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News: Elon Musk defends Tesla’s $2.6B acquisition of SolarCity in Delaware court

• July 12, 2021
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Elon Musk is testifying Monday morning in a lawsuit over Tesla’s 2016 acquisition of SolarCity, a $2.6 billion transaction that a group of shareholders allege was a “bailout” of the failing solar company. The shareholders are seeking repayment to Tesla of the cost to purchase SolarCity. The suit, filed in the Delaware District Court in

Elon Musk is testifying Monday morning in a lawsuit over Tesla’s 2016 acquisition of SolarCity, a $2.6 billion transaction that a group of shareholders allege was a “bailout” of the failing solar company. The shareholders are seeking repayment to Tesla of the cost to purchase SolarCity.

The suit, filed in the Delaware District Court in 2017, alleges that SolarCity was near bankruptcy at the time of the acquisition. Musk, who was the ailing company’s chairman of the board of directors and its largest stockholder, directly benefited from the transaction, as did some of his friends and family, the lawsuit alleges. SolarCity’s founders, Lyndon and Peter Rive, are Musk’s cousins.

SolarCity “had consistently failed to turn a profit, had mounting debt, and was burning through cash at an unsustainable rate,” the plaintiffs say. The suit goes on to note that the company had accumulated over $3 billion in debt in its 10-year history, nearly half of which was due for repayment before the end of 2017. The purchase by Tesla was approved by vote by 85% of shareholders.

Attorneys for Musk say that the acquisition was part of the CEO’s longer-term vision to transform Tesla into a transportation and energy company. In a blog post titled “Master Plan, Part Deux,” published to Tesla’s website around the time of the deal’s closing, Musk says that combining SolarCity and the electric vehicle startup was key to realizing his vision of combining Powerwall (Tesla’s home and industry battery storage product) and solar roof panels.

In his testimony Monday, Musk said Tesla was forced to shift focus away from its solar business to meet production deadlines for the Model 3 sedan, The Washington Post’s Will Oremus tweeted from outside the courtroom. USA Today reporter Isabel Hughes, also at the courtroom, tweeted that Musk blamed the pandemic for poor performance of the company’s solar division. He was being questioned by attorney for the plaintiffs Randall Baron, whom Musk called “a shameful person” at a 2019 deposition.

Musk’s lawyers say that he recused himself from board discussions and negotiations relating to the acquisition — but the plaintiffs maintain that the recusal was “superficial.” A primary question for the court will be whether Musk exerted undue influence over the transaction, and whether he and other board members concealed information relating to the transaction from shareholders.

The other board members named in the suit — Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Kimbal Musk and Stephen Jurvetson — settled for $60 million last year, plus $16.8 million in legal fees and expenses, paid for by insurance. The trial, with Musk as the sole defendant, was postponed a year due to the coronavirus pandemic.

The trial is expected to last 10 business days. The Delaware Court of Chancery, where the suit is being heard, does not have a jury; instead, the case will be heard by judge Vice-Chancellor Joseph Slights III. Even if Slights finds that the deal was improper, he could order Musk to pay far less than the $2.6 billion that Tesla paid for SolarCity at the time.

News: Elevate Brands banks $250M to roll up third-party merchants selling on Amazon’s marketplace

• July 12, 2021
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The Amazon roll-up play — where one company creates economies of scale by buying up and consolidating multiple smaller third-party merchants that sell their goods via Amazon’s marketplace — continues to be a strong e-commerce trend, and in the latest development, one of the hopefuls in this space is announcing a major injection of capital

The Amazon roll-up play — where one company creates economies of scale by buying up and consolidating multiple smaller third-party merchants that sell their goods via Amazon’s marketplace — continues to be a strong e-commerce trend, and in the latest development, one of the hopefuls in this space is announcing a major injection of capital to fuel its own place in the field.

Elevate Brands, a New York- and Austin-based startup that acquires and runs third-party Amazon merchants, has picked up $250 million in funding, money that it will be using both to continue investing in its technology, as well as to buy up more small businesses.

Elevate is already profitable, with 25 brands currently in its stable, many of which also have come to Elevate with patents for their products, CEO and founder Ryan Gnesin told TechCrunch. The plan will be to continue to enhance the systems it has in place for evaluating potential M&A and analyzing the landscape overall — today its algorithms use some 100 million data points, it says, to find suitable acquisition targets — and to continue building out other organizational efficiencies.

Elevate’s funding is coming as a mix of debt and equity — quite standard for these e-commerce businesses that are raising huge rounds to go after the roll-up opportunity — with backers including a number of individuals and investors with track records in fintech and e-commerce. They include FJ Labs, Novel TMT, Adam Jacobs (who had founded The Iconic in Australia), the founders of buy now, pay later business QuadPay, Intermix (acquired by Gap) founder Khajak Keledjian, Ron Suber (of YieldStreet and MoneyLion), and more. No valuation is being disclosed.

It’s estimated that there are some 5 million third-party sellers on Amazon today, with some 1 million sellers joining the platform in 2020 alone. Thrasio — one of Elevated’s larger consolidator-competitors — believes that there around 50,000 of them are making $1 million or more annually in sales. Elevate estimates that the Amazon marketplace, currently valued at $300 billion, will double in the next five years.

