $9.5 million seed round, led by Lux Capital. Other investment firms include Amplo, IA Ventures and Springbank Collective as well as angel investors such as Anne Wojcicki, the founder and CEO of 23andMe, Fred Moll, the founder of Intuitive Surgical and Auris, and Amira Yahyaoui, the founder of Mos and Sequoia Scout.

“I personally believe that improving the quality of care through personalized treatments and reducing costs by increasing the success outcome rate can be incredibly impactful here, not just for the broader population but also specifically for minority groups,” Maeder-York said.

The founder began his career building surgical robots to fight lung cancer at Auris Health which was acquired by Johnson & Johnson in 2019. Now, he’s onto finding a way to help physicians and patients go through the process of IVF.

FYI, IVF

In vitro fertilization, or IVF, takes on average three to six cycles to get pregnant, and each cycle can cost between $10,000 to $20,000 in the United States. Every woman who goes through the process has to be injected with hormones weekly or biweekly – and even then, success is varied. And beyond steep costs and a long process, anyone who goes through the IVF process often has to endure the emotional toll.

Alife Health could alleviate some uncertainty around the complex process if it succeeds.

Currently, there are startups that focus on disrupting IVF from its cost to its accessibility. Maeder-York thinks that there is no single point solution that can fix the process, so he wants to optimize each part, step by step, from education and awareness, and clinical workflows to the actual embryo selection.

While Alife Health’s long-term goal is to use AI in all aspects of the IVF process, at this point, the technology is only used in one step for Alife Health: the embryo selection process.

Alife Health plans to begin its AI-powered IVF solution through embryo selection. During IVF, future parents might create multiple embryos. It’s then on the doctor to look at that embryo image through a microscope and figure out which is most likely to survive, taking into account patient information.

Alife Health is inserting machine learning based on a massive set of historical data it has aggregated, into the embryo selection equation. Maeder-York said that they plan to use data to understand what the “optimal order of transfer is” and then improve chances of a pregnancy, so people don’t have to go through IVF for the third or fourth time.

“It’s been trained on thousands and thousands of images, knowing that this image and this patient turned into a successful pregnancy, “he said. Once machine learning finds a pattern it can move forward with a recommendation and help future parents prioritize which embryos to transfer.

Pandemic baby

Alife Health is not alone. Two other startups,Embryonic and Mojo, claim they have the AI needed to spot a healthy embryo and improve IVF success.

Israel-based Embryonic is in the early stages of its business and has minimal efficacy proof at this point. Mojo uses microscopy hardware and AI software to focus on sperm counts and then better pick strong sperm for the IVF. Internally testing of Mojo Pro shows that the system is 97% accurate compared to manual sperm counting.

Alife Health is a hardware agnostic program so unlike Mojo, for example, a provider doesn’t need to use or buy a special microscope to use its product.

Deena Shakir, partner at Lux Capital, is joining Alife Health’s board as part of the translation. Shakir said she spent over a year meeting with the team and other IVF-focused startups to develop her thesis before eventually cutting a check. She pointed out a number of reasons that Alife Health stood out to her, primarily its focus on an end-to-end solution at the IVF process, but also its clinician-friendly approach.

“Other kludgey solutions require additional interfaces, hardware, [and] time,” she said. “Clinicians don’t have an appetite for that in their daily workflows. It needs to be intuitive.”

Deena Shakir, partner at Lux Capital, and Paxton Maeder-York, founder of Alife Health

Along with being a software-only solution, Alife Health sees part of its competitive edge as its partnerships with clinics. It has spent years cultivating a network of IVF clinics – and their data on prior cases, treatments and outcomes – to get a representative set that could be used to help any person receiving IVF treatment, it says.

“Unfortunately, women have been consistently underrepresented in research and minority women, black women have been incredibly underrepresented in research,” Maeder-York said. “The fact that our data set is so well stratified and representative of these groups means that when we [see] a patient of one off these minority groups, we’re going to be in a really unique position to give them answers and personalized care.”

Alife Health declined to release information about the efficacy of its AI, and it is still yet to get regulatory approval. Fittingly, millions of dollars should help it get to this next, and crucial phase.

