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Element wants to give identity to the whole world, raising $12M Series A
Who are you? That’s both an existential question, and also a very practical administrative concern. Today, identity is often exchanged through the use of government ID cards and official paperwork, but what happens when someone loses that paperwork or it is destroyed? Or, as is often the case in many countries around the world, a citizen never received the paperwork to begin with?
Element wants to completely change the way banks, hospitals, and other service providers work with their customers by providing a platform for decentralized biometric identity. The company’s software runs on any mobile device, and using the device’s camera, it can identify a user’s face, palm, and fingerprints to create a verified match. Users have options on which modality they want to use.
Biometric identification is a tough machine learning application, so it shouldn’t be surprising that Element, which was formed in 2012, was co-founded by Adam Perold, a Stanford-educated product designer, and Yann LeCun, a famed machine learning researcher. LeCun was the progenitor of convolution neural nets, which today form one of the foundational theories for deep learning AI. He is now chief science advisor for the company, having taken a role as Director of AI Research at Facebook in New York while continuing his professorship at NYU.
Element is announcing a $12 million Series A round, led by PTB Ventures and GDP Ventures, with David Fields of PTB and On Lee of GDP joining the company’s board of directors. Earlier investors of the company included Pandu Sjahrir, Scott Belsky, Box Group, and Recruit Strategic Partners.
While technologies like Apple’s Touch ID and Face ID systems have popularized biometric identity, neither of these were around when Element got started. The early years of the company were devoted to solving critical technical challenges. Wireless connectivity can be limited in many developing countries, which meant that identities had to be local to the device in order to be useful. That also meant that the platform couldn’t be a cloud infrastructure solution, since identity information had to be processed on the device.
Furthermore, given the quality of hardware available, data had to be extremely compressed to be useful, and the machine learning algorithms couldn’t use too much compute power since a low-powered Android device wouldn’t be able to execute an identity match quickly enough to provide a good user experience.
That’s where LeCun’s deep expertise in neural nets, and particularly in areas like optical character recognition, came in handy. The Element team managed to reduce the amount of data required to store the identity of a single person down to about two kilobytes, according to the company.
The next challenge the company faced in building out its platform was security. Identity data, particularly biometrics, is a major security challenge, but it was exacerbated by the fact that devices would often be shared between users. A single device at a bank, for instance, might service thousands of users, all of which need independent, secured data. The company said that these security challenges have been designed into the core of the system.
Ultimately, the company’s platform lives as an SDK behind the mobile apps of its partners. It provides not only the identity layer itself, but also a secure data infrastructure that allows records such as bank accounts and medical files to be connected to the underlying identity.
Element is targeting the developing world, and Perold tole me he spends more than half of his time traveling to Southeast Asia and Africa building partnerships and doing research on how the company’s technology can improve critical social services. Among the company’s signed partnerships is Telekom Indonesia, which as the service provider for 180 million subscribers, is one of the key connections between people and their identity in that fast-growing economy.
Another partnership formed by the company is with the Global Good Fund, a joint venture between Bill Gates and Intellectual Ventures. That project works to create better biometric identities for newborns and infants, which is critical for health outcomes. The company is working with icddr,b and the Angkor Hospital for Children in Cambodia to build out the program.
In addition to the lead investors, the company received strategic venture capital investments from Bank BCA (via Central Capital Ventura), Bank BRI, Telkom Indonesia (via MDI Ventures), and Maloekoe Ventures.
Correction: The Global Good Fund is a joint venture with Bill Gates, not the Gates Foundation.
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ICOs like to move fast and break (lots of) things
Startup life is full of quick, lateral thinking. “Move fast and break things” is the mantra. However, with the rise of token sales – essentially vehicles for untested startups to raise millions in a few minutes – lots of stuff gets broken and little gets fixed.
Take BCT – the Blockchain Terminal – for example. This frothy project led by Bob Bonomo, a former hedge fund guy turned Blockchain guru, features some interesting breakages.
