Aug
07
2018
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RiskRecon’s security assessment services for third-party vendors raises $25 million

In June of this year, Chinese hackers managed to install software into the networks of a contractor for the U.S. Navy and steal information on a roughly $300 million top-secret submarine program.

Two years ago, hackers infiltrated the networks of a vendor servicing the Australian military and made off with files containing a trove of information on Australian and U.S. military hardware and plans. That hacker stole roughly 30 gigabytes of data, including information on the nearly half-a-trillion dollar F-35 Joint Strike Fighter program.

Third-party vendors, contractors and suppliers to big companies have long been the targets for cyber thieves looking for access to sensitive data, and the reason is simple. Companies don’t know how secure their suppliers really are and can’t take the time to find out.

The Department of Defense can have the best cybersecurity on the planet, but when that moves off to a subcontractor how can the DOD know how the subcontractor is going to protect that data?” says Kelly White, the chief executive of RiskRecon, a new firm that provides audits of vendors’ security profile. 

The problem is one that the Salt Lake City-based executive knew well. White was a former security executive for Zion Bank Corporation after spending years in the cybersecurity industry with Ernst & Young and TrueSecure — a Washington, DC-based security vendor.

When White began work with Zion, around 2 percent of the company’s services were hosted by third parties; less than five years later and that number had climbed to over 50 percent. When White identified the problem in 2010, he immediately began developing a solution on his own time. RiskRecon’s chief executive estimates he spent 3,000 hours developing the service between 2010 and 2015, when he finally launched the business with seed capital from General Catalyst .

And White says the tools that companies use to ensure that those vendors have adequate security measures in place basically boiled down to an emailed checklist that the vendors would fill out themselves.

That’s why White built the RiskRecon service, which has just raised $25 million in a new round of funding led by Accel Partners with participation from Dell Technologies Capital, General Catalyst and F-Prime Capital, Fidelity Investments’ venture capital affiliate.

The company’s software looks at what White calls the “internet surface” of a vendor and maps the different ways in which that surface can be compromised. “We don’t require any insider information to get started,” says White. “The point of finding systems is to understand how well an organization is managing their risk.”

White says that the software does more than identify the weak points in a vendor’s security profile, it also tries to get a view into the type of information that could be exposed at different points on a network.

According to White, the company has more than 50 customers among the Fortune 500 that are already using his company’s services across industries like financial services, oil and gas and manufacturing.

The money from RiskRecon’s new round will be used to boost sales and marketing efforts as the company looks to expand into Europe, Asia and further into North America.

“Where there’s not transparency there’s often poor performance,” says White. “Cybersecurity has gone a long time without true transparency. You can’t have strong accountability without strong transparency.”

Jun
12
2018
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Reid Hoffman to talk ‘blitzscaling’ at Disrupt SF 2018

When it comes to scaling startups, few people are as accomplished or consistently successful as Reid Hoffman .

While the rest of us consider scaling a startup to market domination a daunting task, Hoffman has continued to make it look easy.

In September, Hoffman will join us at TC Disrupt SF to share his strategies on “blitzscaling,” which also happens to be the title of his forthcoming book.

Hoffman started out his Silicon Valley career at PayPal, serving as EVP and a founding board member. In 2003, Hoffman founded LinkedIn from his living room. LinkedIn now has more than 500 million members across 200 countries and territories across the world, effectively becoming a necessity to the professional marketplace.

Hoffman left LinkedIn in 2007, but his contributions to the company certainly helped turn it into the behemoth it is today, going public in 2011 and selling to Microsoft for a whopping $26.2 billion in 2016.

At Disrupt, he’ll outline some of the methodology behind going from startup to scale up that is outlined in his new book, Blitzscaling, co-authored with Chris Yeh:

Blitzscaling is a specific set of practices for igniting and managing dizzying growth; an accelerated path to the stage in a startup’s life-cycle where the most value is created. It prioritizes speed over efficiency in an environment of uncertainty, and allows a company to go from “startup” to “scaleup” at a furious pace that captures the market.

Drawing on their experiences scaling startups into billion-dollar businesses, Hoffman and Yeh offer a framework for blitzscaling that can be replicated in any region or industry. Readers will learn how to design business models that support lightning-fast growth, navigate necessary shifts in strategy at each level of scale, and weather the management challenges that arise as their company grows.