Unsurprisingly, all that has led to a number of companies like Elevated racking up hundreds of millions of dollars in debt and equity to consolidate the most promising of these businesses. Their rationale: the founders and management of these third-party sellers may lack the appetite to stay with their businesses for the longer-term, or they may lack the capital to scale to the next level; so consolidating these businesses to leverage investments in technology for better market analytics, marketing, manufacturing and supply chains is the logical solution.

Given the size of the market opportunity, that’s led to a lot of investment. Thrasio has raised nearly $2 billion — in both debt and equity — for its efforts; Heyday recently raised $70 million from General Catalyst; The Razor Group in Berlin raised $400 million. Others with huge war chests include Branded; Heroes; SellerX; Perch; Berlin Brands Group (X2); Benitago; Latin America’s Valoreo and emerging groups out of Asia including Rainforest and Una Brands.

Elevate’s pitch to the market is that it’s a little different from the rest of the roll-up pack, in that started out as one of the millions of third-party sellers itself.

“We started selling at the end of 2016, testing the waters by selling a few private label products,” Ryan Gnesin, the CEO and founder of Elevated, told TechCrunch in an interview. That gave the company an early look at how to handle supply chains in manufacturing, and to think about how to differentiate its products from similar ones that are sold alongside them on Amazon. By 2017, Elevate was managing some 8,000 SKUs under that model.

That shifted in 2018 to a wholesale model, he said, reselling established brands on Amazon. It ran into trouble multiple times in that period, with Amazon shutting it down three times under suspicion of running counterfeit activities. 

“We got caught up in an algorithm because we were scaling so quickly,” he said. “They assumed we were doing something wrong.” All of that helped Elevate learn how to navigate the waters more adeptly, with the first shut down taking three months to fix, but the second only one month, and the third a mere 24 hours. Eventually, in 2019, the company decided to take what it had learned and apply it to a wider range of brands, which it would pick up by way of acquisition.

“We began as third-party merchants and so we truly relate to them,” he said. “We didn’t just wake up and start buying Amazon businesses. This is what we are in our core, operators first. Anyone can buy a business, but the ones who can grow them are the most successful. That is our long-term view.”

Companies that become the target of roll-up acquirers are an interesting lot. As Gnesin describes it, in many cases the businesses Elevate talks to were built as side-hustles, and so when they take off, the founders are just as happy to pass them on to someone else for a decent exit than they are to stay the course. This is one reason why some of the acquisitions end up staying confidential, he said. Another is that the sellers are simply getting on, looking to retire, and don’t have anyone to pass the business on to. Other times, this is just how entrepreneurs work. “If they make $5 million in a sale to Elevate, they will keep back $4 million for themselves, and use $1 million to start their next business,” he said.

As for target companies, Elevate right now doesn’t focus on any specific product categories as other roll-up players might, although that may change in the future as the company gets more focused. What is a priority, however, is intellectual property — which to me is notable, given what sometimes feels like a genuine lack of differentiation when you look for products on Amazon.

“We have preferences for businesses with patents, since those tend to be more differentiated,” he said. From there, it goes to those that have strong traction and brand pull. “When a product is doing well on Amazon, there is an enormous amount of data there, and so you tend to have copycats. We look for business that can maintain a competitive position, adding new variations and taking that to other marketplaces. And all of that important in the building of communities. If you can build it that gives you an additional competitive advantage.”

Acquisition valuations vary, he added, but on average are around 4 times a company’s Ebitda, but might go as high as 5 times or as low as 2.5x, depending on how competitive bidding is. Elevated’s acquisitions typically are already making between $2 million and $3 million in sellers’ discretionary earnings, he added.

News: MSCHF drops tiny action figures of your favorite failed startup hardware

• July 12, 2021
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Hardware is hard. You can browse the archives of this site and come up with dozens of bold attempts to make new consumer electronics gadgets work — some of them very close to home. But, like all startups, most hardware companies run into the hard core grind of turning atoms into something worth buying.  To

Hardware is hard. You can browse the archives of this site and come up with dozens of bold attempts to make new consumer electronics gadgets work — some of them very close to home. But, like all startups, most hardware companies run into the hard core grind of turning atoms into something worth buying. 

To commemorate the hardness of hardware, idea factory/art house MSCHF is releasing a set of 5 Dead Startup Toys as vinyl figurines that you can buy for $39.99 each or $159.99 for the set. It bills these as ‘iconic failed startups’ and the sales site offers a brief history of the rise and fall of each endeavor. They range from products that never really existed like the Theranos minilab to poorly timed early movers like Jibo to exercises in over-engineering like Juicero. 

Given that I have spent much of my career absorbing and trying to understand the difficult and complicated process of bringing consumer hardware to market, I love these things. There could be a lens of malice here, but I choose not to see it that way. Fraud is fraud and the people behind Theranos and debacles like the Coolest Cooler have or will see the business end of the legal system. 

But big visions and hardware dreams are not always so clearly pocketed into the hole of ‘failure’. Sometimes the hardware works but the supply chain doesn’t. Sometimes the vision is sound but the product is just too early. There are any number of reasons products fail — but (in as much as they were actually real) you often have to give it up for the teams of people and visionaries that wanted a thing to exist in the universe and dragged it kicking and screaming to that point. And off the cliffs.

