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Last Updated: 2022-07-16 9:30:01 AM

Analysts estimate single digit growth for all retailers during Prime Day sales

Publish Date: Sat, 16 Jul 2022 13:00:22 +0000

Amazon’s annual sales event Prime Day delivered more than $12 billion in sales, according to third-party estimates. The retailer hosted the popular shopping event in the U.S. and in more than 15 other countries worldwide on July 13-15. This was the first Prime Day event under the new CEO Andy Jassy, who took over Jeff Bezos last year after the Amazon founder stepped down.

The company was bullish on its Prime Day results and said it was the “best ever” mentioning that consumers across the world $1.7 billion. Amazon claimed that it sold more than 300 million items during these sales, but didn’t disclose any revenue figures.

It also noted that it sold “more devices than any other Prime Day,” but refused to put any number to it. The firm said shoppers bought goods worth more than $3 billion on over 100 million items from small businesses across the two-day event.

For weeks building up to Prime Day, Amazon banked on influencers to drive sales from QVC-style live video shopping. The firm partnered with celebrities like TikTok creators Joe and Frank Mele, Porsha Williams from “The Real Housewives of Atlanta,” “Selling Sunset” star Chrishell Stause, comedian Kevin Hart, and Australian model Miranda Kerr. The company said these live streams generated more than 100 million views but didn’t emphasize how much in sales they generated.

A report from The Information paints a different picture: it said some videos of some of its top influencers failed to fetch more than 4,000 live viewers. Amazon is not the only one struggling with live commerce. Earlier this month, Financial Times reported that TikTok is scaling back its plans for live video shopping in the U.S. and Europe.

Amazon didn’t comment on revenue or sales figures registered during Prime Day or through Amazon Live experiences.

Image Credits: Amazon

Since Amazon doesn’t disclose its Prime Day sales numbers, we have to rely on analysts and third-party data to paint a picture of how the event’s sales fared.

Analysts estimated that Amazon sold gross merchandise of anywhere between $12.09 billion to $12.59 billion from Prime Day sales globally. It’s important to note that some countries like India, Saudi Arabia, Egypt, and the United Arab Emirates have yet to host Prime Day sales.

In addition, a report by Salesforce noted that global sales for retailers selling goods on their own sites grew by 8% year-on-year for Tuesday and Wednesday in the second week of July. But sales figures for non-Amazon sites globally dipped by 12% compared to Prime Day 2021.

As usual, major U.S.-based retailers took advantage of Amazon’s Prime Day to offer their own discounts, encouraging consumers to splurge more in an inflation-driven market that has seen prices of different items go high in recent times.

A study from Adobe Digital Economy Index said that total U.S. online spend across online retailers touched $11.9 billion — an 8% increase from last year which saw an $11 billion spend. It noted that the second day of Prime Day sales generated more than $5.9 billion, registering a 9.2% growth from the second day last year, which generated $5.4 billion.

“With the second Prime Day also seeing strong gains, retailers were able to generate approximately $12 Billion dollars in online spend, across the two-day event. It’s apparent that consumers are incredibly price conscious, and it will be important for retailers to leverage price effectively, in order unlock new growth potential online,” said Pat Brown, Vice President, Adobe.

In addition, data group Numerator published its own study based on nearly 59,000 Prime Day orders and a survey from more than 4,800 buyers, which said the average order size was up from $44.75 last year to $52.26 on Prime Day sales. It noted that 65% of shoppers who made purchases on both days, spent the same or less amount than last year.

The firm’s study highlighted some numbers that indicated Amazon’s influence on Prime Day sales might have dwindled a bit. 24% of shoppers made purchases from another retailer compared to 20% last year; 44% of people considered only Amazon this year as compared to 52% last year; and 34% of people checked prices at other retailers before making a purchase as compared to 33% people last year.

Image Credits: Numerator (opens in a new window)

These studies indicate inflation has affected Prime Day sales and retailers might not have seen a major boost in their sales as compared to the last year.

Amazon has had a tough year, as its share prices have dropped from roughly $181 a year ago to $110 at the time of writing. It’s important for the company to drive sales, so much so that it might hold another Prime Day later this year. This year, the company’s workers have also raised questions about workplace safety and wages during the Prime Day sales rush.

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Once a key driver of global venture activity, fintech investment slows around the world

Publish Date: Sat, 16 Jul 2022 12:00:24 +0000

As venture capital grew around the world, tracking the fintech market was a fine way to understand the general health of the VC world; when venture was getting bigger, so too was fintech fundraising.

Worth around a fifth of all venture dollars invested last year, fintech startups raised nearly unfathomable sums of capital but with good reason. While companies around the world turned to software during the pandemic to ensure that they could keep operating, accelerating the digital transformation, there has been analogous work going on in the consumer world.

In simple terms, financial technology has been busy digitizing consumers’ lives in recent years, just as enterprise software helped corporations ditch pencils, paper and generic spreadsheets. So it is not a huge surprise that fintech had a big part to play in the venture boom that is now behind us. Nor that as the boom faded, fintech did as well.

New Q2 2022 data from CB Insights and PitchBook lay bare fintech’s retreat.

Let’s talk about the fintech market from a global perspective and a U.S.-focused viewpoint. What’s really going on out there?

The global perspective

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Making sense of the market right now with Danny Rimer of Index Ventures

Publish Date: Sat, 16 Jul 2022 01:08:49 +0000

If you’re feeling confused about the state of startup investing, join the club. Public company shares have been relentlessly hammered in recent months amid rising fears of a recession, yet startup funding seems as brisk as ever and, more surprising, to us, VCs are still routinely announcing enormous new funds as they have for many years.

To better understand what’s going on, we talked this week with Index Ventures cofounder Danny Rimer, who grew up in Geneva, where Index has an office, but who now splits his time between London and San Francisco, where Index also has offices. (It just opened an office in New York, too.)

We happened to catch Rimer — whose bets include Discord, 1stdibs, Glossier, and Good Eggs, among others —  in California. Our conversation has been edited lightly for length.

TC: This week, Lightspeed Venture Partners announced $7 billion across several funds. Battery Ventures said it has closed on $3.8 billion. Oak HC/FT announced almost $2 billion. Usually when the public market is this far down, institutional investors are less able to commit to new funds, so where is this money coming from?

DR: It’s a great question. I think that we should remember that there have been extraordinary gains for a lot of these institutions over the  last few years — call it actually the last decade. And their positions have really mushroomed as well during this period. So what you’re seeing is an allocation to funds that most likely have been around for a while. . . . and have actually provided very good returns over the years. I think that investors are looking to put their money into institutions that understand how to allocate this fresh new money in any market.

These funds keep getting bigger and bigger. Are there new funding sources? We’ve obviously seen sovereign wealth funds play a bigger role in venture funds in recent years. Does Index look farther afield than it once did?

There certainly has been this bifurcation in the market between funds that are probably more in the business of asset aggregation and funds that are trying to continue the artisanal practice of venture and we play in the latter camp. So in relative terms, our fund sizes have not become very significant. They have not grown dramatically, because we’ve been very clear that we want to keep it small, keep our craft alive and continue to go down that route. What that means is that when it comes to our institutional investor base, first of all, we don’t have any family offices, and we don’t take sovereign wealth fund money. We really are talking about endowments, pension funds, nonprofits and funds of funds that make up our base of investors. And we’re fortunate enough that most of those folks have been with us for close to 20 years now.

You do have quite a bit of money under management, you announced $3 billion in new funds last year. That’s not a tiny amount.

No,  it’s not tiny, but relative to the funds that you’re alluding to — the funds that have have grown a lot and have done sector funds or crossover funds — if you look at how much Index has raised [since the outset] versus most of our peers, it’s actually a very different story.

How much has Index raised over the history of the firm?

We should check. I wish I could have the exact number at the tip of my tongue.

It’s sort of refreshing that you don’t know. Are you in the market now? It does feel like it’s been one year on and one year off in terms of fundraising for most firms, and that this isn’t changing.

We’re not in the market to fundraise. We are obviously in the market to invest.

We’re starting to see a lot of companies reset their valuations. Are you having talks with your portfolio companies about doing the same?

We’re having all types of discussions with companies within our portfolio; nothing is off the table. We absolutely do not want to suspend disbelief when it comes to the realities of the situation. I wouldn’t say that it’s an umbrella discussion that we’re having with all our companies. But we consistently try and make sure that our companies understand the current climate, the conditions that are specific to them, and make sure that they’re as realistic as possible when it comes to their future.

Depending on the company, sometimes the valuations have gotten well ahead of themselves, and we can’t count on the crossover funds coming back . . . they have to defend their public positions. So some of these companies have to just weather the storm and make sure they’re prepared for difficult times ahead. Other companies really have an opportunity to lean in during this period and capture significant market share.

Like a lot of VCs, you say you’d prefer that a startup conduct a ‘down round’ rather than agree to onerous terms to maintain a specific valuation. Do you think founders have gotten the memo that down rounds are acceptable in this climate?