Today, Hoffman leads Greylock Partners’ Discovery Fund, where he invests in seed-stage entrepreneurs and companies. He currently serves on the boards of Airbnb, Convoy, Edmodo and Microsoft. Hoffman’s place in the VC world is a natural continuation of his angel investing. His angel portfolio includes companies like Facebook, Flickr, Last.fm, and Zynga.

Hoffman has also invested in tech that affects positive change, serving on the non-profit boards of Biohub, Kiva, Endeavor, and DoSomething.org.

Blitzscaling marks Hoffman’s third book (others include The Startup of You and The Alliance) and we’re absolutely thrilled to have him teach us a thing or two at Disrupt SF.

Tickets to Disrupt SF are available now right here.

May
30
2018
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Here’s Mary Meeker’s essential 2018 Internet Trends report

Want to understand all the most important tech stats and trends? Legendary venture capitalist Mary Meeker has just released the 2018 version of her famous Internet Trends report. It covers everything from mobile to commerce to the competition between tech giants. Check out the full report below, and we’ll add some highlights soon. Then come back for our slide-by-slide analysis of the most important parts of the 294 page report.

  • Internet adoption: As of 2018, half the world population, or about 3.6 billion people, will be on the internet. That’s thanks in large part to cheaper Android phones and Wifi becoming more available, though individual services will have a tougher time adding new users as the web hits saturation.
  • Mobile usage: While smartphone shipments are flat and internet user growth is slowing, U.S. adults are spending more time online thanks to mobile, clocking 5.9 hours per day in 2017 versus 5.6 hours in 2016.
  • Mobile ads: People are shifting their time to mobile faster than ad dollars are following, creating a $7 billion mobile ad opportunity, though platforms are increasingly responsible for providing safe content to host those ads.
  • Crypto: Interest in cryptocurrency is exploding as Coinbase’s user count has nearly quadrupled since January 2017
  • Voice: Voice technology is at an inflection point due to speech recognition hitting 95% accuracy and the sales explosion for Amazon Echo which went from over 10 million to over 30 million sold in total by the end of 2017.
  • Daily usage – Revenue gains for services like Facebook are tightly coupled with daily user growth, showing how profitable it is to become a regular habit.
  • Tech investment: We’re at an all-time high for public and private investment in technology, while the top six public R&D + capex spenders are all technology companies.

Mary Meeker, analyst with Morgan Stanley, speaks during the Web 2.0 Summit in San Francisco, California, U.S., on Tuesday, Nov. 16, 2010. This year’s conference, which runs through Nov. 17, is titled “Points of Control: The Battle for the Network Economy.” Photographer: Tony Avelar/Bloomberg via Getty Images

  • Ecommerce vs Brick & Mortar: Ecommerce growth quickens as now 13% of all retail purchases happen online and parcel shipments are rising swiftly, signaling big opportunities for new shopping apps.
  • Amazon: More people start product searches on Amazon than search engines now, but Jeff Bezos still relies on other surfaces like Facebook and YouTube to inspire people to want things.
  • Subscription services: They’re seeing massive adoption, with Netflix up 25%, The New York Times up 43%, and Spotify up 48% year-over-year in 2017. A free tier accelerates conversion rates.
  • Education: Employees seek retraining and education from YouTube and online courses to keep up with new job requirements and pay off skyrocketing student loan debt.
  • Freelancing: Employees crave scheduling and work-from-home flexibility, and internet discovery of freelance work led it to grow 3X faster than total workforce growth. The on-demand workforce grew 23% in 2017 driven by Uber, Airbnb, Etsy, Upwork, and Doordash.
  • Transportation: People are buying fewer cars, keeping them longer, and shifting transportation spend to rideshare, which saw rides double in 2017.
  • Enterprise: Consumerization of the enterprise through better interfaces is spurring growth for companies like Dropbox and Slack.
  • China: Alibaba is expanding beyond China with strong gross merchandise volume, though Amazon still rules in revenue.
  • Privacy: China has a big opportunity as users there are much more willing to trade their personal data for product benefits than U.S. users, and China is claiming more spots on the top 20 internet company list while making big investments in AI.
  • Immigration: It is critical to a strong economy, as 56% of top U.S. companies were founded by a first- or second-generation immigrant.

May
08
2018
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Intel Capital pumps $72M into AI, IoT, cloud and silicon startups, $115M invested so far in 2018

Intel Capital, the investment arm of the computer processor giant, is today announcing $72 million in funding for the 12 newest startups to enter its portfolio, bringing the total invested so far this year to $115 million. Announced at the company’s global summit currently underway in southern California, investments in this latest tranche cover artificial intelligence, Internet of Things, cloud services, and silicon. A detailed list is below.