The figures themselves are really well done, with crisp stamping and accurate detailing with readable text and nicely printed logos. Some of them are articulated as well, and accessorized. The Coolest Cooler gets its infamous blender and the Juicero has a removable (proprietary of course) ‘fresh veg’ pouch. The quality on these is quite high overall, I’d rank them up with some of the better novelty toys I’ve bought over the years — it’s not phoned in, much like the Cooler’s feature set.

The packaging, too, is quite impressive, each gets a customized box and the big set of all of them comes in a bigger rack box. Each one also comes with a ’cause of death’ on the back that tells you why each venture went under. MSCHF went the lengths to make this a pretty premium ‘toy’ drop, which is only fitting given that it’s a monument to physical products. 

As with much of MSCHF’s work, there’s an element of ‘wait, is this legal’ as well, because there are likely a bunch of holes that the IP connected to these products fell into but some of those holes could still have legal entities attached. But that element of danger is what has made many of its projects resonate so far so I don’t think they’re worried. 

After all, none of these products have the sign of the beast on them. Physically, anyway.

News: Beyond Pride: The fight against tech’s brogrammer culture

• July 12, 2021
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Companies that jump on the rainbow bandwagon without fully living those values aren’t only hypocritical — they’re also doing themselves a disservice.

I was 4 years old when I started playing what I’ve come to think of as “the game.” It was dressing-up time at school, and, as I ran over to a costume box, my teacher grabbed me by the shoulders. Right up in my face, she admonished: “That’s the girls’ box — the boys’ stuff is over there.”

I was taken aback; I didn’t understand what I’d done wrong. But I remember thinking: “Oh! There are rules to how we live together in the world.” Right then and there, I started conforming to the parameter of the game that so many of us operate by: the game that gives us unwritten codes on what is acceptable and how to behave — at school, in work or in society at large.

This game meant I spent years dialing down my “gayness,” even after I came out in my 20s, and the impulse was particularly acute at the early stage of my career. With each new meeting or business deal, I was constantly preempting what parts of me were “OK”’ or what might put people off. Just how much gay was too much?

In some ways, then, the endemic “brogrammer” culture in tech — the industry I call home — is no great surprise to me. When everyone is busy filtering their core identity, sanding down the edges to fit the collective mold, it’s inevitable that minority voices will be pushed out. Follow this picture to its natural conclusion and Silicon Valley — the home of bold disruptors, the armada of innovation — is reduced to a narrow few.

In many ways, Pride Month and the celebrations we’ve just seen are the antidote to this hegemony. Pride, with its rainbow symbolism, is a cornucopia of all that is free, true and uninhibited. With Pride Month drawn to a close, it’s my greatest hope that we can use its particular kind of open-minded energy to activate deeper change.

Show up for your team first

I truly love Pride and the meaningful action that goes with it, but it can’t be denied that some brands are venturing into the territory of window dressing. “Performative activism,” whereby companies mobilize the Pride flag for marketing purposes without necessarily making tangible changes in their own backyards, is on the rise. So too are the businesses that pay lip service to Pride from one side of their mouth while covertly supporting politicians behind anti-transgender legislation on the other.

If you are a leader who’s really committed to diversity in the workplace, it stands to reason that you look within to help your own team first. How can you create a culture where employees can be present in the fullness of themselves — regardless of gender, race, sexuality or even incidental things like taste in clothes or music?

According to a 2019 study by the Yale School of Public Health, an estimated 83% of those who identify as lesbian, gay or bisexual keep their sexuality hidden from all or most of the people in their lives.

This inhibition is magnified in the workplace, where it is woven into the fabric of myriad discriminatory behaviors that are particularly prominent in tech. Almost 40% of LGBTQ tech employees polled by anonymous workplace chat app Blind say they’ve witnessed homophobic discrimination and harassment at work.

Annual diversity reports show that Big Tech companies employ far fewer women and underrepresented minorities than other industries, too. This is a sector that routinely labels people from nonmajority culture groups as “diversity hires,” doling out discrimination in everything from pay to promotions — as reported by thousands of personal experiences shared under the hashtag #SiliconValleySoWhite. The same industry is also hardwired to marginalize women, says Emily Chang, the Bloomberg Technology anchor whose book, “Brotopia,” lifts the lid on Silicon Valley’s culture of machismo.

These aren’t easy issues to solve, but I believe authenticity has an important part in the solution. It’s about calling time on that game that I used to play. When I finally learned that I could show up as I pleased at work and not worry about how people judge me, the freedom was so sweet I could practically taste it. After years of faking it without fully realizing it — in a draining, relentless loop — I was able to be the person and CEO I wanted to be. The more familiar I became with California’s tech scene, and the farther up the ladder I progressed, the more confident I became to be me.

You shouldn’t have to wait until you run a company for the permission to express your full self, however. As the research shows, the price paid for not doing so reaches far beyond personal freedom alone. Though we’ve made steps with important conversations around diversity in recent years, the world we work in is still, overwhelmingly, one-dimensional. It’s full of people not able or willing to reveal the genuine, hi-def version of who they are.

The power of listening and shared vulnerability

If we, as tech leaders, are unable to roll our sleeves up and dig deep on the issue of authenticity, we have little hope of chipping away at the “brogrammer” attitude that seems all too pervasive in our industry.

