Month: March 2021

Another proptech is considering raising capital through the public arena.

Knock confirmed Monday that it is considering going public, although CEO Sean Black did not specify whether the company would do so via a traditional IPO, SPAC merger or direct listing.

Bloomberg reported earlier today that the company had hired Goldman Sachs to advise on such a bid.

According to Bloomberg, Knock is potentially seeking to raise $400 million to $500 million through an IPO, according to “people familiar with the matter,” at a valuation of about $2 billion.

Black and Knock COO Jamie Glenn are no strangers to the proptech game, having both been on the founding team of Trulia, which went public in 2012 and was acquired by Zillow for $3.5 billion in 2014. The pair started Knock in 2015, and have since raised over $430 million in venture funding and another $170 million so in debt.

Knock started out as a real estate brokerage business until last July, when the company announced a major shift in strategy and said it was becoming a lender. At the time, Knock unveiled its Home Swap program, under which Knock serves as the lender to help a homeowner buy a new home before selling their old house. It previously worked with lending partners but has now become a licensed lender itself.

In other words, the company now offers integrated financing – the mortgage and an interest-free bridge loan – with the goal of helping consumers make strong non-contingent offers on a new home before repairing and listing their old home for sale on the open market.

With that move, Knock eliminated its Home Trade In program, where it helped consumers buy before selling by using its own money to purchase the new home on behalf of the consumer before prepping and listing the consumer’s old house on the open market. Under that Trade-In model, the homeowner used the proceeds from selling their old home to buy the new home from Knock and pay the company back for any repairs it did to prep the house for sale.

At that time, Black had told me that Knock had decided to move away from its trade in program in part because it was capital intensive and required the closing of a house to take place twice.

“It added friction to the experience,” he said. “And now, especially during COVID, it can be inconvenient to try and sell a house at the same time as buying one. This is about making something possible that isn’t possible with any other traditional lender. We’re able to lend some money before an owner’s [old] house is even listed on the market.” 

Knock is headquartered in New York and San Francisco and currently operates in Atlanta, Charlotte, Raleigh-Durham, Dallas, Fort Worth and Phoenix. 

Other proptech startups that have recently announced plans to go public include Compass and Doma (formerly States Title).

Stay tuned, as I’ll likely be updating this story with more details later today.

Source: Tech Crunch

Cities traditionally have been bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities. It’s true that we’re still months away from broader reopenings and herd immunity via current vaccination efforts.

However, those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.   

U.N. forecasts show that by 2030, two-thirds of the world’s population will reside in cities, communities that are the epicenters of culture, innovation, wealth, education and tourism, to mention just a few benefits. They are not only worth saving — they’re also ripe for rebirth, precisely why many municipal leaders in the U.S. anticipate the Biden administration will allocate substantial monetary resources to rebuilding legacy infrastructure (and doing so in a way that prioritizes equitable access). 

With this emphasis on inclusivity and social innovation, the tech community has the ability to address a range of lifestyle and well-being issues: infrastructure, transportation and mobility, law enforcement, environmental monitoring, and energy allocation.

In this time of reset for cities, what smart city technologies will transform how we live our lives? What kinds of technology will make the biggest impact on cities in the next 12 months? Which smart cities are ahead of the curve? 

To unpack these questions and more, we conducted the SmartCityX Survey of industry experts — including smart city investors, corporate and municipal thought leaders, members of academia, and startups on the front lines of urban innovation — to help provide valuable insights into where we’re heading. Below you’ll find some key takeaways:

Infrastructure is the most crucial issue for cities

Critical infrastructure topped the list of most prominent issues facing today’s cities, followed closely by traffic and transportation. Cisco may have left the party too soon, but others, including countless startups, are lining up and capitalizing on future growth opportunities in the space. A couple of recent data points that support this trend — particularly as it relates to infrastructure rebuilding, IoT and open toolkits to connect fragmented technologies — include the following:  

• Bentley Systems, fresh off a September IPO, announced a $100 million corporate venture capital fund.
• Qualcomm announced its IoT Services Suite, comprising leading solutions ranging from wireless connectivity, hardware, software and data analytics to platform integration.   