It really depends. I think you probably have some new funds that started during this period — you have some new sector funds — that make it complicated because [they’re] not investing in the best business. [They’re] investing in the best business, or trying to fund the best business, within that sector. So there are probably some pressures with respect to some of the VCs that’s being felt by some of the entrepreneurs.

I do want to highlight that not all companies need to take a cold shower with respect to valuation. There are a lot of companies that are doing very well, even in this environment.

Fast, an online login and checkout company, quickly shut down earlier this year, and Index was razzed a bit online for quickly removing the company from its website. What happened there and, in retrospect, what more could Index have done in that situation? I’m guessing your team had a postmortem on this one.

I wasn’t aware that we took it down from our website. I guess it’s probably there but probably harder to find, is what I suspect. We do promote the companies that are doing great.

You’re right, we did digest it as a firm and really tried to take the lessons learned from there. There are a number of factors that we’re still digesting or we can’t know about but probably what was difficult during COVID was really evaluating talent and understanding the folks that we were working with. And I’m sure that my partners who were responsible for the company would have been able to spend more time and really understand the entrepreneurial culture of the company in a lot more detail had we been able to spend more time with them in person.

(We’ll have more from this interview in podcast form next week; stay tuned.)

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Elon Musk pushes for the Twitter trial to start next year

Publish Date: Fri, 15 Jul 2022 23:09:27 +0000

With Twitter pressing for a quick trial, Elon Musk’s lawyers are making a case to slow things down.

In the lawsuit Twitter filed against its would-be owner, the company argued that it would only need four days to prove that the court should require Musk to follow through with his agreement to buy it for $44 billion. Twitter took the SpaceX and Tesla CEO to task in the lawsuit, not just for trying to back out of the deal but for dragging the social network through the mud in the process.

Twitter, likely tired of being in limbo as the drama drags on, requested that the trial be expedited with a start date as soon as September.

Musk’s legal team pushed back on Friday, claiming that the case will require “forensic review and analysis” of a deep pool of data, referring to his argument that Twitter undercounts its number of spam and otherwise fake accounts. Bloomberg reported the new filing from Musk’s legal team.

Team Musk is aiming for a February 13, 2023, trial date, which Bloomberg describes as “an extremely rapid schedule for a case of this enormous magnitude.”

“Twitter’s sudden request for warp speed after two months of foot-dragging and obfuscation is its latest tactic to shroud the truth about spam accounts long enough to railroad defendants into closing,” Musk’s legal team wrote. The filing argues that an analysis of Twitter’s bot population will be time-intensive but that the process is “fundamental” to determining how much Twitter is worth.

We’ll know more about the timeline of the trial on July 19, when a judge will evaluate if the case should be expedited.

Twitter sues Elon Musk to force him to seal the deal

Twitter v. Elon brings us a meme-driven lawsuit for the books

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Daily Crunch: After developers complain, Microsoft clarifies new policy on open source monetization

Publish Date: Fri, 15 Jul 2022 22:05:49 +0000

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Time to do the Friday dance! We’ve mentioned our virtual TC Sessions: Robotics event a few times, but we’ve got some good news for events fans. Hang on to your blockchains and sharpen those crypto wallets — we’re doing a TechCrunch Sessions: Crypto in November as well! Happy weekend! See y’all on Monday. — Christine and Haje

The TechCrunch Top 3

Words mean everything: Microsoft came under fire recently by developers due to the way it worded a new policy banning profiting off of open source software, and while the company clawed back that policy, Paul provides a look at what all this will mean.

No snakes and frozen statues here: Christine writes about Medusa’s $8 million seed round to take on Shopify with its open source e-commerce tool for small businesses to grow their business beyond the basic API implementations provided by marketplaces.

B-O-A-R-D: No, it’s not today’s Wordle answer — we checked — but fans of the game will be delighted to know that the popular guess-the-word computer game is being turned into a board game, Ivan writes.

Startups and VC

“We have entered an unprecedented combination of crypto winter and broad macroeconomic instability, and we need to prepare the company for the possibility of a prolonged downturn,” OpenSea CEO Devin Finzer said, as Lucas reports.

The question bouncing around Alex’s mind this morning is why venture investments are slowing when so much capital has been raised by VCs to invest? (Read about it on TC+, our subscription product.)

NGL and Sendit’s apps are problematic, Sarah writes, because they’ve been using misleading tactics to trick their young users into thinking they were receiving engagement from friends when they were not.

Kick off the weekend by bopping along to this wildly dark and weirdly threatening EDM track from RĂŒfĂŒs Du Sol, as you skim the best of the rest:

Hi, is that Nothing? Brian just posted his review of the Nothing Phone (1), sharing that it’s “a refreshing change of pace in a smartphone market that has lost much of its sense of fun.”

Hi, WYD: The race is on, with a number of startups racing to build a crypto-native, consumer-friendly messaging platforms for web3, reports Connie.

Shields up: With her new startup, Granitt, Runa Sandvik aims to help at-risk people, like journalists and activists but also politicians, lawyers, refugees and human rights defenders, from threats they face doing their work, Zack reports.

You get a credit card, you get a credit card: Stori offers credit cards to underserved populations in Mexico. It has raised $50 million in equity at a $1.2 billion valuation, writes Mary Ann.

They’re really going places: Vektor Partners raises new $126 million fund to look specifically at sustainable mobility companies, reports Mike.

It’s the birds, and the bees, and the flowers, and the vee cees: Systemiq secures $70 million to fund early-stage climate tech founders, reports Harri.

Pivoting your startup in a bear market: Become undeniably fundable

Image Credits: Eoneren (opens in a new window) / Getty Images

Every founder is searching for ways to conserve cash at the moment, but a laser focus on saving money instead of creating efficiencies will only delay the inevitable.

In July 2022, investors will not back companies that can’t demonstrate proficiency in five basic KPIs, according to Kraig Swensrud, founder and CEO of Qualified.

“We’re not going back to the sugar high of the past decade anytime soon, but with integrity, strong leadership and operational efficiency, we can not only survive, but thrive.”

Pivoting your startup in a bear market: Become undeniably fundable

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

Brian writes that after testing out drone delivery in California, Amazon is heading over to the Lone Star State — that’s Texas, y’all — to begin delivering in the town of College Station, where Texas A&M University is located. Now when Texans look at the sky, it kind of gives a new meaning to “the stars at night are big and bright.”

As one of our colleagues noted, TikTok wrote a rather lengthy post basically announcing that its chief security officer stepped down from his position. Aisha reduces the news down to a more manageable length.

All you Apple Music subscribers out there gained another perk with Apple Music Sessions, which provides access to audio recorded at Apple music studios around the world. Country stars Carrie Underwood and Tenille Townes were the first to give it a go, Lauren writes.

Natasha L gave us a good headline today with her story on a proposal by European lawmakers to make it easier to share medical data across borders, but in a way that is also secure.

Oh, and Bungie is now officially part of Sony, Taylor reports.

In case you missed it, our colleagues were working hard yesterday, and here are some late-day stories we don’t want you to miss:

Put it in drive: In car news, Jaclyn wrote about Hyundai’s N brand, some rather expensive (multimillion-dollar value) electric vehicles coming this summer and where VinFast is building its new EV factory. Meanwhile, Rebecca is keeping us up-to-date on what’s going on with Cruise’s robotaxi service. You may remember a bunch of its vehicles stalling traffic for hours in San Francisco.

Patting yourself on the back: That’s how Kyle described Meta’s first human rights report.

We want you to know that your car insurance may have lapsed: The FCC slapped one robocaller with a $116 million fine and now it is ready to go again, Devin wrote.

Ready and willing: Coinbase may have some competition knocking at the door. Anita digs into why Binance.US is prepared to come in.

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Cryptominers defend gigawatt-scale energy usage called out by Congress

Publish Date: Fri, 15 Jul 2022 21:23:21 +0000

Citing “disturbing” levels of power used by cryptocurrency miners, a group of Democrats led by Sen. Elizabeth Warren is urging the Environmental Protection Agency and the Department of Energy to crack down on the controversial industry.

The letter, signed by four senators and two representatives, calls on regulators to compel cryptominers to disclose their carbon emissions and energy use. Environmentalists have long raised concerns about Bitcoin and other power-hungry, proof-of-stake tokens — and globally, cryptocurrencies are estimated to consume more energy than entire countries, such as Venezuela and Finland.

In the U.S., just seven firms have built more than 1.045 gigawatts of capacity for cryptomining purposes, the report states. “This is enough capacity to power all the residences in Houston, Texas.” The mining farms highlighted in the report are run by Stronghold, Greenidge, Bit Digital, Bitfury, Bitdeer, Marathon and Riot.

Though the crypto winter of 2022 might incentivize some miners to scale back operations, the lawmakers argue the industry at large is poised to grow rapidly and “is likely to be problematic for energy and emissions.” Still, they caution that “little is known about the full scope of cryptomining activity.” Hence their call for more data. 