Not only does this kind of climate engender unsaid fear, fatigue and anxiety, it also affects the bottom line. Research is clear on the fact that happy employees are more productive, while companies with more diverse management teams have greater profitability, creativity and problem-solving abilities. Having the freedom to be your authentic self at work is a conduit to success and fulfillment.

So, how can tech CEOs and management get to this place? In my mind, a dual-sided approach is called for. First, efforts to harness authentic expression have to be enacted as policies. Leaders must give their teams direct responsibility for helping employees to bring their full selves to work. Help make your people accountable for an inside effort allowing all voices in your organization to be heard.

In GumGum’s case, this includes the formation of a STRIDE (Seeking Talent Representation Inclusion Diversity & Equity) Council. Made up of employees from all divisions, locations and levels of seniority across the company, council members make tangible recommendations to improve diversity and inclusivity in the company as part of their paid daily roles.

Unconscious bias training is also vital for empowering authentic expression in the workplace. If I walked down the street in glitter shorts and a crop top, everyone around me would have some kind of reaction to my chosen outfit — regardless of whether they’d admit it. Building awareness of subconscious judgments like this is the first step to reining them in, and creates understanding of how bias inevitably impacts decision-making at work.

Second, the quest for business authenticity lies with CEOs and senior management and their ability to lead by example. I think today’s cancel culture has made leaders hypersensitive about the need to keep it together, to toe the line with their behavior, to be professional and not make mistakes.

Professionalism has its time and a place, of course, but I’ve always made it a point to be as open as possible as a CEO — to shine a light over every element of my personality, even the aspects that other people may judge or find less desirable. My determination to do this comes directly from the hidden identity that I used to struggle with. The fear I felt over being gay is now my fuel to showing my true self. By doing so, I aim to give those around me permission to do the same.

No one really wants their tech company to breed a bro culture where only one type of person can thrive. But it’s not enough to simply say that. You have to start by showing that it’s OK to be different, to turn up in every shade of gray. I have a penchant for flamboyant fashion, for example, so I don’t think twice about attending a Zoom meeting in a baby blue fedora. That’s just how I express myself as a CEO.

Showing up like this involves an element of fear, and I think it’s important to be open about that, too. As CEOs, we should share our vulnerabilities, our struggles with identity, the secret parts of ourselves that we’re tempted to keep masked away. This includes owning up to failures — CEOs are only human, and that humanity should be put on a pedestal if authenticity is the goal.

People need to feel that their vulnerabilities are heard without judgment. Whether they’re in an interview or taking on a new project, one of my favorite questions to ask employees is simply, “What are you afraid of?”

We all have fears, and by answering that question, you get to access someone’s vulnerable side. They might be scared of failing, making the wrong decision or upsetting the apple cart in some way. Tapping into that emotion is a great way of giving people permission to be their full selves.

A turning point for tech

Pride Month is part of a wider narrative around acceptance and freedom of being. Companies that jump on the rainbow bandwagon without fully living those values aren’t only hypocritical — they’re also doing themselves a disservice. Pride isn’t a revenue opportunity, and even if it was, those brands that attach messaging to it without substance are missing a trick.

Beneath the LGBTQ+ Pride gift wrap lies a thousand work environments in urgent need of the values that the Pride movement espouses. Making those values a living, breathing part of everyday work life is no mean feat. But allowing people to untether from who they “should” be at work is a vital starting point for a change that is long overdue.

I know the shame of hiding my true self away, which is why I make every effort for others to avoid that experience. Nowadays, I show up at work as more myself than I’d ever dared in my younger years. In this one small act, I challenge my co-workers to follow suit. It’s only when, together, we embark on that exploration of what authenticity in business looks like that the endless game-playing can stop — and the real work gets underway.

News: Eat the rich, but let them build rockets in the meantime

• July 12, 2021
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Do you really want Bezos tackling child hunger? Do you want Musk trying to expand healthcare access? Do you want Branson to focus on voting rights? Hell no.

Richard Branson’s Virgin Galactic went to space (or the vicinity of space) in a PR-suffused event over the weekend. It was all rather twee, packed with maudlin riffs about childhood dreams and riddled with hero worship. And the stream kept stuttering while some of the planned vehicle-to-Earth communications failed.

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The Exchange is continuing its look into Q2 venture capital results this week. If you’re a VC with a hot take on the numbers, we’re collecting comments and observations at alex.wilhelm@techcrunch.com. Use subject line “hot dang look at all this money.” Thanks! — Alex and Anna

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But the launch accomplished what it set out to do: A few folks made it to into zero gravity after launching their rocket-powered space plane from a larger aircraft, flipping it around at the top of its arc so that its passengers could get a good view of our home while floating. Then it came back to the surface and, we’re sure, much champagne was consumed.

In the aftermath of the event, lots of folks are pissed. Complaints have rolled in, dissing the event and generally mocking the expense involved when there are other issues to manage. A sampling follows. Note that these are merely illustrative examples of a general vibe. I have precisely zero beef with anyone in the following tweets or articles:

And from the media side of things, this stood out today from the Tribune:

I disagree.

Sure, it’s maddening that Jeff Bezos’ new yacht will require a second boat so that he can have a mobile heliport on the go — his new boat has sails, so you can’t chopper to it — while the company that built his fortune churns through workers with abandon and squeezes its drivers so much that they have to piss in bottles due to scheduling constraints.

