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Wednesday 31 March 2021

Spain’s Glovo picks up $528M as the food deliver market continues to heat up

Spain’s Glovo picks up $528M as the food deliver market continues to heat up

On the heels of Deliveroo raising more than $2 billion ahead of its debut on the London Stock Exchange this week, another hopeful in the food delivery sector has closed a super-sized round. Glovo, a startup out of Spain with 10 million users that delivers restaurant take-out, groceries and other items in partnership with brick-and-mortar businesses, has picked up a Series F of $528 million (€450 million).

Glovo aims to become the market leader in the 20 markets in Europe where it is live today, in part by expanding its “q-commerce” service — the delivery of items to urban consumers in 30 minutes or less — and it will be using the money to double down on that strategy.

This is a milestone funding round not just for the company, but its home country: it marks the largest-ever round raised by a Spanish startup.

“We started in Spain, where you have access to far less capital than other countries in Europe. We do more with less and that’s made us leaner,” said Sacha Michaud, the co-founder of the company, in an interview this week. “We’ve got our own strategy and it seems to be working.”

The funding is being led by Lugard Road Capital and Luxor Capital Group (the former is an affiliate of the latter), with Delivery Hero, Drake Enterprises and GP Bullhound also participating. All are previous backers of Glovo.

“We’re thrilled to have the continued backing of Luxor Capital Group and all of our existing investors. Over the last few months, we’ve moved very, very quickly but our vision remains unchanged,” said Oscar Pierre, Glovo’s other co-founder and CEO, in a statement. “This investment will allow us to double-down in our core markets, accelerate our leadership position in places where we are already very strong and continue to expand our excellent Q-Commerce division, as well as bring new innovations to our unique multi-category offering to extend more choice to our customers.”

Valuation is not being disclosed with this round, but when it raised its $166 million Series E in December 2019 — just ahead of the Covid-19 pandemic that truly changed the face of delivery services in many parts of the world — the company had a valuation of $1.18 billion, according to PitchBook data. Michaud would only confirm to me that it was “definitely an up-round,” which would put it at at least $1.7 billion, based on that estimate.

The funding comes on the heels of a very busy period of fundraising in the sector as investors the race to get in on the delivery of hot food, groceries and other necessities in Europe — a fast-growing business model in the most normal of times that blasted off in the last year as an essential service for consumers confined to their homes, often by government mandate, to stave off the spread of the coronavirus.

Just in the last few days, Gorillas in Berlin raised $290 million on a $1 billion+ valuation for its on-demand grocery business; Everli out of Italy (formerly called Supermercato24) raised $100 million (Luxor is one of its investors too); and reportedly Zapp in London has also closed $100 million in funding. Earlier in March, Rohlik out of the Czech Republic bagged $230 million.

Amid all those private raises, we also had Deliveroo’s IPO yesterday, which — as IPOs so often do — exposed some of the trickier aspects of the business. The company — which is backed by Amazon, a formidable player in food and essentials delivery — easily raised the most of money of the month — $2.1 billion in the private placement ahead of the listing — but then proceeded to slog out its debut on the LSE with shares progressively slumping throughout the day and ending up significantly lower than its offer price.

Areas of concern around Deliveroo serve as cautionary tales for all of them: not just how you price an IPO and what allocation you give to future shareholders, but also the unit economics of your business model, the price of competition, and where labor costs will fit into the bigger picture (and the bottom line).

“We’ve got our own road and we’re doing a pretty good job,” Michaud said in an interview when the subject of Deliveroo IPO came up. “We’re still David versus the Goliath out there.” Part of that for Glovo has also included some decisions made on rationalizing its own business: the company sold off its Latin American operations in a $272 million deal to its backer Delivery Hero last year to focus solely on Europe and adjacent geographies.

But even before the Series F being announced today, Glovo itself was one of the companies raising money for specific purposes, and those efforts point to how it plans to proceed in the weeks and months ahead on its own growth plan.

In January Glovo announced a strategic deal with Swiss real-estate firm Stoneweg, which pitched in €100 million ($117 million), to co-develop a number of “dark stores” in areas where Glovo already operates to improve its distribution networks and help speed up its delivery times. It’s part of a fulfillment operation that complements the hot food that Glovo sells on behalf of its restaurant partners: the dark stores are stocked with items Glovo sells on behalf of other companies such as Carrefour, Continente, and Kaufland, as well as a lot of independent retailers, companies that have not built their own (costly) B2C delivery networks but have wanted to provide that service to consumers nonetheless.

Although the company today promises deliveries in 29 minutes, in many markets, Michaud said, it’s already averaging 10-15 minutes and the aim is to make that the norm everywhere.

Restaurant delivery of hot food remains the biggest category of business for Glovo, but the company has seen a surge of demand for the other kinds of items and is expanding that accordingly.

“With Covid, we’ve been delivering pretty much anything you want in your city,” Michaud said. “Covid has been an accelerator and has educated the market. Instead of crossing city and spending time waiting and buying items, anything I want and Glovo will bring it to me. Why wouldn’t I do this?” He believes the more traditional rush of people doing in-person shopping is “definitely not gong to come back,” with groceries to be in the same position as restaurants in a couple of years. That’s leading the company to expand into more areas: “clothing, fashion and pharmacy, flowers. Hopefully we’re now in a good position to do that.”

Jonathan Green, Founder and Portfolio Manager at Lugard Road Capital, said in a statement: “Our investment in Glovo reflects our commitment to a company and leadership team that continues to innovate and disrupt in the on-demand delivery space.  As a long-term investor in Glovo, we are excited to watch the company continue to delight its customers through its unique multi-category offering, amidst an enormous market opportunity in both existing and new geographies.”

 



Celonis announces significant partnership with IBM to sell its process mining software

Celonis announces significant partnership with IBM to sell its process mining software

Before you can improve a workflow, you have to understand how work advances through a business, which is more complex than you might imagine inside a large enterprise. That’s where Celonis comes in. It uses software to identify how work moves through an organization and suggests more efficient ways of getting the same work done, also known as process mining

Today, the company announced a significant partnership with IBM where IBM Global Services will train 10,000 consultants worldwide on Celonis. The deal gives Celonis, a company with around 1200 employees access to the massive selling and consulting unit, while IBM gets a deep understanding of a piece of technology that is at the front end of the workflow automation trend.

Miguel Milano, chief revenue officer at Celonis says that digitizing processes has been a trend for several years. It has sped up due to COVID, and it’s partly why the two companies have decided to work together. “Intelligent workflows, or more broadly spoken workflows built to help companies execute better, are at the heart of this partnership and it’s at the heart of this trend now in the market,” Milano said.

The other part of this is that IBM now owns Red Hat, which it acquired in 2018 for $34 billion. The two companies believe that by combining the Celonis technology, which is cloud based, with Red Hat, which can span the hybrid world of on premises and cloud, the two together can provide a much more powerful solution to follow work wherever it happens.

“I do think that moving the [Celonis] software into the Red Hat OpenShift environment is hugely powerful because it does allow in what’s already a very powerful open solution to now operate across this hybrid cloud world, leveraging the power of OpenShift which can straddle the worlds of mainframe, private cloud and public cloud. And data straddle those worlds, and will continue to straddle those worlds,” Mark Foster, senior vice president at IBM Services explained.