In response to the lawmakers, the companies downplayed the industry as a source of planet-cooking emissions. Nevertheless, they highlighted their individual efforts to curtail emissions and tap into renewable sources.

Marathon pointed to its work “with energy companies to build clean, green, renewable energy resources (e.g., solar and wind) that might not otherwise be built.” However, most of the energy tapped by Marathon currently comes from a coal-burning plant in Hardin, Montana.

Along similar lines, Riot argued that “Bitcoin mining drives more demand for renewable energy than the typical U.S. energy consumer” and spotlighted its use of hydroelectricity in upstate New York. Riot’s operations in Rockdale, Texas, however, feature nearly seven times the capacity and draw power from the state grid. Texas generated most of its energy from nonrenewable sources last year (51% from natural gas and 13.4% from coal).

Speaking of coal, Stronghold told lawmakers that it is “actively working to remediate coal refuse piles and converting coal refuse into energy.” Coal mining waste is an environmental nightmare, and cleaning it up is a good idea. Burning coal waste, on the other hand, still yields harmful emissions, though scrubbers can lessen the worst effects.

Blockfusion and Bitdeer, meanwhile, pointed to their use of software to minimize strain on energy grids.

Though the letter casts a critical eye on crypto, the majority of near-term emissions cuts in the U.S. need to come from the power and transportation sectors in order for the U.S. to reach its 2030 net emissions goal, according to researchers at the Electric Power Research Institute. In April last year, the White House said it aimed to halve U.S. greenhouse gas emissions by 2030.

D.C. remains virtually deadlocked on climate legislation, yet Democratic lawmakers (those not named, Sen. Joe Manchin) have sought to curtail emissions via tax credits, which could juice both renewable energy generation and electric car sales. In a June interview with TechCrunch, Energy Secretary Jennifer Granholm said passing clean-energy tax credits this summer was “the most certain path” for the U.S. to follow.

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Astrology addicts can now see zodiac content on Bumble

Publish Date: Fri, 15 Jul 2022 20:17:05 +0000

Is it really written in the stars? This week, Bumble launched weekly customized astrology content in-app, with astrologer Aliza Kelly taking on the task of helping you find a star-crossed soulmate.

Dubbed “Astrology Tuesdays,” Bumble users in the U.S. can go to the new astrology channel within the conversations screen in Bumble’s Date mode. There will be weekly updates giving users content such as dating guides based on zodiac signs, advice on how to deepen relationships, what your astrological chart really means, the exploration of your big three placements: sun, moon and rising, and more.

Plus, users who engage with the astrology content will receive complimentary access to Bumble’s Zodiac Filter every Tuesday, allowing them to filter out people with zodiac signs that are incompatible with theirs.

The company also told TechCrunch that there will be content around specific astrological events and how the different star signs can navigate them, as well as a chance to receive a personal compatibility reading from Aliza.

Brands have grabbed onto astrology as an easy way to connect with consumers. The company’s partnership with an astrologer is Bumble’s attempt at enhancing dating and relationship experiences.

Selby Drummond, Bumble’s chief brand officer, said in a statement, “As of May, 78% of active Bumble members in the U.S. adopted a ‘Zodiac’ badge on their profiles, which tells us that there is a tremendous appetite for more insights about potential connections that come through astrology.”

Over time, as members become more engaged, Bumble will explore “deeper features focused on compatibility,” the company revealed to TechCrunch.

However, while the new astrology content is trendy, it’s not really accurate when it comes to relationship compatibility.

In 2019, Bumble introduced Zodiac Badges so people could list their sun sign on their profile and filter matches based on whether they want to date confident Leos or compassionate Cancers.

Bumble now lets you filter potential matches on Bumble Date, Bizz and BFF

When the feature first launched, Allure’s resident astrologer Sophie Saint Thomas argued that Bumble seemed to be capitalizing on the trending interest.

“This does not improve the odds of finding someone you really connect with 
 to cross out all Libras just because you once dated one who left a bad taste in your mouth slices away one out of every 12 potential matches for a pretty arbitrary reason. Most of us are in a place where we could use more chances for love, not fewer, so let’s not cancel people based on their sun sign alone,” Thomas wrote.

Despite the critics, the company boasted that Zodiac Badges had taken off.

Bumble said adding your zodiac sign could increase your number of average monthly matches, per its U.S. data. In 2021, one of the most popular profile badges on Bumble globally was astrology, the company added.

However, skeptics — or astrology atheists — took to Twitter to express their annoyance with the Astrology Tuesdays launch:

@bumble what in the world are you guys thinking with this “astrology Tuesday” junk? Offensive pseudoscience garbage. Just stop.

— Tyler (@TylerHarris_216) July 13, 2022

Astrology is a controversial topic, and while it may seem like fun and games for some people, experts say that making relationship decisions solely based on your sun sign is a bad move.

When the average person thinks of astrology, it is usually a super basic version. Your sun sign is only a tiny aspect of a much more complex natal chart. In an interview with Vogue, certified astrologer Diana Brownstone said, “You should never dismiss a romantic relationship with someone just by their sun sign, moon sign or ascendant — because they could have other planets in line with yours. It’s a whole science, and the longer you study it, the more quickly and precisely you can come to conclusions.”

According to Aliza Kelly’s site, the celebrity astrologer, columnist and author has years of experience with astrology and has consulted thousands of clients on their birth charts. Getting Kelly on board as Bumble’s resident astrologer could be the company’s attempt to educate members who may be misinformed about their zodiac signs.

All that is to say, if you are told that Geminis aren’t compatible with your sun sign, maybe talk to them first instead of ruling them out with a dating app filter.

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Hulu is turning Spotify’s most popular playlist into a new docuseries, ‘RapCaviar Presents’

Publish Date: Fri, 15 Jul 2022 20:15:16 +0000

Spotify’s hip-hop playlist “RapCaviar” will now be a new documentary series on Hulu. The eight-episode docuseries “RapCaviar Presents” aims to address “today’s most provocative issues” through stories of top hip-hop artists like Tyler the Creator, Jack Harlow, Megan Thee Stallion, Doja Cat, Saweetie and Roddy Ricch, according to Spotify.

The show will premiere on Hulu later this year, but an exact launch date was not offered.

The playlist and its companion podcast are touted for launching the careers of artists such as Migos, Lil Uzi Vert and Kyle. Getting a track featured on “RapCaviar” can result in millions of streams, great for emerging hip-hop artists looking to draw the attention of record labels.

Partnering with the streaming giant Hulu is a strategic move for Spotify as music documentaries have seen a jump in popularity with Hulu’s “Look at Me: XXXTentacion,” which dropped in May, as well as Hulu’s “Machine Gun Kelly’s Life in Pink” and “Untrapped: The Story of Lil Baby” coming to Amazon Prime Video in August.

The podcast-to-streaming-docuseries pipeline has also been proven profitable in the past year with Hulu’s podcast-turned show “The Dropout,” Apple TV+’s “WeCrashed” and NBC’s “The Thing About Pam,” which streams on Hulu and Peacock. 

There’s even a fictionalized series about Spotify coming to Netflix. “The Playlist” will revolve around the music streaming service’s origin story and debuts later this year. Spotify worked with Netflix earlier this month to launch a personalized “Stranger Things” playlist dedicated to season 4 volume 2.

“RapCaviar Presents” will be executive produced by Karam Gill, who will also serve as creative director; Steve Rivo, who will also be the series showrunner; Carl Chery and Liz Gateley, who are overseeing creative on the show for Spotify; and Eli Holzman and Aaron Saidman from The Intellectual Property Corporation (IPC), a part of Sony Pictures Television.

Farah X, Karam Gill, Keith McQuirter, Mandon Lovett and Peter J. Scalettar are the episodic directors. Av Accius and Marcus A. Clarke will serve as co-executive producers.

The RapCaviar playlist was created by Spotify’s global head of Hip Hop Programming, Tuma Basa, and has an audience of more than 14 million people, per the company.

In other Spotify-related news, the company acquired the Wordle-inspired music guessing game Heardle earlier this week.

Spotify acquired Heardle, the Wordle-inspired music guessing game

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Nothing Phone (1) review

Publish Date: Fri, 15 Jul 2022 19:21:45 +0000

Can a smartphone still be cool? They were, once upon a time, in those days when they were more luxury than ubiquity. But what happens when everyone has one — and, more to the point, we all pretty much have the same one? Phones aren’t fashion. They’re not clothes or shoes or even cars. Chances are probably roughly equal that you’ve got the same one as the world’s richest billionaire or the person who bags your groceries.

I won’t go so far as to say choice among smartphones is an illusion, but it’s also probably not as great as you think. The last several years have seen a consolidation of the market among a fleetingly small handful of companies, while once mighty brands like LG and HTC have fallen off. Add in geographical and carrier limitations, and it becomes clear how small a pool we’re ultimately swimming in here.

Nothing is a company founded on, among other things, the notion that smartphones can still be cool. That they can be exciting and interesting in an area where they’re more or less all similar touchscreen electronic slabs.