And, yes, Branson is annoying quite a lot of the time. He also owns an island and likes himself too much.

News: Gembah raises $11M to ‘democratize product innovation’

• July 12, 2021
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Gembah’s mission statement is a deceptively simple one. The Austin-based company says it’s looking to “democratize product innovation by drastically lowering barriers to entry for creation of new products.” In that respect, at least, it’s not so dissimilar from various startup initiatives that have arrived over the past decade and change, from crowdfunding to additive

Gembah’s mission statement is a deceptively simple one. The Austin-based company says it’s looking to “democratize product innovation by drastically lowering barriers to entry for creation of new products.” In that respect, at least, it’s not so dissimilar from various startup initiatives that have arrived over the past decade and change, from crowdfunding to additive manufacturing.

The company’s product is a platform/marketplace designed to guide users through the product-creation process, promising results in “as little as 90 days.” The forum connects smaller business connect to factories, supply chain experts, designers, engineers, etc. to help speed up the process. Just ask anyone who has attempted to launch a hardware startup — these things can be massive difficult to navigate.

To help accelerate its own vision, Gembah has raised an $11 million Series A, led by local firm ATX Venture Partners along with Silverton, Flexport, Brett Hurt, Jim Curry and Dan Graham.

It follows a $3.28 million seed led by Silverton announced in April of last year, bringing its total funding up to $14.75 million.

The company says the pandemic has actually been something of a boon for its business model, as hardware startups are looking toward a more online model – and something a bit closer to home than the traditional sales channels. The company says its revenue grew 500% in 2020 and is on track to triple revenues this year. It’s impressive growth in the face of some major supply chain issues that have impacted the industry during the past year and a half.

It currently has 300 active customers, though it was yet to achieve profitability — hence the new round. “Since most of our customers are e-commerce companies we benefited from the accelerated growth of e-commerce,” CEO and co-founder Henrik Johansson tells TechCrunch. “Supply chains have been impacted to some degree, but as the global supply chain gets more complex and many companies want to diversify outside of China, they need help to navigate that change, and Gembah can help with that transition.”

The funding will go toward increasing the company’s engineering team. At present, Gembah has 55 employees in the U.S, and 19 in other locations, including Asia and Mexico. The new headcount will be focused on growing the marketplace, supply chain workflow and machine-learning capabilities. Gembah will also look to grow its global network and make additional hires in marketing and UI/UX.

“Gembah is a true innovator poised to help businesses capitalize on the growth of global eCommerce,” ATX Venture Partners’ Chris Shonksaid in a statement. “The Gembah marketplace promises to unlock virtually unlimited entrepreneurial equity by enabling a whole new breed of creators to enter the market.”

News: Indian financial services firm MobiKwik looks to raise $255 million in IPO

• July 12, 2021
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Gurgaon-based mobile wallet service firm MobiKwik plans to raise up to $255 million in an initial public offering, becoming the latest Indian startup to explore the public markets. The 12-year-old firm, which counts Sequoia Capital India and Abu Dhabi Investment Authority among its investors and has raised about $250 million to date, plans to offer

Gurgaon-based mobile wallet service firm MobiKwik plans to raise up to $255 million in an initial public offering, becoming the latest Indian startup to explore the public markets.

The 12-year-old firm, which counts Sequoia Capital India and Abu Dhabi Investment Authority among its investors and has raised about $250 million to date, plans to offer new shares of up to $201 million and sell up to $54 million worth of equity shares, according to papers submitted to the market regulator on Monday.

The firm, which allows users to pay digitally and also cross-sells small sachet of insurance and loans as well as provides them with American Express-powered credit cards, is targeting a valuation of about $1 billion in the IPO, according to two people familiar with the matter.

MobiKwik, which has amassed over 101 million registered users and 3.44 million online, offline and billing merchant partners, said its total income for the financial year that ended in March 2021 was about $40.5 million, down 18%, while its loss also shrank 12% to $14.9 million during the period.

MobiKwik’s move comes as a handful of Indian startups including Zomato and Paytm are working to list on stock exchanges. Zomato, a food delivery startup in India, last week boosted its plan to raise $1.3 billion in its initial public offering, which opens on July 14 and closes July 16.

This is a developing story. More to follow…

News: Equity Monday: Cybersecurity startups see deluge of capital as Microsoft looks to buy RiskIQ

• July 12, 2021
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Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines. This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You

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

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

It was a busy weekend for everyone, regardless of whether you were watching the technology, what Branson was up to, or the footie. I won’t take sides on the match, but I will say that it was gripping unto the very end and a great example of sport. Now, the news:

• Microsoft is said to be hunting up the purchase of RiskIQ, a cybersecurity firm. The deal is reported to be worth around $500 million.
• And this weekend, Twitter began to conform with new regulations in India, moves that come after it lost some legal protections during a scrap with the Indian government.
• China’s tech market has been busy: News is out concerning ByteDance’s IPO delay, Tencent is being forced to drop some music label exclusivity, and the Chinese government recently blocked a merger of streaming giants in the country.
• There’s big news out from Flipkart this morning, thanks to its recent and huge new funding round worth $3.6 billion.
• And returning to the cybersecurity theme from earlier, startups in the sector are having a lovely time raising capital in recent months, it turns out.