Celonis pushes beyond process mining into automated workflow tooling

You might think that IBM, which acquired robotic process automation vendor, WDG Automation last summer, would simply attempt to buy Celonis, but Foster says the partnership is consistent with the company’s attempt to partner with a broader ecosystem.

“I think that this is very much part of an overarching focus of IBM with key ecosystem partners. Some of them are going to be bigger, some of them are going to be smaller, and […] I think this is one where we see the opportunity to connect with an organization that’s taking a leading position in its category, and the opportunity for that to take advantage of the IBM Red Hat technologies…” he said.

The companies had already been working together for some time prior to this formal announcement, and this partnership is the culmination of that. As this firmer commitment to one another goes into effect, the two companies will be working more closely to train thousands of IBM consultants on the technology, while moving the Celonis solution into Red Hat OpenShift in the coming months.

It’s clearly a big deal with the feel of an acquisition, but Milano says that this is about executing his company’s strategy to work with more systems integrators (SIs), and while IBM is a significant partner it’s not the only one.

“We are becoming an SI consulting-driven organization. So we put consulting companies like IBM at the forefront of our strategy, and this [deal] is a big cornerstone of our strategy,” he said.

IBM CEO Arvind Krishna wants to completely transform his organization



Tips for founders thinking about doing a remote accelerator

Tips for founders thinking about doing a remote accelerator

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, the Equity team got ahold of three founders from the recent Y Combinator batch (more here, and here) to chat through their experiences with a remote accelerator. TechCrunch was curious if the program lived up to founder expectations, how extreme timezone differentials were handled, and how easy it was to build camaraderie during a digital program. Oh, and how their demo day went.

Here’s who is on the show:

The short version is that the founders were generally happy with Y Combinator being remote, and that the setup allowing them to stay in their normal location was plus. We also asked the founders for learnings regarding how to best handle remote accelerators in the future.

More from Equity on Friday, at which point we’ll put Y Combinator aside for a good while.

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



Facebook denies its algorithms are a problem, but launches a tool to more easily view a non-algorithmic News Feed

Facebook denies its algorithms are a problem, but launches a tool to more easily view a non-algorithmic News Feed

Following years of backlash over its algorithms and their ability to push people to more extreme content, which Facebook continues to deny, the company today announced it would give its users new tools to more easily switch over to non-algorithmic views of their News Feed. This includes the recently launched “Favorites,” which shows you posts from up to 30 of your favorite friends and Pages, as well as the “Most Recent” view, which shows posts in chronological order. It also introduced new controls for adjusting who can comment on your posts, and other changes.

The features themselves aren’t entirely new, in some cases, but they’ve been made easier to get to with the addition of a Feed Filter Bar on mobile for changing the view of the News Feed, and an option menu on your posts to control who can comment.

The “Most Recent” view of the News Feed has long existed but has been buried in the extended “more” menu (the three-bar hamburger icon) on the Facebook mobile app. It’s not as useful as it sounds because it shows you all the posts from both friends and Pages in a single chronological view. If you’ve been on Facebook for many years, then you’ve probably “Liked” a number of Facebook Pages for brands, businesses and public figures. These Pages tend to post with more frequency than your friends, so the feed has become largely a long scroll through Page updates.

However, if you still prefer the “Most Recent” view, the Feed Filter Bar will give you a tool to easier switch back and forth between this and other views. The feature will launch on Android first, then roll out to iOS.

Meanwhile, Facebook has offered a way to prioritize who you see in your News Feed through a “See First” setting, but the newer “Favorites” feature rebrands this effort and gives you a single destination under Settings to select and deselect your Favorites, including favorite Pages.

The updated commenting controls are a new take on a habit many Facebook users have already adopted — when they share a post only to a given audience, like family or friends, while excluding other groups like work colleagues or even specific people. Now, users will have the option to instead share their posts but control who can engage in conversations. Public figures, for example, may choose to adopt the feature to restrict their audience to only those brands and profiles they’ve tagged.

Facebook says it will also show more context around suggestions it displays in the News Feed with its “Why am I seeing this?” feature that will explain how its algorithmic suggestions work. It says several factors may be at work here, in terms of what’s shown and why — including your location, whether you or people like you have engaged with related topics, groups or Pages, and more.

The changes arrive at a time when Facebook, along with other tech giants, has come under fire for its role in spreading misinformation leading to deadly events, like the storming of the U.S. Capitol, and serious public health crises, like vaccine hesitancy during a pandemic. Facebook CEO Mark Zuckerberg last week testified before the House’s Subcommittee on Communications and Technology about its failures to remove dangerous misinformation and its allowing of extremists to become more radicalized and to organize online.

Facebook’s official position, however, is that it doesn’t play a role in directing people towards problematic content — they seek it out. And people’s News Feeds are only a reflection of their own choices, in that way.

These thoughts and more were detailed today by Nick Clegg, VP of Global Affairs for Facebook, where he insists personalization algorithms are common across tech companies — Amazon and Netflix use them, too, for instance. And ranking simply makes what’s most relevant to the user appear first — effectively blaming users for the problems here. He also throws back the decisions to be made around Facebook’s role in misinformation peddling to the lawmakers, adding: “It would clearly be better if these [content] decisions were made according to frameworks agreed by democratically accountable lawmakers.”



Ensemble raises $3M to help divorced parents avoid arguing about money

Ensemble raises $3M to help divorced parents avoid arguing about money

At the age of 14, Jacklyn Rome saw firsthand how divorce can impact families, and how arguing about finances both during and after the process can impact children.

The experience stuck with her. As an adult, after leading new product launches at Uber and Blue Apron,  Rome came up with the concept behind her startup, Ensemble. The expense tracking app quietly launched in the App Store in 2020 with the mission of reducing tension among co-parents and making sure kids’ needs aren’t negatively impacted by a divorce.

Today, Ensemble is coming out of stealth with $3 million in seed funding from TTV Capital, Lerer Hippeau and Citi Ventures.

Put simply, Ensemble’s mission is to improve the lives of co-parents and their children by giving parents a streamlined way to track shared expenses.

“Most co-parents either figure out finances on their own ad hoc or rely on child support payments — however, child support only covers food, shelter and clothing, which is only half of the cost of raising a child,” Rome points out. The other half of expenses, including medical bills, extracurricular activities, transportation, etc., often end up being discussed by co-parents via text messages and spreadsheets.

Ensemble founder and CEO Jacklyn Rome. Image courtesy of Ensemble

Ensemble kicked off a six-month pilot in January 2020, when the credit-first version of the app went live. In April 2020, the dual functionality version — where two parents could connect their accounts — went live.

Since its App store launch last spring, Ensemble has seen “strong organic growth and referrals” from its users, according to Rome. Ensemble’s users, on average, are tracking over $1,000 per month in shared expenses for their children.

Roughly 30% of Ensemble’s downloads were organic in people discovering the app in the App Store, she said.

