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Although FTX collapsed last week, raises their ventures team contributed to are still being announced.
Joepegs, an NFT marketplace on the Avalanche blockchain, raised $5 million in a seed round led by now-defunct FTX Ventures and the Avalanche Foundation, its co-founders who go by the pseudonyms Cryptofish and 0xMurloc, exclusively told TechCrunch.
“The funding from FTX Ventures was completed in June, and have since been transferred out of FTX prior to recent bankruptcy events,” the team said in a statement.
The marketplace launched in May and has grown rapidly to the largest NFT marketplace on Avalanche with over $3.4 million in secondary NFT sales and 12,000 users. It also has an in-house production unit, Joe Studios, as well as an NFT Launchpad, which has on boarded over 50 projects to the Avalanche ecosystem, the company said.
The co-founders also founded and remain involved in the operations of Trader Joe, a decentralized exchange on Avalanche (not to be confused with the American supermarket chain), which launched in early July 2021 and has a total trading volume over $88 billion.
“As we started building this, we realized very quickly that in order to deliver a platform that really helps users discover great NFTs we have to invest in a lot more platform capabilities so that’s what the fundraise will go toward,” 0xMurloc said. “On top of that, we also create a lot of content on our end. We did this at the start to fill a need. Marketplaces are only as good as the content in the ecosystem.”
Joepegs also invests in the operational side, beyond Avalanche, to partner with different traders, projects and artists “across the ecosystem,” 0xMurloc said. “That is something we do ferociously.”
Earlier this year, Avalanche dove further into the NFT space after partnering with the largest NFT marketplace, OpenSea, which now operates on the blockchain alongside other platforms like Joepegs and Kalao. With about $408.2 million in total sales, Avalanche is the seventh-largest blockchain by NFT sales volume, CryptoSlam data shows.
“People are focused on what is happening to the greater market,” 0xMurloc said. “Yes, there are less people playing with crypto and the NFT market as a whole right now, but, we do see that the interest from creators, brands and projects to dive deeper into web3 and NFTs – that appetite is not softening.”
There are a lot of companies, creators and artists who are “eager to explore this form of commerce and community building,” 0xMurloc added.
“We’re very bullish on the future of NFTs and what it could bring,” Cryptofish said. “The idea that you can have clothing backed by NFTs is very bullish. You see that with Azuki with their skateboards and Nike sneakers and we want to be on the forefront of NFT innovation with digital stuff and clothing.”
As more alternative NFT products come out, NFT markets will have to adapt to accommodate, Cryptofish added. “Our vision on NFT marketplaces will have to be like Amazon over time. Initially it was a bookstore and now they’ve branched out to sell everything. That’s how I see things going.”
In the short term, the team plans to continue driving in-house content and has new collections coming up in the near future, 0xMurloc said.
“Longer term, we want to branch into different flavors of NFTs and explore what Fish mentioned, whether it’s fashion, physical merchandise or gaming. We’re excited about what’s to come.”
FTX and Avalanche co-led $5M round for Joepegs NFT marketplace by Jacquelyn Melinek originally published on TechCrunch
https://techcrunch.com/2022/11/14/ftx-and-avalanche-co-led-5m-round-for-joepegs-nft-marketplace/
Hello, and welcome back to Equity, the podcast about the business of startups, where we unpack the numbers and nuance behind the headlines.
Here’s what we got into on our Monday episode, a weekly kick-off of sorts:
And that’s all the time we had this morning! More Wednesday!
Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. TechCrunch also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!
Cleanup, aisle FTX by Alex Wilhelm originally published on TechCrunch
This year marks the 10th anniversary of the fintech phenomenon.
Companies such as E*TRADE, Rocket Mortgage, and TurboTax began to disrupt the established financial services sector well before 2012, but that year marked the turning point when fintech morphed into a sustained movement that would drastically change how most people manage their money.
If you’re a fintech startup, you will face four main types of competitors over the next decade:
Your firm will need a very strong value proposition to compete with all four types of competitors.
This leaves most firms with two options over the next decade. One avenue is to specialize in a handful of products or services that you believe will have value on their own that consumers will sign up for despite robust competitor ecosystems. Alternatively, you need to develop a comprehensive strategy to compete and build a compelling suite of products, services and perks.
How can fintech startups prepare to compete in the next decade? Here are four steps you can take to remain competitive.
Any corporate strategy document will remain a fantasy on paper if your tech infrastructure is outdated and incapable of meeting your future needs.
The foundational step of any long-term strategy for the 2020s is to revamp your firm’s tech stack to support future needs. You will need modern tech infrastructure that can support greater cross-product automation, a sophisticated AI assistant, more integrations with external parties such as the crypto ecosystem, and non-financial perks/benefits.
The process for improving your tech stack varies based on the type of firm. If you work for a large bank still running COBL, the first step is likely a massive investment in a multi-year process to migrate to a modern and streamlined tech infrastructure. If you are a relatively young fintech company, you generally have more “white space” to design your stack. The challenge for smaller companies isn’t dealing with decades of tech debt; rather, it’s optimizing limited engineering resources to build the best possible tech stack.
Modernizing tech infrastructure is a difficult and expensive proposition. Generally speaking, the best way to get company leadership on board with such investments is to highlight what competitors are doing to help them understand the competitive threat.
