Category: Tech news

The mellifluously named Yarkovsky–O’Keefe–Radzievskii–Paddack effect is tearing an asteroid apart, and it could also save the Earth from asteroid strikes.

Opinion: The average big construction project is overdue and over budget. A dose of automation could help.

It doesn’t sound like the worst idea…

Changeaview.com, the new home for the 700,000-member discussion group, adds custom features that go beyond Reddit’s capabilities.

Let’s start this week’s newsletter with some data. Nationally, startups pulled in $30.8 billion in the first quarter of 2019, up 22 percent year-on-year, according to Crunchbase’s latest deal round-up.

A closer look at the numbers shows a big drop in angel funding and a slight decrease in mega-rounds, or financings larger than $100 million. The number of mega-rounds fell to 57 deals in Q1 and deal value was down too. With that said, mega-rounds still accounted for $16.4 billion, making Q1 2019 the second-best quarter on record for mega-rounds.

The bottom line is these monstrous deals represented a big chunk (29 percent) of all the dollars invested in U.S. startups in Q1. As investors move downstream and startups opt to stay private longer and longer, we’ll continue to see a greater pick up in mega rounds.

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OK, on to other news…

IPO corner

Once trading after the pink confetti was swept up off the floor, analysts and investors had a different story to tell about one of the first unicorns to make its public debut. Lyft began the week struggling to hit its IPO price, closing several days under that $72, despite opening with a 20 percent pop at $86. What’s going on? People are shorting the Lyft stock, looking to profit off the company’s sinking value. Things are looking up though; on Friday as I typed this newsletter, Lyft was trading at about $74 per share.

In other IPO, or shall I say, direct listing news, Slack has reportedly chosen the NYSE for its upcoming exit. A quick reminder why Slack has opted to go public via direct listing: The company doesn’t need any IPO cash thanks to the hundreds of millions of dollars on its balance sheet, but its longtime employees and investors need the liquidity. A direct listing allows it to go public without listing any new shares, with no lockup period and no intermediary bankers. The process saves it some money and expedites the process. OK, that wasn’t as brief as I intended, moving on…

Saying goodbye to venture capital

In a story that sent the entirety of Silicon Valley into a frenzy, Forbes reported that Andreessen Horowitz was denouncing its status as a venture capital firm and would register all its employees as financial advisors. For those inclined, Crunchbase News’ Alex Wilhelm and I unpacked what this means in the latest episode of Equity; for those less inclined, here’s the TLDR: For a16z to have the freedom to make riskier bets, like buying public company stock or heaps of cryptocurrency, the title of financial advisor gives them that ability.

Femtech’s billion-dollar year

Femtech, defined as any software, diagnostics, products and services that leverage technology to improve women’s health, has attracted some $250 million in VC funding so far this year, according to PitchBook. That puts the sector on pace to secure nearly $1 billion in investment by year-end, greatly surpassing last year’s record of $650 million. For more historical context, startups in the space brought in only $62 million in 2012, $225 million in 2014 and $231 million in 2016.

The 20-Min Term Sheet

Alternative financier Clearbanc says it will invest $1 billion in 2,000 e-commerce startups in 2019. Here’s the catch: Until the companies have paid back 106 percent of Clearbanc’s investment, Clearbanc takes a percentage of their revenues every month. Clearbanc’s goal is to help companies preserve equity, favoring a revenue share model rather than the traditional VC model, which eats equity in startups in exchange for capital. I spoke to Clearbanc co-founder Michele Romanow to learn more about Clearbanc’s attempt to disrupt venture capital.

Startup capital

• Home buying and selling platform Perch raises $220M in debt and equity
• Online catering marketplace ezCater gets $150M at a $1.2B valuation
• Parker Conrad’s Rippling raises $45M
• Tonal raises $45M to bring strength training to living rooms
• Elvie raises $42M to become the go-to destination for women’s health
• NextGen Jane gets $9M to fight endometriosis 
• Good Dog raises $6.7M to help you find a pup

Extra Crunch

TechCrunch’s Megan Rose Dickey authored the be-all-end-all story on the shared-electric-scooter business. Here’s a quick passage: “The startup ecosystem had become accustomed to the ethos of begging for forgiveness, rather than asking for permission. But that’s not the case with electric scooters. These companies have found their entire businesses to be contingent on the continued approval from individual cities all over the world. That inherently creates a number of potential conflicts.” Extra Crunch subscribers can read the full story here. 

Plus, we dropped the Niantic EC-1, in which Greg Kumparak dives deep into the history of the maker Pokemon Go, contributor Sherwood Morrison looked at remote workers and nomads, who represent the next tech hub.

Unicorns are investors, too

TechCrunch has confirmed that Airbnb has invested between $150 million to $200 million in Indian hotel startup Oyo. Airbnb confirmed the existence of the deal but not the exact amount. The home-sharing giant is continuing to widen its focus beyond “unconventional” hotels as it prepares to begin selling pubic market investors on its long-term vision. Remember, this deal comes right after its big acquisition of HotelTonight.