“Even in the most amicable divorces, money is the number one thing that divorced parents end up arguing about. In more contentious divorces, it often gets used as a power lever among two emotionally charged individuals with no other tools at their disposal,” Rome said. “We set out to build a product that eases tense communication about shared finances and serves the nuanced needs of separated parents.”

For now, the app is free. Ensemble plans to begin monetizing with the use of funds from its seed round.

Eventually, the company is planning to build out a paid subscription model. Over the long term, it’s also planning to expand beyond being an expense tracking app to offering a suite of financial products and primarily banking products, for things like shared credit cards with tight spending controls, Rome told TechCrunch.

“Ultimately, we want to help make sure that the children of divorced parents are not at a financial disadvantage when it comes to building for their financial future,” she said.

Are subscription services the future of fintech?

Rome founded Ensemble while she was an Entrepreneur in Residence (EIR) at Co-Created, a venture studio based in New York, with support and funding from Citi Ventures’ D10X program.

“A key insight that Citi had given us was that for them as a bank, it’s incredibly hard to acquire new customers because people don’t often change banks,” Rome said. “One of the few times in life that people regularly change banks is when they get divorced. And that sparked the thought process around the pain points that people feel through their divorce, specifically as it relates to finances.”

Luis Valdich, managing director of venture investing at Citi Ventures, says the bank has been “tracking for some time” how the financial needs of individuals have been evolving given societal trends, while at the same time identifying potential investment opportunities in startups that address underserved needs.

“One growing gap is for divorced or separate parents to track and manage shared expenses,” Valdich said. “Ensemble solves this problem by striking the optimal balance of delivering ease of use, visibility and empathy for modern co-parents, minimizing the need for back-and-forth communications. While it is early, we found its user experience to be substantially superior to the alternatives in the market, and Jacklyn brings a unique perspective on the challenge Ensemble is trying to solve.”

And while he could not speak to specific plans between Citi and Ensemble, Valdich said that Citi Ventures’ approach has always been to invest in companies with an eye toward future collaborations.

“We are proud that the majority of our portfolio has been commercialized within Citi and/or with Citi clients and we will certainly explore opportunities for collaboration when mutually convenient for both parties, as we always do,” Valdich added.

Meanwhile, TTV Capital Partner Mark Johnson said his firm has been investing in fintech for over 20 years and that it’s clear “people are craving digital tools to simplify communication and finances.”

He called Ensemble’s app “a sleek and simple platform” that addresses those needs for co-parents.



Diversity-focused Harlem Capital raises $134M

Diversity-focused Harlem Capital raises $134M

Harlem Capital is announcing that it has raised $134 million for its second fund — well above its target of $100 million and its initial cap of $125 million.

The firm was founded in 2015 by managing partners Henri Pierre-Jacques and Jarrid Tingle. It started out as an angel syndicate with the goal of investing in founders from diverse backgrounds, then announced its first VC fund of $40 million at the end of 2019. The firm’s investments include e-commerce companies Pangaea, CashDrop, Malomo and Repeat, as well as wellness startups, Wellory, Expectful, Wagmo and Shine. 

It hasn’t invested all of that initial $40 million yet — the firm says it’s aiming to make five more investments from Fund I. Apparently 61% of Harlem Capital’s Fund I portfolio companies are led by Black or Latinx executives, while 43% are led exclusively by women. While the firm was founded in New York City’s Harlem neighborhood — where I live and am typing these words — it invests in startups across the United States.

Meanwhile, with Fund II, it’s shifting its focus to seed stage investments in companies that are post-product, aiming to invest between $750,000 and $1.5 million and take a 10% stake or more. The firm says it’s industry agnostic, but will be focusing on both consumer and enterprise tech with the new fund. It will also introduce the idea of “culture carry,” where the founders backed by the fund will split 1% of the carry — basically, they’re getting a stake in the fund’s profits and in each other’s success.

The focus on diversity extends to the limited partners who invested in Fund II, with 42% of LPs being women or people of color.

“We are focused on building an institution and platform to support diverse founders for many generations,” said Managing Partner Henri Pierre-Jacques in a statement. “Fund II is one step closer to our mission, but we know the work and journey continues. We are excited to provide more capital and resources to even more diverse founders tackling unique problems.”

Last week, Harlem Capital also announced that it had promoted Brandon Bryant to partner and Gabby Cazeau and Kelly Goldstein to principal.



Moveworks expands IT chatbot platform to encompass entire organization

Moveworks expands IT chatbot platform to encompass entire organization

When investors gave Moveworks a hefty $75 million Series B at the end of 2019, they were investing in a chatbot startup that to that point had been tuned to answer IT help question in an automated way. Today, the company announced it had used that money to expand the platform to encompass employee questions across all lines of business.

At the time of that funding, nobody could have anticipated a pandemic either, but throughout last year as companies moved to work from home, having an automated systems in place like Moveworks became even more crucial, says CEO and company co-founder Bhavin Shah.

“It was a tragic year on a variety of fronts, but what it did was it coalesced a lot of energy around people’s need for support, people’s need for speed and help,” Shah said. It helps that employees typically access the Moveworks chatbot inside collaboration tools like Slack or Microsoft Teams, and people have been spending more time in these tools while working at home.

“We definitely saw a lot more interest in the market, and part of that was fueled by the large scale adoption of collaboration tools like Slack and Microsoft Teams by enterprises around the world,” he said.

The company is working with 100 large enterprise customers today, and those customers were looking for a more automated way for employees to ask questions about a variety of tooling from HR to finance and facilities management. While Shah says expanding the platform to move beyond IT into other parts of an organization had been on the roadmap, the pandemic definitely underscored the need to expand even more.

Chatbots spotlight machine learning’s trillion-dollar potential

While the company spent its first several years tuning the underlying artificial intelligence technology for IT language, they had built it with expansion in mind. “We learned how to build a conversational system so that it can be dynamic and not be predicated on some person’s forethought around [what the question and answer will be] — that approach doesn’t scale. So there were a lot of things around dealing with all these enterprise resources and so forth that really prepared us to be an enterprise-wide partner,” Shah said.

The company also announced a new communications tool that enables companies to use the Moveworks bot to communicate directly with employees to get them to take some action. Shah says companies usually send out an email that for example, employees have to update their password. The bot tells you it’s time to do that and provides a link to walk you through the process. He says that beta testers have seen a 70% increase in responses using the bot to communicate about an action instead of email.

Shah recognizes that a technology that understands language is going to have a lot of cultural variances and nuances and that requires a diverse team to build a tool like this. He says that his HR team has a set of mandates to make sure they are interviewing people in under-represented roles to build a team that reflects the needs of the customer base and the world at large.

The company has been working with about a dozen customers over the last 9 months on the platform expansion, iterating with these customers to improve the quality of the responses, regardless of the type of question or which department it involves. Today, these tools are generally available.

Moveworks snags $75M Series B to resolve help desk tickets with AI



Zapp, the on-demand delivery and ‘dark’ store operator, picks up backing from Lightspeed and Atomico

Zapp, the on-demand delivery and ‘dark’ store operator, picks up backing from Lightspeed and Atomico

Zapp, one of a number of startups currently battling it out in London and beyond by promising to let you order everyday items on-demand from its own delivery-only stores, has quietly raised a new round of funding from leading VCs, TechCrunch has learned.