Preparing for fintech’s second decade: 4 moves your firm must make now by Ram Iyer originally published on TechCrunch
Micromobility company Bird said Monday it had overstated its revenue for more than two years by recognizing unpaid customer rides.
Bird’s audit committee found on Friday that the company’s financial reports spanning the first quarter of 2020 through the second quarter of 2022 “should no longer be relied upon,” according to a U.S. Securities and Exchange Commission (SEC) filing.
The committee discovered the discrepancy while preparing Bird’s financial statements for the quarter ended September 30, 2022. The Santa Monica–based e-scooter and e-bike sharing company also said it will delay filing its third-quarter financial report, originally scheduled for Monday.
Bird said it had recorded revenue on certain trips even when customers lacked sufficient “preloaded ‘wallet’ balances.” The company said it should have reported the unpaid balances on its financial statements as deferred revenue.
An internal investigation found that the company’s “disclosure controls and procedures are not effective at a reasonable assurance level.”
Bird, which went public in a November 2021 SPAC deal that valued the company around $2.3 billion, said it plans to file its third quarter results as soon as possible and restate its previous financial results.
In August, Bird reported that it missed Q2 revenue estimates slightly, with a net loss of $310.4 million on revenue of $76.7 million. It said that its total number of rides doubled over the year-ago period but that its average fare and number of rides per vehicle dropped.
Overall, the company suffered a tumultuous second quarter, announcing plans to dismantle its retail business, shut down operations in unprofitable markets and laying off close to 140 workers. CEO Travis VanderZanden stepped down as president in June, shortly after the New York Stock Exchange warned that the company could be delisted for trading below $1.
Bird said during its second-quarter financial report that it would realize savings from the cost-cutting measures in the third quarter.
Bird tells SEC it overstated revenue for two years by Jaclyn Trop originally published on TechCrunch
https://techcrunch.com/2022/11/14/bird-tells-sec-it-overstated-revenue-for-two-years/
Twitter Blue, Twitter’s paid tier, appears to be on ice at the moment as the company tries to navigate how to control it from being abused by impersonators while still promoting it as a mass market product to build out a new revenue stream among “official” users and the hundreds of millions of others who use Twitter. No biggie! In the absence of any official announcements, Twitter’s new owner and CEO Elon Musk is reverting to type and pushing out some social guerilla marketing around how brands, other organizations, and the rest of us use the platform.
Yesterday, Musk said in a Tweet that the company soon would be letting “organizations to identify which other Twitter accounts are actually associated with them.” In later notes, he clarified this meant organizations would be able to manage their own affiliations and affiliated accounts, but that Twitter would likely be the arbiter of what counted as a primary organization.
It’s not clear if managing affiliations will be a tool only for organizations that pay for the privilege to use it — a la a Twitter Blue-style tier for orgs, brands and influencers — or if it will be something that any verified account will be able to do. Where Verified blue-check accounts will sit in relation to paid Blue blue-check accounts is in itself still a big question mark, since Twitter has made so many changes around the product in the last week that most people have now lost track of what is going on.
In any case, if it all goes to plan — Twitter’s business plan as meted out in Tweets, that is — Twitter Blue, plus another related service that was paused due to impersonation abuse — a current lock on verified users changing Twitter screen names — should both be reinstated by end of week, Musk noted.
Without doubt, Twitter is trying to make some lemonade out of lemons here. Musk’s tweets are coming on the back of an unbelievably chaotic couple of weeks of the company operating under new ownership, spearheading a different business model (focusing on subscriptions and paywalls rather than just ads while also going from publicly-traded to privately-held), and in some ways maybe most critically, as of last week with half the staff it had compared to a week before.
That’s meant not only sharp turns in what the company is doing, and how it’s carrying things out (the latest as of this morning: a freeze on code changes) but very little communication about any of it.
Case in point: Twitter Blue has expanded, been pretty mercilessly trolled and abused, contracted, and ultimately paused in the space of little more than a week. Yet the service’s own “Official” Twitter account has not sent a single Tweet out, nor made any actual announcements, since October 18 — a full 10 days before Musk closed his deal to buy the company.
On the other hand, if Musk’s hint of the new feature does get rolled out and it has to do with managing affiliated accounts (rather than creepily keeping tabs, say, on how employees discuss the company in their individual accounts), it’s actually long overdue. One of the problems with Twitter had been that accounts that were getting impersonated typically had to proactively find and request take-downs of other accounts, and even then the process was not always instantaneous. (Ditto abusive and harassing accounts.)
Something like this could effectively turn that problem on its head by making it easier for organizations to track and report those unaffiliated accounts, which would be one step towards Twitter sweetening the deal for getting organizations to sign up to (and pay for?) “official” tiers, and for Twitter improving its credibility with brands and organizations, which appears fairly poor at the moment.
Indeed, just as it’s downright hard for us regular people to stake much faith on what might happen next, brands and organizations have somewhat been left out in the cold, too.
We’ve received some research passed to us from Battenhall, a London-based marketing agency that works with brands and companies on social media strategy. It lays bare the state of Twitter’s current interface with commercial organizations. The long and short of it: like the rest of Twitter right now, it’s all over the place.