There’s never been a good or easy time to launch a new smartphone company. But in a number of ways, founder Carl Pei may have chosen the worst — or at very least, the most difficult. Along with the aforementioned consolidation comes an overall stagnation and decline in smartphone sales. After a decade of flying high, things came sputtering down to Earth. It’s a regression that pre-dates but was ultimately accelerated by the pandemic.

Image Credits: Brian Heater

Smartphone manufacturers painted themselves into a corner in a bid to beat the competition. In the process, devices improved to a point that people felt less compelled to upgrade as often. Differentiation grew more difficult and continued attempts to add features to outdo others drove flagship prices into the quadruple digits. It’s a paradox of sorts — smartphones may have gotten too popular for their own good.

Those factors presaged a massive supply chain crunch. Chips and other components have been increasingly difficult to procure at scale for companies not named Apple or Samsung, while external financial factors, including inflation, have driven up the price of consumer electronics. Anyone with a passing interest in the category will probably agree that the category could use some new life, but how one might go about supplying it is a different question altogether.

“Nothing has been a difficult company to launch,” Pei recently told me. “This industry, in general, has one of the highest barriers of entry. We have huge companies, and it’s consolidating. There are a handful of companies that are active, and huge companies tend to be pretty bureaucratic, slow moving and very analytical. No wonder why all the products are kind of similar these days. In a regular industry or product category, you also have fresh blood that keeps coming in from below. In our industry, there’s no fresh blood because the barrier to entry is so high.”

Other barriers exist, as well. That, after all, is precisely the reason Nothing isn’t bringing its first phone to the States. While American consumers have begun to recognize the appeal of purchasing unlocked devices, carriers still have a stranglehold on the market. “You have to work with a big carrier,” Pei added, “they have a lot of negotiation power over you.”

Nothing Ear (1) headphones were a fine way to test broader consumer interest. The earbud market, while still saturated, still has room for growth. And, besides, $99 for a pair of headphones from a brand-new manufacturer is a much easier ask than a smartphone — even a $400 one.

Image Credits: Brian Heater

In the meantime, the company has worked diligently to build out a brand. Pei’s biggest strength has been his ability to build community. It was a key piece of OnePlus’ early successes, and he’s doing his best to recapture that magic with Nothing. For the phone, that’s meant things like invite-only purchasing (something that happens to dovetail nicely with those supply chain issues), crowd equity investing and, yes, NFTs. Scarcity isn’t a concept one tends to think about when discussing a mass-produced product like a phone, but maybe there are lessons to be learned from crypto and hype beasts cultures.

Aesthetic consistency is another shortcut for building a brand. When we broke the news that the company was working on a phone back in March, we noted:

Details around the forthcoming device are thin, though the source notes that the product will share a similar design language and “elements of transparency” seen in Nothing’s first product.

It’s safe to say that the report bore out. The clear back, coupled with the “Glyph” LED lighting arrangement is, by far, the phone’s most striking visual element, sharing a language with Nothing’s transparent earbuds. Stripped of that aspect, it, well, looks an awful lot like an iPhone. “I’ve gotten that feedback,” Pei told me when I brought this up. “It’s the most efficient use of space.”

Is the current iPhone some platonic ideal of smartphone design? I guess it is until it isn’t, and someone else figures out something better. Perhaps this speaks to another kind of limitation: physical design and use of space. Sure, Nothing could have gone out of its way to produce something entirely different, but 1) good luck finding a manufacturer that will work with you and 2) you’re suddenly catapulting yourself in the world of function over form. There’s certainly some wiggle room to play with, but a phone needs to be functional first, and then you can start worrying about the other stuff.

Ultimately, when you choose utility, you’ve got to find other ways to stand out as a true alternative in the samey world of handsets. That’s the liminal space the Nothing Phone occupies. It’s a kind of thought experiment into how one can go about differentiating oneself in a product category that’s already so mature and well defined.

Image Credits: Brian Heater

One thing that’s undeniable, however, is that the form factor is solid. The combination of glass and metal, coupled with the heft of the device, affords the Phone (1) a premium feel. It’s not heavy — certainly not for a phone this size — so much as substantial. Build-wise, there was never point I felt like I was carrying around anything but a flagship.

The company determined that bleeding-edge specs weren’t the hill to die on, either. This much is understandable. Going head-to-head against Samsung and Apple in an all-out spec war is a game you’re going to lose. This is most glaringly obvious in the case of the chipset. The inclusion of the Qualcomm Snapdragon 778G+ chip puts the device firmly in the mid-range category. Like pretty much every other aspect of building your first phone in 2022, there are trade-offs.

I’d assumed the decision was largely budgetary. I suspect that still played a factor in the decision, but ultimately Nothing’s choice not to go all-in on the latest flagship chip was a bit wonkier than that. Pei said the decision to go with a TSMC fab — rather than Samsung — is what pushed it over the edge. “It was a difficult choice, because we knew there would be people saying, ‘hey what are you doing? It’s not the latest.’ But I think it’s the most responsible choice in the seven series.”

Performance-wise, the phone can hang. It performs well, particularly will those devices in its price range. Sure, there are trade-offs that come with not adopting this year’s latest flagship chip, but nothing that should have a profound impact on your daily use. The chips are coupled with a solid starting 8GB of RAM and 128GB of memory. There are three tiers, in all, ranging from ÂŁ399 ($473) to ÂŁ499 ($592) for 12GB/256GB — again, positioning the product in the mid-tier.

Image Credits: Brian Heater

It’s a good value — especially for a first-time phone. The resources required to launch a device like this are tremendous. Pei certainly alluded to the fact that a large portion of the company’s raise thus far is tied up in the Phone (1), making this phone’s success nearly make or break for the young company. For that reason, I wouldn’t have been entirely surprised if Nothing passed some of the financial burden along to the consumer.

Much like the spec conversation, pricing your product similarly to Apple and Samsung’s is a fool’s errand. Firstly, $1,000+ phone prices are one element that has throttled phone sales. Finding a better price point makes the product more competitive, and opens up additional markets like India, which tend to be more interested in mid-tier pricing (a big market for Nothing, as it happens). It’s likely no coincidence that pricing was also a key part of OnePlus’s strategy, as well.

The back is, meanwhile, the most unique design element I’ve seen on a handset recently, aside from foldable screens. Is it a gimmick? Yes, 100%. It’s a decent one, however, with some real functionality. It’s also the reason the device ships with a warning for people with epilepsy and light sensitivity. That’s not something you see with most handsets — and partially an indication of just how bright this thing gets at full power. The “Glyph” is made from 900 LEDs, covered by a diffusing layer that makes it look like one connected light source. The design is certainly unique. “They told me it’s the kanji character for ‘love,’” Pei told me about his design team. “But I call bullshit on that. I can’t see it.” It can be programmed for a variety of different notifications, but it takes some time to remember which is which.

Image Credits: Brian Heater

In the center is a 5W wireless charging coil. Choose “Power Share” from the drop-down menu, pop a pair of earbuds in the center and the ring will light up to let you know it’s doing its thing. The battery life overall isn’t head-turning, but the 4,500mAh battery will get you through a day and a half of normal use with no problem.

The OLED screen measures in at 6.55 inches. It’s a great-looking display at 2400 x 1080, with a smooth 120Hz refresh rate. The screen is on the larger side, which, in turn, makes for a larger phone. I’m on the taller side of the human spectrum and had no problem porting the handset around, but that could certainly be a limited factor for many users.

The 16-megapixel front-facing camera sits behind a hole punch in the display. It has a built-in night mode and is capable of shooting video in 1080. A pair of rear-facing 50-megapixel cameras sit atop each other on the rear, their respective housings creating a small camera bump. The overall quality of images is quite sharp, and the system has some built-in tricks, including the inclusion of a macro mode and clever use of the two cameras to double as a depth detector. Overall, it’s a solid implementation and an impressive showing for a first-time phone-maker.

Image Credits: Brian Heater

The device itself isn’t rated for dust or waterproofing. Pei told me that the decision to skip the official process came down to time. Each side of the product is covered in Gorilla Glass 5, which should protect against drops, and rubber elements inside the phone will — at the very least — help it deal with rain and splashes. I wouldn’t, however, go swimming with the phone just yet.

Nothing’s Phone (1) is a refreshing change of pace in a smartphone market that has lost much of its sense of fun. It’s not a revolutionary device — but marketing material aside, that was never really the point. It has to be a solid and reliable Android handset at its foundation, and on that front it’s a success. It’s novel enough to turn heads and service as the starting point for an interesting company.

But is it cool? That’s ultimately in the eye of the beholder. It’s definitely fun, functional and nice to look at. Too bad it’s not available in the U.S.

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Sony officially owns Bungie now

Publish Date: Fri, 15 Jul 2022 19:09:17 +0000

The ink is dry on Sony’s acquisition of Bungie, the gaming company that created sci-fi hits Halo and Destiny.