Other notable news from the event included a new deal between the NBA and Intel Capital to work on more collaborations in delivering sports content, an area where Intel has already been working for years; and the news that Intel has now invested $125 million in startups headed by minorities, women and other under-represented groups as part of its Diversity Initiative. The mark was reached 2.5 years ahead of schedule, it said.

The range of categories of the startups that Intel is investing in is a mark of how the company continues to back ideas that it views as central to its future business — and specifically where it hopes its processors will play a central role, such as AI, IoT and cloud. Investing in silicon startups, meanwhile, is a sign of how Intel is also focusing on businesses that are working in an area that’s close to the company’s own DNA.

It’s hasn’t been a completely smooth road. Intel became a huge presence in the world of IT and early rise of desktop and laptop computers many years ago with its advances in PC processors, but its fortunes changed with the shift to mobile, which saw the emergence of a new wave of chip companies and designs for smaller and faster devices. Mobile is area that Intel itself acknowledged it largely missed out.

Later years have seen still other issues hit the company. For example, the Spectre security flaw (fixes for which are still being rolled out). And some of the business lines where Intel was hoping to make a mark have not panned out as it hoped they would. Just last month, Intel shut down development of its Vaunt smart glasses and reportedly the entirety of its new devices group.

The investments that Intel Capital makes, in contrast, are a fresher and more optimistic aspect of the company’s operations: they represent hopes and possibilities that still have everything to play for. And given that, on balance, things like AI and cloud services still have a long way to go before being truly ubiquitous, there remains a lot of opportunity for Intel.

“These innovative companies reflect Intel’s strategic focus as a data leader,” said Wendell Brooks, Intel senior vice president and president of Intel Capital, in a statement. “They’re helping shape the future of artificial intelligence, the future of the cloud and the Internet of Things, and the future of silicon. These are critical areas of technology as the world becomes increasingly connected and smart.”

Intel Capital since 1991 has put $12.3 billion into 1,530 companies covering everything from autonomous driving to virtual reality and e-commerce and says that more than 660 of these startups have gone public or been acquired. Intel has organised its investment announcements thematically before: last October, it announced $60 million in 15 big data startups.

Here’s a rundown of the investments getting announced today. Unless otherwise noted, the startups are based around Silicon Valley:

Avaamo is a deep learning startup that builds conversational interfaces based on neural networks to address problems in enterprises — part of the wave of startups that are focusing on non-consumer conversational AI solutions.

Fictiv has built a “virtual manufacturing platform” to design, develop and deliver physical products, linking companies that want to build products with manufacturers who can help them. This is a problem that has foxed many a startup (notable failures have included Factorli out of Las Vegas), and it will be interesting to see if newer advances will make the challenges here surmoutable.

Gamalon from Cambridge, MA, says it has built a machine learning platform to “teaches computers actual ideas.” Its so-called Idea Learning technology is able to order free-form data like chat transcripts and surveys into something that a computer can read, making the data more actionable. More from Ron here.

Reconova out of Xiamen, China is focusing on problems in visual perception in areas like retail, smart home and intelligent security.

Syntiant is an Irvine, CA-based AI semiconductor company that is working on ways of placing neural decision making on chips themselves to speed up processing and reduce battery consumption — a key challenge as computing devices move more information to the cloud and keep getting smaller. Target devices include mobile phones, wearable devices, smart sensors and drones.

Alauda out of China is a container-based cloud services provider focusing on enterprise platform-as-a-service solutions. “Alauda serves organizations undergoing digital transformation across a number of industries, including financial services, manufacturing, aviation, energy and automotive,” Intel said.

CloudGenix is a software-defined wide-area network startup, addressing an important area as more businesses take their networks and data into the cloud and look for cost savings. Intel says its customers use its broadband solutions to run unified communications and data center applications to remote offices, cutting costs by 70 percent and seeing big speed and reliability improvements.

Espressif Systems, also based in China, is a fabless semiconductor company, with its system-on-a-chip focused on IoT solutions.

VenueNext is a “smart venue” platform to deliver various services to visitors’ smartphones, providing analytics and more to the facility providing the services. Hospitals, sports stadiums and others are among its customers.

Lyncean Technologies is nearly 18 years old (founded in 2001) and has been working on something called Compact Light Source (CLS), which Intel describes as a miniature synchrotron X-ray source, which can be used for either extremely detailed large X-rays or very microscopic ones. This has both medical and security applications, making it a very timely business.

