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The trust dilemma of continuous background checks

First, background checks at startups, then Huawei’s finance chief is arrested, SoftBank’s IPO is subscribed and I am about to record our next edition of TechCrunch Equity. It’s Thursday, December 6, 2018. TechCrunch is experimenting with new content forms. This is a rough draft of something new — provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here. The dilemma of continuous background checks My colleague John Biggs covered the Series A round for Israel-based Intelligo, a startup that provides “Ongoing Monitoring” — essentially a continuous background check that can detect if (when?) an employee has suddenly become a criminal or other deviant. That’s a slight pivot from the company’s previous focus of using AI/ML to conduct background checks more efficiently. Background checks are a huge business. San Francisco-based Checkr, perhaps the most well-known startup in the space, has raised $149 million according to Crunchbase, driven early on by the need to on-board thousands of contingent workers at companies like Uber. Checkr launched what it calls “Continuous Check,” which also actively monitors all employees for potential problems, back in July. Now consider a piece written a few weeks ago by Olivia Carville at Bloomberg that explored the rise of “algorithmic auditors” that actively monitor employee expenses and flags ones it feels are likely to be fraudulent: U.S. companies, fearing damage to their reputations, are loath to acknowledge publicly how much money they lose each year on fraudulent expenses. But in a report released in April, the Association of Certified Fraud Examiners said it had analyzed 2,700 fraud cases from January 2016 to October 2017 that resulted in losses of $7 billion. Here’s a question that bugs me though: We have continuous criminal monitoring and expense monitoring. Most corporations monitor web traffic and email/Slack/communications. Everything we do at work is poked and prodded to make sure it meets “policy.” And yet, we see vituperative attacks on China’s social credit system, which …. monitors criminal records, looks for financial frauds and sanctions people based on their scores. How long will we have to wait before…

Taiwan-based travel startup AsiaYo raises $7M Series B led by Alibaba Taiwan Entrepreneurs Fund

AsiaYo, a travel accommodation booking platform based in Taipei, Taiwan, has raised a $7 million Series B led by Alibaba Taiwan Entrepreneurs Fund, a nonprofit initiative run by the Chinese e-commerce giant, and China Development Financial. Darwin Ventures and Delta Ventures also participated in the round, which brings AsiaYo’s total raised since its launch in 2014 to $10 million, including a $3 million Series A. Founded by CEO C.K. Cheng, AsiaYo has grown over the past four years to a team of about 100 people and now claims about 300,000 members on its site. In addition to Taiwan, the platform operates in Japan, Korea, Hong Kong and Thailand, and says overseas bookings account for 60 percent of its business. AsiaYo’s new funding will be used to launch in new markets, with operations in Singapore and Malaysia and a new Japanese website slated to launch next year. Cheng told TechCrunch that it picked Singapore and Malaysia as its newest markets because of the amount of travel between the two countries, which are next to one another. AsiaYo works with 50 partners, including Hong Kong Airlines, KKday and Rakuten LIFULL STAY, to provide reward programs and deals on vacation bookings. The website is currently available in English, Chinese and Korean and claims 60,000 listings across 60 cities. The startup targets younger tourists traveling within Asia with what it calls “hyper-personalized journeys” created with the help of its AI-based algorithm AYSort, which analyzes user behavior to provide booking suggestions. In a press statement, Alibaba Taiwan Entrepreneurs Fund executive director Andrew Lee said “With rapid economic development across Asia, we have seen a significant rise in inter-regional tourism. AsiaYo has capitalized on this trend, demonstrating its growth potential. We’re currently working with AsiaYo to further develop technological capabilities in the travel industry.” AsiaYo’s listings include a combination of rooms, apartments, hostels and hotels, which means it competes against a wide variety of other accommodation booking sites, like Airbnb, Agoda and HotelQuickly. The startup differentiates, however, by verifying listings with landlords before they go live for quality assurance and to “inspire travelers to step out…