Both companies announced the news on Twitter Friday, confirming that the $3.6 billion deal had gone through without any surprises.

The agreement to acquire Bungie has closed. So now we can officially say
 welcome to the PlayStation family, @Bungie! pic.twitter.com/x5jVmelaxl

— PlayStation (@PlayStation) July 15, 2022

While that’s a large sum for a relatively small company, the merger was modest enough to evade the antitrust scrutiny that Sony rival Microsoft triggered with its planned parallel acquisition of Activision Blizzard for $69 billion.

Bungie may not be a sprawling entity like Activision Blizzard — which publishes everything from Overwatch and World of Warcraft to the Call of Duty mega-franchise — but it’s nonetheless poised to have a huge impact on Sony’s roadmap for near-future games.

At Sony, Bungie will remain a standalone game studio but its expertise will be woven into the company’s strategy for PlayStation Studios, the division of Sony Interactive Entertainment dedicated to making tentpole games that showcase the company’s technological prowess. Sony has big plans to leverage Bungie’s fine-tuned model for a whole slate of live service games — online multiplayer games that sell virtual goods and evolve over time, often charging players set monthly fees for access or special perks.

We are proud to officially join the incredible team at PlayStation, we are excited for the future of our company, and we are inspired to bring together players from all over the world to form lasting friendships and memories.

Per Audacia ad Astra! https://t.co/trVT3s0BTE pic.twitter.com/YQbnLrnAQW

— Bungie (@Bungie) July 15, 2022

In an investor presentation this May, Sony Interactive Entertainment CEO Jim Ryan outlined the company’s intention to steer 49% of its PlayStation Studios development budget toward live service games by the end of 2022. Within three years, Sony plans to launch and maintain 12 of its own in-house live service games.

“The strategic significance of this acquisition lies not only in obtaining the highly successful Destiny franchise, as well as major new IP Bungie is currently developing but also incorporating into the Sony group the expertise and technologies Bungie has developed in the live game services space,” Sony CFO Hiroki Totoki said shortly after news of the Bungie acquisition was made public.

Though the company didn’t specify which titles would get the live service treatment, it’s likely that core PlayStation properties like Horizon Forbidden West, God of War and The Last of Us will be imbued with Bungie’s secret sauce, bringing in ongoing revenue well beyond launch day if Sony plays its cards right.

After buying Bungie, Sony goes all in on live service games

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Despite creaky markets, European edtech is showing its resilience

Publish Date: Fri, 15 Jul 2022 19:00:56 +0000

Rhys Spence

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Rhys Spence is head of research at Brighteye Ventures, a European edtech-focused fund, where he works with portfolio companies to help address priorities, with a focus on internationalization and HR.

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European, North American edtech startups see funding triple in 2021

The unbundling of professional learning and entrepreneurship education

These are turbulent times. Given the circumstances, it’s hardly surprising that public markets are creaking and only niche sectors remain either unaffected or in a marginally positive position. Edtech is no exception.

Today, Brighteye Ventures published its Half Year European Edtech Funding report, built around Dealroom’s data. The report primarily focuses on investment activity in Europe but is contextualized with what we are seeing in other markets.

Global VC funding into edtech startups totaled $6.5 billion in H1 2022 compared to a total of $20.1 billion raised in 2021. This pullback in global funding can partially be explained by fewer edtech mega-rounds (over $100 million) in H1 2022 compared to previous periods.

The first half of 2022 saw 16 so-called mega-rounds, compared to 24 in the second half of 2021 and 30 in the first half of 2021. At the same time, the number of early-stage rounds, categorized as deals under $15 million, has fallen fairly consistently since a peak in H1 2018.

We expect the European edtech market to maintain some positive signs of resilience, but naturally, the ecosystem cannot be immune to the headwinds it faces.

Note that this doesn’t necessarily reflect lower activity in the ecosystem — it simply means that more early deals are being done by angels and via involvement with incubators and accelerators, which are not comprehensively covered in the data.

We were pleased to see that the European edtech ecosystem has managed to maintain most of its momentum, at least for the time being. The fact that the sector has secured $1.4 billion thus far in 2022, 40% more than a year earlier, demonstrates its resilience to maintain growth even amid challenging conditions.

This isn’t surprising given the inverse correlation between worsening macro employment markets and appetite for education, particularly in the market for post-18 education.

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TechCrunch podcasts this week: Bowery Farms, web3 startup Yat and Stripe’s internal valuation

Publish Date: Fri, 15 Jul 2022 18:17:17 +0000

TechCrunch is more than just a site with words. We have a growing stable of podcasts focused on the most critical topics relating to the startup and venture capital worlds. Embedded below are the latest from The TechCrunch Podcast from Darrell, who talks to TC writers about their own stories of the week; Chain Reaction, our crypto-focused podcast hosted by Lucas and Anita; Found, a long-form bit of work that goes deep on the real saga of company formation from Jordan and Darrell; and Equity, our long-running, Webby-award-winning podcast focused on venture capital and the latest startup news, hosted by Natasha, Mary Ann and Alex. Be sure to subscribe where you listen to podcasts!

The TechCrunch Podcast

This week on The TechCrunch Podcast Managing Editor Darrell Etherington gives you a rundown of the biggest stories in tech this week and sits down with TC writers for a deep dive into a few of them. In this episode, he talks with Zack Whittaker about Apple’s latest security feature, Lockdown Mode, and Amanda Silberling about the end of former Theranos exec Sunny Balwani’s trial.

Please note, we recorded with episode before news of Elon’s attempt to terminate his deal to acquire Twitter broke. Read Taylor Hatmaker’s coverage here to stay up to date.

Articles from the episode:

Apple says Lockdown Mode in iOS 16 will help block government spyware attacks

Former Theranos exec Sunny Balwani is found guilty

Other news from the week:

Elon Musk tells Twitter he is killing the deal

Things get messy for Elon Musk with report about new twins he shares with Neuralink exec

A huge data leak of 1 billion records exposes China’s vast surveillance state

Hotel giant Marriott confirms yet another data breach

Apple reportedly plans to launch an ‘extreme sports’ Apple Watch with a larger screen and metal casing

Chain Reaction

This week Lucas and Anita return to discuss the ultimate meme investing crossover episode with GameStop launching an NFT marketplace. We also break down this week’s latest drama with the liquidation of crypto hedge fund 3 Arrows Capital. It wasn’t all doom and gloom, as we discussed some of the new crypto funds injecting fresh capital into the space.

In their interview this week, Lucas and Anita chat with Naveen Jain. Naveen is the founder of web3 startup Yat, which lets people buy their own emoji URL. The marketplace saw some wildly expensive sales this year, but when can pricey emojis tell us about the future of identity?

Found

Bowery Farms founder and CEO Irving Fain wants you to taste the best strawberry you’ve ever had, grown only a few miles from your urban home. As the leading and largest vertical farming company in the U.S, their goal is to make agriculture possible in urban spaces while also making it possible to grow a wide array of crops from anywhere in the world. Darrell and Jordan talk to him about how agtech companies all have a space in the fight against climate change, what led him to founding Bowery and how they are innovating and scaling thoughtfully.

Subscribe to Found to hear more stories from founders each week.

Connect with us:

On Twitter

On Instagram

Via email: found@techcrunch.com

Call us and leave a voicemail at (510) 936-1618

Equity

Alex, Natasha and Mary Ann enjoyed yet another edition of Equity Live this week, hopping on Twitter Spaces to chat about everything from Musk’s meme suit to a new take on Wordle that landed Spotify’s attention. When we stopped recording the episode, news broke that Stripe is cutting its internal valuation by 28%. Luckily, we do this three times a week, so stay tuned for our take soon.

In the meantime, here’s what we got to in today’s episode:

Spotify acquired Heardle, which felt like a throwback to trivia and of course a nod at its famous predecessor, NY Times-owned Wordle. Only one of us has played the music guessing game so far, so tweet @equitypod your thoughts on if it’s actually fun.

We also spoke about a startup that is trying to address male infertility in a personalized, engaging way. It caught investors’ attention, and ours too.

Our last deal of the week, Continuum, gave us a chance to talk about productizing one of the worst jobs in startups: laying folks off. The fractional work play feels even more important given the volatility of startups across all stages right now. Hopin, for example, conducted its second layoff within four months this week and parted ways with its COO, CFO and other executives. Medium had an executive shake-up, with Ev Williams stepping down.

The last two themes of the episode were built around Instacart and the future of grocery delivery, as well as the latest of the Twitter and Elon Musk saga.

This is our Wednesday show, where we niche down to a single topic, think about a question and unpack the rest. This week, Natasha asked: How does Roe’s reversal impact the ways that companies are built?

The question was inspired by a recent TechCrunch+ column, “Roe reversal weighs heavily on emerging tech cities in red states.” The reporters behind the piece, Dominic-Madori Davis and Becca Szkutak, joined Equity to talk about the story and help us get more of the nuance behind this huge setback.