And don’t forget that earnings season is just around the corner. It’s a pretty important cycle. Why? Because startup valuations are hot, and could take a hit if earnings come up short. And the IPO market is pretty freaking active; poor earnings from major tech companies could crimp exit-prices for mature startups.

Ok! Talk to you on Wednesday!

News: VU raises $12M to remove cybersecurity friction from digital experiences

• July 12, 2021
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Pretty soon, people won’t have to provide a fingerprint or a driver’s license to prove their identity — if VU has its way.

Pretty soon, people won’t have to provide a fingerprint or a driver’s license to prove their identity — if VU has its way.

The Argentina-based fraud and identity protection company announced $12 million in Series B funding Monday from backers including software developer, Globant, as well as Agrega Partners, NXTP Ventures, Bridge One, the IDB Lab and Telefónica. The new funding gives the company total venture-backed investments of $20 million, CEO Sebastián Stranieri told TechCrunch.

Stranieri, who has worked in the cybersecurity industry for the past 20 years, got the idea for VU in 2007 after spending hours helping his grandmother verify her identity with the Argentinian government in what turned out to be a two-minute process.

“It pushed me to create a company to help create digital experiences without the friction,” he told TechCrunch.

VU’s technology takes a person’s “online persona” and uses geolocation, biometrics and user behavior analysis to provide identity verification for users and enable a continuous authentication process that sees and connects the users’ online and offline personas. Simply put, it works mainly with government entities in countries like Argentina and Ecuador, providing them a way to confirm if people are who they say they are.

VU is one of several startups applying technology to fraud and identity within a global digital identity market expected to reach over $33 billion by 2025, according to Adroit Market Research. Companies recently capturing investment dollars for similar technology include Sift, which raised $50 million in April for a valuation of over $1 billion, and Socure, which announced $100 million in Series D funding at a $1.3 billion valuation.

In the past three years, VU has grown to more than 150 employees and is operating across Latin America and Europe, catering to big name customers  like Santander, Prisma, and governments in Latin America. The company also opened its first office in New York, where Stranieri expects to grow headcount five-times in the next year.

The company is averaging 85 percent year over year of revenue growth, and he expects that to continue in 2021 with 100 percent growth forecasted for 2022. In addition to New York, VU opened an office in Madrid and will open offices in Italy and France, and in the United Kingdom.

As such, he intends to use the new funding to hire developers across Europe and in the U.S.

Globant’s investment into VU also serves as a partnership. Globant provides software development to the likes of Google, Disney and Apple. Together, they will package VU’s digital experience so that companies can purchase the basic software and then customize it. Currently, VU’s technology is suited for banks and to provide a one-click e-commerce checkout where a retailer’s system will recognize and confirm the buyer.

“Globant is changing the digital experience, so having their backing is a great message to our customers and partners that we are performing well,” Stranieri said. “Their backup and those of all of our investors provides an opportunity to take a risk and help us grow faster.”

 

News: The Station: Rimac-Bugatti is born, Tesla releases FSD beta v9 and Ola raises $500M

• July 12, 2021
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Hello and welcome to The Station, your central hub for all past, present and future means of moving people and packages from Point A to Point B. I’m back from my road trip and swimming in emails. If you sent me a message on Twitter, email or pigeon post, please give me a few days

Hello and welcome to The Station, your central hub for all past, present and future means of moving people and packages from Point A to Point B.

I’m back from my road trip and swimming in emails. If you sent me a message on Twitter, email or pigeon post, please give me a few days to dig out of the pile that awaits me.

You might recall that I mentioned I was off to do some backpacking and climbing in Grand Teton National Park and then eventually would make it to Yellowstone National Park. Yes, the crowds were real, especially for those who stuck to the traditional schedule of sightseeing between 9 a.m. and 5 p.m. I took the early morning and late evening approach and never encountered the infamous parking lot traffic jams.

It’s that tactic that allowed me to take a ride in an empty T.E.D.D.Y., the autonomous vehicle that is being piloted in Yellowstone this summer. Beep, in partnership with Local Motors, is operating the autonomous shuttle called T.E.D.D.Y., which stands for The Electric Driverless Demonstration in Yellowstone. The company plans to operate two routes, seven days a week. Information collected during the pilot will be used to inform future deployments in national parks across the country.

Here’s what I discovered. The two shuttles, which always have a human operator who can take manual control if needed, are currently shuttling folks around the busy Canyons section of the park, specifically between the lodging area and main shopping area, where there is a general store, post office and eateries. The folks operating the shuttle told me about 1,240 people a week are riding the TEDDY vehicles and that riders were both curious and more knowledgeable about the tech than they expected.

My ride was on eventful, as it should have been. The vehicle did pause unnecessarily because the self-driving system thought it needed to. The human safety operator warned me that this pause would likely occur, as it had been happening regularly over the past few days.

One final item. The Autonocast, the podcast I co-host with Alex Roy and Ed Niedermeyer, is teaming up with SAE for a zoom call to have a wide-ranging discussion on the future of transportation and how the discourse about autonomous vehicle technology that occurs online — yes, Twitter I’m looking at you — impacts public perception. Specifically, we’re going to dig into a term coined by Liza Dixon called “autonowashing.

