StrictlyVC: December 5, 2017

December 5, 2017

 

Happy Tuesday, all! We’re bathed in the warm green glow of Disrupt Berlin again today, where the Battlefield Winner was just announced. (VCs, psst, it’s Lia Diagnostics.) You can find loads of coverage from the event here.

 

 

Top News

 

The Federal Communications Commission will move ahead with its vote to kill net neutrality rules next week despite an unresolved court case that could strip away even more consumer protections.

 

 

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Hope Grows That a Larger SEC Crackdown on ICOs is Coming — and Soon 

 

More than $3 billion has been raised through so-called initial coin offerings so far in 2017. Yet while numerous of these have already proven to be good old-fashioned scams, regulators in Washington have remained relatively quiet aside warning issuers that at least some coins sold in ICOs could be considered securities; publishing a statement saying celebrity endorsements of ICOs may be unlawful without appropriate disclosures around compensation; and bringing two cases against fraudulent coin offerings.

 

That wait-and-see stance looks to evolve into much more action 2018, suggest those who’ve either spoken with the Securities & Exchange Commission or otherwise have a vested interest in its rulings. (The SEC isn’t commenting publicly on its specific plans.)

 

Just Friday, a new division of the agency that’s focused on ICOs filed charges against an outfit called PlexCoin that reportedly raised $15 million from thousands of investors by promising a 1,354 percent return in 29 days or less. The person spearheading the effort — Dominic Lacroix — is a serial violator of SEC laws, says the agency, which describes him in its filing as a “recidivist securities law violator in Canada,” so this one might have been easy pickings.

 

Still, Ethereum cofounder Joe Lubin told us on stage last month that he is among other blockchain experts who has spoken to the SEC, and he described the staffers with whom he has spoken as  “very interested people who are trying to understand the context that’s evolving around them . . . They are certainly in information-gathering mode.”

 

I fought the law and the law won

 

Without question, the SEC isn’t blind to the ICO fever that’s sweeping the globe and has already prompted regulators in China and South Korea to ban them outright — and regulators in Switzerland and Singapore and Japan to meanwhile welcome them with open arms.

 

Former Wall Street attorney turned SEC Chairman Jay Clayton said at a recent meeting at the Federal Reserve Bank of New York that the agency is planning to pursue offerings that violate securities laws, telling those gathered that, “Where we see fraud and where we see people engaging in offerings that are not registered, we are going to pursue them because these types of things have a destabilizing effect on the market.”

 

It’s a stronger statement than Clayton offered in September, when, speaking at an event in Washington, he said it “would shock me if you don’t see pump-and-dump schemes in the initial coin offering space . . .This is an area where I’m concerned about what’s going to happen to retail investors.”

 

In these coin offerings, investors typically pay using Bitcoin and other virtual currencies. In the PlexCoin case, Lacroix was accepting credit card payments via PayPal, Stripe, and Shopify, but he raised the bulk of the $15 million via ethereum, Litecoin and other cryptocurrencies, which can be harder to trace and recoverbecause they’re sent outside the traditional financial system.

 

In addition to past violations, Lacroix was an easy target for the SEC owing to the sensational language PlexCoin used to entice potential investors, telling them to obtain its “tokenized currency” so they could “Take control of [THEIR] money!”

 

Equally suspect: telling investors that that the identity of PlexCorps’ executives had to be kept hidden to avoid poaching by competitors and for privacy concerns.

 

Words do concern those who’d like to see regulators work with — and not shut down — ICOs more broadly. Lubin, who today runs Consensys, a studio building decentralized applications, told us on stage, for example, that his “legal team and all of our legal advisors are not comfortable with the term ICO,” because it sounds a lot like IPO.

 

More here.

 

 

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New Fundings

 

Earny, a two-year-old, L.A.-based automated assistant that automatically gets consumers’ money back on purchases that are discounted soon afterward, has raised $9 million led by Mayfield, with participation from Comcast Ventures and Science Inc. The company has now raised $11.5 million altogether. TechCrunch has more here.

 

Joy, a year-old, San Francisco-based HD touchscreen that can sync photos from a range of services, has raised $7 million in fresh funding led by Obvious Ventures and consumer investor David Heller. The round brings total funding for the company to $9.5 million. TechCrunch has more here.