One of Twitter’s attempts at clearing up the confusion (hah) between “Blue” paid accounts, the pre-existing blue-check verification status and impersonations that were running riot exploiting the Blue paid tier, was to create a “double verification” route, where “real” accounts were denoted with both “official” notes and blue checkmarks.
But taking just the FTSE 100 top companies in the U.K., Battenhall found that only 23% of them had been given that double verification status as of late Friday.
Further to that, 39% of FTSE 100 companies had just a single blue tick verification. But as Battenhall founder Drew Benvie pointed out to me, “That can signify either a verified account or an $8 per month Twitter Blue pay-for-verification account.” Sounds inconsistent? On top of this, a full 38% of FTSE 100 companies did not have any form of verification at all.
“Burberry, the brand with the largest Twitter following in the FTSE 100, has not been given ‘official’ white tick status, ranking it equally in prominence to $8 Twitter Blue subscribers,” Benvie added. Burberry’s Twitter account, which does have the blue check, has around 8.2 million followers. Phoenix Group, which 4,100, has the smallest following among FTSE 100 companies with 4,100 followers, yet it does have double verification. Other FTSE 100 organizations with the double include AstraZeneca, BP, Diageo, Sainsburys, Tesco and Vodafone.
“There is no clear pattern to which accounts are verified, official, or even really who they say they are as blue ticks can be purchased for £6.99 or $8,” Benvie noted. “I believe (although don’t categorically know) that the verification situation is currently more or less random, in that certain brands – large and small, big advertisers and small advertisers – are seeing different levels of verification. I would expect people are making decisions based on this, as opposed to an algorithm, but as far as I’m aware the rationale is not being communicated to the brands involved.”
They are not the only ones not getting any communication. We’ve contacted Twitter for comment on this story — as we have for all of our coverage — but have yet to receive a reply. We will update this post as and when we do hear from the company.
Musk says orgs will soon verify affiliated accounts; Blue sign-ups and name changes will be reinstated end of this week by Ingrid Lunden originally published on TechCrunch
The Station is a weekly newsletter dedicated to all things transportation. Sign up here — just click The Station — to receive the full edition of the newsletter every weekend in your inbox. This is a shorter version of The Station newsletter that is emailed to subscribers. Want all the deals, news roundups and commentary? Subscribe for free.
Welcome back to The Station, your central hub for all past, present and future means of moving people and packages from Point A to Point B.
This coming week I will be heading to Los Angeles to check out the LA Auto Show as well as a few EV and AV related events. Maybe I’ll see some of you there!
Let’s get right to it.
Got a news tip or inside information about a topic we covered? I’d love to hear from you. You can reach at kirsten.korosec@techcrunch.com to share thoughts, criticisms, opinions or tips. Or you can drop us a note at tips@techcrunch.com. If you prefer to remain anonymous, click here to contact us, which includes SecureDrop (instructions here) and various encrypted messaging apps.
Taur, a scooter company we wrote about in February, has launched its virtual showroom, a very cool interactive website that allows prospective scooter buyers to virtually test out different aspects of the scooter, from how to set up the foot platforms and activate the throttle to how to turn on the lights and charge the battery.
I recently got the opportunity to try out one of Taur’s front-facing scooters, and I’ll admit it’s a very cool ride. The scooter doesn’t have a traditional board for your feet to balance on, but rather has a foot deck that lets riders face forward while riding. I found that this gave me greater visibility of my peripherals — having my left foot in front of my right on a traditional kick scooter meant I could see to my right quite well, but had less range of motion to look over my left shoulder. Whereas, facing forward on a Taur scooter meant I had equal range of motion to look over each shoulder.
Perhaps the most interesting part of the ride was that it didn’t even feel like I was riding a scooter. It almost felt like I was riding a moped or a bike (maybe something to do with being front facing?) I kept mistakenly calling it “a great bike” — a term co-founder Carson Brown and head of marketing Ed Turner said they were also hearing from others. It might be more accurate to say that the movement of riding Taur’s scooter was similar to the movement of skiing, where you turn by pushing your weight off each foot, rather than by angling the handlebars. This gave me a better feeling of control and a sense that I could do some serious shredding on this thing.
The fat tires certainly made for a bouncy experience. I rode the scooter over uneven roads in a parking lot in Greenpoint, Brooklyn, and once I got used to the jostling, I felt safe enough to brave the meanest of potholes.
Taur is focusing on launching in Los Angeles this year and will be running pop ups there over the next few months. The startup has almost 1,000 units to ship to LA this year to fulfill pre-orders and general sales.
In other news …
Amazon and other retailers are facing criticism for selling devices that allow e-bikes to be upgraded to illegal speeds for as little as $100.
Bird is apparently launching in Qatar, which is weird because the company recently said it was exiting several dozen cities around the world, including in the Middle East.
Honda is developing and testing a range of micromobility vehicles equipped with “cooperative intelligence,” a technology that combines cameras, voice recognition, AI and standard controls to enable more “human-like” cooperation between people and the vehicles. The vehicles would be able to generate a 3D map of their surroundings in real time.
Revel is taking its e-mopeds out of Washington D.C. The company said it wanted to focus its attention on growing out its electric ridehail and EV charging businesses.