We chatted about the reappearance of geographic boundaries, selective silence from the money behind the money and how founders need to rethink their growth strategy if they’re coming from red states. We also chatted about how some founders have already started to react to the overturning of Roe vs. Wade and their sentiments revolving the legality of what happens next.

Alex and Grace are back to cover the biggest, boldest and baddest technology news. After some holiday weeks, we are back on an actual Monday! What a treat. Here’s what we got into:

Stocks are off around the world, partially due to government action, partially due to the complex web of negative factors that we’ve discussed for months now.

Cryptos are more staid; if you like bitcoin at $20,000 this is your moment.

Tiger’s slowdown is no mere blip, TechCrunch reports. The investing powerhouse is going to slow its roll for the rest of 2022, and is looking to raise a new fund.

Unacademy is looking to cut costs, go public in two years per TechCrunch. And Kadamos raised more capital, marking a pretty quick reload after raising a few months ago.

Quick Hits: The Uber Files are a mess, layoffs aren’t solving a talent crunch in Southeast Asia and fintech staffing cuts are starting to pile up.

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

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Nucleus Genomics lands new funding from Alexis Ohanian to help people assess specific disease risks

Publish Date: Fri, 15 Jul 2022 18:00:35 +0000

Nucleus Genomics, a genetic testing company focused on calculating a patient’s risk of certain diseases, is adding $14 million to their initial seed funding round. With this round the company has raised, in total, $17.5 million.

This “seed plus” funding round was led by Alexis Ohanian’s 776. Ohanian is joining investors like Founders Fund, Adrian Aoun (CEO at Forward Health), Brent Saunders (former CEO at Allergan), Matteo Franceschetti (CEO at Eight Sleep) and others. Nucleus originally announced a $3.5 million seed round back in December of 2021.

Typically, Nucleus users will upload their own genetic results previously obtained by an at-home testing company like 23andMe or Ancestry. Then Nucleus will calculate polygenic risk scores, which is a measure that provides a genetic predisposition for a potential condition, and provide information about said risk on their platform. Customers also have the option of ordering their own genetic testing kit provided by the company.

Polygenic risk scores have been scrutinized for their potential bias. In a study published in the National Library of Medicine, close to 80% of participants in genetic studies (and the base of evaluation) have been from European descent, and does not account for demographic differences, like race.

“In genetics, they’re so European biased, so when we actually build models we want to make sure the models work for everyone, not just the United States, or anything out there,” said founder and CEO Kian Sadeghi.

Although Nucleus allows users to upload their genetic info obtained by a third-party, Sadeghi said there is “no need for a formal partnership” with those companies.

Up to now the company has been “focused on assessing risk,” but funds from this round will be used to grow their current team across different areas. Additionally, the company will be establishing their own genetic testing infrastructure and buying testing kits in bulk.

Sadeghi added, he wants (and will allow) users to be in the most control of their data.

When a user signs up on the platform they are asked how they would like their data to be shared, if even, in addition to providing the option, if users would like, to provide data to research groups to “advance research and medicine” according to the company.

“Nucleus believes very much in kind of a foundational data ownership and control,” Sadeghi said. “We are built in our DNA, so to speak, on maximal data ownership, and data control. You decide if your data is shared, and if so with who, when and how.”

However, the company has yet to launch mainstream and it is unclear how this will look for users on the company’s platform.

The company suggested in an interview with TechCrunch there would be a possibility they expand into an international market, and for Sadeghi he said it aligns with the vision he’s had since day one.

“When we say human genome and every smartphone, we’re not kidding,” Sadeghi said. “We really see a world beyond just the boundaries of the United States where people can engage and interact and take agency over their health.”

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Are convertible notes the right way to fund your startup?

Publish Date: Fri, 15 Jul 2022 18:00:22 +0000

Julie Gionfriddo

Contributor

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Julie Gionfriddo is director of advisory services at accounting and advisory firm Fiondella, Milone & LaSaracina LLP. Prior to joining FML CPAs, Julie spent nearly 20 years at PE and VC firms rising to the level of principal.

If an early-stage startup is ready to raise money but its valuation hasn’t been established yet, a convertible note can serve as a good fundraising option.

A convertible note is a debt instrument that typically converts into equity at a later date. Investors who invest in a note are effectively loaning money to the startup, but instead of getting their investment back as dollars with interest, they get it back in the form of equity once a valuation is assigned at a later fundraising round.

This approach has a number of advantages for both the company and investors. Convertible notes allow companies to delay being valued until an equity funding round, extending the time they have to build a product and flesh it out. And for investors, while riskier than the traditional funding route, convertible notes give them an opportunity to get more equity for their money than if they wait until Series A.

How to tell if convertible notes are a good fit for your startup

One advantage to convertible notes that founders shouldn’t overlook is that they typically don’t come with any control or board seats.

Convertible notes work best for early-stage companies, especially pre-revenue startups. That could mean a company that has a solid proof of concept — a product that’s proven to work on the current scale or a medical device in the early stages of applying for FDA approval.

In both cases, the companies are building their value, and the dollars they raise with a convertible note help them scale. The end result is that when they’re ready for an equity financing round, they’re already at a higher pre-money valuation than they would be otherwise.

When funding a company with a convertible note, investors look for massive upside potential. The best-case scenario is when the company ends up having a substantially higher-than-anticipated valuation by the time it gets to Series A.

Convertible notes typically include a valuation cap so that early investors don’t lose out if the company’s value skyrockets before a Series A. When the note converts, investors get more equity at the price of the valuation cap, and they share the benefits of the company’s increased value.

What kind of investors use convertible notes?

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TechCrunch+ roundup: Save your equity, LatAm crypto survey, where the runway ends

Publish Date: Fri, 15 Jul 2022 17:03:20 +0000

Money doesn’t need to be protected from sudden vibrations or direct sunlight, so the term “dry powder” strikes me as a poor metaphor for the mounds of cash investors were dropping on startups just a few months ago.

“What’s crazy to me is that some of these companies are still in the seed stage backed by very large firms who dabbled at this stage,” said Elizabeth Yin, a general partner and co-founder at pre-seed-focused Hustle Fund.

“An extra $200,000 or $500,000 wouldn’t make a dent in a billion-dollar fund even if it went horribly.”

Rebecca Szkutak interviewed Yin and Kirby Winfield, founding general partner at pre-seed-focused Ascend, about the sudden, urgent funding requests they’ve recently received from founders with short runways.

Full TechCrunch+ articles are only available to members.

Use discount code TCPLUSROUNDUP to save 20% off a one- or two-year subscription.

“I had one cross my desk yesterday where a brand-name VC led the seed, which they are now calling a pre-seed,” Winfield told TechCrunch.

“I know this company. I know they raised a pre-seed and a seed round and are now coming back around and saying, it was pre-seed and now we are raising a seed.”

With more investors content to wait things out, a traditional three-month fundraising timeline might stretch on for six. Or even longer.

As a result, founders are stuck with potentially unwelcome options, such as marking down their valuations and/or accepting flat and down rounds.

On Monday, we’ll run columns with practical advice for exploring both of those scenarios. In the meantime, have a great weekend, and thanks very much for reading.

Walter Thompson

Editorial Manager, TechCrunch+

@yourprotagonist

Battle of the bridge: Startups struggle to secure runway financing

10 steps for managing layoffs respectfully

Image Credits: MirageC (opens in a new window) / Getty Images

As I’ve written previously, I decline most guest columns we receive, particularly ones that explain basic best practices. Rules are made to be broken, however.

This 10-point guide to managing layoffs with empathy and respect can help inexperienced managers find their way through the worst part of running a startup: letting people go.

“People will remember this day for the rest of their lives,” says Nolan Church, co-founder and CEO of Continuum, previously chief people officer at Carta and head of talent at DoorDash.

“They can remember it one of two ways: Either you surprised them with bad news and treated them like cattle, or you did all you could to look out for them and help them navigate to the next chapter.”

10 steps for managing layoffs respectfully

Here’s how to protect your equity if you get laid off

Image Credits: Colin Anderson Productions pty ltd (opens in a new window) / Getty Images

Take note, startup workers: The same people who welcomed you aboard when you signed your offer letter are now looking for places to save money so they can keep the company afloat.

Reducing headcount is another way for founders to claw back equity, as many workers who’ve been laid off will not have enough cash to exercise all of their vested options. Once those options expire, they’ll go back to your (former) employer.

If you work for a startup that extends the traditional 90-day post-termination exercise window, count your blessings.

If you don’t, this TC+ guest post contains useful advice for budgeting, negotiating and strategizing to save your hard-won equity.

Here’s how to protect your equity if you get laid off

5 investors explain why Latin America is poised to weather the crypto winter

Image Credits: gece33 (opens in a new window) / Getty Images

Even as a cohort of crypto companies continue their calamitous collapse, investors who back DeFi startups in Latin America are “positioning themselves for a rebound,” reports Anna Heim.

