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Sign up for tomorrow’s Pitchers & Pitches session

Published June 9, 2020

We’re just 24 hours away from the second installment of Pitchers & Pitches. If you want to whip your elevator pitch into shape, select your favorite beverage and join us for an interactive pitch-off and feedback session. We kick off tomorrow, June 10 at 4pm ET / 1pm PT. It won’t cost you a penny, so register here today.

You’ll walk away with insightful advice and actionable tips to help you create a 60-second pitch that highlights the best of your business. The companies competing in the pitch-off will vie for a consulting session with cela, an organization that connects early-stage startups to accelerators and incubators that can help them scale their business.

Note: The Pitchers & Pitches webinar series is free and open to all, but only companies that purchased a Disrupt Digital Startup Alley Package are eligible to pitch. We randomly chose these five startups to compete:

Scanta protects machine learning algorithms and the businesses that use them.
Qualetics has developed a platform that helps Startups and SaaS companies scale AI-based solutions.
Findster gives pet parents peace of mind by monitoring pets’ health and safety 24/7.
Hiago is a hyperlocal social network that empowers cities to organize neighbors around shared interests.
Whip Mobility is a B2B SaaS platform for auto dealerships.

The VCs providing feedback for this session are Amish Jani, managing director at First Mark Capital and Merritt Hummer, partner at Bain Capital Ventures. On the TechCrunch side, we have Darrell Etherington and Jordan Crook, two TechCrunch editors with years of experience coaching founders in Startup Battlefield, the OG of startup pitch competitions. The four will evaluate the pitches and offer insightful feedback. The virtual audience will declare the pitch-off winner.

Whether you compete or simply watch and take copious notes, you’ll hear plenty of ideas and tips to help you craft the kind of pitch that captures investor interest, imagination and — not to be too crass about it — money.

Grab every opportunity to keep your startup moving forward. Register for Pitches & Pitchers today, and join us tomorrow, June 10 at 4pm ET / 1pm PT.

Is your company interested in sponsoring or exhibiting at Disrupt 2020? Contact our sponsorship sales team by filling out this form.

Grow Credit, which builds credit scores by paying for online subscriptions, gets Mucker cash

Published June 9, 2020

Grow Credit, the startup that launched last year to help customers build out their credit scores by providing a credit line for online subscriptions like Spotify and Netflix, has added Mucker Labs as an investor and closed its seed round with $2 million in total commitments.

The Los Angeles startup founded by serial entrepreneur Joe Bayen, had been bootstrapped initially and then received funding from a clutch of core angel investors before signing a deal with Mucker earlier this month, according to Bayen.

Using the Marqeta platform, Grow Credit can extend a loan to customers to expand their subscription services. Using the Mastercard network for payments, and Marqeta’s tools to restrict payment access, Grow offers credit facilities to its customers to pay for their monthly subscriptions. By using Grow Credit for those payments, users can improve their credit scores by as much as 61 points in a nine-month span, says Bayen.

The company doesn’t charge any fees for its loans, but users can upgrade their service. The initial tier is free for access to $15 of credit, once a user connects their bank account. For a $4.99 monthly fee, customers can get up to $50 of subscriptions covered by the service. For $9.99 that credit line increases to $150, Bayen said.

Increases to a user’s credit score can make a significant dent in their costs for things like lease agreements for cars, mortgages for houses and better rates on other credit cards, said Bayen.

“Everything is cheaper, you can get access to a credit card with lower interest rates and better rewards,” he said. “We’re looking at ourselves as the single best route to getting access to an Apple card.”

Additional capital for the new round came from individual investors like DraftKings chief executive, Jason Robins; former National Football League player and hall of famer Ronnie Lott; and Sebastien Deguy, VP of 3D at Adobe.

Coming up, Grow Credit said it has a deal in the works with one very large consumer bank in the U.S. and will be launching the Android version of its app in a few weeks.

Using Spotify and Netflix payments to build your credit score? Grow Credit has a service for that.

Robocallers face $225M fine from FCC and lawsuits from multiple states

Published June 9, 2020

Two men embodying the zenith of human villainy have admitted to making approximately a billion robocalls in the first few months of 2019 alone, and now face an FCC fine of $225 million and a lawsuit from multiple attorneys general that could amount to as much or more — not that they’ll actually end up paying that.