Yesterday at about 3pm Eastern Time the company’s FAQ – which has since been updated but is still hidden here – read something like this:
While this sort of techno greeking is fine if you’re sending mock-ups back and forth, the token sale had been running since April 1st, a fact that was baffling to me and another reporter. Was this an April Fool’s joke? No, because when I visited the sale’s Telegram room I found a group of happy buyers asking questions about their future tokens.
Ever the reporter, I asked if anyone had seen the terminals and a community manager sent me this:
Interesting… blank screens at a demo event. The other CM, quicker on the draw, sent this:
Fair enough. In fact, crypto needs a product like this to legitimize it with Wall Street. But clearly they were moving so fast that the wheels were falling off.
Finally I did the obvious thing: visit the white paper. There we find that the Terminal is being built in conjunction with FactSet, a venerable research company that has seen all the vicissitudes of financial data. In fact, the paper is a tour-de-force on par with the best of the white papers I’ve seen. But we also discover that the white paper is a draft.
In short, BCT wouldn’t pass the average human investor sniff test but is definitely well on the way to completing its token sale. This is a problem.
BCT is not alone. I’ve spoken to development houses working with founders who barely understand cryptocurrency let alone understand their own token sales. I’ve seen founders’ eyes light up like the Big Bad Wolf eyeing Porky Pig when they talk about all the capital they will unlock. And I spoke to a founder on stage who said he would be very careful with the $80 million they raised for a company designed to raise money for ICOs. Greed is clouding this market in ways that are at once dangerous and comical.
There is precedent for this. In the early days of the Internet and even the frothiest dot-com days you could see the avarice in the eyes of Pets.com and Cisco executives who knew that big money was just around the corner. And we can’t begrudge these founders their excitement. What founder wouldn’t want the sweet feeling of being fully funded for, we presume, the next decade?
I’ve been following token sales with great interest over the past few months for a few reasons. First, I understand the hype cycle. I’ve seen tactics used by token sellers used before by hardware sellers, most notably with flops like the Phantom gaming console and the Notion Ink Adam, and there is a stink that permeates projects that are, at best, half-baked.
I want token sales to thrive as a method to raise capital. I want small startups to be able to turn on a spigot previously available to the well-connected and well-heeled. But the exact opposite seems true. Bankers are moving into a technology space that they little understand while carpetbaggers – lawyers, PR folks, advisors – are working hard to extract cash out of these windfalls. In the end the token sale industry should formalize itself and become as boring as the VC industry. I just hope it survives long enough to get there.
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Bloglovin’ becomes Activate and names Kamiu Lee as its new CEO
Bloglovin’ has a new name, new funding and a new CEO: Kamiu Lee, who previously served as the company’s vice president of strategy and business development.
It sounds the rebrand and Lee’s promotion are both part of a growing emphasis on the company’s influencer marketing business, where it helps advertisers find influencers who can promote their brands and products. In fact, the new name Activate comes from the company’s existing influencer marketing platform Activate by Bloglovin’, which was built around its acquisition of Sverve two years ago.
“Activate, from a commercial standpoint, is what represents who we are today,” Lee told me.
At the same time, she said the company will continue to support the Bloglovin’ product, which allows readers to find and follow fashion bloggers. The two sides of the business are tied together because it’s “a way for these creators to get discovered, and so it continues to be an audience development tool … for them.”
Lee told me she’s actually worn a number of different hats at Bloglovin’ since joining four years ago as the company’s first monetization-focused hire. With her experience across the company and her current focus on business and strategy, she said it seemed like a “natural step” to take the lead for “the next stage of the company.”
Meanwhile, Bloglovin’s outgoing CEO Giordano Contestabile will remain involved as a board member and advisor.
Lee acknowledged that Activate faces plenty of competition from other influencer marketing companies, but she said its approach is distinguished by the richness of its data (Activate isn’t just scraping public data but also getting direct access to the influencers’ own analytics), as well as its “real care for the content and the influencers.”
“It’s really easy to completely cater to the brands, and to a certain extent, if the dollars are there, the influencers will follow,” Lee said. “But in order to be really sustainable, you need great content, and you need to really understand the influencers.”