According to multiple sources, Silicon Valley’s Lightspeed and Europe’s Atomico (the VC firm started by Skype founder Niklas Zennström) have invested in Zapp’s unannounced Series A. Those same sources have also confirmed that Zapp has raised around $100 million in total, including via an earlier seed round.

In addition to Lightspeed and Atomico, other investors in Zapp include 468 Capital, and Burda, alongside notable angels such as Mato Peric, Christopher North (former Amazon UK CEO), and Stefan Smalla (Westwing CEO). One source tells me that the startup’s Series A is the first deal that consumer-focused partner, Sasha Astafyeva, has led on Atomico’s behalf since joining the London-headquartered VC firm.

“We’re relentlessly focused on delighting our customers and generally do not comment on our capital structure. We are excited to bring Zapp to millions of customers in London and beyond this year,” said Zapp, in a statement issued to TechCrunch when asked about the Series A and list of investors.

In conversation with Sasha Astafyeva, Atomico’s new consumer-focused investment partner

Started last summer, Zapp’s founders are Joe Falter, who was part of the founding team at Jumia where he led the on-demand services business through to the group’s IPO, and Navid Hadzaad, who most recently was a product leader at Amazon’s Seattle HQ after founding GoButler and scaling several ventures at Rocket Internet. The leadership team also spans ex-employees of Deliveroo, Just Eat, Dominoes and Tesco, to name just a few.

Zapp operates a vertical or “dark store” model, seeing it set up its own micro fulfillment centers. They include several locations in London already: Kensington, Chelsea, Fulham, Notting Hill, Hammersmith, Shepherd’s Bush, Shoreditch, Islington and Angel.

Shunning the gig economy model used by companyies like Deliveroo, Zapp employs its riders directly. It also emphasises sustainability and utilises an all-electric fleet.

From what we can glean online and through conversations with sources, Zapp also looks to be focusing less on fresh food/groceries and more on convenience a la goPuff in the U.S., thus targeting impulse purchases rather than trying to usurp the traditional grocery shop. This is in contrast to many of the other dark store competitors, although there is clearly cross-over in all of the offerings from a multitude of players.

Alongside Zapp, dark store operators in London alone include Getir, Gorillas, Jiffy, Dija and Weezy — with some also raising and deploying significant amounts of capital, including, in some instances, employing heavy discounting as the land grab accelerates.

Gorillas, the on-demand grocery delivery startup, raises $290M and ‘surpasses’ $1B valuation



Strength-training startup Tonal crosses unicorn status after raising $250M

Strength-training startup Tonal crosses unicorn status after raising $250M

When the pandemic unfolded last year, demand for at-home fitness equipment skyrocketed, and Tonal was no exception. The maker of a smart home fitness trainer experienced an explosive increase in sales, and now the six-year-old San Francisco-based startup is gearing up for its next stage of growth. Tonal is adding $250 million of new funding in a Series E round valuing the startup at $1.6 billion.

Participants in the round include Dragoneer, Cobalt Capital, L Catterton, Sapphire Ventures, and athlete investors Drew Brees, Larry Fitzgerald, Maria Sharapova, Mike Tyson and Sue Bird. According to Tonal, the new funds will allow it to spend more on marketing its strength-training product to shoppers to increase brand visibility, grow its catalog of streamed fitness classes, and invest further in operations and scaling its business to meet increased demand. To date, the at-home fitness tech startup has raised $450 million.

“We’re really getting ready to scale the business: we’re pouring a lot more capital into marketing and brand awareness, and we’re pouring a lot more capital into scaling our supply chain to get ready for the next phase, which I really think is the next two holiday seasons,” says Orady.

As part of its efforts to increase staffing across the organization, Tonal also added three new executives to its bench: COO Shannon Crespin, a former Johnson & Johnson executive; Chief Strategy Officer Gregory de Gunzburg, who previously served as Head of Corporate Strategy and Development at NBCUniversal; and CTO Bryan James, whose previous employers include Google, Nest, and Apple. Ostensibly, Crespin, de Gunzburg, and James will be crucial to Tonal’s next chapter, as the startup continues to scale on all fronts, including hardware and content production.

This latest round of funding and set of new hires are all steps the startup is taking as part of a slow march towards an IPO, says Orady, although Tonal’s chief executive declined to give a timeline regarding when the startup may go public.

“We’re going to IPO at a time when it’s best for the business, because being a public company can be incredibly distracting,” adds Orady. “I get SPAC offers, or inquiries almost daily, and our answer is consistently ‘no.’ While an IPO Is a great milestone for the business and gives us access to a certain class of capital and liquidity, we also know that you’ve got to do it at the right time.”

Founded in March 2015 by Orady, who was motivated to start Tonal by his own personal quest to shed weight and strength train, Tonal has since carved out a reputation among fitness enthusiasts for an all-in-one design and digital weights system that enables the device to replicate different gym weight stations. Extra Crunch’s EC-1 on Tonal, published earlier this week, offers a unique deep dive into this rapidly growing fitness startup, exploring Tonal’s origin story, product launch, customer engagement strategy, and future outlook.

The Tonal EC-1

Tonal’s Series E follows an extremely eventful year-and-a-half for the startup, which saw sales increase 800% from December 2019 to December 2020, causing delivery delays of between 10 to 12 weeks — an issue the company previously told TechCrunch it’s working to address by ramping up production of devices, increasing employee headcount, and air-shipping equipment from Taiwan to the U.S. to meet demand. This March, Tonal also announced a new partnership with Nordstrom, placing 50-square-foot stations in the women’s activewear departments of at least 40 Nordstrom locations across the U.S., bringing the total number of Tonal physical locations to 60 by the end of 2021.

How a homegrown experiment became one of the fastest-growing companies in fitness tech



Clockwork Technology Ventures makes $25M bet on Latin American fintechs

Clockwork Technology Ventures makes $25M bet on Latin American fintechs

The fintech space and the Latin American venture scene are both booming.

So it’s no surprise that an increasing number of global investors are investing in fintech startups based in Latin America.

The latest is Clocktower Technology Ventures (CTV), the investing affiliate of Santa Monica, California-based macro investment firm Clocktower Group. 

Since launching in 2015, Clocktower Technology Ventures has invested in a total of 92 fintech companies in North America, Europe and Latin America — eight of which are in LatAm specifically. Those investments include Flink, a neobank, commission-free trading platform that recently raised a $12 million Series A; Habi, an iBuyer and listing service; Kushki, a digital payments processor; and ontop, an automated taxes, payroll and onboarding service for employers.

Accel backs Mexican startup Flink’s effort to bring consumer investing to Latin America

Now CTV is launching its first fund focused on investing exclusively in Latin American fintechs at the seed and Series A stages. The fund has a target of $25 million. Most of the capacity of the vehicle has already been taken by existing investors and a few strategics.

The firm is targeting about 40 investments out of the new fund “in the coming years.”

CTV Partner Ben Savage said the affiliate’s strategy for Latin America is consistent with its approach to its flagship funds. 