 

Kespry, a three-year-old, Menlo Park, Ca.-based industrial drone startup, has raised $33 million in Series C funding led by G2VP, with participation from Shell Technology VenturesCisco Ventures and ABB Ventures. TechCrunch has more here.

 

Pi Charging, a Bay Area company that won at TechCrunch Disrupt SF with its wireless charging tech, has closed a $11.4 million Series A round led by Foundry Group, with participation from Silicon Valley Bank and earlier backers Uncork CapitalNextview VenturesENIAC, and E14 Fund. The company has now raised $14.4 million altogether. TechCrunch has more here.

 

VirtualHealth, a 5.5-year-old, New York-based care coordination and workflow management platform, has raised $7 million in funding led by Edison Partners.More here.

 

 

New Funds

 

Rise of the Rest, a fund created by AOL cofounder Steve Case to invest in startups derided by elites as “flyover states” has raised $150 million from a list of heavy hitters, including Amazon founder Jeff Bezos, Alphabet Chairman Eric Schmidt, Starbucks Chairman Howard Schultz, and fashion mogul Tory Burch. Dealbook has more here.

 

 

Exits

 

Apple has acquired five-year-old Pop Up Archive, an Oakland, Ca.-based online platform focused on building tools to transcribe, organize, and search audio files. Terms aren’t known. More here.

 

Intuit, the company behind products like QuickBooks and TurboTax, says it has acquired TSheets, an 11-year-old, time-tracking service and employee scheduling app for $340 million in cash and stock. TSheets had raised roughly $15 million, including from Summit Partners. TechCrunch has more here.

 

Banking giant J.P Morgan Chase has officially closed its acquisition of WePay, a payments startup that powers payments for crowdfunding platforms like GoFundMe and competes with the likes of Stripe to provide payments infrastructure to businesses that make transactions online. TechCrunch sources confirm the price of the deal is just over $300 million with up to $400 million, including retention bonuses and earn-outs. More here.

 

A ten-year-old, New York-based marketing tech company, Zeta Global, is making good use of its recent $140 million Series F funding round, acquiring Disqus, a ubiquitous online commenting service for close to $90 million, says TechCrunch. Ten-year-old Disqus had raised $10.5 million from investors, including North Bridge Venture PartnersMore here.

 

 

IPOs

 

Early next year music-streaming service Spotify is due to mount what is arguably the greatest challenge to the Wall Street IPO machine since Google went public in 2004. The WSJ takes a quick look at the risks here.

 

 

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People

 

Former U.S. President Bill Clinton is warning that “too many social media sites are fever swamps of extremist foreign and domestic invaders” and replacing inclusiveness nationalism with tribalism. More here.

 

Democratic Senators Kamala Harris and Cory Booker say they’re giving money they’ve received from venture capitalist Shervin Pishevar to charities after Bloomberg reported on multiple women who say Pishevar sexually harassed or assaulted them. More here.

 

It pays to get fired if your Aetna CEO Mark Terolini, who could walk away with at least $88.3 million if he’s terminated after CVS buys the insurer, says Bloomberg.

 

 

Jobs

 

Kaiser Permanente is looking to add an associate to its corporate venture unit. The job is in Oakland, Ca.

 

 

Data

 

Consumer spending on all mobile app stores will surpass $110 billion in 2018, according to a new report from App Annie. That’s about a 30 percent increase over the year prior. TechCrunch has more here.

 

98,750,067,000,000 reasons to be worried about 2018, in Bloomberg.

 

 

Essential Reads

 

Facebook reportedly wants to spend a “few billion dollars” for streaming sports rights.

 

Student loan debt is now as big as the junk market.

 

The case against buying an Amazon Echo.

 

 

Detours

 

The strange case of the look-alike credit cards.

 

Last night, John Oliver confronted Dustin Hoffman about the various sexual misconduct claims that have surfaced against him over the past few weeks. Hoffman was not pleased.

 

Yummy holiday food (and drink) recipes by Susan MacTavish Best.

 

 

Retail Therapy

 

Egg-zactly.

 

 

 

 



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