She also pointed to the size and breadth of Activate’s influencer network — it’s worked with 75,000 influencers to create 6,500 pieces of content per month over the past 12 months. This allows brands to create campaigns that combine content from, say, a single top tier influencer, 15 mid-tier influencers and 100 micro-influencers.
Activate is also launching a new service called Activate Studio, which supplements its existing self-serve product by supporting brands that don’t have large social media teams of their own, helping them develop and manage their influencer marketing strategy.
On top of its other news, the company has also raised an undisclosed amount of new funding from Northzone.
“Within the marketing and advertising industries, we see the incredible value to be captured by influencer marketing,” said Northzone’s Par Jorgen Parson in a statement. “Activate’s unique relationship and dedication to their influencers and industry-leading expertise make them an obvious front-runner among companies competing in the space.”
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Here Technologies and Argus join our Tel Aviv lineup
Let’s share a bit more about our agenda for TechCrunch’s Tel Aviv event. This year, the event will focus on mobility and everything around it, from autonomous vehicles, to sensors, drones and security.
That’s why I’m incredibly excited to announce two great speakers. Argus Cyber Security co-founder and CEO Ofer Ben Noon and Here Technologies Head of Mobility Liad Itzhak will join us on stage.
By focusing on mobility, we have the opportunity to spend more time talking about the companies making the magic happen behind the scene.
Here Technologies has been around for more than 30 years. But the company is currently going through a sort of renaissance. After flourishing as an independent company and getting acquired by Nokia, the company is now owned by Audi, BMW and Daimler.
In many ways, mapping technology is the new oil. Car manufacturers need to control mapping data to develop self-driving technologies and services. And Liad Itzhak is well aware of that as he was previously working for Waze and Google.
As for Argus Cyber Security, the company is well-positioned to become one of the companies that matter when it comes to security in the mobility industry. Argus has been working with some of the biggest car manufacturers out there to protect their connected vehicles.
Ofer Ben Noon is a cyber security veteran and the co-founder and CEO of Argus. He’s going to talk about the security risks associated with the cars of the future.
These two speakers will have plenty of interesting things to say on June 7 at the TechCrunch Tel Aviv conference.
Buy tickets here and see you at the Tel Aviv Convention Center!
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TravelPerk grabs $21M to make booking business trips suck less
TravelPerk, a Barcelona-based SaaS startup that’s built an end-to-end business travel platform, has closed a $21 million Series B round, led by Berlin-based Target Global and London’s Felix Capital. Earlier investors Spark Capital and Sunstone also participated in the round, alongside new investor Amplo.
When we last spoke to the startup back in June 2016 — as it was announcing a $7M Series A — it had just 20 customers. It’s now boasting more than 1,000, name-checking “high growth” companies such as Typeform, TransferWise, Outfittery, GetYourGuide, GoCardless, Hotjar, and CityJet among its clients, and touting revenue growth of 1,200% year-on-year.
Co-founder and CEO Avi Meir tells us the startup is “on pace” to generate $100M in GMV this year.
Meir’s founding idea, back in 2015, was to create a rewards program based around dynamic budgeting for business trips. But after conversations with potential customers about their pain-points, the team quickly pivoted to target a broader bundle of business travel booking problems.
The mission now can be summarized as trying to make the entire business travel journey suck less — from booking flights and hotels; to admin tools for managing policies; analytics; customer support; all conducted within what’s billed as a “consumer-like experience” to keep end-users happy. Essentially it’s offering end-to-end travel management for its target business users.
“Travel and finance managers were frustrated by how they currently manage travel and looked for an all in one tool that JUST WORKS without having to compare rates with Skyscanner, be redirected to different websites, write 20 emails back and forth with a travel agent to coordinate a simple trip for someone, and suffer bad user experience,” says Meir.