“Across our investments, we’ve led zero deals, and we’ve taken zero board seats,” Savage said. “We expect to replicate this approach for our strategy in Latin America. We recognize it’s an unusual approach, but we believe we can add more incremental value by doing other things.”

By other “things,” the firm believes its ability to connect founders and startups to other players in the financial services space such as CIOs of “globally significant investors, hedge fund managers thought leaders and academics” can be even more beneficial than if it led a round or took a board seat.

CTV will be looking at consumer and enterprise companies in Latin America, across the “entire spectrum” of financial services, including insurance, payments, personal finance, lending and credit, asset management, real estate finance and banking. 

“Some fintech VCs narrow the scope, we go the opposite direction,” Savage said. “We attempt to see as much as possible in the early-stage fintech landscape.”

CTV made its first investment in the region about one year ago (in Kushki). 

“We had spent time before then getting to know the landscape and exploring it,” Savage told TechCrunch. “About six months ago, we realized just how good we believed the opportunity in Latin America to be, and we thought it made sense to pursue a purpose built financial innovation strategy in the region.”

CTV believes financial innovation in Latin America is “on the cusp of exponential growth” considering that a significant portion of the population is underbanked or unbanked. The COVID pandemic is expected to only accelerate the shift away from brick-and-mortar financial services there and everywhere, really.

Latin America’s digital transformation is making up for lost time

The firm is also operating under the premise that “the oligopoly of financial services institutions has not been able to provide quality and robust services to its customers.”

“We believe this is partially attributed to regulation and market forces,” Savage said.

“In the same way the modern tech stack unlocked a wave of tech startups at a high velocity, new fintech entrants, we think, will change the competitive dynamics for the financial services industry, especially in a region like Latin America,” he added.

Also, the quality of entrepreneurial talent in the region has continued to grow, largely a byproduct of a number of well-established tech companies in the region (such as Rappi, Nubank and Loft) “having seeded the next generation of talent,” according to Savage.

“Some really exciting tech companies, all of which have a financial services angle to them, are spitting out teams of very talented engineers and operators — this trend we’ve seen occur in the same fashion in Silicon Valley, New York, Los Angeles, etc., has generated an ecosystem of fintech alumni that go on and do great things,” he said. “In fact, in some cases we see entrepreneurs who have been successful in the U.S. return home to Latin America to build a new company. We think over time a large cohort of the next wave of technology companies will be folks who spun out of great businesses.”

LPs in the new fund include institutions such as Hirtle Callaghan, an outsourced investment office for families and institutions that manages about $18 billion, along with hedge fund CIOs such as Alan Howard, Philippe Jabre, Glen Kacher and John Burbank’s Passport Foundation.



Huawei seeks growth in internet of things as phone business suffers

Huawei seeks growth in internet of things as phone business suffers

Huawei’s struggles amid U.S.-China trade tensions are driving it to seek opportunities in other smart devices, setting itself up against a raft of hardware makers at home and abroad.

The Chinese tech giant recorded sluggish revenue growth in 2020, climbing just 3.8% to 891.4 billion yuan ($136 billion), as its net profit grew 3.2% to 64.6 billion yuan. The results were in line with Huawei’s forecasts, the company said Wednesday at its annual report day in Shenzhen, a rare occasion to get a glimpse into the private entity’s financials.

To put the numbers in comparison, Huawei’s revenues were up 19% and 19.5% in 2019 and 2018, respectively.

The slowdown in 2020 was primarily due to a slump in Huawei’s overseas smartphone sales after U.S. export controls cut the firm off core chipsets and Google services critical to consumers. But the challenge has also sped up the firm’s pace to diversify and offset losses from its phone business.

For the past two years, Huawei’s has been ratcheting up efforts in a multitude of smart devices, including AR/VR headsets, tablets, laptops, TVs, smartwatches, speakers, headphones and in-car systems.

Huawei’s foray into the automotive industry has in particular attracted much limelight as the global smart vehicle industry booms. Reuters reported recently that Huawei would be producing its own branded cars, which the company denied. At today’s event, the firm’s rotating chairman Ken Hu reiterated that Huawei would play to its own strengths and only be supplying certain car components and services, such as the in-car operating system and smart cockpit. 

Huawei’s matrix of connected products is reminiscent of Xiaomi’s IoT strategy built around its smartphones and operating system, with the difference being that Huawei is also a telecom infrastructure supplier.

Despite moves by a few countries, such as the United Kingdom, to exclude Huawei from their 5G rollout plans, Huawei’s carrier segment in 2020 generated revenues on par with the year prior. The COVID-19 pandemic was a boon to the bsuiness, Hu said, which saw global demand in network solutions rise as people worked and learned from home.

Huawei’s IoT push has shown some early traction but competition is fierce. Smartwatches, it said, was one of its major revenue drivers from last year.

Globally, Apple held onto its leading position in wearables with 34.1% of the market in 2020, according to research firm IDC. Huawei ranked third at 9.8%, trailing its domestic rival Xiaomi which accounted for 11.4% of total shipments last year.

Overall, Huawei was leaning heavily on its home market to sustain growth in 2020. China accounted for 65.5% of its total revenues, growing by 15.4% year-over-year. Meanwhile, revenues fell 12.2% in Europe, the Middle East and Africa, was down 8.7% in the rest of Asia and down 24.5% in the Americas.

Huawei posts revenue growth in H1 despite sanctions and pandemic



Apple invests $50M into music distributor UnitedMasters alongside A16z and Alphabet

Apple invests $50M into music distributor UnitedMasters alongside A16z and Alphabet

Independent music distribution platform and tool factory UnitedMasters has raised a $50M series B round led by Apple. A16z and Alphabet are participating again in this raise. United Masters is also entering a strategic partnership with Apple alongside this investment. 

If you’re unfamiliar with UnitedMasters, it’s a distribution company launched in 2017 by Steve Stoute, a former Interscope and Sony Music executive. The focus of UnitedMasters is to provide artists with a direct pipeline to data around the way that fans are interacting with their content and community, allowing them to connect more directly to offer tickets, merchandise and other commercial efforts. UnitedMasters also generally allows artists to retain control of their own masters.

Neither of these conditions are at all typical in the music industry. In a typical artist deal, recording companies retain all audience and targeting data as well as masters. This limits an artist’s ability to be agile, taking advantage of new technologies to foster a community. 

While Apple does invest in various companies, it typically does so out of its Advanced Manufacturing Fund to promote US manufacturing or strategically in partners that make critical components of its hardware like silicon foundries or glass manufacturing. Apple does a lot more purchasing than investing, typically, buying a company every few weeks or so to supplement one product effort or another. UnitedMasters, then, would be a relatively unique partnership, especially in the music space. 

I spoke to UnitedMasters CEO Steve Stoute about the deal and what it means for the businesses 1M current artists and new ones. Stoute credits Apple executive Eddy Cue having a philosophy aligned with the UnitedMasters vision with getting this deal done. 

“We want all artists to have the same opportunity,” says Stoute. “Currently, independent artists have less opportunity for success and we’re trying to remove that stigma.”