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The wave of consolidation that has affected the autonomous vehicle industry has extended to lidar companies as well. For example, take this week’s merger of Ouster and Velodyne — two lidar companies that separately went public via special purpose acquisition companies.
Under this all-stock transaction, both Ouster and Velodyne will maintain a 50% stake in the new company.
Why are lidar companies sucked up into this wave of consolidation? Too many lidar companies are competing for a sliver of business from OEMs. (That whole supply-demand problem). Scaling up is also an expensive endeavor.
Velodyne and Ouster have each snapped up lidar companies prior to this merger. Velodyne acquired in 2022 Bluecity.ai, and last year, Ouster bought lidar startup Sense Photonics.
What lidar company is next?
Other deals that got my attention this week …
Acerta Analytics, an advanced analytics company that helps automakers and suppliers improve quality in manufacturing processes and support early defect detection, raised $10.4 million CAD. The Series B round was led by BDC Capital’s Industrial Innovation and Thrive Venture Funds with participation from existing investors OMERS Ventures and StandUp Ventures.
Elon Musk nearly $4 billion worth of Tesla shares.
Foxconn increased its investment in EV startup Lordstown Motors by buying $170 million in common stock and newly created preferred shares. Once the deal is complete, Foxconn will hold all of Lordstown’s outstanding preferred stock and 18.3% of its common stock on a pro forma basis. Foxconn will also have the right to two board seats.
Kyte, the rental car delivery startup founded in 2019, raised $60 million in Series B round led by InterAlpen Partners, whose founder, Stephen George is joining Kyte’s Board. Other new investors include Valor Equity Partners, Anthemis, Citi Ventures, and Hearst Ventures, with significant participation from existing investors DN Capital plus 1984 Ventures, FJ Labs, and Urban Innovation Fund. This round brings Kyte’s total funding to approximately $300 million across equity and debt.
Want more deals? A whole list of them were in the subscription version this week. Subscribe for free here.
Aurora is partnering with Ryder to pilot on-site fleet maintenance at Aurora’s terminal in South Dallas, a step closer to building out the network Aurora will need as it moves towards commercialization.
TuSimple co-founder Xiaodi Hou was fired earlier month from his CEO, president and CTO posts by the company’s board. That move might have stripped Huo of power —he was even removed from his position as chairman of the board and member of the board’s government security committee. But it didn’t immobilize him.
Hou teamed up with co-founder and major shareholder Mo Chen and fired board members Brad Buss, Karen C. Francis, Michelle Sterling and Reed Werner. Hou became the sole remaining member of the board; he then appointed Chen and Cheng Lu, a shareholder and the former CEO, to the board.
While power now rests back in the hands of the co-founders, it’s unclear how this will affect an investigation into the company by the Federal Bureau of Investigation, Securities and Exchange Commission and Committee on Foreign Investment in the U.S. (CFIUS). The investigation is apparently focused on TuSimple’s relationship with Hydron, a hydrogen-powered trucking company led by Chen and backed by Chinese investors.
Waymo reached two milestones this past week.
The company opened up its fully driverless ride-hail service in downtown Phoenix to the general public. And the California Department of Motor Vehicles approved an amendment to Waymo’s existing deployment permit to include driverless, as well as drivered, operations. Waymo will now be able to charge for food and grocery delivery using its autonomous vehicles, which will operate without anyone in the driver’s seat. All Waymo needs now is a driverless deployment permit from the California Public Utilities Commission (CPUC) to finally start charging for rider-only autonomous rides in the city.
Arrival said in its Q3 earnings that it doesn’t expect to earn revenue until after 2023. Yes, I said REVENUE. The EV company, which is restructuring its business to develop commercial vans for the U.S. instead of Europe and is at risk of being delisted from the Nasdaq exchange, reported a third-quarter loss of $310.3 million, compared with a $30.6 million loss for the same period a year ago.
Canoo said in its Q3 earnings that it entered into an agreement to acquire a vehicle manufacturing facility in Oklahoma City. This shouldn’t be confused with Canoo’s “megamicro factory” in Pryor, Oklahoma. This other facility will help Canoo ramp production and bring EVs to market in 2023. Another item of note in Q3: Canoo closed out the quarter with cash and cash equivalents of $6.8 million. 
Lyft reported a net loss of $422.2 million in the Q3. Nearly one third of that loss ($135.7 million) was due to the shutdown of Argo AI, which Lyft had a small stake in.
Rivian affirmed that the company is on track to hit its annual production target of 25,000 vehicles despite unpredictable supply chain crunches and component shortages. The company is still losing money and has had to adjust some of its plans for growth. Rivian reported a net loss of $1.72 billion on revenue of $536 million in Q3 and delayed the launch of its next-generation R2 EV platform.
Audi and Redwood Materials are teaming up to collect end-of-life batteries from cell phones, electric toothbrushes and other lithium-ion-powered devices at participating dealerships nationwide.
California voters shot down Proposition 30, which would have made EVs more affordable for some residents, dealing a blow to Lyft and the EV industry alike. Prop 30 would have taxed residents making more than $2 million a year to subsidize electric cars and public charging stations as well as funded wildfire prevention programs.
Tesla opened up its EV connector design to automakers and suppliers. The aim? Tesla wants to be the new standard in North America. Separately, Zoom said it is working with Tesla to bring video conferencing into its vehicles. (Zoom meetings would only be possible when the vehicle is parked).