“Smart Infrastructure is paramount to Smart City success. It’s crucial that this infrastructure be ‘architected’ as opposed to just connected. This is the only way to truly achieve seamless interoperability while ensuring scalability, reliability, security and privacy. Technology companies that offer robust architectural components and/or platforms stand to deliver tremendous stakeholder value and outsized returns to investors.” – Sue Stash, – — General Partner, Pandemic Impact Fund

What’s driving change in cities?

When asked what will accelerate innovation and change in cities, an overwhelming majority cited COVID-19 as the primary factor, followed by remote work, which has accelerated the adoption of online collaboration tools and forced legacy companies to complete multi-year digital transformation projects in a matter of months. The biggest opportunity is to build cities back better and smarter, focusing on new infrastructures that do more with less, and for most of us, that begins and ends at home.

Source: Tech Crunch

Non-fungible tokens (NFTs) are trending hotter than pogs right now, and the number of articles published on the subject in the last few weeks has ballooned into the thousands. So a pardon must be begged at the outset here, but the overlooked potential of token economies is simply too important to let slip away.

NFTs are but one small part of a much larger development in the world of finance capital. What leaves some scratching their heads and chuckling could, within a decade, completely transform the model of investment that has been in place since the rise of Silicon Valley.

Non-fungible what?

NFTs have had a strange first step into the spotlight, bringing wealth to a very small group of people and making most people simply perplexed. Before NFTs are written off as a flash in the pan, it might be worth considering that NFTs were never designed to be very useful in traditional investment frameworks.

An auction house selling a $69 million JPEG is akin to a horse-and-buggy driver strapping a small nuclear reactor to the top of the cab and declaring, “This is an atomic buggy!” as the horse continues to chug along, doing all the work. You’ll get the attention of bystanders, but nothing has fundamentally changed here.

Each of the headline-grabbing NFT sales seen recently are instances of exactly this kind of backward thinking. And the bystanders criticizing the buggy driver and saying, “nuclear reactors are hype,” are not really seeing the long-term implications, or they just don’t like horses.

Whales, dogs and unicorns

From early conceptions of investment as a way to fund transoceanic ship voyages, to the rise of venture capital as we know it today, the entire cosmos of finance capital has remained an elite sport. This is because the current model is based on big investors getting big wins.

Almost the entire world of finance capital is structured on big whales and unicorns, mythical creatures that mere mortals consider themselves lucky to have glimpsed. The word “structured” is chosen here carefully, as the “big-dog” theory of capital is literally built on powerful intermediaries that facilitate the will of these top investors.

The invention of bitcoin is an epochal event in the development of finance. Bitcoin itself has crystallized into merely another playground of power, but the technological tremors it left in its wake are starting to emerge as the real game-changers. Primarily, distributed ledger technologies (DLTs) — of which blockchain is but one instance — are a breakthrough on par with being able to send a message instantaneously to a person on the other side of the world.

DLTs mean that finance capital no longer has a need for powerful intermediaries — or intermediaries of any kind. Middlemen are currently very necessary in order for parties to establish trust in transactions, trades contracts or investments. Paying for the services of these middlemen can be written off as the cost of doing business for large companies and wealthy individuals, but these expenses remain prohibitive barriers for many.

DLTs break down these barriers because trust is established by and built into the very architecture of the network itself. With DLTs, anybody with an internet connection can do big-dog-style business deals at whatever level they can afford, and the way that these deals are transacted is through tokens.

Token economies will be transformative

DLT economies are going to be adopted by all of the major investment players in the next few years as the advantages of decentralizing investment are too numerous to ignore — lower friction for transactions due to automation, much quicker (real-time) results and analysis of market conditions, greater security through transparency, and a higher level of customization for financial products and services. The adoption of decentralized finance by major players will have a net-positive impact for everyone else.

Tokens are the lifeblood of this new system, and non-fungible tokens are just one type of token. In this emerging model, there are payment tokens that behave like money, security tokens that are comparable to stocks, utility tokens that provide functions like space or bandwidth and hybrid tokens that mix these tokens into new forms. If it sounds a bit confusing and exciting, that’s because it is.