“We understood that in order to fix business travel there is no way around but diving into it head on and create the world’s best OTA (online travel agency), combined with the best in class admin tools needed in order to manage the travel program and a consumer grade, smart user experience that travelers will love. So we became a full blown platform competing head on with the big TMCs (travel management companies) and the legacy corporate tools (Amex GBT, Concur, Egencia…) .”
He claims TravelPerk’s one-stop business trip shop now has the world’s largest bookable inventory (“all the travel agent inventory but also booking.com, Expedia, Skyscanner, Airbnb… practically any flight/hotel on the internet — only we have that”).
Target users at this stage are SMEs (up to 1,500 employees), with tech and consulting currently its strongest verticals, though Meir says it “really runs the gamut”. While the current focus is Europe, with its leading markets being the UK, Germany and Spain.
TravelPerk’s business model is freemium — and its pitch is it can save customers more than a fifth in annual business travel costs vs legacy corporate tools/travel agents thanks to the lack of commissions, free customer support etc.
But it also offers a premium tier with additional flexibility and perks — such as corporate hotel rates and a travel agent service for group bookings — for those customers who do want to pay to upgrade the experience.
On the competition front the main rivals are “old corporate travel agencies and TMC”, according to Meir, along with larger players such as Egencia (by Expedia) and Concur (SAP company).
“There are a few startups doing what we are doing in the U.S. like TripActions, NexTravel, as well as some smaller ones that are popping up but are in an earlier stage,” he notes.
“Since our first round… TravelPerk has been experiencing some incredible growth compared to any tech benchmark I know,” he adds. “We’ve found a stronger product market fit than we imagined and grew much faster than planned. It seems like everyone is unhappy with the way they are currently booking and managing business travel. Which makes this a $1.25 trillion market, ready for disruption.”
The Series B will be put towards scaling “fast”, with Meir arguing that TravelPerk has landed upon a “rare opportunity” to drive the market.
“Organic growth has been extremely fast and we have an immediate opportunity to scale the business fast, doing what we are doing right now at a bigger scale,” he says.
Commenting in a statement, Antoine Nussenbaum, partner at Felix Capital, also spies a major opportunity. “The corporate travel industry is one of the largest global markets yet to be disrupted online. At Felix Capital we have a high conviction about a new era of consumerization of enterprise software,” he says.
While Target Global general partner Shmuel Chafets describes TravelPerk as “very well positioned to be a market leader in the business travel space with a product that makes business travel as seamless and easy as personal travel”.
“We’re excited to support such an experienced and dedicated team that has a strong track record in the travel space,” he adds in a supporting statement. “TravelPerk is our first investment in Barcelona. We believe in a pan-European startup ecosystem and we look forward to seeing more opportunities in this emerging startup hub.”
Flush with fresh funding, the team’s next task is even more recruitment. “We’ll grow our teams all around with emphasis on engineering, operations and customer support. We’re also planning to expand, opening local offices in 4-5 new countries within the upcoming year and a half,” says Meir.
He notes the company has grown from 20 to 100 employees over the past 12 months already but adds that it will continue “hiring aggressively”.
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Mark Zuckerberg: “We do not sell data to advertisers”
While many of us in the tech world are familiar with Facebook’s business model, there is a common misconception among people that Facebook collects information about you and then sells that information to advertisers.
Zuckerberg wants everyone (especially the U.S. Senate) to know that’s not the case, and has laid forth the most simple example to explain it.
During his testimony, the Facebook CEO clarified to Senator John Cornyn that Facebook does not sell data.
There is a very common misconception that we sell data to advertisers, and we do not sell data to advertisers. What we allow is for advertisers to tell us who they want to reach and then we do the placement. So, if an advertiser comes to us and says, ‘Alright, I’m a ski shop and I want to sell skis to women,’ then we might have some sense because people shared skiing related content or said they were interested in that. They shared whether they’re a woman. And then we can show the ads to the right people without that data ever changing hands and going to the advertiser. That’s a very fundamental part of how our model works and something that is often misunderstood.
While, again, this may seem straightforward to many of us, Zuckerberg found himself having to explain more than once that Facebook does not sell data during his Senate testimony.