Movellus “develops semiconductor technologies that enable digital tools to automatically create and implement functionality previously achievable only with custom analog design.” Its main focus is creating more efficient approaches to designing analog circuits for systems on chips, needed for AI and other applications.

SiFive makes “market-ready processor core IP based on the RISC-V instruction set architecture,” founded by the inventors of RISC-V and led by a team of industry veterans.

Apr
12
2018
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Subscription biller Zuora soars 43% following IPO

Subscription biller Zuora was well-received by stock market investors on Thursday, following its public debut. After pricing its IPO at $14 and raising $154 million, the company closed at $20, valuing the company around $2 billion.

It was also much higher than expected. The company said in its filings that it planned to price its shares between $9 and $11, before it raised that range to $11 to $13.

Founder and CEO Tien Tzuo told TechCrunch that he believes “a bet on us is really a bet on an entire shift to a new business model, to a subscription economy.” He is optimistic that subscriptions are the “business model of the future.”

Zuora sees itself as an early pioneer in a growing category. The company believes that more businesses will shift their business models to subscriptions, across sectors like media and entertainment, transportation, publishing, industrial goods and retail.

It helps its 950 customers manage subscriptions, including billing and revenue recognition. Zuora touts that it has 15 of the Fortune 100 businesses as clients.

Zuora’s revenue for its fiscal 2018 year was $167.9 million. This was up from $113 million in 2017 and $92.2 million the year before. Losses remained constant in this timeframe, from $48.2 million in 2016 to $47.2 million in 2018.

“We have a history of net losses, anticipate increasing our operating expenses in the future, and may not achieve or sustain profitability,” warned the requisite risk factors section of the filing.

It also acknowledged a competitive landscape. Oracle and SAP are amongst the companies offering software in the ERP (enterprise resource planning) category. It also competes with other startups like Chargebee.

The largest shareholders are Benchmark, which owned 11.1% prior to the IPO . Founder and CEO Tien Tzuo owned 10.2%. Others with a significant stake included Wellington Management, Shasta Ventures, Tenaya Capital and Redpoint.

The San Mateo, California-based company previously raised over $240 million, dating back to 2007.

Zuora listed on the New York Stock Exchange, under the ticker “ZUO.” Goldman Sachs and Morgan Stanley worked as lead underwriters on the deal. Fenwick & West and Wilson Sonsini served as counsel.

After a slow start to the year for tech IPOs, there has been a flurry of activity in recent weeks. Dropbox and Spotify were amongst the recent public debuts. We also have DocuSign, Pivotal and Smartsheet on the horizon.

Apr
12
2018
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Background checks pay for Checkr, which just rang up $100 million in new funding

Criminal records, driving records, employment verifications. Companies that use on-demand employees need to know that all the boxes have been checked before they send workers into the world on their behalf, and they often need those boxes checked quickly.

A growing number of them use Checkr, a San Francisco-based company that says it currently runs one million background checks per month for more than 10,000 customers, including, most newly, the car-share company Lyft, the services marketplace Thumbtack, and eyewear seller Warby Parker.

Investors are betting many more customers will come aboard, too. This morning, Checkr is announcing $100 million in Series C funding led by T. Rowe Price, which was joined by earlier backers Accel and Y Combinator.

The round brings the company’s total funding to roughly $150 million altogether, which is a lot of capital in not a lot of time. Yet Checkr is very well-positioned considering the changing nature of work. The company was born when software engineers Daniel Yanisse and Jonathan Perichon worked together at same-day delivery service startup Deliv and together eyed the chance to build a faster, more efficient background check. The number of flexible workers has only exploded in the four years since.

So-called alternative employment arrangements, in the parlance of the Bureau of Labor Statistics, including gig economy jobs, have grown from representing 10.1 percent of U.S. employees in 2005 to 15.8 percent of employees in 2015. And that percentage looks to rise further still as more digital platforms provide direct connections between people needing a service and workers willing to provide it.

Meanwhile, Checkr, which has been capitalizing on this race for talent, has its sights on much more than the on-demand workforce, says Yanisse, who is Checkr’s CEO. While the 180-person company counts Uber, Instacart, and GrubHub among its base of customers, Checkr is also actively expanding outside of the tech and gig economy, he says. It recently began working with the staffing giant Adecco, for example, as well as the major insurer Allstate.