This infusion, Stoute says, will be used to hire talent that are mission oriented to take UnitedMasters global. They’re seeking local technical talent and artists talent to build out the platform worldwide. 

“Every artist needs access to a CTO,” Stoute says. “Some of the value of what a manager is today for an artist needs to be transferred to that role.”

UnitedMasters wants to provide that technical edge at scale, allowing artists to build out their fanbase at a community level.

Currently, UnitedMasters has deals with the NBA, ESPN, TikTok, Twitch and others that allow artists to tap big brand deals that would normally be brokered by a label and manager. It also has a direct distribution app that allows publishing to all of the major streaming services. Most importantly, they can check stream, fan and earnings data at a glance. 

“Steve Stoute and UnitedMasters provide creators with more opportunities to advance their careers and bring their music to the world,” said Apple’s Eddy Cue in a release statement. “The contributions of independent artists play a significant role in driving the continued growth and success of the music industry, and UnitedMasters, like Apple, is committed to empowering creators.”

“UnitedMasters has completely transformed the way artists create, retain ownership in their work, and connect with their fans,” said Ben Horowitz, Co-Founder and General Partner of Andreessen Horowitz in a release. “We are excited to work with Steve and team to build a better, bigger, and far more profitable world for musical artists.” 

We are currently at an inflection point in the way that artists and fans connect with one another. Though there have been seemingly endless ways for artists to get their messages out or speak to fans using social media and other platforms, the actual business of distributing work to a community and making money from that work has been out of their hands completely since the beginning of the recording industry. Recent developments like NFTs, DAOs and social tokens, as well as an explosion of DTC frameworks have begun to re-write that deal. But the major players have yet to make the truly aggressive strides they need to in order to embrace this ‘artist centric’ new world. 

The mechanics of distribution have been based on a framework defined by DRM and the DMCA for decades. This framework was always marketed as a way to protect value for the artist but was in fact architected to protect value for the distributor. We need a rethinking of the entire distribution layer.

As I mentioned when reporting the UnitedMasters + TikTok deal, it’s going to be instrumental in a more equitable future for artists:

It’s beyond time for the creators of The Culture to benefit from that culture. That’s why I find this UnitedMasters deal so interesting. Offering a direct pipeline to audiences without the attendant vulture-ism of the recording industry apparatus is really well-aligned with a platform like TikTok, which encourages and enables “viral sounds” with collaborative performances. Traditional deal structures are not well-suited to capturing viral hype, which can rise and fall within weeks without additional fuel.

In music, Apple is at the center of this maelstrom along with a few other major players like Spotify. One of the big misses in recent years for Apple Music, in my opinion, was Apple’s failure to turn Apple Music Connect into an industry-standard portal that allowed artists to connect broadly with fans, distribute directly, sell tickets and merchandise but — most importantly — to foster and own their community. 

A UnitedMasters tie up isn’t a straight line to that goal, but it’s definitely got the ingredients. I’m looking forward to seeing what this produces. 

Image Credits: Steve Stoute



Accel-backed mobile money platform NALA to start offering remittance services to East Africa

Accel-backed mobile money platform NALA to start offering remittance services to East Africa

According to a McKinsey report, the total number of mobile money services worldwide was 282 in 2017, with more than half of those operating in sub-Saharan Africa. 

In 2020, these numbers increased significantly, but the ratio remained similar.  In 96 countries, there are 310 live mobile money services, according to a GSMA report. Out of that number, 171 are from Africa, while 157 are in sub-Saharan Africa.

In Tanzania, mobile money services can be relatively difficult to use due to unstable internet and high service fees. Benjamin Fernandes noticed this as a national television host while building a mobile money service to enable people to pay for TV subscriptions in East Africa back in 2011. 

Six years later, he would start his own mobile money and wallet aggregator, NALA, to solve these issues. Its first mobile application allowed users to make mobile money payments and utilize mobile banking without an internet connection. The business grew to 250,000 users in over a year after its official launch.

Nala has built a hassle-free, offline mobile money payment platform for Africa

Last year, the WorldBank predicted a sharp decline of international remittances to Africa. But even though Africa is still the most expensive region to send money to with averages of 10.6% in transaction fees, the opposite happened. There was an increase in remittance activity on the continent.

Kenya, for instance, had its highest-ever inbound remittance at $3 billion, while WorldRemit acquired Sendwave in August 2020 for $500 million and Mama Money claimed to have grown 500% within the year.

NALA also noticed an uptick in remittance requests where 1 in 7 users wanted to receive money internationally. This happened despite not being in that business at the time. It’s not hard to see why: Presently, over 70% of money sent to Sub-Saharan Africa is transacted through physical stores. When many over-the-counter services were suspended or limited due to coronavirus restrictions, people were left with expensive, unreliable or hard-to-access alternatives.

Combined with the increasing trend for digital-first financial services and listening to some users’ requests, NALA began testing international money transfers in August 2020 to facilitate payments from the U.K. to Kenya, Uganda and Tanzania. By building a multi-currency ledger where people can send money from the U.K. to Tanzania and back to the U.K., Fernandes says NALA can build a Wise for Africa.

“I believe international payments are only 1% built today. Until you can send money both ways seamlessly, our work isn’t done,” Fernandes told TechCrunch. “We believe African markets should be ‘sender’ markets, too; there is a lot of trade happening with other countries, and most of the money is sent via costly bank wires or at physical stores. It doesn’t need to be this way; it’s time for something better.” 

Various platforms are trying to achieve this, but none specifically targets the East African region. That is NALA’s play, according to the CEO. “This is where we see a big advantage for us. We are local, we understand mobile money, we built bill payments on our previous product, and this is an extension of that,” he added.

Since graduating as the first East African company from Y Combinator in 2019, NALA has brought other interesting investors on board to support its mission. The most notable is Accel, which has been kept under wraps for some time. The VC firm rarely makes deals on the continent and has only invested in NALA and Egypt’s Instabug. Other backers include NYCA Partners and angel investors like Shamir Karkal (co-founder of Simple), Peeyush Ranjan (former Flipkart CTO and current head of Google Payments), and Thomas Stafford (DST Global). 

NALA also enlisted the services of Nicolas Esteves, who was the VP of engineering at Osper and had a stint at Monzo to become the company’s CTO which, according to Fernandes, will considerably improve the company’s chances of achieving its goal. “When we brought someone of his calibre on our team, it just opened up the doors of what we could accomplish because he has built multi-currency ledgers across different large companies.”   

For now, though, the company will be rolling out a beta product next month for U.K.-based customers sending money to Kenya and Uganda (Tanzania will come later). The company claims that the service will support instant payments to all major mobile money accounts and says it is closing some banking partnerships that will allow it to facilitate money transfers from East Africa to the U.K.



Kaya VC launches its new $80M fund, focusing on Prague, Warsaw and the CEE region

Kaya VC launches its new $80M fund, focusing on Prague, Warsaw and the CEE region

Kaya VC’s new €72 million ($80m) fund will focus on startups in Prague, Warsaw and the wider CEE region. Previously called Enern, the Central and Eastern European VC — which, historically, started out investing in wind-farms and ended up invested in software — has changed its name to better reflect its modern focus. The firm will also back startups “at any stage” of funding. LPs in the fund include the EIF and a number of successful entrepreneurs from the region.