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New research shows successful founders are far older than the Valley stereotype
There is a classic stereotype of the Silicon Valley entrepreneur: often a computer science nerd, almost certainly male, ambitious and, most importantly, young — very young. Founders who have been covered extensively by the media, like Bill Gates, Steve Jobs and Mark Zuckerberg, started their companies still glimpsing their teenage years, and that reputation has spread widely across the industry.
Now, a group of economics researchers have conducted a comprehensive investigation of the starting age of founders of high-growth startups — and found that that stereotype just doesn’t match the data.
In a new National Bureau of Economic Research working paper, Pierre Azoulay, Benjamin Jones, J. Daniel Kim and Javier Miranda connected a variety of administrative data sets to investigate the age of founders of new businesses, and particularly the age of founders of high-performance startups. Administrative data sets are the “gold standard” of data, because unlike surveys or other statistical sampling methods, they represent the entire population under consideration.
What they found is that the average age of a startup founder is about 41.9 years of age among all startups that hire at least one employee, and among the top 0.1 percent of highest-growth startups, that average age moves up to 45 years old. Those ages are taken from the time of the founding of the company.
The researchers broke down the population of founders along a number of lines, including geography and industry. They found little difference in their results between subcategories, and, in many cases, the subcategory definition actually increased the average age. For instance, industries like oil and gas can have average founder ages as high as 51.4 years old. The researchers wrote that “The only category where the mean ages appear (modestly) below age 40 is when the firm has VC-backing. The youngest category is VC-backed firms in New York, where the mean founder age was 38.7.”
One interesting dynamic in the data is that older entrepreneurs appear correlated with better startup performance. “For example, the 1,700 founders of the fastest growing new ventures (1 in 1,000) in our universe of U.S. firms had an average age of 45.0 (compared to 43.7 for the top 1% and 42.1 for the top 5%),” the researchers wrote.
Indeed, it’s not just that older entrepreneurs are more successful, but that younger founders are less successful. “Overall, we see that younger founders appear strongly disadvantaged in their tendency to produce the highest-growth companies,” the researchers wrote (italics in original). One reason, they argue, is that older founders tend to have more years of experience in their industries.
With those results out of the way, there is a critical question: If indeed the most successful ventures are run on average by founders in their 40s, why is it that VCs seem to focus so intently on younger founders who seem to be wildly statistically unsuccessful?
The authors speculate that the reason could be that younger founders are “more in need of early-stage external finance” because older founders have the connections, networks and personal wealth to fund their ventures. VCs don’t have access to those deals, so they gravitate to the kinds of deals they can potentially fund.
I think there is a more blunt reason for this dynamic: VCs believe they have “pattern recognition” abilities that they simply don’t have. Instead, they rely on suppositions and stereotypes that don’t match the underlying data on startup success. The same reason why older founders are ignored by the ecosystem is the same reason why women and other minorities struggle in the Valley: It’s really not about what you build, but what you look like while building it. Data like those found in this paper should force all of us to reevaluate what kind of founders with whom we should be partnering.
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Mark Zuckerberg: ‘There will always be a version of Facebook that is free’
Today during Mark Zuckerberg’s testimony before the Senate, the Facebook CEO reiterated that “there will always be a version of Facebook that is free.”
In the midst of the Cambridge Analytica scandal, in which the user data of up to 87 million people was sold by a third-party developer to Trump Campaign-linked firm Cambridge Analytica, there has been talk of Facebook potentially adding a subscription layer.
The scandal has brought to light the heart of a problem that many have been well aware of: if you’re not buying a product, you are the product.
Last week, when asked if there might be a way for users to opt out of being targeted for ads, Sandberg responded saying they’d have to pay for it.
“We have different forms of opt-out,” Sandberg replied. “We don’t have an opt-out at the highest level. That would be a paid product.”
Our own Josh Constine made an argument that ad-free subscriptions could save Facebook. And while there’s no word on an ad-free subscription, Zuckerberg did at least leave room for it in the future, noting that there will always be a version of Facebook that is free.