SAE MidCal, in conjunction with SAE SoCal, is hosting the meeting, which you can register for here. Please join us and post your questions in advance to get the conversation started.

As always, you can email me at kirsten.korosec@techcrunch.com to share thoughts, criticisms, offer up opinions or tips. You can also send a direct message to me at Twitter — @kirstenkorosec.

Micromobbin’

With many people blissfully still on holiday after the fourth of July weekend, it was a slow week in the micromobilty universe. One thing that did catch my eye though was an announcement from Stockholm-based e-scooter operator Voi that it launched the “world’s first large scale pilot of computer vision on e-scooters” using Irish computer vision startup Luna’s technology.

Now, I’m not quite sure what Voi means by “at scale” since the press release had no mention of how many of these scooters the company would be bringing to its pilot beginning this month in Northampton, U.K. However, the release did make reference to Luna’s AI models getting more accurate by using data captured from 100 cameras on e-scooters in the English city, so that’s at least 100 scooters. The problem is, Voi is by no means the first. Spin beat them to the punch.

Last month, Ford-owned Spin launched its Spin Insight Level 2 — its bundle of sensors, cameras and on-board computing power to detect sidewalk- and bike-lane riding and validate parking from its partner Drover AI — with 100 e-scooters in Milwaukee. Spin also has some computer vision-enabled scooters in Santa Monica, where it just launched, and will be bringing them to Seattle and Miami in the coming months.

BMW is finally producing its electric scooter

BMW’s new electric scooter is very cool-looking, with a retro-futuristic vibe and a low to the ground ride. But it ain’t cheap. At $12,000, is anyone gonna buy this thing? I guess we’ll find out. The first scooter actually produced from the Motorrad Concept Link series will be part of BMW’s 2022 lineup.

More electric scooter news …

Indian ride hailing company Ola has announced its giant e-scooter facility is ready and will soon begin production, with an expected launch this month. Late last year, the company invested $327 million to set it up, so we’ll potentially see the fruits of that investment. Apparently, Ola Electric has 3,000 robots building a scooter every two minutes, and the factory has 10 production lines, bringing total production capacity to about 10 million e-scooters.

According to a new report by Acute Market Reports, electric kick scooters are expected to reach a market volume of 1.4 million units by 2028. The analysis found kick scooters are getting more popular as more people try to avoid public transportation, and that there’s a growing demand for longer range scooters for heavy usage. The report identified some of the key manufacturers of electric kick scooters to be Razor USA LLC, GOTRAX, Xiaomi, Segway, Inc., ZERO Electric Scooters, MINIMOTORS Co., Ltd., Kaabo Electric Scooter, Titan Group, Glion, and SWAGTRON.

Helbiz, micromobility operator that recently went SPAC by merging with GreenVision Acquisition Corp, has announced a partnership with IrenGo and Telepass to deploy 50 MiMoto electric mopeds throughout the Italian cities of Portofino, Santa Margherita Ligure, Rapallo, Paraggi and Punta Pedale. Hellbiz is the first and only operator in this region.

What’s a newsletter without a hint of Lime

Lime’s e-bikes are officially in downtown Cleveland after the city issued permits allowing the bikes this year. The company started with 50 but will add more soon. Lime’s bikes will also be accompanied by more from Spin and Bird.

— Rebecca Bellan

Deal of the week

The deal I’ve been waiting for is finally done. Rimac Automobili, the Porsche-backed Croatian company that makes electric hypercars and components for automakers, is taking over Bugatti. Rimac will own a controlling 55% share in the new company, Bugatti-Rimac, with VW’s Porsche owning the remaining 45%.

A few nuts and bolts on the deal: Rimac is going to separate the development, production and supply of battery systems, drivetrains and other EV components into a new entity owned by Rimac Group called Rimac Technology, which will work independently with other global car manufacturers.

Founder Mate Rimac will continue to hold his 37% share in Rimac Group, with Hyundai Motor Group holding the same 12% and other investors at 27%. Porsche recently upped its stake in Rimac from 15% to 24%, but its total ownership doesn’t give It a controlling interest in the new EV company. Mate Rimac will lead Bugatti-Rimac, which will be headquartered in Zagreb, Croatia. Bugatti’s manufacturing will remain in Molsheim, France.

Mate Rimac was on our virtual stage in June and talked about the company’s future plans, including confirming that they were in talks with Bugatti. Extra Crunch members can watch the entire interview or read a recap here.

Other deals that caught my eye as I emerge from vacation mode …

Kurly, a South Korea startup that provides next-day grocery delivery services across the country, raised $200 million in funding in a Series F valuing the company at $2.2 billion. The company’s valuation has more than doubled in the last year. Last April, Kurly closed a Series E of $150 million at a $780 million valuation.

Lacuna Technologies, a startup that helps cities create and enforce transportation policies by building and managing open-source digital tools, has raised $16 million in a Series A round, bringing the company’s total investment to $33.5 million. The round was led by Xplorer Capital Management, and includes Playground Global, the company’s founding investor. Participating investors include JetBlue Technology Ventures and Lauder Partners. Along with the funding news Lacuna is announcing the addition of Keith Nilsson, MP and co-founder of Xplorer, to the company’s board.