This is the team’s fourth fund, and together with the previous funds, the AUM is around €250m. The fund has invested in 27 companies with the latest investments into B2B marketplaces, healthtech and blockchain. 

The decade-old Prague-based VC (“KAYA” will be the official naming format) has previously invested in Booksy (raised $70 million in January 2021), Twisto (€16 million this year), DocPlanner (€80m in 2019), and Rohlik ($230m this year). Kaya previously participated in liquidity events for Skype, Wise (formerly TransferWise) and Bolt, UiPath which recently raised $750 million at a $35 billion valuation ahead of an IPO.

Kaya says it will be sector agnostic, with partners following some personal passions: Tomas Obrtac on agri-tech; Pavel Mucha on next-generation consumer experiences; Tomas Pacinda on fintech, and Martin Rajcan focuses on energy transition. All other areas of tech will be looked at. Similar to funds such as Point Nine in Berlin, Kaya says it is an ‘equal partnership’ meaning each partner can make decisions on what to back.

The firm plans to be able to write the first cheque and is also backing super-early ‘studio projects’ which have gone on to raise subsequent funding rounds.

Pavel Mucha, partner at Kaya VC, commented in a statement: “When I initially started investing in local startups in Prague and Warsaw, it was because there was a need to work with people to build something valuable that didn’t exist already. Over the past 10 years, we’ve seen this sector grow and mature, and with that our strategy of backing intrepid founders who are making a difference from Booksy’s Stefan Batory to Rohlik’s Tomáš Čupr.”

Kaya is also part of the Included VC, network, a mentor network for underrepresented groups such as women and people of color. Mucha told me: “We’ve hired through their program, been closely involved and big supporters. We think it’s a great addition to the ecosystem within Europe, and hope to do more. It’s definitely a very meaningful initiative we stand fully behind.”

Martin Rajcan, partner at Kaya VC, added: “Founders coming out of Central and Eastern Europe are globally-orientated, have strong technical skills, and an unmatched hunger for success. It’s these strong fundamentals paired with a next-level intensity that makes them so exciting to work with and we want to support such talent in any way we can. With partners, venture partners, advisors, and scouts across Europe, we’re in a unique position to support founders in the diaspora outside of core cities such as Prague and Warsaw.” 

In Turkish the word Kaya means ‘rock’, in Japanese, it’s ‘sanctuary’. Whatever the case, Kaya is in a good position to take advantage of the burgeoning startups in the CEE region. According to Dealroom there has been 5x more foreign investment in the CEE region than in 2015.



Cryptocurrency wallet and blockchain tech startup imToken raises $30 million Series B

Cryptocurrency wallet and blockchain tech startup imToken raises $30 million Series B

imToken, the blockchain tech startup and crypto wallet developer, announced today it has raised $30 million in Series B funding led by Qiming Venture Partners. Participants included returning investor IDG Capital, and new backers Breyer Capital, HashKey, Signum Capital, Longling Capital, SNZ and Liang Xinjun, the co-founder of Fosun International.

Founded in 2016, the startup’s last funding announcement was for its $10 million Series A, led by IDG, in May 2018. imToken says its wallet for Ethereum, Bitcoin and other cryptocurrencies now has 12 million users and over $50 billion in assets are currently stored on its platform, with total transaction value exceeding $500 billion.

Ethereum wallet imToken raises $10M Series A from IDG to expand in the US, Asia and Africa

The company was launched in Hangzhou, China, before moving to it current headquarters to Singapore, and about 70% of its users are in mainland China, followed by markets including South Korea, the United States and Southeast Asia.

imToken will use its latest funding to build features for “imToken 3.0.” This will include keyless accounts, account recovery and and a suite of decentralized finance services. It also plans to expand its research arm for blockchain technology, called imToken Labs and open offices in more countries. It currently has a team of 78 people, based in mainland China, the United States and Singapore, and expects to increase its headcount to 100 this year.

In a press statement, Qiming Venture Partners founding managing partner Duane Kuang said, “In the next ten to twenty years, blockchain will revolutionize the financial industry on a global scale. We believe that imToken is riding this trend, and has strongly positioned itself in the market.”

Crypto boom continues as Chainalysis raises $100M, doubles valuation to over $2B



Remote-controlled forklifts have arrived in France, courtesy of Phantom Auto

Remote-controlled forklifts have arrived in France, courtesy of Phantom Auto

Global logistics company Geodis has tapped startup Phantom Auto to help it deploy forklifts that can be controlled remotely by human operators located hundreds, and even thousands, of miles away.

The aim is to use the technology to reduce operator fatigue — and the injuries that can occur as a result — as well as reduce the number of people physically inside warehouses, according to the Geodis. The use of remotely operated forklifts won’t replace employees — just where they work. It’s that detail that Geodis, which often has operations outside of city centers, finds appealing.

Stéphanie Hervé, chief operating officer for Geodis’ Western Europe, Middle East and Africa operations, told TechCrunch that use of the remotely operated forklifts will help the company attract a new group of workers, including those with physical disabilities. The intent isn’t to outsource workers to other countries, but to find more workers within a region, according to the company.

Under the partnership, Phantom Auto’s remote operation software is integrated into KION Group forklifts. The forklifts are equipped with 2-way audio so that remote operators, which Geodis also describes as ‘digital drivers’, can communicate with their co-workers inside the warehouses.

Geodis Phantom Auto forklift

Image Credits: Geodis

Phantom Auto and Geodis have been working together for more than two years via pilot program conducted in Levallois and Le Mans, France. This announcement signals a deeper relationship and one that could be a boon for Phantom Auto.

The initial deployment is focused on France, Hervé said. For now, Phantom Auto’s software will be used to remotely operate forklifts in the initial pilot sites of Levallois and Le Mans and will then expand throughout the country over the next year. Geodis employees at the two initial sites have already been trained to remotely operate the forklifts, Phantom Auto co-founder Elliot Katz said.  

Geodis’ footprint extends far beyond the boundaries of France. The company has some 165,000 clients in 120 countries. They own 300 warehouses, which are located throughout the world, and also provide third-party logistics services to thousands of other customers, including Amazon and Shopify.

Phantom Auto’s tie-up with Geodis is another example of the company seeking business outside of the fledging autonomous vehicle industry, which was its initial focus. The company, founded in 2017, developed vehicle-agnostic software to remotely monitor, assist operate fleets of unmanned vehicles such as forklifts, robots, trucks and passenger vehicles.

The company is adjacent to the AV industry. While AV operators rarely talk publicly about the need for teleoperations, it is viewed as a necessary support system to commercially deploy robotaxis and for other AV applications. But as autonomous vehicle developers pushed back timelines to commercialize the technology, Phantom Auto expanded into new areas.

Phantom Auto, which has raised $25 million to date, expanded a logistics business targeting sidewalks, warehouses and cargo yards, all the places where autonomy and teleoperation are being deployed today.