Volvo unveiled the EX90, a flagship electric seven-passenger SUV loaded with sensors and software that the company hopes will push it ahead in an increasingly saturated luxury EV market. Luminar founder and CEO Austin Russell shared his thoughts about the EX90 (the company’s lidar is integrated into the EV) and called it a new era of safety. He also addresses consolidation in the marketplace and struggles within the AV industry.
Want to read more of the notable reads plus other bits of news from the week? The Station’s weekly emailed newsletter has a lot more on EVs and AVs, future of flight, insider info and more. Click here and then check “The Station” to receive the full edition of the newsletter every weekend in your inbox.
TuSimple co-founders clapback, consolidation continues and Waymo reaches two milestones by Kirsten Korosec originally published on TechCrunch
India has lifted the download ban on VLC, more than nine months after it mysteriously blocked the official website of the popular media playback software in the South Asian market. VideoLAN, the popular software’s developer, filed a legal notice last month seeking an explanation from the nation’s IT and Telecom ministries for the block order.
The Ministry of Electronics and IT has removed its ban on the website of VLC media player, New Delhi-based advocacy group Internet Freedom Foundation, which provided legal support to VideoLAN, said on Monday. VideoLAN confirmed the order.
Indian telecom operators began blocking VideoLAN’s official website, where it lists links to downloading VLC, in February of this year, VideoLAN president and lead developer Jean-Baptiste Kempf told TechCrunch in an earlier interview. India is one of the largest markets for VLC.
The vast majority of people rely on VLC’s official website to download the popular application.
“Most major ISPs [internet service providers] are banning the site, with diverse techniques,” Kempf said of the blocking in India. In light of the blocking, the site immediately observed a drop of 80% in traffic from the South Asian market, he told TechCrunch.
Last month, VideoLAN and Internet Freedom Foundation used legal means to get answers and redressal surrounding the ban. India’s IT ministry never made public the order of the ban, yet all telecom operators in the country complied with it. In its legal notice last month, VideoLAN sought a copy of the blocking order.
Indian telecom operators never disclosed why they were blocking the VideoLan website, but some speculated that it could be because of a misinterpretation of a security warning from earlier this year.
Security firm Symantec reported in April this year that the hacker group Cicada, which has ties with the Chinese government, was exploiting VLC Media Player as well as several other popular applications to gain remote access to the victim’s computers. Kempf said he was never contacted by any government agency.
VLC, downloaded over 3.5 billion times worldwide, is a local media player that doesn’t require internet access or connection to any particular service online for the vast majority of its features. A block on its website didn’t considerably impact the existing install base of VLC.
But by blocking the website, India was pushing its citizens to “shady websites that are running hacked version of VLC. So they are endangering their own citizens with this ban,” Kempf warned.
India lifts download ban on VLC by Manish Singh originally published on TechCrunch
https://techcrunch.com/2022/11/14/india-lifts-download-ban-on-vlc/
The complexity of streaming data technologies – not just streaming video but any kind of streaming data – has created a headache around dealing with that high speed data processing.
Accordingly, companies like Spark, Flink have spring up to address this ksqlDB. Many are either either java-based solutions or SQL-based analytics solutions. However, UK startup Quix says it is a platform for developing event-driven applications with Python, which can have uses in, say, physics-based data modelling and anomaly detection in machine learning.
It’s now raised a £11m / $12.9m Series A funding round led by London-based VC MMC Ventures, with participation from existing investors Project A Ventures (out of Berlin) and Passion Capital (London).
The Quix founders are familiar with real-time decision-making, having worked in Formula 1, where success is based on milliseconds. In fact one of its customers is McLaren, as well as mobility startup Voi, and the National Health Service (UK), among others.
In a statement, Mike Rosam, Co-Founder at Quix, said: “Many companies are struggling to combine raw technologies like Kafka into real-time data capabilities… This new capital will fuel our mission to simplify event-driven data engineering so that more companies can build modern data-intensive apps.”
Oliver Richards, Partner at MMC Ventures, added: “We have been doing an increased amount of research in the data infrastructure space, it is clear that there is a growing demand for real-time streaming data, both across consumer and B2B use cases.”
Real-time data startup Quix raises a $12.9M Series A round led by MMC Ventures by Mike Butcher originally published on TechCrunch
Unicorn Flexport is revolutionizing the world of logistics, serving as a freight forwarder with software that enables customers to manage their shipments. But there are still thousands of smaller freight forwarders, many running on outdated ERP software or spreadsheets. A startup called GoFreight wants to help them compete by providing the “Shopify of freight forwarding,” with backend software that makes their operations run more smoothly, and a frontend that lets them set up a storefront and provide quotes in a few minutes.
The Los Angeles and Taipei-based startup has raised $23 million in Series A funding, co-led by Flex Capital and Headline. The round included participation from LFX Venture Partners, Palm Drive Capital and returning investors Mucker Capital, Cornerstone Ventures and Red Building Capital.
GoFreight, which currently has about 1,000 customers, helps manage transportation of goods through ocean, air and land routes. It also lets them set up online storefronts with a few clicks. Potential customers can connect to freight forwarders by sending them an inquiry through storefront and getting a quotation within a few minutes, instead of the 24 to 48 hours usually necessary.