John Spiller and Jakob Mears, Texans of ill repute, are accused of (and have confessed to) forming a pair of companies to make millions of robocalls a day with the aim of selling health insurance from their shady clients.

The operation not only ignored the national Do Not Call registry, but targeted it specifically, as it was “more profitable to target these consumers.” Numbers were spoofed, making further mischief as angry people called back to find bewildered strangers on the other end of the line.

These calls amounted to billions over two years, and were eventually exposed by the FCC, the offices of several attorneys general and industry anti-fraud associations.

Now the pair have been slapped with a $225 million proposed fine, the largest in the FCC’s history. The lawsuit involves multiple states and varying statutory damages per offense, and even a conservative estimate of the amounts could exceed that number.

Unfortunately, as we’ve seen before, the fines seem to have little correlation with the amounts actually paid. The FCC and FTC do not have the authority to enforce the collection of these fines, leaving that to the Department of Justice. And even should the DoJ attempt to collect the money, they can’t get more than the defendants have.

FTC smacks down robocallers, but the penalties don’t match their heinous crimes

For instance, last year the FTC fined one robocaller $5 million, but he ended up paying $18,332 and the market price of his Mercedes. Unsurprisingly, these individuals performing white-collar crimes are no strangers to methods to avoid punishment for them. Disposing of cash assets before the feds come knocking on your door is just part of the game.

In this case the situation is potentially even more dire: the DoJ isn’t even involved. As FCC Commissioner Jessica Rosenworcel put it in a statement accompanying the agency’s announcement:

There’s something missing in this all-hands effort. That’s the Department of Justice. They aren’t a part of taking on this fraud. Why not? What signals does their refusal to be involved send?

Here’s the signal I see. Over the last several years the FCC has levied hundreds of millions in fines against robocallers just like the folks we have here today. But so far collections on these eye-popping fines have netted next to nothing. In fact, it was last year that The Wall Street Journal did the math and found that we had collected no more than $6,790 on hundreds of millions in fines. Why? Well, one reason is that the FCC looks to the Department of Justice to collect on the agency’s fines against robocallers. We need them to help. So when they don’t get involved—as here—that’s not a good sign.

While the FCC’s fine and the lawsuit will certainly put these robocallers out of business and place further barriers to their conducting more scam operations, they’re not really going to be liable for nine figures, because they’re not billionaires.

It’s good that the fines are large enough to bankrupt operations like these, but as Rosenworcel put it back in 2018 when another enormous fine was levied against a robocaller, “it’s like emptying the ocean with a teaspoon.” While the FCC and states were going after a pair of ne’er-do-wells, a dozen more have likely popped up to fill the space.

Industry-wide measures to curb robocalls have been underway for years now, but only recently have been mandated by the FCC after repeated warnings and delays. Expect the new anti-fraud frameworks to take effect over the next year.

Data startup Axiom secures $4M from Crane Venture Partners, emerges from stealth

Published June 9, 2020

Axiom, a startup that helps companies deal with their internal data, has secured a new $4 million seed round led by U.K.-based Crane Venture Partners, with participation from LocalGlobe, Fly VC and Mango Capital. Notable angel investors include former Xamarin founder and current GitHub CEO Nat Friedman and Heroku co-founder Adam Wiggins. The company is also emerging from a relative stealth mode to reveal that is has now raised $7 million in funding since it was founded in 2017.

The company says it is also launching with an enterprise-grade solution to manage and analyze machine data “at any scale, across any type of infrastructure.” Axiom gives DevOps teams a cloud-native, enterprise-grade solution to store and query their data all the time in one interface — without the overhead of maintaining and scaling data infrastructure.

DevOps teams have spent a great deal of time and money managing their infrastructure, but often without being able to own and analyze their machine data. Despite all the tools at hand, managing and analyzing critical data has been difficult, slow and resource-intensive, taking up far too much money and time for organizations. This is what Axiom is addressing with its platform to manage machine data and surface insights, more cheaply, they say, than other solutions.

Co-founder and CEO Neil Jagdish Patel told TechCrunch: “DevOps teams are stuck under the pressure of that, because it’s up to them to deliver a solution to that problem. And the solutions that existed are quite, well, they’re very complex. They’re very expensive to run and time-consuming. So with Axiom, our goal is to try and reduce the time to solve data problems, but also allow businesses to store more data to query at whenever they want.”