The main takeaway to understand here is that tokens are going to replace not just stocks and other investment products but also the entire idea of having middlemen between you and your purchases, whether that middleman is an investment broker, a credit card company, a platform provider or a bank. The decentralized economy is going to be a much more open and direct kind of market.

The rubber hits the road like this

It can be hard to imagine how this might all play out, but we are already seeing the outlines of this new economy begin to poke through the dried-out skin of the old model. These protrusions are most apparent where economic reality doesn’t really make sense.

Think of the emerging gig economy, where nobody really seems to have a steady job anymore, where each of us is some kind of professional mercenary, moving from gig to gig. Think of the huge number of subscriptions that most of us carry like millstones around our necks. Think of the paradoxically frustrating relationship of musicians to streaming platforms, or artists to galleries. Think about the amount of crushing poverty that still remains on our planet.

These are all instances of models of living and working not really fitting into old containers. We can all sense that these aspects of our lives aren’t really functioning optimally, but we can’t quite say why and we certainly don’t know what the solution might look like. Decentralized, tokenized economies have the potential to erase all of these pain points, paradoxes and kludges and replace them with something much more intuitive and elegant.

This new reality is easy to imagine in some of its attributes: Instead of nine different subscriptions, you can just pay directly for the content that you want, when you want it. Instead of artists giving up half of their earnings to galleries or musicians giving, well, all of their earnings to streaming platforms, they now just take direct payment for their work through fluid networks built by and for this type of content. Instead of paying brokers to facilitate your investments, you can now just invest directly in the enterprises that interest you, including formerly out-of-reach sectors like real estate investment. Instead of crushing poverty and fiercely protected borders between classes, we break down barriers and give everyone access to value.

Many of the other developments in a token economy have yet to be imagined, and this is probably the most exciting aspect of all. When we distribute the economy globally, in a way that allows anyone with an internet connection the ability to interact and contribute in a meaningful way, we are unlocking the value of untapped assets that are worth literally trillions of dollars. So what is holding us back, and how do we get there as soon as possible?

The work ahead is very clear

The hardest part of unlocking this new economy has already been achieved — we have the technological understanding of how to distribute and decentralize a system of consensus that combines with a system of digitizing assets for trade and investment.

The remaining work that will actually bring this system online is fairly obvious — first and foremost, we need to take a look at the ecological impacts that this new system has had in its infancy. We should absolutely outlaw mining farms or set the strictest limits for how much of their energy comes from nonrenewables. If the backbone of this new economy is destroying the planet, we need to shut it down before it grows, full stop. The system needs to be ecologically sustainable.

The second most immediate concern is that there are currently no standards, no common network, that the multitude of different cryptocurrencies and tokens agree on. It’s astounding and absolutely frustrating that the various cryptos are hardly even talking about this.

It’s as if we have a bunch of different companies not only inventing the light bulb but also inventing their own light sockets and wiring protocols, and each one is insisting that they are the best and they will win out in the end. Light bulbs are great, but can we please agree on one socket? This beautiful new economy will never get off the ground unless we build a neutral, interoperable network, and this network needs to be feeless and scalable.

The last cause of immediate concern is regulation and legal frameworks. There are too many people still in crypto that have some kind of anarchist’s deathwish to just be completely left outside, and this is not serving the long-term goals of our communities.

I’m all for knocking intermediaries out of the value chain, but this doesn’t automatically entail the establishment of a never-never land that no regulatory agencies are invited to. Legal frameworks for decentralized economies go hand in hand with our ethos of open-source, community-building, transparent operations. We all need to be advocates for thorough and precise regulation of our nascent technology.

With ecology, interoperability and regulation as our watchwords, we can begin work on building the actual apps and other infrastructure that will allow users to leverage the power of a new economy. The uses are limitless, from selling excess electricity to your regional smart power grid, to investing in your favorite artists’ network, to accepting direct payment for your own labor, to — yes — buying NFTs, which will make a lot more sense in the new economy.