Once a freight forwarding job is underway, shipments can be tracked with an EDI-integrated, real-time tool, so freight forwarders and customers know exactly where their shipment containers are. Tracking software also integrates with accounting tools on GoFreight’s platform, so users know how the performance of shipments is impacting their earnings.
Co-founder and CEO Trenton Chen earned his Masters and PhD in the United States before returning to Taiwan to join TSMC. At that time, AppWorks and other startup programs were getting a lot of attention, and Chen decided he wanted to become an entrepreneur. He left TSMC (“it was a tough decision, because no one agreed with that,” he told TechCrunch), and gave himself six months to find a viable idea. During that time, one of his co-founders was living in Los Angeles, working as an importer for a family business.
“When I was in the States, I knew a lot of people in this industry as well. So many of our good friends asked us to go there and see how bad the software is. So in the last month of my six month period, I decided to give it an opportunity, bought a ticket for three months to go to LA and spend time with the first 10 freight forwarders, learning how they do business with software. We founded GoFreight after the first week we were there,” Chen said.
Even though Chen says the global freight forwarding market is worth about $280 billion dollars, almost all the software it runs on is outdated. GoFreight’s goal is to empower traditional freight forwarders to stay competitive with the same quality of technology that Flexport has.
“A freight forwarding business is about how to ship cargo from point A to point B. Software can really help, but that’s not their main business. The service itself is the main business and software cannot help minimize the shipping costs or get it there faster. But it can certainly help provide additional valuable information to customers, importers and exporters,” Chen said, adding, “We try to empower incumbents to compete with Flexport. That’s an approach to make this entire industry better and faster.”
Chen says GoFreight differentiates from other freight forwarding software startups because most of them are trying to create new ERP system, or integrate with existing ones. This is challenging to do because many freight forwarders use ERP systems that are out of date, and it’s a fragmented market. Some don’t even use ERP systems; instead, they work off of spreadsheets or pen-and-paper systems.
On the backend, GoFreight’s software has sales, operating and accounting tools, so when customers have an inquiry, freight forwarders can enter it into their system and then come back with a quotation. Once a job is confirmed, GoFreight manages bookings, real-time shipments and any necessary electronic filings. They can also generate and send invoices through GoFreight.
“Very importantly, we’re trying to become the Shopify of the space, so in one-click they can open an online store, and their importers can use the online web portal to send an inquiry and it just pops up in the system, automatically with pricing and they can book their tickets online,” said Chen. “So the front end application is so important and we provide visibility solutions as well.”
A major challenge that GoFreight wants to solve is the process of generating quotes, which can take a couple days since freight forwarding orders are complex. For example, if a customer wants to ship three containers from Shanghai to Los Angeles, freight forwarders need to check with overseas agents who are also freight forwarders. They also need to arrange trucking and warehouses. Another thing to consider is spot rates versus contract rates, since spot rates can be much lower.
Most of this work is done through emails, phone calls and text messages, but a centralized customer-facing app means freight forwarders can complete the entire process, including checking with overseas agents, through GoFreight’s integrations, which Chen says reduces the process from two days to about 10 or 20 seconds. GoFreight is currently working with partners to build a network that connects customers with freight forwarders, and freight forwarders with carriers.
GoFreight also provides a digital payment solution, since most payments were done by paper checks. This means freight forwarders can issue a link to customers, and once they click on that they are taken to GoFreight’s website, where they can decide what invoices to pay with credit cards or bank accounts. Then that information goes back into GoFreight’s ERP system.
Analytics provided by GoFreight can help freight forwarders make more money, Chen said. For example, if they book a 40-foot container, GoFreight will record how much they paid for it and how much customers were charged. The system analyzes performance for top customers and overseas agents, uncovering hidden fees so freight forwarders have a better understanding of the real cost of a shipment. It also breaks down costs per SKU, so freight forwarders and their customers know exactly how much it cost to ship an item.
The new funding will be used to develop more features like smart quotations, rate management and purchase order management.
In a statement about the funding, Headline partner Tom Gieselmann said, “GoFreight’s all-in-one software provides greater transparency to freight movement, allowing freight forwarders to better manage their business, which can range anywhere from 0-1500+ users, end-to-end. This versatility makes the product incredibly impactful, and a big reason behind why we’ve identified them as one of the most promising logistics tech companies on the market.”
GoFreight raises $28M to become the “Shopify of freight forwarding” by Catherine Shu originally published on TechCrunch
https://techcrunch.com/2022/11/13/gofreight-raises-28m-to-become-the-shopify-of-freight-forwarding/
One day in 2020, I published an article about a Chinese hardware maker which would have otherwise been a typical funding story. Instead, I got a complaint from its PR asking me to remove all mentions of “China” from the piece. The startup wanted to be called “American” on the basis of its having a small office in California. I declined, insisting on our duty to uncover relevant facts for readers. I never heard from the company again.
That turned out to be just the beginning of a trend in my interaction with Chinese startups that are expanding abroad. “We don’t want to be seen as Chinese,” many of them tell me. My attitude has over time gone from disappointment at companies’ lack of respect for journalistic independence to a growing concern that my portrayal of them might unfairly prejudice their growth. By putting the Chinese label on them, these firms might lose business partners, get stricter oversight by app stores, and receive more scrutiny from local regulators.