Why did they work with Crane? “We needed to figure out how enterprise sales work and how to take this product to market in a way that makes sense for the people who need it. We spoke to different investors, but when I sat down with Crane they just understood where we were. They have this razor-sharp focus on how they get you to market and how you make sure your sales process and marketing is a success. It’s been beneficial to us as were three engineers, so you need that,” said Patel.

Commenting, Scott Sage, founder and partner at Crane Venture Partners added: “Neil, Seif and Gord are a proven team that have created successful products that millions of developers use. We are proud to invest in Axiom to allow them to build a business helping DevOps teams turn logging challenges from a resource-intense problem to a business advantage.”

Axiom co-founders Neil Jagdish Patel, Seif Lotfy and Gord Allott previously created Xamarin Insights that enabled developers to monitor and analyse mobile app performance in real time for Xamarin, the open-source cross-platform app development framework. Xamarin was acquired by Microsoft for between $400 and $500 million in 2016. Before working at Xamarin, the co-founders also worked together at Canonical, the private commercial company behind the Ubuntu Project.

Stop with the Vroom and gloom on Wall Street

Published June 9, 2020

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This time around we’re recording what we call an Equity Shot, a single-topic show that we pull together whenever there’s a news item of sufficient weight that it demands we break our regular cadence and record a little more.

So Danny and Tash and Alex got together to discuss the recent Vroom IPO and Lemonade filing to go public. These are topics that TechCrunch has covered quite a lot lately, so here’s a chronology to help you keep it all straight:

We dug into Vroom’s economics detailed in its IPO filing
TechCrunch covered hoped-for price range
We reported on Vroom’s raised IPO pricing range
Lemonade filed to go public and we dug into its numbers
A bit more on the Lemonade IPO filing and what we can learn from it
And here’s our coverage on Vroom’s final IPO pricing

So you can catch up as you need to. What matters is that public investors have swooned over the Vroom IPO, pushing its pricing and, today, more than doubling its value as a public company. It’s a huge debut, and that bodes well for other gross-margin-light businesses — unicorns, even — that might want to go public.

The IPO window is pretty open, it appears. And best of all, we three disagreed quite a bit this week. It’s a fun show.

OK, that’s enough from us. We are back on Friday. Take care, and keep up the good fight.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts.

Decrypted: DEA spying on protesters, DDoS attacks, Signal downloads spike

Published June 9, 2020

This week saw protests spread across the world sparked by the murder of George Floyd, an unarmed Black man, killed by a white police officer in Minneapolis last month.

The U.S. hasn’t seen protests like this in a generation, with millions taking to the streets each day to lend their voice and support. But they were met with heavily armored police, drones watching from above, and “covert” surveillance by the federal government.

That’s exactly why cybersecurity and privacy is more important than ever, not least to protect law-abiding protesters demonstrating against police brutality and institutionalized, systemic racism. It’s also prompted those working in cybersecurity — many of which are former law enforcement themselves — to check their own privilege and confront the racism from within their ranks and lend their knowledge to their fellow citizens.

THE BIG PICTURE

DEA allowed ‘covert surveillance’ of protesters

The Justice Department has granted the Drug Enforcement Administration, typically tasked with enforcing federal drug-related laws, the authority to conduct “covert surveillance” on protesters across the U.S., effectively turning the civilian law enforcement division into a domestic intelligence agency.

The DEA is one of the most tech-savvy government agencies in the federal government, with access to “stingray” cell site simulators to track and locate phones, a secret program that allows the agency access to billions of domestic phone records, and facial recognition technology.

Lawmakers decried the Justice Department’s move to allow the DEA to spy on protesters, calling on the government to “immediately rescind” the order, describing it as “antithetical” to Americans’ right to peacefully assembly.

Nintendo now says 300,000 accounts breached by hackers

Published June 9, 2020

Nintendo has almost doubled the number of user accounts compromised by hackers in the past few months.

The Japanese gaming giant originally said that 160,000 Nintendo accounts were compromised, exposing personal information like the account owner’s name, email address, date-of-birth and their country of residence. In an updated statement, the company said another 140,000 Nintendo accounts had been compromised.