M&A

WeWork acquired Managed by Q this week, a VC-backed startup that helps office managers and other decision-makers handle supply stocking, cleaning, IT support and other non-work related tasks in the office by simply using the Managed by Q dashboard. The company was most recently valued at $250 million, having raised a total of $128.25 million from investors such as GV,  RRE and Kapor Capital.

#Equitypod

If you enjoy this newsletter, be sure to check out TechCrunch’s venture-focused podcast, Equity. In this week’s episode, available here, Crunchbase News editor-in-chief Alex Wilhelm and I chat about the future of a16z, Jumia’s IPO, the Midas list and more of this week’s headlines.

Whether you’re pounding the pavement or cheering your friends on, we have the gear for you, including fitness watches, running shoes, socks, shorts, jackets, headlamps, water bottles, and more.

Plus: Mar-a-Lago mishaps, Airbnb’s creepy camera problem, tax-season phishing scams, and more.

So Twitter’s a hellsite. Now what?

The social network says it shows users the most “relevant” ads, but a new study suggests the system perpetuates bias.

Photo-editing app-maker VSCO has filed a lawsuit against competitor PicsArt.

The suit focuses on 19 PicsArt filters that were supposedly “reverse engineered from VSCO’s filters,” with VSCO alleging it has become a legal issue involving false advertising and violations of the app’s terms of service.

“VSCO has invested significant time and resources in developing its presets [a.k.a. filters], which represent valuable intellectual property of VSCO,” the company writes.

In a statement, PicsArt denied the suit’s claims:

VSCO is not a direct competitor, but they clearly feel threatened by PicsArt. VSCO’s claims are meritless. It’s disappointing that they have made these false claims against us. PicsArt will vigorously defend itself against these baseless claims and all options are under consideration.

Specifically, VSCO says that at least 17 PicsArt employees created VSCO accounts — probably not an uncommon competitive practice, but the suit claims they used those accounts to reverse engineer the filters, thus violating the terms in which users “agree not to sell, license, rent, modify, distribute, copy, reproduce, transmit, publicly display, publicly perform, publish, adapt, edit or create derivative works from any VSCO Content.”

In addition, the suit accuses PicsArt of engaging in false advertising by describing the filters in its PicsArt Gold subscription as “exclusive” and “only for [PicsArt] Gold users.”

Why is VSCO so sure that the PicsArt filters were based on its own? The suit says:

VSCO’s color scientists have determined that at least nineteen presets published by PicsArt are effectively identical to VSCO presets that are only available through a VSCO account. Specifically, VSCO determined that those PicsArt filters have a Mean Color Difference (“MCD”) of less than two CIEDE2000 units (in some cases, far less than two units) compared to their VSCO counterparts. An MCD of less than two CIEDE2000 units between filters is imperceptible to the human eye and cannot have been achieved by coincidence or visual or manual approximation. On information and belief, PicsArt could have only achieved this degree of similarity between its filters and those of VSCO by using its employees’ VSCO user accounts to access the VSCO app and reverse engineer VSCO’s presets.

The suit goes on to claim that VSCO’s lawyers sent PicsArt a letter in February demanding that the company identify and remove any filters that were reverse engineered or copied from VSCO. The letter also demanded “an accounting of all profits and revenues generated from such filters” and that PicsArt identify any employees who had created VSCO accounts.

In VSCO’s telling, PicsArt then responded that it was “in the process of replacing certain underperforming filters and modifying others,” including the 19 filters in question, but it only removed 17 — and supposedly two of the new filters “were similarly reverse engineered from VSCO’s proprietary presets.” The suit also says PicsArt has failed to provide the information that VSCO demanded.

VSCO does not appear to be suing for a specific monetary value, but the suit asks for “disgorgement of any proceeds obtained from PicsArt’s use of VSCO filters,” as well as injunctive relief, compensatory damages and “the costs of corrective advertising.”

You can read the full complaint below.

VSCO Complaint by on Scribd

It’s getting bare-knuckled out there again in the ride-hailing wars.

According to a report earlier today from The Information, newly public Lyft threatened Morgan Stanley with legal action earlier this week, demanding in a letter that the powerful investment bank stop marketing a short-selling product that it believed was disrupting trading in its stock.

The outlet says Lyft learned about the product through the New York Post, which reported in its own, separate story early this week that Morgan Stanley — the lead underwriter for Uber’s IPO — had been calling pre-IPO investors in Lyft’s offering and pitching them on a way to lock in gains, regardless of Lyft’s lockup agreements with those investors.

At first glance, it seems like the kind of dirty pool we’ve grown accustomed to seeing between the rival companies and their associates. But Morgan Stanley spokesman Mark Lake tells TechCrunch that the New York Post report was flat-out wrong, providing us with the following statement: “Morgan Stanley did not market or execute, directly or indirectly, a sale, short sale, hedge, swap, or transfer of risk or value associated with Lyft’s stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement.

“Our firm’s activities have been in the normal course of market making, and any suggestion that Morgan Stanley engaged in an effort to apply short pressure to Lyft is false.”