What used to be a no-brainer geographic categorization of a company — “it is Chinese/based in China” — has become politically charged. Five years ago, a Chinese firm would be boasting its “successful entry into Europe” as a Chinese firm. These days, with rising tensions between China and the West, many globalizing Chinese companies choose to bury their origin. They worry that their links to home — however it is defined — can be viewed as a national security threat to the foreign market they serve.
“We are going from longing China to longing Chinese, like Eric Yuan.”
As startups build increasingly distributed teams, it’s also become harder to put a geographic pin on them. The world’s largest crypto exchange Binance, which started out in China, famously doesn’t have a headquarters.
“If you look at companies such as Tiktok, Binance, Grab…these startups all started from day one with a global market in mind and built with teams located in multiple jurisdictions. It is really difficult to label them as from a certain country” said Ron Cao, who’s an early investor in Pinduoduo and founder of Sky9 Capital, an early-stage VC with a presence in China, Singapore, and the U.S.
But Chinese startups aren’t just concealing their origin. Many of them are in effect moving legally and operationally to distance themselves from their homeland to reassure foreign authorities that they aren’t beholden to Beijing. The upside of decoupling is companies end up investing more in localization, which is always conducive to overseas expansion. But in the process, they also risk losing some of the advantages of being Chinese.
The journey of becoming less “Chinese” is long and complicated, and the extent to which companies choose to reduce their ties to home is playing out differently across sectors and the stage of their business. But there’s one overarching sentiment shared by the dozen entrepreneurs I spoke to: They have never felt more confident about competing with international rivals, thanks to the talent and knowledge they have accumulated at home. But they are also increasingly daunted by — and weary of the geopolitical uncertainty they face in the process.
U.S.-China relations sharply deteriorated under former President Trump’s reign from 2017 to 2021, and President Biden seems to be staying the course, taking a firm stance on China with a sweeping chip ban. Having seen how U.S. sanctions have kneecapped Huawei’s supply chains and the spate of regulatory scrutiny on TikTok in the West, startups fear that they might be the next to get caught between the two superpowers.
Companies play down their Chinese association as a result. In the past, startups might get a pass by simply claiming they are Singapore or San Francisco-based without actually having a meaningful operation in those places. Shein, for example, used to bill itself as being “founded in L.A.” when in reality it started out in Nanjing and Guangzhou as a typical Chinese e-commerce exporter leveraging the country’s robust supply chains.
But scrutiny by foreign politicians and the press are driving Chinese firms to ramp up their overseas footprint, especially when they reach a critical size. Recently, Shein announced plans to open major warehouses in North America. The company has moved most of its assets to Singapore and made the island nation — which is widely regarded as politically neutral — its headquarters.
Sky Xu, the founder and CEO of Shein, is also reportedly seeking Singaporean citizenship. Several entrepreneurs told me that top VC firms in China now provide passport shopping as part of their post-investment service for founders targeting overseas markets in response to a new rule on offshore IPOs: last December, China’s securities authority proposed that a company, regardless of where it’s incorporated, must go through a filing process with the Chinese government if its main management mostly consists of Chinese nationals or executives who live in China, and whose main business operation is in China.
“If you look at companies such as Tiktok, Binance, Grab…these startups all started from day one with a global market in mind and built with teams located in multiple jurisdictions. It is really difficult to label them as from a certain country.”
Getting the overseas legal setup is just the first step. The greater challenge lies in winning the trust of local regulators and customers. The founder of a productivity app that is targeting the U.S. market told me that “everything we use at work is non-Chinese,” so all of its data, internally or those of its end users, are kept offshore. Rather than ByteDance’s Lark and Alibaba’s Dingtalk, the startup uses Notion and Slack for internal communication, AWS for data hosting, and Stripe for payments. The company was founded in Shenzhen but is in the process of setting up a Singaporean company to be its holding entity.
For enterprise software providers, the need to localize is even more pressing. While consumer app developers might gain traction without having to leave their China office, as they can remotely answer user emails and master search engine optimization to acquire users, building an enterprise business from afar is nearly impossible. For large corporations and even small mom-and-pop shops, business is expected to be done face-to-face. Why would a warehouse in Dallas trust a Shenzhen-based robotics startup to move its parcels?
Localization creates interdependence between economies, which can in turn become a bargaining chip for Chinese firms as they navigate geopolitical complications. “Once you have hired enough employees in the U.S., you have vested interests in the local economy, and your staff and local regulators will speak for you,” reckoned Richard Xu, an investor at Grand View Capital, which focuses on helping Chinese startups go global.
Decoupling from China has many challenges. Relocating staff and executives often means moving their whole families abroad, and building teams in the West can be expensive. For many globalizing startups, their presence in China is the very advantage they enjoy. Just as China’s cheap, skilled labor allows factories to produce affordable and quality goods for the world, its millions of engineers, who on average earn just a fifth of their American peers in 2022, give Chinese tech firms a cost advantage that translates into cheaper gadgets, better app experience, and lower SaaS subscription fees.