Foxconn or Foxgone? Tariffs, Wisconsin and iPhone fires

First some notes on SoftBank’s rumored expansion into China and its weird fund math, then Foxconn and then quick notes on tech depression, Huawei and more. TechCrunch is experimenting with new content forms. This is a rough draft of something new — provide your feedback directly to the author (Danny at danny@techcrunch.com) if you like or hate something here. SoftBank has fund visions (and a Vision Fund) for China? That, and more money Kane Wu at Reuters reported overnight that SoftBank is looking to open an office and hire an investment team in China, which Wu says will be based in Shanghai. That’s following the fund’s recent global expansion with new targeted offices in Saudi Arabia and India. When I saw this, I sort of did a double-take: SoftBank doesn’t have a presence in China? The fund has reportedly been seeking investments in some of China’s leading unicorn stars, including controversial face recognition startup SenseTime, and leading edtech startup Zuoyebang (作业帮, which literally translates as “school assignment help”). (Hat-tips to Selina Wang at Bloomberg, who seems to just be sitting in Vision Fund partner meetings). And of course, it dumped a pretty penny into WeWork China, where it was part of a $500 million syndicate, and is a huge investor in Didi. It’s sort of obvious that SoftBank would expand to China. What will be interesting though is to see how the fund structures itself long-term. As far as I know, the Vision Fund is a singular “fund” that invests worldwide (send me an email if I am wrong on this count). China has a thicket of regulations on funds and companies, which is one of several reasons we see specifically China-focused vehicles (such as Lightspeed and Lightspeed China or Sequoia and Sequoia China). If the Vision Fund continues to be a unified fund, that would be a notable strategy shift that might be cloned by other trans-Pacific funds. Aside: SoftBank Vision Fund math is complicated Rajeev Misra, board director of SoftBank Group and CEO of SoftBank Investment Advisors. Photo by Drew Angerer/Getty Images. When it first closed the Vision…

Agtech startup Imago AI is using computer vision to boost crop yields

Presenting onstage today in the 2018 TC Disrupt Berlin Battlefield is Indian agtech startup Imago AI, which is applying AI to help feed the world’s growing population by increasing crop yields and reducing food waste. As startup missions go, it’s an impressively ambitious one. The team, which is based out of Gurgaon near New Delhi, is using computer vision and machine learning technology to fully automate the laborious task of measuring crop output and quality — speeding up what can be a very manual and time-consuming process to quantify plant traits, often involving tools like calipers and weighing scales, toward the goal of developing higher-yielding, more disease-resistant crop varieties. Currently they say it can take seed companies between six and eight years to develop a new seed variety. So anything that increases efficiency stands to be a major boon. And they claim their technology can reduce the time it takes to measure crop traits by up to 75 percent. In the case of one pilot, they say a client had previously been taking two days to manually measure the grades of their crops using traditional methods like scales. “Now using this image-based AI system they’re able to do it in just 30 to 40 minutes,” says co-founder Abhishek Goyal. Using AI-based image processing technology, they can also crucially capture more data points than the human eye can (or easily can), because their algorithms can measure and asses finer-grained phenotypic differences than a person might pick up on or be easily able to quantify just judging by eye alone. “Some of the phenotypic traits they are not possible to identify manually,” says co-founder Shweta Gupta. “Maybe very tedious or for whatever all these laborious reasons. So now with this AI-enabled [process] we are now able to capture more phenotypic traits. “So more coverage of phenotypic traits… and with this more coverage we are having more scope to select the next cycle of this seed. So this further improves the seed quality in the longer run.” The wordy phrase they use to describe what their technology delivers is: “High throughput precision phenotyping.” Or,…

China is funding the future of American biotech

Silicon Valley is in the midst of a health craze, and it is being driven by “Eastern” medicine. It’s been a record year for US medical investing, but investors in Beijing and Shanghai are now increasingly leading the largest deals for US life science and biotech companies. In fact, Chinese venture firms have invested more this year into life science and biotech in the US than they have back home, providing financing for over 300 US-based companies, per Pitchbook. That’s the story at Viela Bio, a Maryland-based company exploring treatments for inflammation and autoimmune diseases, which raised a $250 million Series A led by three Chinese firms. Chinese capital’s newfound appetite also flows into the mainland. Business is booming for Chinese medical startups, who are also seeing the strongest year of venture investment ever, with over one hundred companies receiving $4 billion in investment. As Chinese investors continue to shift their strategies towards life science and biotech, China is emphatically positioning itself to be a leader in medical investing with a growing influence on the world’s future major health institutions. Chinese VCs seek healthy returns We like to talk about things we can interact with or be entertained by. And so as nine-figure checks flow in and out of China with stunning regularity, we fixate on the internet giants, the gaming leaders or the latest media platform backed by Tencent or Alibaba. However, if we follow the money, it’s clear that the top venture firms in China have actually been turning their focus towards the country’s deficient health system. A clear leader in China’s strategy shift has been Sequoia Capital China, one of the country’s most heralded venture firms tied to multiple billion-dollar IPOs just this year. Historically, Sequoia didn’t have much interest in the medical sector.  Health was one of the firm’s smallest investment categories, and it participated in only three health-related deals from 2015-16, making up just 4% of its total investing activity.  Recently, however, life sciences have piqued Sequoia’s fascination, confirms a spokesperson with the firm.  Sequoia dove into six health-related deals in 2017 and has already participated in 14 in 2018 so far.  The firm…