Source: Tech Crunch

The non-fungible token (NFT) mania has inspired Ethereum fans to spend more than $224 million on crypto collectibles so far in 2021 through marketplaces OpenSea and Rarible, but many buyers may not understand what they actually own.

“An NFT is not that different from any other crypto purchase in that you are buying control over information in an entry in a ledger,” said attorney Nelson Rosario, one of the founders of Smolinski Rosario Law.

NFT buyers don’t actually own the media files associated with their blockchain receipts, whether those files are JPEGs or GIFS or MP3s. The best way to know which aspects of the NFT craze will outlast this trendy boom is to look at the history of comparable assets. As it turns out, people have been making crypto collectibles for nearly seven years.

Zebedee co-founder Christian Moss, who has been working on blockchain-based games since 2014, said he stopped making Bitcoin-based collectibles because transaction fees shot up. To make matters worse, some buyers viewed tokens as investments instead of as toys.

“They were tokens on Bitcoin,” Moss said. “A lot of developers ended up trying to pump their tokens and prices. … It felt like people who played those games felt like they were investors on the board. I don’t want my game to be an investment vehicle. Then players might try to sue me if they lost their tokens. It changed the dynamic of the game.”

These days, Moss helps people earn small amounts of bitcoin by playing mainstream video games like “Counter-Strike.” That way, there’s no confusion about how to value virtual assets; cryptocurrency is money and in-game assets are toys.

“NFTs aren’t game items at all; they are receipts,” Moss said. “If you have the receipt, you might be able to get an item in a game, but they can’t allow a Zelda sword NFT [in “Counter-Strike”], for example, because that might be copyright infringement. There are legal implications there.”

Indeed, legal implications are the crux of the NFT trend. Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors.

“It’s great if the artist intends to transfer any copyright for a work of art to an NFT purchaser, but can that be perfected to the point where a court of law or copyright office would recognize that transfer? That gets into additional questions of jurisdiction,” Rosario said. “Brands and platforms need to make sure they have the right agreements in place to govern these relationships.”

With regard to NFT sellers who take screenshots of other people’s content and profit from a corresponding NFT, Rosario said it’s hard to say whether that violates any laws.

“You probably start by looking at Twitter’s terms of service and begin the investigation there. It really depends,” he said, adding that impersonation or stealing someone’s passwords are different issues entirely.

And there are still open questions beyond copyright issues and fraud, such as sanctions and porn regulations.

Finding a space for adult content

A growing number of adult content creators are selling erotic NFTs on platforms like Rarible, often earning hundreds of dollars per photo. One such artist, PolyAnnie, said she has earned more from selling NFTs on Rarible alone than her average annual earnings across platforms like OnlyFans, Patreon and ManyVids combined.

“I sold 90 NFTs, bringing in 10.11 ETH in 5 months,” she said. “I purchased 18 NFTs from other creators, too.”

Some jurisdictions have age-verification requirements for platforms with adult content, while other jurisdictions make platforms potentially liable for child porn or revenge porn if the platforms don’t heavily moderate explicit content. As such, platform providers tend to be conservative about their terms of service.

“A lot of these NFT platforms don’t want to deal with the risks of sexually oriented content,” PolyAnnie said.

That’s why some sex workers have had their content censored by platforms like Rarible. As for the most popular NFT platform, OpenSea, which raised a Series A round from a16z earlier this month, CEO Devin Finzer said his team moderates the platform and limits search results for adult content, so those NFTs can only be found by someone going directly to the creator’s profile.

“We haven’t exactly nailed it down, but one option is a separate section of our site for that type of content,” Finzer said.

Source: Tech Crunch

Apple has released an update for iPhones, iPads and Watches to patch a security vulnerability under active attack by hackers.

The security update lands as iOS 14.4.2 and iPadOS 14.4.2, which also covers a patch to older devices as iOS 12.5.2. watchOS also updates to 7.3.3.

Apple said the vulnerability, discovered by security researchers at Google’s Project Zero, may have been “actively exploited” by hackers. The bug is found in WebKit, the browser engine that powers the Safari browser across all Apple devices.