News: With backers like Tiger Global, LatAm crypto exchange Bitso raises $250M at a $2.2B valuation

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Bitso, a regulated crypto exchange in Latin America, announced today it has raised $250 million in a Series C round of funding that values the company at $2.2 billion. Tiger Global and Coatue co-led the round, which also included participation from Paradigm, BOND & Valor Capital Group and existing backers QED, Pantera Capital and Kaszek.

Bitso, a regulated crypto exchange in Latin America, announced today it has raised $250 million in a Series C round of funding that values the company at $2.2 billion.

Tiger Global and Coatue co-led the round, which also included participation from Paradigm, BOND & Valor Capital Group and existing backers QED, Pantera Capital and Kaszek.

The news caught our attention for several reasons. For one, it comes just four months after the startup raised $62 million in a Series B round. Secondly, the company believes the funding makes it the most valuable crypto platform in Latin America. And lastly, it also makes the company one of the most highly valued fintechs in the region.

Last year was a good one for Bitso, which says it processed more than $1.2 billion in international payments — including remittances and payments between companies — during 2020 alone. Bitso says it also has surpassed 2 million users. These two milestones, the company argues, is evidence of the growing use of crypto as an everyday financial tool in the region.

Demand for crypto assets and crypto-enabled financial products have soared in popularity both for individuals and businesses in the region, according to Bitso, which aims to be “the safest, most transparent, and only regulatory compliant platform” in Latin America. The company also says it’s the only player in the region to offer crypto-insurance for its client’s funds.

“The growth of the crypto ecosystem this year has been remarkable. It took Bitso six years to get its first million clients. Now — less than 10 months later — we have reached the 2 million mark,” said Bitso co-founder and CEO Daniel Vogel. But the metrics he is most proud of are that Bitso has also more than doubled the assets on its platform in the last five months and that its transacting volume during the 2021 first quarter exceeded the transaction volume it did in all of 2020.

Bitso was founded in January 2014 and acquired its first customer in April of that year.

Bitso’s mission, put simply, is to build next-generation borderless financial services for consumers and businesses alike. “Cryptocurrencies are the future of finance and Bitso makes the future available today,” the company says.

“Bitso offers products and services for individuals and businesses to use crypto in their everyday life,” Vogel said. “In some parts of the world, crypto is associated with speculation. Bitso’s customers rely on the technology for everyday uses from receiving remittances to engaging in international commerce.”

Image Credits: Bitso

Bitso says its “global-minded” product offerings fit the needs of local customers in Mexico, Argentina and now Brazil, where it just launched its retail operations. The company plans to use its new capital toward broadening its capabilities and product offering. It also plans to expand its operations in other Latin American countries in the coming months. In January, the Financial Superintendence of Colombia announced Bitso as one of the authorized companies in its Sandbox and crypto pilot program.

Bitso’s upcoming products include a crypto derivatives platform and interest bearing accounts for crypto.

“This is a pivotal moment for the future of finance in Latin America,” Vogel told TechCrunch. “We see a significant amount of traditional financial infrastructure in the region being replaced by crypto. We plan to use this funding to continue that trend by expanding our product offering for individuals and businesses.”

Naturally, Bitso’s investors are bullish on the company’s potential.

QED Investors co-founder and managing partner Nigel Morris admits that in the past he was “a crypto denier.”

“For the longest time, we didn’t see a way [that] crypto fit [into our portfolio]. It wasn’t clear until recently that the use cases for crypto expanded much beyond speculative trading. There are now a whole series of conventional banking products that we can wrap around it,” Morris told TechCrunch.

Bitso’s mission, he said, is to “make crypto useful” and QED believes the company is succeeding at doing just that.

“Daniel and the entire Bitso team is passionate about taking the mystique out of crypto. Crypto is not going away; it’s going to be here for the future,” Morris said. “By sitting at the intersection of crypto and traditional financial institutions, Bitso has a promise to provide lower-cost, friction-free financial services to entire populations of individuals who otherwise would be excluded — a laudable and unique mission indeed.”

Bitso, he added, is learning from the crypto experience in the U.S. and around the world.

“Not making the same mistakes and leaning into the emerging regulatory landscape has been a competitive advantage to Bitso’s success in Mexico,” Morris said. “As Bitso grows throughout the regions, they certainly have a leg up and might even leapfrog crypto adoption in the U.S.”