What went wrong is hard to know, given that the Post shielded its sources. But it was descriptive in how it characterized the purported short-selling scheme. From its story:

Driving the unusual bets is language in Lyft’s lock-up agreements that has hedge funds and other early Lyft investors giving themselves a green light to make limited “short” bets, which make money on a stock’s decline. The goal is to position the bets in such a way that investors don’t benefit from a decline or a rise in the stock, but simply to lock in their IPO gains, which were significant.

“If I can lock in $70 now, I’m going to do that,” said an investor.

“Lyft made a mistake,” one investor who bought into Lyft shares prior to the IPO told The Post. “People who own the stock are allowed to hedge their positions. You are not allowed to reduce your economic interest.”

The investor was referring to a recent e-mail Lyft sent to investors reminding them that they are not allowed to engage in any transactions that might affect a holder’s “economic interest ” in the stock. This — and other “lock-up” language around the IPO — has Lyft investors protecting against a decline in an amount identical to their stock holdings, rather than betting on the stock’s decline.

We’ve reached out to Lyft for comment, which has yet to respond.

A source familiar with the situation confirms that Lyft’s ire with Morgan Stanley rests entirely on that Post piece, as noted in The Information. We’re told that no further action has been taken, beyond the letter sent to the bank by Lyft’s attorneys.

Whether the story ends here remains to be seen. The Information has updated its original post to include part of Morgan Stanley’s statement of denial, but it continues to report that, according to one of its sources, Morgan Stanley had been calling early Lyft investors for weeks during its roadshow and pitching them on a short-selling transaction that would enable them to lock in gains, regardless of the lockup.

Assuming Morgan Stanley is telling the truth — and we can’t imagine the bank would go on the record otherwise — there’s still the question of who floated misinformation about a short-selling product in the first place. It may be one that regulators want to dig into. Stay tuned.

Catch up on the most important news today in 2 minutes or less.

Two passports, three voice recorders, one gas mask: How journalist Kenneth R. Rosen reports his stories from conflict zones in the Middle East.

Carnegie Mellon’s Biorobotics Lab is probably best known as the birthplace of the modular snake robot. Initially designed to squeeze into tight spots for search and rescue missions and infrastructure inspections, the lab’s snake robot has given rise to an army of different projects, and at least one Pittsburgh-area startup.

Several years ago, the robot became modular, allowing engineers to mix and match pieces and replace malfunctioning segments. From those modules, the team of CMU students have built a wide range of different projects, including a spider-like hexapod robot, whose six limbs are constructed from robotic segments. We also spent time with Hebi, whose modular robotic actuators commercialized versions of the lab’s research.

When we returned to the lab two years later, the researchers had an entirely new project to show us. “Students in this group are very self-directed, we come up with our own projects,” CMU doctoral student Julian Whitman explained. “We’re often inspired by the ability of our hardware to reconfigure into any kind of shapes. Sometimes people will look at a pile of modules. So they’ll build that and very quickly program it to do some kind of interesting behavior, and sometimes that’ll spur an entirely new research direction.”

Whitman’s project fashions the modules into a wearable extra limb. The system, he’s quick to point out, isn’t an exoskeleton. Instead, it’s a robotic arm mounted to a backpack-style support structure. The idea behind the project is to allow wearers to complete jobs that are a bit too complex for just two hands.

“One somewhat common task in automotive assembly or airplane assembly is to hold something up over your head and fix it to the ceiling,” Whitman explained, before demoing the action at a nearby workstation. “So if you’re putting a part on the bottom of a car or on the roof of an airplane, oftentimes in industry, they have to have two people working on this job, one guy is just holding the part up in place, the other one’s fixing it.”

The project currently supports one limb, controlled using a game pad. Whitman explained it’s possible to add as many limbs “as a person can carry,” for a more Dr. Octopus-style approach. But the biggest limitation is how many a wearer can control at a given time.

“Right now I’m controlling it with a button or with voice commands, so you now have two sets of buttons and two sets of voice commands,” Whitman said. “At some point, it becomes harder for the user to control it and becomes less useful, the more arms you add. But in the future we’re hoping to have these arms be more autonomous that have their own perception, their own decision-making processes.”

Today’s startups have a distinct advantage when it comes to launching a company because of the public cloud. You don’t have to build infrastructure or worry about what happens when you scale too quickly. The cloud vendors take care of all that for you.

But last month when Pinterest announced its IPO, the company’s cloud spend raised eyebrows. You see, the company is spending $750 million a year on cloud services, more specifically for AWS. When your business is primarily focused on photos and video, and needs to scale at a regular basis, that bill is going to be high.

That price tag prompted Erica Joy, a Microsoft engineer, to publish this tweet and start a little internal debate here at TechCrunch. Startups, after all, have a dog in this fight, and it’s worth exploring if the cloud is helping feed the startup ecosystem, or sending your bills soaring, as they have with Pinterest.

For starters, it’s worth pointing out that Ms. Joy works for Microsoft, which just happens to be a primary competitor of Amazon’s in the cloud business. Regardless of her personal feelings on the matter, I’m sure Microsoft would be more than happy to take over that $750 million bill from Amazon. It’s a nice chunk of business; but all that aside, do startups benefit from having access to cloud vendors?