Despite the flurry of skepticism around TikTok’s data practice, the short video powerhouse seems to be keeping its core development force in Beijing for now. If the firm were to set up an engineering army from the ground up in the U.S., its operational costs will no doubt skyrocket.
TikTok could in theory implement data anonymization, that is, to create a system so that engineers in China only have access to data of which identifiers connecting to overseas individuals have been erased. According to a former employee of an American internet giant who worked in both the firm’s U.S. and China offices, “data anonymization isn’t impossible, but it’s extremely counter-productive for developers, which is why many companies aren’t willing to do it.”
“[Chinese startups] are very aggressive with going after market share and have rapid product iterations capabilities. They operate with a highly efficient and results-driven mindset and are comfortable with taking risks because in many ways they come from the world’s most competitive local market.”
Companies stay in China not just for the country’s cheap talent but also for its brain power. The U.S. might still have a lead in fundamental research around artificial intelligence, quantum computing, and other cutting-edge technologies, but in China, one can find some of the world’s best product managers who obsess over user experiences. While Vine pioneered the idea of short videos, it was TikTok that elevated the medium to a global phenomenon.
In their transformation of becoming “less Chinese,” a question that founders keep asking is: how far should one go? While Zoom’s Eric Yuan is hailed as a role model for immigrant founders, his upbringing was thrust into the limelight amid rising U.S.-China tensions. U.S. lawmakers and media raised suspicions that the conferencing giant’s R&D center in China could be used as Beijing’s spying outpost, prompting the founder to issue a statement saying he had long been an American citizen and had no allegiance to Beijing.
Along with pressure from the West, regulatory changes in China are also pushing Chinese startups to drift away. In the last few years, Beijing’s clampdown on Alibaba, Tencent, and other domestic tech giants has dampened venture capitalists’ confidence in the consumer internet sector. New regulations around data practices and industry monopolies mean tech companies no longer enjoy the kind of unfettered growth experienced by their predecessors in the last two decades.
Regulations might also compromise the core of a startup’s servic, a particularly salient issue for content-heavy startups. Game developers need to be pundits of Communist ideologies to ensure their works meet the government’s content guidelines. Social networks are required to run speech moderation systems that are costly and undermine user experiences. Many founders operating in these areas are either pivoting to another sector or switching to overseas markets.
For businesses that aren’t aligned with the interest of the government, even having a physical footprint in China can be risky. “In China, we operate like a semi-illegal, underground business,” the founder of a web3 startup said, asking for anonymity.
Like many other blockchain entrepreneurs, he recently moved to Singapore after China outlawed cryptocurrency transactions, even though his target audience had been global from the get-go. Since rules around the budding industry are ever-changing, “you never know if you’d be the next to be in trouble, especially when it’s an industry flooded with money.”
As they march into foreign territory, many Chinese startups are withdrawing themselves from public view — not to hide a nefarious behavior but out of a fear of being misunderstood. They resort to a strategy of “lying low and making money.” The taciturn further widens the gap between them and Western media, meaning American VCs have few ways to learn about them. Despite their international ambitions, many of them feel more comfortable with Chinese media and continue to raise from China-focused VCs, who are happily following the founders abroad.
“In more recent years, we are entering a new phase of entrepreneurship as more and more local startups are building businesses for global markets while leveraging the most strategic and relevant resources globally. In order to support this new phase, successful investors need to have a global perspective and value-added,” said Cao of Sky9.
“Entrepreneurs from China can be very competitive in many sectors globally. They are very aggressive with going after market share and have rapid product iterations capabilities. They operate with a highly efficient and results-driven mindset and are comfortable with taking risks because in many ways they come from the world’s most competitive local market,” he added.
My attitude has over time gone from disappointment at companies’ lack of respect for journalistic independence to a growing concern that my portrayal of them might unfairly prejudice their growth. By putting the Chinese label on them, these firms might lose business partners, get stricter oversight by app stores, and receive more scrutiny from local regulators.
As their money traverses borders to follow Chinese talent and ideas, VCs have a new slogan for their investment thesis. “We are going from longing China to longing Chinese, like Eric Yuan,” said Xu. “Chinese founders need to speak up more and accept that being Chinese is a thing to be proud of. But unfortunately, under the current geopolitical environment, it’s not really achievable.”
There are more encouraging stories, though. I recently met a neural search engine startup called Jina.ai for lunch in Berlin. The founder, Han Xiao, turned up with 10 of his employees, who chatted in English and sat by a long table while Han, who is originally from China, proudly counted the number of nationalities present — twleve.
I was impressed by how globalized the team is, in part thanks to the diverse tech talent in Berlin and Xiao’s experience in Germany. On a daily basis, Jina’s developers in Berlin work closely with the rest of its team in Shenzhen, the Chinese city known for birthing tech powerhouses such as Tencent, Huawei, and DJI. In a way, Xiao has achieved the dream of many Chinese founders — to run a global startup that still gets to play to China’s advantage — without having to cover up their Chinese ties.
“In the beginning, people would still ask if we were a Chinese company, but these questions happen less and less now. I’ve been in Germany for years. Most of our staff are international, and they are the people who represent us in meetings with clients and business partners,” said Xiao.
The dilemma of Chinese startups going global by Rita Liao originally published on TechCrunch
https://techcrunch.com/2022/11/13/dilemma-chinese-startups-going-global/