“How do you sustain a business model in which users don’t pay for your service?” Senator Orrin Hatch asked Zuckerberg.
“Senator, we run ads.”
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A new app called Garden helps you stay in touch with friends and family without Facebook
Facebook has become the de facto way people today keep up with their friends and family and, at times, their wider network of professional acquaintances and colleagues. But its inattention to user data protection is leading some people looking for an out. A new app called Garden, officially launching today, wants to offer people a more private and personal way to keep up with those who are important to them.
The app was created by Zander Adell, previously the CEO of the package delivery startup Doorman, which shut down last fall. Doorman had tried to solve the problem with last mile delivery by allowing people to schedule when their online orders were actually delivered. The business had taken a lot of work, as many startups do. And that distracted Adell from maintaining his other relationships.
“I built Garden because I lost a friend,” he says. “I got so busy running my last startup that I neglected some of my closest personal relationships with the assumption that we’d connect when life calmed down. Years went by and life never got any easier,” Adell admits.
He also believes that social media has tricked users into thinking they have stronger relationships with others than they really do – that “liking” a post is some sort of meaningful experience, for example, when it’s actually not.
“Maintaining a real personal or business relationship that adds value and meaning to your life takes regular and substantive effort,” Adell explains. “Just like you can’t expect the plants in a garden to stay healthy without regularly watering them, you shouldn’t expect your relationships to thrive without putting in the time.”
Garden initially grew out of Adell’s own efforts in better tending to his relationships which took the form of a big spreadsheet where he wrote down when he last caught up with someone. He found it helped him better keep up with both his business contacts and his personal relationships.
When he heard from others who had also built their own spreadsheets for a similar purpose, he thought it may make sense to offer the solution as an app instead.
With Garden, you set a reminder frequency on your contacts in your phone, and indicate how often you want to keep up with the person in question – weekly, monthly, quarterly, every six months, etc. When you do catch up with a friend, you can leave notes in the app and write details about your last conversation. In effect, it’s a personal CRM.
Of course, CRM-in-an-app has been done before, but the focus is almost always on business relationships – not personal ones. Garden could effectively manage both.
The app also plays in the same space as all those Address Book replacement apps once did, few of which have lasted. For example, Tinder bought Humin, Brewster’s team joined RBI, and Cobook sold to FullContact.
But perhaps now people will give new apps that help them maintain their relationships another look.
Garden is well-designed if fairly simple – it’s a contact manager with push notifications. The hard work of actually keeping up will have to be done by you – you can’t just like a few posts and call it day. But this may be what some people want right now as they wean themselves off Facebook.
Given that Garden is a database of your personal relationships, Adell says that data privacy is critical. The data itself is hosted with AWS in the cloud, and transferred securely, he says. It will also not spam your friends as many apps in the past have done, Adell promises.
That said, contacts apps have gotten themselves into trouble before – bugs exposed private information, and people have always been a bit uncomfortable in granting apps permission to their private contacts. Garden, like others, asks for access to your Contacts to do its work. And that will give some people pause.
Adell says the project is something he bootstrapped himself, but is his full-time focus for the time being.
The app is currently a free download on iOS, but may become ad-supported at a later date.
Image credit, top: Georgian Style Flower Garden by ricoeurian on Flickr; others: Garden
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Watch Zuckerberg’s Senate testimony live right here
Today, Facebook CEO Mark Zuckerberg will begin two of the most publicly scrutinized days of his career.
This afternoon, members of the Senate will hear from Zuckerberg on data use, protection and privacy in the midst of the Cambridge Analytica scandal and Russian election meddling. While Zuckerberg’s prepared statement has already been released to the public, there are plenty of lingering questions to be answered.
We’ll be watching diligently and bringing you all the breaking news and analysis from the hearing. But if you want to watch along yourself, here’s what you need to know:
The hearing begins at 2:15 pm ET.
It’s a joint hearing held by the Senate Judiciary Committee and Senate Committee on Commerce, Science and Transportation.
The hearing will be live streamed right here.
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