At present, all of these customers pay Checkr per background check. That may change over time, however, particularly if the company plans to go public eventually, which Yanisse suggests is the case. (Public shareholders, like private shareholders, love recurring revenue.)

“Right now, our pricing model for customers is pay-per-applicant,” says Yanisse. “But we have a whole suite of SaaS products and tools” — including an interesting new tool designed to help hiring managers eradicate their unwitting hiring biases — “so we’re becoming more like a SaaS” business.

While things are ticking along nicely, every startup has its challenges. In Checkr’s case, one of these would seem to be those high-profile cases where background checks are painted as far from foolproof. One situation that springs to mind is the individual who began driving for Uber last year, six months before intentionally plowing into a busy bike path in New York. Indeed, though Checkr claims that it can tear through a lot of information within 24 hours — including education verification, reference checks, drug screening — we wonder if it isn’t so fast that it misses red flags.

Yanisse doesn’t think so. “Overall background checks aren’t a silver bullet,” he says. “Our job is to make the process faster, more efficient, more accurate, and more fair. But past information doesn’t guarantee future performance,” he adds. “This isn’t ‘Minority Report.’”

We also ask Yanisse about Checkr’s revenue. Often, a financing round of the size that Checkr is announcing today suggests a revenue run rate of $100 million or so. Yanisse declines to say, telling us Checkr doesn’t share revenue or its valuation publicly. “It’s still a bit early,” he says. “There’s this obsession with metrics in Silicon Valley, and we just want to make sure we’re focused on the right things.”

But, he adds, “you’re in the ballpark.”

Correction: An earlier version of this story incorrectly listed Visa as a customer.

Apr
10
2018
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Conductive Ventures launches $100 million enterprise fund

There’s a new venture fund in town from some familiar faces.

Carey Lai, who previously worked at Intel Capital and IVP, is joining forces with Paul Yeh, formerly of Kleiner Perkins.

They’re calling it Conductive Ventures and it’s launching with $100 million under management. They’ll be investing in “expansion stage” companies across enterprise software and hardware categories, meaning Series A, Series B and beyond.

Check sizes will be between $2 million and $7 million dollars. They expect to invest in 10-15 companies for this first fund.

Conductive will be looking for “early product market fit with customer success,” Lai told TechCrunch. Then the plan is to “help them grow their businesses abroad.”

It’s not a corporate venture arm, but Conductive has Panasonic as its sole LP. Because of this, there will be a special focus on helping North American startups expand into Asia, particularly Japan.

Lai and Yeh touted “connections to Foxconn” and also ties to Taiwan to help them succeed overseas.

They also said they want to be hands-on when it comes to growth. Conductive will place an emphasis on improving margins, aiming to accelerate revenue and reduce costs.

The two were roommates when they were younger and think that they will get along especially well as an investment team.

So far, they’ve made four investments. There’s Ambiq Micro, a semiconductor manufacturer; CSC Generation, for consumer leasing; Desktop Metal, in 3D printing; and Sprinklr, for customer experience management. Lai has served on the board of Sprinklr. They hope to continue to take board seats.

Not to get ahead of things, but they are already thinking about fund two. Yeh said that it will be in “a couple years” and “slightly higher, slightly bigger” in size.

Oct
24
2017
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Primer helps governments and corporations monitor and understand the world’s information

 When Google was founded in 1998, its goal was to organize the world’s information. And for the most part, mission accomplished — but in 19 years the goalpost has moved forward and indexing and usefully presenting information isn’t enough. As machine learning matures, it’s becoming feasible for the first time to actually summarize and contextualize the world’s… Read More

Oct
17
2017
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Feedzai closes $50M Series C to help banks and merchants identify fraud with AI

 Feedzai is announcing a $50 million Series C this morning led by an unnamed VC with additional capital from Sapphire Ventures. The six year old startup builds machine learning tools to help banks and merchants spot payment fraud. In today’s rapidly maturing world of fintech, Feedzai is trying to thread the needle between turnkey solution and customizable platform. With 60 clients… Read More

Oct
11
2017
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ROSS Intelligence lands $8.7M Series A to speed up legal research with AI

 Armed with an understanding of machine learning, ROSS Intelligence is going after LexisNexis and Thomson Reuters for ownership of legal research. The startup, founded in 2015 by Andrew Arruda, Jimoh Ovbiagele and Pargles Dall’Oglio at the University of Toronto, is announcing an $8.7 million Series A today led by iNovia Capital with participation from Comcast Ventures Catalyst Fund,… Read More

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