Hiver lets you manage shared email addresses from Gmail

Meet Hiver, a service that lets you collaborate on generic email addresses, such as jobs@yourcompany.com, support@, sales@, etc. Hiver isn’t the only company working on shared inboxes. But compared to Front, everything happens in Gmail directly. To be fair, Front has been doing a fantastic job when it comes to multiplayer email — and the company has been doing great. Front is a new email client that lets you work together on your inbound emails. But many teams don’t necessarily want to use a brand new email client. Some people love the Gmail interface so much that they don’t even think about switching to something else. Hiver is a Google Chrome extension that adds a bunch of feature to your Gmail inbox. In addition to your personal inbox, you can now access shared inboxes with other people in your team. You can then assign an email to one of your coworkers and see what everybody is working on. If you need help in order to reply to a tedious email, you can write a note in the right column and notify your teammates using @-mentions. All your comments live in this separate column so that you don’t clutter your email thread with forwards and CCs. Whenever someone starts replying, Hiver shows a collision alert so that customers don’t get two replies. You can also use templates for faster replies, send emails later and share drafts to get another pair of eyes. More recently, Hiver added automation with simple if/then rules to assign conversations to the right person and categorize your emails automatically. If you’ve used Front in the past, those features will sound familiar as you can do all of this in Front, and much more. But it turns out that some companies really wanted a “Front for Gmail”. Hiver just raised a $4 million funding round from Kalaari Capital and Kae Capital. The company is based in India and has 50 employees already. A thousand companies are currently using Hiver, such as Hubspot, Vacasa, Pinterest and Lyft. Most of Hiver’s clients are based in the U.S. Building a product on…

With $50M in fresh funding, Allbirds will open new stores in the US, UK and Asia

The quintessential venture capitalist’s uniform consists of a pair of designer jeans, a Patagonia fleece vest and $95 wool sneakers. The company behind the shoes, Allbirds, entered the unicorn club this morning with the announcement of a $50 million Series C from late-stage players T. Rowe Price, which led the round, Tiger Global and Fidelity Investments. The 3-year-old startup founded by Joey Zwillinger and Tim Brown has raised $75 million to date, including a $17.5 million Series B last year. It’s backed by Leonardo DiCaprio, Scooter Braun, Maveron, Lerer Hippeau and Elephant, the venture capital firm led by Warby Parker founder Andrew Hunt. The Wall Street Journal is reporting the round values Allbirds at $1.4 billion. The company would not confirm that figure to TechCrunch. Like Warby Parker, San Francisco-based Allbirds began as a direct-to-consumer online retailer but has since expanded to brick-and-mortar, opening stores in San Francisco and New York. It currently ships to locations across the U.S., New Zealand, Australia and Canada. Next week, the company plans to open its first storefront in the U.K. in London’s Covent Garden neighborhood. It will begin shipping throughout the U.K. In 2019. Using its latest investment, Allbirds will double down on its brick-and-mortar business. In addition to the U.K., the company says it will open even more locations in the U.S., as well as open doors in Asia in the coming months. Tiger Global, which has backed Allbirds since its Series B, may be of help. The firm has offices in Hong Kong and Singapore, as well as partners across Asia. Allbirds makes eco-friendly wool shoes for men, women and kids via its kid’s line, aptly named Smallbirds. The shoes are made of sustainable materials, including merino wool, a fabric made from eucalyptus fiber that the company has dubbed “Tree” and “SweetFoam,” a shoe sole made from sugarcane-based, carbon-negative foam rubber. “Climate change is the problem of our generation and the private sector has a responsibility to combat it,” Zwillinger, Allbirds’ chief executive officer, said in a statement. “This injection of capital will help us bring our sustainable products to more people around the globe, demonstrating that comfort, design…

Study says the US is quickly losing its entrepreneurial edge

Photographer: Daro Sulakauri/Bloomberg According to a new study conducted by the Center for American Entrepreneurship and NYU’s Shack Institute of Real Estate, the US may be losing its competitive advantage as the dominant nucleus of the startup and venture capital universe.  The analysis, led by senior Brookings Institution fellow Ian Hathaway and “Rise of the Creative Class” author Richard Florida, examines the flow of venture capital over 100,000 deals from 2005 to 2017 and details how the historically US-centric practice of venture capital has become a global phenomenon. While the US still appears to produce the largest amount of venture activity in the world, America’s share of the global pie is falling dramatically and doing so quickly. In the mid-90s, the US accounted for more than 95% of global venture capital investment.  By 2012, this number had fallen to 70%. At the end of 2017, the US share of total venture investment had fallen to just 50%.    Over the last decade, non-US countries have propelled growth in the global startup and venture economy, which has swelled from $50 billion to over $170 billion in size.  In particular, China, India and the UK now account for a third of global venture deal count and dollars – 2-3x the share held ten years ago.  And with VC dollars increasingly circulating into modernizing Asia-Pac and European cities, the researchers found that the erosion in the US share of venture capital is trending in the wrong direction. Growth of global startup cities and the myth of the American “rise of the rest” We’ve spent the summer discussing the notion of Silicon Valley reaching its parabolic peak – Observing the “rise of the rest” across smaller American tech hubs.  In reality, the data reveals a “rise in the rest of the world”, with startup ecosystems outside the US growing at a faster pace than most US hubs. The Bay Area remains the world’s preeminent beneficiary of VC investment, and New York, Los Angeles, and Boston all find themselves in the top ten cities contributing to global venture growth.  However, only six of the top 20 cities are located in the US, while 14 are in Asia or Europe.  At the…