She surveyed five investors who have staked companies in the region’s crypto and DeFi sector to learn more about how their ethos has changed since winter began and why consumer adoption in LatAm is stronger than in other markets:

Matias Nisenson, co-founder, DeFi Wonderland

Christine Chang, head of corporate development and ventures, Tribal

Patricio Jutard, co-founder and general partner, Newtopia VC

Claire Diaz-Ortiz, startups committee chair, VC3; scout, Kleiner Perkins

Andy Areitio, general partner, TheVentureCity

5 investors explain why Latin America is poised to weather the crypto winter

Dear Sophie: Questions about green cards and EB-2 priority dates

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

I’ve been on an H-1B since 2011. I have an EB-2 I-140 approved with a priority date in April 2015. I’m Indian by birth, so I know I’m going to be waiting a long time to get a green card.

As an experienced cybersecurity professional, I think I could qualify to apply for an EB-2 NIW. Will there be any benefit from applying for an EB-2 NIW now?

— Idealistic from India

Dear Sophie: Questions about green cards and EB-2 priority dates

The experiment of force-feeding late-stage startups infinite money is wrapping up

Image Credits: Nigel Sussman (opens in a new window)

It’s not your imagination: After a deluge, it has stopped raining venture capital.

According to CB Insights’ State of Venture Q2 2022 Report, global venture funding decreased by 23% quarter over quarter, the second-largest drop in a decade.

Mega-rounds larger than $100 million took a nasty hit: In Q4 2021, they accounted for six of every 10 dollars invested in private-market capital. In Q2 2022, that fell to 47%.

“That is a swoon for the ages,” writes Alex Wilhelm.

The experiment of force-feeding late-stage startups infinite money is wrapping up

Pivoting your startup in a bear market: Become undeniably fundable

Image Credits: Eoneren (opens in a new window) / Getty Images

Every founder is searching for ways to conserve cash at the moment, but a laser-focus on saving money instead of creating efficiencies will only delay the inevitable.

In July 2022, investors will not back companies that can’t demonstrate proficiency in five basic KPIs, according to Kraig Swensrud, founder and CEO of Qualified.

“We’re not going back to the sugar high of the past decade anytime soon, but with integrity, strong leadership and operational efficiency, we can not only survive, but thrive.”

Pivoting your startup in a bear market: Become undeniably fundable

Pitch Deck Teardown: Forethought’s $65M Series C deck

Image Credits: Forethought (opens in a new window)

Last month, enterprise reporter Ron Miller spoke to Forethought CEO Deon Nicholas about the pitch deck his company used to nab a $65 million Series C round in 2022.

This week, Forethought shared 23 slides with us for analysis, including an eye-catching advisor/investor slide that includes Gywneth Paltrow, Sean “Diddy” Combs and Robert Downey, Jr.

Pitch Deck Teardown: Forethought’s $65M Series C deck

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TikTok’s chief security officer steps down amid increased scrutiny from US officials

Publish Date: Fri, 15 Jul 2022 17:00:52 +0000

TikTok announced today that its head of global security, Roland Cloutier, is stepping down effective September 2. Cloutier will be replaced by Kim Albarella, who has been appointed the interim head of TikTok’s Global Security Organization. Cloutier will move into an advisory role at the company to focus on the business impact of TikTok’s security and trust programs. The organizational change comes as the popular ByteDance-owned app has been facing increased scrutiny from U.S. officials.

“Part of our evolving approach has been to minimize concerns about the security of user data in the U.S., including the creation of a new department to manage U.S. user data for TikTok,” TikTok CEO Shou Zi Chew said in a statement. “This is an important investment in our data protection practices, and it also changes the scope of the Global Chief Security Officer (CSO) role.”

The change follows the aftermath of a BuzzFeed News report that revealed TikTok staff in China had access to the company’s U.S. users’ data. At the same time, TikTok said it was moving U.S. users’ data to Oracle servers stored in the U.S. The BuzzFeed News report, which cites recordings from 80 TikTok internal meetings it obtained, claims that U.S. employees of TikTok repeatedly consulted with their colleagues in China to understand how U.S. user data flowed because they did not have the “permission or knowledge of how to access the data on their own.”

The report came as U.S. officials have expressed concern for years that TikTok might let China’s authoritarian government have access to the data the firm collects from Americans and users from other nations.

In response to the report, numerous Republican senators wrote to TikTok to express concern about the company’s policies regarding data access. TikTok responded to the letter by admitting that some China-based employees have access to data “subject to a series of robust cybersecurity controls and authorization approval protocols overseen by our US-based security team.” The company also assured the senators by noting that it’s working on a program called “Project Texas” to bolster data security for U.S.-based users.

“The broad goal for Project Texas is to help build trust with users and key stakeholders by improving our systems and controls, but it is also to make substantive progress toward compliance with the final agreement with the U.S. government that will fully safeguard user data and U.S. national security interests,” Chew had said in the letter.

TikTok says ‘Project Texas’ will bolster security for US users in wake of China data access concerns

TikTok moves all US traffic to Oracle servers, amid new claims user data was accessed from China

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Apple Music Sessions launches with country stars Carrie Underwood and Tenille Townes

Publish Date: Fri, 15 Jul 2022 16:38:53 +0000

Apple is introducing a new perk for Apple Music subscribers, Apple Music Sessions, which gives listeners access to exclusive releases in spatial audio that have been recorded in Apple’s music studios around the world. The performances are also filmed, providing subscribers with companion live music videos.

The sessions offer musicians the opportunity to recreate hits from their catalog and cover classic songs for listeners to enjoy.

Country fans will especially appreciate today’s launch as Apple Music released a short selection of tracks from country singers Carrie Underwood and Tenille Townes. The initial two artists were both recorded in Apple Music’s studio in Nashville, Tennessee.

Carrie Underwood has 25 CMT Music Awards, and is the most-awarded artist in the award show’s history. For her Apple Music Session, Underwood performed two of her own songs, “Ghost Story” and “Blown Away,” plus a cover of Ozzy Osbourne’s “Mama, I’m Coming Home.”

Tenille Townes is a rising country music artist, most recognized for her hit song “Somebody’s Daughter.” She performed the song along with “Same Road Home” for her Apple Music Session. Townes also covered “At Last” by Etta James.

Country music singers Ronnie Dunn and Ingrid Andress are lined up next to release sessions, Apple announced. The company plans to have more artists in the future, and expand Apple Music Sessions into other genres.

Apple has been steadily adding features and exclusive experiences in order to garner more subscribers for its music service.

In 2020, Apple rolled out At Home Sessions with artists such as Arlo Parks reworking three of her tracks in the comfort of her own home. Apple Music Sessions seems to be a step up from this, inviting artists into professional studios and recording songs with spatial audio technology.

Just a few months ago, Apple debuted Apple Music Live, a new concert livestreaming series with top artists such as Harry Styles.

Apple Music’s new concert series will livestream select performances, starting with Harry Styles

This April, Apple Music added DJ mixes in spatial audio with Dolby Atmos. It also rolled out a Siri-only music plan late last year.

The company is also looking to entice new subscribers by focusing on catering to particular interests. For example, Apple acquired classical music service Primephonic last year to expand its music offering for Apple Music classical fans. The acquisition of Primephonic is believed to be for Apple’s new classical music app expected to launch in 2022 with “visual, audial, and haptic” aspects for a distinct listening experience.

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Yes, it’s become harder for startups to raise funding

Publish Date: Fri, 15 Jul 2022 16:30:10 +0000

Today’s venture capital market feels strange because it isn’t uniform. While some companies are still able to raise mega-rounds, reach unicorn status, and even attract lots of new capital in sectors that have seen their exits struggle on the public markets, other startups are not having similar luck.

After several years in which capital flowed freely and the entire venture capital ecosystem and startup market marched in lockstep toward bigger, faster rounds at new, higher prices, we’re in a more mixed environment today. This has made reporting on Q2 venture capital totals a bit tricky; Yes, for example, fintech venture totals are falling, but they remain above 2020 levels. Is that bad or good?

To better understand where the venture market actually stands today, we’ve pulled in a new dataset, this time from DocSend (former unicorn Dropbox bought the company in 2021). DocSend is best known as a software service that helps founders create and share their pitch decks with investors. As a result, it has a wealth of data concerning both founder and investor activity. The aggregated behavior of both sides of the investing table when it comes to startup funding is incredibly useful and paints a picture of a venture market diverging — but not as fast as we might have anticipated. There’s some good-ish news to be found.

(If you are fashioning a pitch deck — or wondering what one looks like — our pitch deck teardown series should be your jam!)

The Exchange explores startups, markets and money.

Read it every morning on TechCrunch+ or get The Exchange newsletter every Saturday.

The divergence between founders and investors that we’ll detail below is not good news in gross terms. However, when we compare the data to the doom and gloom we’ve heard from some founders, the information is nearly encouraging. Not great, but not terrible either. Let’s talk about it.