It’s not known who is actively exploiting the vulnerabilities, or who might have fallen victim. Apple did not say if the attack was targeted against a small subset of users or if it was a wider attack. It’s the third time (by our count) that Apple has pushed out a security-only update this year to fix flaws under active attack. Earlier this month the company released patches for similar vulnerabilities in WebKit.

Update today.

Read more on TechCrunch:

• The disconnect between Y Combinator Demo Day and due diligence
• Jeff Bezos’ investment fund is backing a startup hoping to be the AWS for SMB accounting
• A new Android spyware masquerades as a ‘system update’
• FatFace tells customers to keep its data breach ‘strictly private’
• Amazon goes on the offensive ahead of next week’s union vote counting
• This Week in Apps: App Store bills gets ghosted, Dispo drama, Facebook’s Clubhouse clone
• Facebook caught Chinese hackers using fake personas to target Uyghurs abroad

Send tips securely over Signal and WhatsApp to +1 646-755-8849. You can also send files or documents using SecureDrop.

Source: Tech Crunch

Welcome back to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s broadly based on the daily column that appears on Extra Crunch, but free, and made for your weekend reading.

Well that was a crazy week

I may be getting older, but it does seem that the pace of tech news has gotten stuck in top-gear. It’s bonkers. Think about how small a splash the news that WeWork is going public via a SPAC made. It was small potatoes in the broader rush of happenings that blasted past us over the last seven days.

Y Comabinator’s Demo Day was this week, somehow, even if it feels like a few weeks have gone by since. Still, it’s what I want to riff on with you today. A nice early-stage break, we could say.

During the one-day demo day rush, a few hundred startups showed off what they are doing in single-slide format. TechCrunch covered some favorites, but we had to leave far more startups on the shelf than we got to write about. Let’s add some names to the mix, shall we?

On the fintech front, a few names stood out to me during the hours I was able to tune in. Alinea wants to build a trading app for Gen Z. I dig the idea as Zoomers seem far cooler than any other generation. Why shouldn’t they get a native investing experience aimed at their demographic?

Hapi is a similar idea, but aimed at Latin America. Again, I like it. One trend I’ve enjoyed seeing in recent quarters has been the application of startup models that have worked in the United States taken to new markets, replicated with local tweaks, and offered up to way more people. Investing has long been artificially expensive. Here’s to making it cheaper.

Atrato checks similar boxes, taking the Affirm-style buy now, pay later (BNPL) model to Latin America. I am generally less stoked about consumer credit apps than I am about consumer savings apps, but given the growth that Affirm, Klarna and others have managed, there’s real demand for their products. Let’s see what Atrato can get done.

Turning from Latin America to Southeast Asia, OctiFi is building BNPL products for that market. It’s not the only startup that we saw at demo day taking on that geographic slice — BrioHR is working there as well.

Bueno Finance fits the theme of fintech for markets other than the United States and Europe, building what it calls “Chime for India.” If you think, as I do, that Chime and other neobanks are generally doing an alright job providing lower-cost, higher-quality banking experiences to less-wealthy consumers, this is an obvious winner. Of course most startups fail, but I like where their thinking is focused. (NextPay is working on SMB digital banking for the Philippines; the list goes on.)

Another theme I had my eyes on were startups delivering their software via an API instead of as a managed service. It’s something that we’ve covered on The Exchange for ages. Some demo day names included Dyte (“Stripe for live video”), Pibit.ai (an API to help structure data), Dayra (finservices for Egyptians via an API), enode (energy provider-EV API), and so on.

Finally, there were a few startups working on services for IRL SMBs. The Third Place is building subscription services for small businesses, while Per Diem wants to bring quick shipping to companies other than Amazon.

There were a bunch of other neat companies (GimBooks! Recover! Wasp! Axiom.ai!), more than I could ever write down for you. Now it’s time to sit back and see which grow the most in the next half year. But I left this particular demo day pretty excited about global startup activity. That’s not a bad way to close a Tuesday.

Late-stage everything

Amidst all the IPO and SPAC news (here and here in case you need to catch up), there were a host of big rounds worth our time. Two came from the insurtech space, with Pie (workers’ comp insurance) and Snapsheet (claims management) raising $118 million and $30 million apiece.