China’s secret startup advantage: liquidity

This year’s rush of IPOs from Chinese tech companies has dominated headlines, but what’s more interesting is how quickly they got there. Traditionally, “going public” represented the gratifying culmination of sleepless nights and missed birthdays that went into building a company. The peak of a lengthy climb, where founders and VCs would finally see the fruits of their labor.  However, Chinese companies appear to be reaching that peak much quicker than their American peers, heading to the public markets only a few years after initial venture investments, and often with little operating history.  Analyzing twenty of the most high profile Chinese tech IPOs this year, the average time from first venture investment to IPO was only around three to five years. Take e-commerce platform Pinduoduo, which pulled in $1.6 billion less than three years after its Series A.  Or the recent IPO of EV-manufacturer NIO, which raised a billion dollars just three-and-a-half years after its Series A and having just delivered its first car in June. China IPO data for 2018 compiled from NASDAQ, Pitchbook, and Crunchbase That’s less than half the average 10-year timeline for venture-backed US tech companies that went public in 2018, including Dropbox, Eventbrite, and DocuSign, which all IPO’d more than a decade after their initial investments. Differences in market maturity, government involvement, and support from large tech incumbents all undoubtedly play a factor, but the speed to liquidity for the Chinese companies is still astounding. Faster liquidity can push cycle of returns, fundraising, reinvestment Speed to liquidity is a critical metric for the health of a startup ecosystem. It creates a positive cycle where faster liquidity can drive faster fundraising, faster reinvestment, faster startup building, and faster public liquidity again.  An accelerated cycle could be especially appealing for funds with LPs that require faster returns due to cash commitments or otherwise. It’s important to note that venture returns are a function of capital and time, so quicker exits will also drive higher returns for the same amount invested.  For example, a $1 million investment with a $5 million exit after ten years would generate an Internal Rate of…

Taiwan startup FunNow gets $5M Series A to help locals in Asian cities find last-minute things to do

“Instant booking” apps that let tourists sign up for activities on very short notice have been in the news a lot lately, partly because of Klook’s new unicorn status, but also because of the proliferation of startups in the space, especially in Asia. With so many instant booking apps, are there any niches left to fill? FunNow thinks so. Instead of targeting tourists, FunNow serves locals who want to find new things to do in their cities. The Taipei, Taiwan-based startup announced today that it has raised a $5 million Series A led by the Alibaba Entrepreneur Fund, with participation from CDIB, a returning investor, Darwin Venture and Accuvest. The capital will be used to expand FunNow into Southeast Asian and Japanese cities. Along with a pre-A round closed last July, its newest funding brings FunNow’s total raised since its launch in November 2015 to $6.5 million. FunNow currently claims 500,000 members and 3,000 vendors, who provide more than 20,000 activities and services daily. Co-founder and CEO T.K. Chen says the startup will focus on building its presence in Hong Kong, Okinawa, Kuala Lumpur, Bangkok, Osaka and Tokyo. One noteworthy fact about its Series A is the participation of Alibaba, which is beefing up its online-to-offline (or O2O, the business of enabling users to book and pay for offline services) offerings as competitor Meituan-Dianping prepares to go public in Hong Kong. A roster of Alibaba apps, including Koubei for local bookings, food delivery platform Ele.me and travel app Feizhu, compete against Meituan-Dianping, which describes itself as a “one-stop super app” because it offers all those services. A not-for-profit initiative, the Alibaba Entrepreneurs Fund supports startups that might eventually contribute to the tech giant’s ecosystem. While Alibaba’s O2O apps are focused on capturing a bigger share away from Meituan-Dianping in China, Chen says future synergies may include listing FunNow’s activities on Koubei so Chinese tourists can continue using the app when they travel. (Chen added that Alibaba wants FunNow to expand in Southeast Asia as soon as possible.) Even with a backer like Alibaba, however, the obvious question is how does…

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