“Crypto is rapidly gaining adoption in Latin America,” said Tiger Global Partner Scott Shleifer, in a written statement. “We are excited to partner with Bitso and believe they have the right team and platform to increase share in this growing market.”

Founded in 2014, Bitso has more than 300 employees across 25 different countries. That compares to 116 employees last year at this time. In particular, its growth in Brazil is increasing exponentially.

“We’ve gone from 1 to 26 Bitsonauts already based in Brazil, with many more working from abroad, and plan to 3X our number of hires in Brazil by the end of the year,” Vogel said, who acknowledged that the pandemic really impacted his company via the shift to remote work. “As we expand our reach into new territories, it has become a lot easier to meet staffing needs when the requirements are based on knowledge over geography.”

Bitso’s leadership is mostly based in Mexico, but the company also has offices in Buenos Aires, São Paolo and Gibraltar.

News: Peloton’s leaky API let anyone grab rider’s private account data

• May 5, 2021
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Halfway through my Monday afternoon workout last week, I got a message from a security researcher with a screenshot of my Peloton account data. My Peloton profile is set to private and my friend’s list is deliberately zero, so nobody can view my profile, age, city, or workout history. But a bug allowed anyone to

Halfway through my Monday afternoon workout last week, I got a message from a security researcher with a screenshot of my Peloton account data.

My Peloton profile is set to private and my friend’s list is deliberately zero, so nobody can view my profile, age, city, or workout history. But a bug allowed anyone to pull users’ private account data directly from Peloton’s servers, even with their profile set to private.

Peloton, the at-home fitness brand synonymous with its indoor stationary bike, has more than three million subscribers. Even President Biden is even said to own one. The exercise bike alone costs upwards of $1,800, but anyone can sign up for a monthly subscription to join a broad variety of classes.

As Biden was inaugurated (and his Peloton moved to the White House — assuming the Secret Service let him), Jan Masters, a security researcher at Pen Test Partners, found he could make unauthenticated requests to Peloton’s API for user account data without it checking to make sure the person was allowed to request it. (An API allows two things to talk to each other over the internet, like a Peloton bike and the company’s servers storing user data.)

But the exposed API let him — and anyone else on the internet — access a Peloton user’s age, gender, city, weight, workout statistics, and if it was the user’s birthday, details that are hidden when users’ profile pages are set to private.

Masters reported the leaky API to Peloton on January 20 with a 90-day deadline to fix the bug, the standard window time that security researchers give to companies to fix bugs before details are made public.

But that deadline came and went, the bug wasn’t fixed, and Masters hadn’t heard back from the company, aside from an initial email acknowledging receipt of the bug report. Instead, Peloton only restricted access to its API to its members. But that just meant anyone could sign up with a monthly membership and get access to the API again.

TechCrunch contacted Peloton after the deadline lapsed to ask why the vulnerability report had been ignored, and Peloton confirmed yesterday that it had fixed the vulnerability. (TechCrunch held this story until the bug was fixed in order to prevent misuse.)

Peloton spokesperson Amelise Lane provided the following statement:

It’s a priority for Peloton to keep our platform secure and we’re always looking to improve our approach and process for working with the external security community. Through our Coordinated Vulnerability Disclosure program, a security researcher informed us that he was able to access our API and see information that’s available on a Peloton profile. We took action, and addressed the issues based on his initial submissions, but we were slow to update the researcher about our remediation efforts. Going forward, we will do better to work collaboratively with the security research community and respond more promptly when vulnerabilities are reported. We want to thank Ken Munro for submitting his reports through our CVD program and for being open to working with us to resolve these issues.

Masters has since put up a blog post explaining the vulnerabilities in more detail.

Munro, who founded Pen Test Partners, told TechCrunch: “Peloton had a bit of a fail in responding to the vulnerability report, but after a nudge in the right direction, took appropriate action. A vulnerability disclosure program isn’t just a page on a website; it requires coordinated action across the organisation.”

But questions remain for Peloton. When asked repeatedly, the company declined to say why it had not responded to Masters’ vulnerability report. It’s also not known if anyone maliciously exploited the vulnerabilities, such as mass-scraping account data.

Facebook, LinkedIn, and Clubhouse have all fallen victim to scraping attacks that abuse access to APIs to pull in data about users on their platforms. But Peloton declined to confirm if it had logs to rule out any malicious exploitation of its leaky API.