ServiceTitan raised $500 million at a quadrupled valuation of $8.3 billion, Forbes reported. In about two years. That’s a chonky boi valuation differential. I suppose we’ll be covering their IPO next year. And accounting-focused Pilot raised $100 million at a $1.2 billion valuation. The pace of 2021 unicorn creation feels anything but slow.

And I can’t help but note that the UiPath IPO filing is pretty bonkers in terms of illustrating how the company turned terrifying losses into some pretty reasonable economics. It’s looking like it’s working to pull a Snowflake, at least in GAAP terms.

I could add another 17 paragraphs with news just from this month and not even get close to all the eight and nine-figure rounds. It’s bonkers! Surely the Q1 2021 venture capital numbers feel like they should be both hot and spicy. More on that as soon as we get the data.

Various and sundry

I am not here to merely feed you vegetables, however. There’s a budding story that I need to get to in the near future that involves my favorite sport, and my job. More precisely it’s about F1 (the car racing thing) and tech.

Recently Cognizant sponsored the Aston Martin F1 team. Splunk works with McLaren. Microsoft has a deal with Renault’s team, now named after the car company’s Alpine brand. Epson, Bose and Hewlett Packard Enterprise sponsor the Mercedes racing team. Oracle sponsors Red Bull racing. The list goes on!

And this week Zoom announced that it was getting into the F1 game as well. This is all very good fun for myself, and leads me to a hope. Namely that we see some tech companies begin to use F1 teams as a method of intra-industry competition. That would, one, allow me to write about F1 at work — like I am doing right now — and annoy more tech CEOs on earnings calls about why their team isn’t faster. I am sure that by now Splunk CEO Douglas Merritt is tired of my questions about his orange team. But I don’t want to stop.

So if you are a tech CEO, and you do not sponsor an F1 team, I shall from here on presume that your company is too small to matter, or too boring to be fun. And I am only mostly kidding.

Alex

Source: Tech Crunch

Who knew building a vertical software as a service toolkit focused on home heating and cooling could be worth $8.3 billion?

That’s how much Los Angeles-based ServiceTitan, a startup founded just eight years ago is worth now, thanks to some massive tailwinds around homebuilding and energy efficiency that are serving to boost the company’s bottom line and netting it an unprecedented valuation for a vertical software company, according to bankers.

The company’s massive mint comes thanks to a new $500 million financing round led by Sequoia’s Global Equities fund and Tiger Global Management.

ServiceTitan’s backers are a veritable who’s who of the venture industry, with longtime white shoe investors like Battery Ventures, Bessemer Venture Partners and Index Ventures joining the later stage investment funds like T. Rowe Price, Dragoneer Investment Group, and ICONIQ Growth.

In all, the new $500 million round likely sets the stage for a public offering later this year or before the end of 2022 if market conditions hold.

ServiceTitan now boasts more than 7,500 customers that employ more than 100,000 technicians and conduct nearly $20 billion worth of transactions providing services ranging from plumbing, air conditioning, electrical work, chimney, pest services and lawn care.

If Angi and Thumbtack are the places where homeowners go to find services and technicians, then ServiceTitan is where those technicians go to manage and organize their own businesses.

Based in Glendale, Calif., with satellite offices in Atlanta and Armenia, ServiceTitan built its business to solve a problem that its co-founders knew intimately as the children of parents whose careers were spent in the HVAC business.

The market for home services employs more than 5 million workers in the US and represents a trillion dollar global market.

Despite the siren song of global expansion, there’s likely plenty of room for ServiceTitan to grow in the U.S. Home ownership in the country is at a ten-year high thanks to the rise of remote work and an exodus from the largest American cities accelerated by the COVID-19 pandemic.

A focus on energy efficiency and a desire to reduce greenhouse gas emissions will likely cause a surge in residential and commercial retrofits which will also boost new business. Indeed these trends were already apparent in the statistic that home improvement spending was up 3 percent in 2020 even though the broader economy shrank by 3.5 percent.

Source: Tech Crunch