MaxAB, an Egyptian startup based out of Cairo that serves a network of traditional food and grocery retailers across Egypt, has raised $40 million in Series A financing.

Ola, the Indian ride-hailing giant, is flush with $500 million in new capital thanks to investments from Temasek and an affiliate of Warburg Pincus .Ola co-founder and chief executive Bhavish Aggarwal is also participating in the new investment, the startup said. Ola said in a statement that the investment comes “ahead of IPO” — but didn’t elaborate.

Stellantis, the global automaker born out of a merger between Fiat Chrysler Automobiles and French automaker Groupe PSA, will invest €30 billion ($35.5 billion) in electric vehicles and new software over the next four years as part of a major push to transition away from internal combustion engines. Stellantis shared a few of its plans, including manufacturing an electric Dodge muscle car and an electric Ram pickup truck by 2024. Stellantis also said it would offer an electric or plug-in model in every vehicle segment under its Jeep brand by 2025.

Volvo Group, Daimler Truck and Volkswagen’s AG heavy-truck business the Traton Group plan to invest €500 million (~$593 million USD) to install and operate 1,700 charging points in strategic locations and close to highways for electric heavy-duty long-haul trucks and buses around Europe. The automakers intend to finalize the agreement by the end of this year and start operations next year, with the hopes of increasing the number of charge points significantly as the companies seek additional partners for the future joint venture.

Zomato, a food delivery startup in India that competes with Swiggy, has boosted its plan to raise $1.3 billion in its initial public offering, which opens on July 14 and closes July 16. Zomato said it will price its shares in the range of 72 Indian rupees (96 cents) to 76 ($1) and is targeting an upper limit valuation of $8.56 billion. It plans to list on Indian stock exchanges.

Policy corner

Welcome back to Policy Corner! The big news this week comes from across the Atlantic, where European lawmakers are planning to introduce a ban on the sale of new internal combustion engine vehicles by 2035.

Yep — less than 15 years from now. The ban would be phased in; countries would first be required to drop emissions from new vehicles by 65% by 2030, according to a document from the European Commission that was viewed by Bloomberg. The ruling would accompany a larger set of procedures for lowering greenhouse gas emissions across sectors, with the overall aim of reaching net-zero emissions on the continent by 2050.

News of a 2035 ban has been floating around for a while, but it seems that we’re now approaching the introduction of the proposal on July 14. Nor will it likely shock automakers, many of whom have been announcing their own ambitious zero-emissions targets. Fiat and Volvo have both set their own ICE phase outs in the continent by the end of the decade, for example. Volvo, along with Uber, also signed a letter in support of the ban in April.

If the ban is included in the final proposal, it would still need to be approved by European Commissioners before going into effect. We’ll be keeping our eyes out for that final proposal — I’m especially interested to see if it will include any mandates for installing EV chargers or other rulings to help spur the transition toward electric mobility. While many EU countries have already set electrification targets separate from the proposed mandate, auto-making remains a cornerstone of the economy in countries like France and Germany. Whatever ends up happening, it’ll likely be expensive.

— Aria Alamalhodaei

Notable reads and other tidbits

A short week + vacation means this won’t be as long as usual. (At least for me.) Let’s dig in.

Autonomous vehicles

Yandex Self-Driving Group, a unit of the publicly-traded Russian tech giant, is partnering with food delivery service GrubHub to be its multi-year robotic delivery provider across American college campuses. Yandex hopes to reach over 250 campuses over the course of this partnership, beginning with dozens of robots in the fall, according to Yandex Self-Driving CEO Dmitry Polishchuk.

Electric vehicles

Bentley Motors revealed its newest hybrid model that is part of the company’s Beyond100 plan to become a carbon-neutral organization with an entirely electrified range by 2023 and a totally electric lineup by 2030. As Rebecca Bellan noted, that’s a tall order given the fact that the British company’s first all-electric vehicle isn’t expected to come to market until 2025. So far, Bentley only has this hybrid and another, the Bentayga SUV.

Tesla has started the long-promised updates for its “Full Self-Driving” Beta v9 software. This is not full self-driving, which is why this item is housed under “electric vehicles.” Instead, this is an advanced driver assist system. But it’s important because this is the first “feature complete” version of the so-called FSD. This version also only relies on cameras and doesn’t include radar, a sensor that was previously used by Tesla’s advanced driver assistance system.

There are already a bunch of videos popping up on the beta V9 FSD. And while many folks are excited to have early access, what struck me was the numerous disengagements I viewed during these videoed drives. Check out this one on unprotected left hand turns.

Other stuff

The European Union issued fines of $1 billion (€875 million) to Volkswagen and BMW  for their involvement in an emissions cartel. According to the EU, Volkswagen, Audi, Porsche, BMW and Mercedes-Benz parent company Daimler have been illegally colluding to restrict competition in emission cleaning for new diesel passenger cars, essentially slowing the deployment of cleaner emissions tech.

Halo, the Las Vegas-based startup, is launching a remotely operated electric car service powered by 5G. This is starting as a pilot with just five vehicles. Halo users can order a vehicles via an app. Once a vehicle is ordered, a remote operator will drive it to the waiting customer. The user takes delivery and then manually operates the vehicle until they’re done. When the trip is complete, the remote operator takes back over and drives it to the next waiting customer. The pilot is being conducted in partnership with T-Mobile.