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Not gonna lie, this NGL lawsuit is kinda juicy

Publish Date: Fri, 15 Jul 2022 16:01:06 +0000

The anonymous Q&A app NGL climbed to the top of the App Store by tricking its users with questions it claims are sent in by their friends and by charging for useless hints about who supposedly wrote those messages. But many of the questions users receive aren’t from real people; they’re generated automatically — an idea NGL’s top competitor, the maker of the Sendit apps, is now alleging NGL’s maker stole alongside other confidential business information, according to a new lawsuit.

In a complaint filed on July 1, 2022, in the Superior Court of California, Sendit’s creator, Iconic Hearts Holdings, Inc. (previously known as FullSenders), claims that NGL acquired its trade secrets through “improper means” as a result of a breach of duties by the suit’s defendant, Raj Vir, an Instagram software engineer, who had worked on Sendit on the side.

For those who don’t keep up with teen app trends, both Sendit and NGL are leading anonymous Q&A apps, a subgroup of social apps currently popular among a younger demographic. The apps have been ranking at the top of the app store charts for months, as anonymous apps typically do — before they implode from bullying, lawsuits or get banned by the app stores themselves.

As of today, NGL is the No. 5 top (non-game) free app on the U.S. App Store. Since launching late last year, the company has generated more than $2.4 million in revenue, according to third-party estimates. Sendit’s apps are currently ranked at No. 12 in Social Networking (Sendit) and No. 57 in Social Networking (Sendit — Q&A on Instagram), and have earned over $11 million, per data from Sensor Tower.

Anonymous social NGL tops 15M installs, $2.4M in revenue as users complain about being scammed

Both Sendit and NGL allow users to post links to their social accounts, like Instagram or Snapchat Stories, which friends can click on to send the poster anonymous questions. (Think: “who do you have a crush on?” and other teenage gossip.)

The recipient, in turn, receives the questions in the app’s inbox, and can then post their response to their social accounts for all to read. The apps monetize this activity by offering their users “hints” about the person asking the questions so they can find out who asked what.

While NGL focuses only on anonymous Q&As, Sendit offers two variations of its service. Its original app is aimed at Snapchat users and provides a variety of games in addition to the anonymous Q&A feature. Its newer app, meanwhile, brings anonymous Q&A’s to Instagram. It launched following Snapchat’s rollout of stricter policies earlier this year that banned anonymous apps from using its developer tools. (Sendit received an extension to come into compliance with those policies, Snapchat told us.)

Snapchat’s stricter policies for anonymous apps and friend finders aren’t yet fully enforced

The apps are problematic, however, because they’ve been demonstrated to be using misleading tactics to trick their young users into thinking they were receiving engagement from friends when they were not.

Both apps are also incredibly similar, including in their visual design, how they work, their business model and other aspects.

As it turns out, that may not have been an accident.

The recently filed Iconic Hearts lawsuit (see below) states that the company hired Vir to develop Sendit’s mobile apps back in September 2018. Vir then continued to consult with the company afterward, it says. In May 2021, Iconic Hearts began having conversations with Vir about offering him a full-time position or allowing him to continue as a contractor. But instead of taking the job, Vir took the company’s ideas and insights and used them to build his own version of Sendit’s app, the complaint explains.

“Vir was integral in founding, building, and launching ‘NGL – anonymous q&a,’ an app that is nearly identical to, and directly competes with, the Sendit apps,” reads the filing. It additionally details how Vir used his friendship with Iconic Hearts’ founder Hunter Rice and his role as a Sendit developer and consultant in order to gain information about the company and its apps. (Apparently, Rice and Vir weren’t just business colleagues, they were friends — former high school classmates who had bonded after college over their shared interest in tech, the filing notes.)

During Vir’s time working on Sendit’s apps, he had access to insider information — like which features drove the most user engagement and other future development plans, the lawsuit states. He had also signed a developer agreement, which forbade him from using this information for any other purpose beyond his work with the Sendit apps, it says.

Rice believes Vir was never serious about the job offered to him at Iconic Hearts, the complaint continues, but was instead using his ongoing access to build NGL, a copy of Sendit which launched in late 2021 on the App Store and soon became the App Store’s No. 1 app in June 2022.

The filing explains how Vir had access to detailed app data and KPIs (key performance indicators) and other metrics designed to make the app succeed. Because of his relationship with Sendit, Vir asked for and was given access to all sorts of business data and metrics — like click-through rates, conversion rates, which prompts were the highest performing, how they were ordered to create virality, the placement of call-to-action buttons, financial performance, MRR (monthly recurring revenue), churn rate, LTV (lifetime value), metrics related to average response rates, share counts, viral coefficients and much more.

Among these business details was Sendit’s use of fake questions. The company had previously denied using bots when TechCrunch asked.

Many users of Sendit and NGL’s apps had already suspected some of the questions they received were not really coming from their friends, but had been automatically generated. The app stores are filled with user reviews that claim these apps are tricking them, then ripping them off by charging for unhelpful hints — like those that only share a user’s city or the type of phone they have.

TechCrunch also recently tested both NGL and Sendit’s anonymous Q&A system by generating a link for questions but then didn’t show it to anyone, and yet still received half a dozen so-called “questions from friends” in our inboxes.

This feature is actually detailed in the new lawsuit as one of the many aspects of Sendit’s apps that NGL supposedly stole. Reads the complaint:

Iconic Hearts had also developed a unique system, “Engagement Messages,” which sends content to an inbox if interactions with the user had been idle over a certain period of time. “Engagement Message” re-trigger a user to use the app. This generates more “shares” on the app, more density within a user’s trend network (i.e. more people sharing more times), which adds to an app’s saturation, the most critical measure of success and growth. It took Iconic Hearts years of trial-and-error, testing, and iterating its product to optimize its proprietary Engagement Messages System and various components thereof, such as the optimal period of time after which to send an Engagement Message, how the Engagement Message gets pushed, the design of the Engagement Message, and the content of the Engagement Message.

This section essentially confirms users’ suspicions about the fake questions. It also now places a burden on the app stores to take action, we should think, as neither company discloses to its users that these “engagement messages” are not being sent by their friends as the app’s description would lead them to believe.

Surprisingly, Iconic Hearts didn’t know of Vir’s betrayal until recently. Even as late as June 2022, Vir concealed his involvement with NGL, the complaint states. The lawsuit claims Vir finally admitted his involvement to Rice on June 21, 2022, by saying “okay, I’ll clear the air. I’ve been lying to your face this entire time. I am building NGL,” and then, “congratulations for being the Head of Product at NGL.”

Yikes, if true.

Neither party has responded to our requests for comment at this time.

As to what extent Iconic Hearts will be able to prove its claims in a legal fashion remains to be seen. The suit is asking for damages and injunctive relief. The suit also names dozens of unknown defendants who may be working or partnering with NGL, which Iconic Hearts hopes the court will reveal and name.

ICONIC HEARTS HOLDINGS, INC. vs. RAJ VIR; NGL LABS LLC; and DOES 1 through 50, inclusive, by TechCrunch on Scribd

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Get ready for TechCrunch Sessions: Crypto in November

Publish Date: Fri, 15 Jul 2022 15:30:55 +0000

Whether you love it, hate it or barely understand it, you can’t escape the wild world of blockchain. It’s one of the buzziest technologies going due to both its potential and its volatility. Will it fulfill its promise to democratize financial transactions and access, or will its risky nature stymie its move to the mainstream?

We’ll dig into these questions — and plenty more — at TechCrunch Sessions: Crypto, which takes place on November 17 in Miami, Florida. This is our first dedicated foray into the cryptoverse, and we can’t wait to hear from some of the leading movers, shakers and risk-takers in web3, DeFi and NFTs.

Whether you’re a whale, a degen or a new ape (or someone who’s interested, but has no idea what those terms mean), you’ll find information and opportunity at TC Sessions: Crypto. As with every TechCrunch conference, you’ll enjoy in-depth interviews and interactive panel discussions with the founders, developers and investors building and driving the sector.

Take advantage of our special launch pricing

We have a limited number of general admission passes available. Buy yours now — before they sell out — and you’ll save $250.

Amp up your exposure to the blockchain community and demo your crypto-related tech. We have just 10 special launch-priced Startup Exhibitor Packages available. Buy one before they’re gone, and you’ll save $200.

You’ll have plenty of time to network, and our event app takes the pain out of finding the right people — the folks with compatible business goals. Based on information you provide when you register, the app searches the attendee list and makes recommendations. You can send invites to schedule 1:1 meetings as you wish. Meet the perfect co-founder, or find a dev with mad skills or pitch investors. It’s a quick, easy and efficient way to mine for opportunities.

Speaking of opportunities, if you’re interested in sponsorships, reach out to our events team for all the options.

We’re just getting started building out an awesome agenda, and we’ll announce specific speakers, topics and related news in the coming weeks. Sign up for updates to keep your fingers on the pulse of our first crypto conference and other TC events.

Take advantage of our special launch pricing. Buy your pass or package today, and then join the web3, DeFi and NFT communities at TC Sessions: Crypto on November 17 in Miami.

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