Nintendo said the number increased as a result of its continuing investigation.

The company said it reset those passwords and contacted customers. The statement reiterated that fewer than 1% of all accounts were impacted by the breach.

News of account compromises came as early as March when users complained that their accounts were charged for digital items without their permission. Nintendo said in a tweet in April that users should enable two-factor authentication on their accounts but without saying why.

It took another two weeks before Nintendo admitted that accounts had been improperly accessed.

But Nintendo still hasn’t said how the accounts were accessed, beyond claiming that hackers got access to accounts by obtaining account passwords “by some means other than our company’s service.” Its implication is that users may have used weak passwords that hackers cracked, or reused passwords that were breached from other services and used by hackers to break into their Nintendo accounts.

If you haven’t enabled two-factor authentication on your Nintendo account yet, now would probably be a good time.

After 160,000 accounts are compromised, Nintendo shuts down NNID logins

Razer’s Android gaming controller is available now for $80

Published June 9, 2020

The Razer Kishi mostly got buried in a deluge of Razer announcements during CES (it was just too difficult to compete with 5G routers and a massive racing simulator). It’s not the first smartphone gaming peripheral — heck, it’s not even the first to adopt this particular form factor. But a company like Razer lending the familiar triple-headed snake logo to the category could certainly go a ways toward further legitimating these devices, following the release of a pair of mobile-first handsets from the company.

Razer soups up its gaming smartphone

The accessory starts shipping today for Android handsets, priced at $80 a pop. Again, not the cheapest product in the category, but the Razer’s products are generally well regarded in their execution, and the Kishi is being met with solid reviews so far.

It’s also been drawing comparisons to Nintendo’s Joy-Cons for the Switch, partly due to the layout of the buttons and dual-analog thumbsticks. There’s a D-pad on the left, four buttons up top, two analog triggers and a pair of bumper buttons. The Kishi plugs directly into the USB-C port, for lower latency gameplay than comparable Bluetooth accessories. Notably, it also works with the Stadia service, which could be a nice bump for Google’s cloud gaming service, which has thus far failed to set the world ablaze.

There’s an iPhone version on the way, as well. That will arrive at some point this summer.

Dear Sophie: Which visa should a startup pursue to hire someone from Mexico?

Published June 9, 2020

Sophie Alcorn
Contributor

Sophie Alcorn is the founder of Alcorn Immigration Law in Silicon Valley and 2019 Global Law Experts Awards’ “Law Firm of the Year in California for Entrepreneur Immigration Services.” She connects people with the businesses and opportunities that expand their lives.

The rise of low-margin, no-margin unicorns

Published June 9, 2020

Yesterday evening, Vroom, a digital used car retailer, priced its IPO at $22 per share, a figure that was a full $7 above the low end of its first proposed IPO price range. The venture-backed firm first proposed a $15 to $17 per-share IPO price range, which it later raised to $18 to $20 per share.

Pricing at $22 per share meant that there was strong demand for the company’s equity during its IPO process. Pricing strength doesn’t guarantee performance as a public company, but it does provide a proxy for investor interest.

TechCrunch has covered a few IPOs lately, noting along the way that some recent offerings have featured heavy financial backing and incredibly slim margins. Not profit margins, mind, those don’t exist for the firms we’re talking about — we’re discussing gross margins, the most basic element of corporate profitability.

Gross margins are part of why software companies are so valuable. Their incredibly strong gross margins make their revenues, and therefore their operations, attractive to investors; higher gross margins mean more money left over to cover expenses and redistribute to shareholders via dividends and buybacks. Lower gross margin businesses, in contrast, have less money once they are done paying for revenue costs, making it harder for those companies to cover operating costs, let alone give away leftover funds to their owners.

So it has been to our surprise that Kingsoft Cloud, Vroom, and, soon, Lemonade are seeing such strong responses. It’s perhaps even more surprising that these companies managed to raise as much private capital as they did in their youth, despite not sporting gross margins that track with what we expect from venture-backed, tech and tech-ish companies.

With markets at all-time highs — and thus comparable valuations contentedly stretched — it’s probably a great time to take low-margin, growth-y companies public. But that doesn’t mean the situation makes perfect financial sense.