Facebook gets a C – Startup rates the ‘ethics’ of social media platforms, targets asset managers

Facebook gets a C – Startup rates the ‘ethics’ of social media platforms, targets asset managers

By now you’ve probably heard of ESG (Environmental, Social, Governance) ratings for companies, or ratings for their carbon footprint. Well, now a UK company has come up with a way of rating the ‘ethics’ social media companies. 
  
EthicsGrade is an ESG ratings agency, focusing on AI governance. Headed up Charles Radclyffe, the former head of AI at Fidelity, it uses AI-driven models to create a more complete picture of the ESG of organizations, harnessing Natural Language Processing to automate the analysis of huge data sets. This includes tracking controversial topics, and public statements.

Frustrated with the green-washing of some ‘environmental’ stocks, Radclyffe realized that the AI governance of social media companies was not being properly considered, despite presenting an enormous risk to investors in the wake of such scandals as the manipulation of Facebook by companies such as Cambridge Analytica during the US Election and the UK’s Brexit referendum.

EthicsGrade Industry Summary Scorecard – Social Media

The idea is that these ratings are used by companies to better see where they should improve. But the twist is that asset managers can also see where the risks of AI might lie.

Speaking to TechCrunch he said: “While at Fidelity I got a reputation within the firm for being the go-to person, for my colleagues in the investment team, who wanted to understand the risks within the technology firms that we were investing in. After being asked a number of times about some dodgy facial recognition company or a social media platform, I realized there was actually a massive absence of data around this stuff as opposed to anecdotal evidence.”

He says that when he left Fidelity he decided EthicsGrade would out to cover not just ESGs but also AI ethics for platforms that are driven by algorithms.

He told me: “We’ve built a model to analyze technology governance. We’ve covered 20 industries. So most of what we’ve published so far has been non-tech companies because these are risks that are inherent in many other industries, other than simply social media or big tech. But over the next couple of weeks, we’re going live with our data on things which are directly related to tech, starting with social media.”

Essentially, what they are doing is a big parallel with what is being done in the ESG space.

“The question we want to be able to answer is how does Tik Tok compare against Twitter or Wechat as against WhatsApp. And what we’ve essentially found is that things like GDPR have done a lot of good in terms of raising the bar on questions like data privacy and data governance. But in a lot of the other areas that we cover, such as ethical risk or a firm’s approach to public policy, are indeed technical questions about risk management,” says Radclyffe.

But, of course, they are effectively rating algorithms. Are the ratings they are giving the social platforms themselves derived from algorithms? EthicsGrade says they are training their own AI through NLP as they go so that they can automate what is currently very human analysts centric, just as ‘sustainalytics’ et al did years ago in the environmental arena.

So how are they coming up with these ratings? EthicsGrade says are evaluating “the extent to which organizations implement transparent and democratic values, ensure informed consent and risk management protocols, and establish a positive environment for error and improvement.” And this is all achieved, they say, all through publicly available data – policy, website, lobbying etc. In simple terms, they rate the governance of the AI not necessarily the algorithms themselves but what checks and balances are in place to ensure that the outcomes and inputs are ethical and managed.

“Our goal really is to target asset owners and asset managers,” says Radclyffe. “So if you look at any of these firms like, let’s say Twitter, 29% of Twitter is owned by five organizations: it’s Vanguard, Morgan Stanley, Blackrock, State Street and ClearBridge. If you look at the ownership structure of Facebook or Microsoft, it’s the same firms: Fidelity, Vanguard and BlackRock. And so really we only need to win a couple of hearts and minds, we just need to convince the asset owners and the asset managers that questions like the ones journalists have been asking for years are pertinent and relevant to their portfolios and that’s really how we’re planning to make our impact.”

Asked if they look at content of things like Tweets, he said no: “We don’t look at content. What we concern ourselves is how they govern their technology, and where we can find evidence of that. So what we do is we write to each firm with our rating, with our assessment of them. We make it very clear that it’s based on publicly available data. And then we invite them to complete a survey. Essentially, that survey helps us validate data of these firms. Microsoft is the only one that’s completed the survey.”

Ideally, firms will “verify the information, that they’ve got a particular process in place to make sure that things are well-managed and their algorithms don’t become discriminatory.”

In an age increasingly driven by algorithms, it will be interesting to see if this idea of rating them for risk takes off, especially amongst asset managers.



Nested, the UK-based ‘modern’ estate agent, raises additional £5M to improve the home-selling experience

Nested, the UK-based ‘modern’ estate agent, raises additional £5M to improve the home-selling experience

Nested, the London-based startup that is using technology to build a “modern” estate agency and improve the home-selling experience, has raised an additional £5 million. Backing comes from Axel Springer, alongside previous backers Balderton Capital and Northzone.

Described as a “strategic investment,” Nested co-founder and CEO Matt Robinson tells TechCrunch that the round brings the “vast industry experience and resources” of Axel Springer to the board, in advance of a U.K. nationwide launch this year — meaning that the proptech is expanding beyond its current footprint of London.

Pitched as a “modern estate agent,” Nested’s offering pairs local agents with what it claims is industry leading tools and technology to help them better-support home-sellers (and buyers). It initially launched by offering to front the cash needed to buy your next home before you had sold your existing one, but now covers the entire house-selling journey.

Most recently, Robinson says Nested has been testing a new “hyper-local” approach so it can better service different neighbourhoods in a huge city like London. The idea, he says, is to give customers the best of both worlds: “a fantastic local agent who knows their area inside out, powered by Nested’s unique technology”.

This saw Nested launch 5 hyper-local areas in 2020 and Robinson says it has quickly gained up to 15% market share in those local markets. It is planning to launch an additional 30 areas over the next 18 months, as well as moving outside London for the first time.

“We find the best local agents and empower them with unique technology and services versus anyone else in the industry, traditional or online,” says Robinson. “There are some good traditional agents out there but the tools they have to do their job and for the customer to see what’s happening are pre-internet. We take the best local agents and give them tools to instantly be better at their job and give customer a better experience”.

He says that this is very different to online estate agencies, such as Purplebricks, which effectively offer “a DIY option where the agents are set up to fail by having to serve too many customers to give any of them a good service”. Meanwhile, he notes, traditional agents have barely changed in 50 years.

“Customers used to pick us because we had great features and services they couldn’t get anywhere else and great people but it was clear that the vast majority of customers also really value the knowledge and experience of a local agent and we were forcing them to pick between superior features, service and people versus most local,” adds Robinson.

“Our approach now is to give them both. We hire the absolute best local agents, and empower them and our customers with features to manage their sale better than they could anywhere else. For example, our customer account, buying agent and advance”.

Furthermore, Robinson argues that by focusing on each local market, customers benefit from local network effects through cross-selling homes. “We are [also] able to give agents a healthier workload with less travel, meaning more time for clients and better tailored advice”.

As an example of how Nested’s tech helps local agents do a better job, the company recently released updates to its mobile app which gives home-sellers instant access to every aspect of their sale — from viewing feedback and scheduled viewings to even showing what actions their agent has taken to generate enquiries and how many times they have chased up specific enquiries. “All at the tap of a button instead of playing phone tag with your agent,” is how Robinson frames it.



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