GDPR has cut ad trackers in Europe but helped Google, study suggests

An analysis of the impact of Europe’s new data protection framework, GDPR, on the adtech industry suggests the regulation has reduced the numbers of ad trackers that websites are hooking into EU visitors. But it also implies that Google may have slightly increased its marketshare in the region — indicating the adtech giant could be winning […]

An analysis of the impact of Europe’s new data protection framework, GDPR, on the adtech industry suggests the regulation has reduced the numbers of ad trackers that websites are hooking into EU visitors.

But it also implies that Google may have slightly increased its marketshare in the region — indicating the adtech giant could be winning at the compliance game at the expense of smaller advertising entities which the study also shows losing reach.

The research was carried out by the joint data privacy team of the anti-tracking browser Cliqz and the tracker blocker tool Ghostery (which merged via acquisition two years ago), using data from a service they jointly run, called WhoTracks.me — which they say is intended to provide greater transparency on the tracker market. (And therefore to encourage people to make use of their tracker blocker tools.)

A tale of two differently regulated regions

For the GDPR analysis, the team compared the prevalence of trackers one month before and one month after the introduction of the regulation, looking at the top 2,000 domains visited by EU or US residents.

On the tracker numbers front, they found that the average number of trackers per page dropped by almost 4% for EU web users from April to July.

Whereas the opposite was true in the US, with the average number of trackers per page rose by more than 8 percent over the same period.

In Europe, they found that the reduction in trackers was nearly universal across website types, with adult sites showing almost no change and only banking sites actually increasing their use of trackers.

In the US, the reverse was again true — with banking sites the only category to reduce tracker numbers over the analyzed period.

“The effects of the GDPR on the tracker landscape in Europe can be observed across all website categories. The reduction seems more prevalent among categories of sites with a lot of trackers,” they write, discussing the findings in a blog post. “Most trackers per page are still located on news websites: On average, they embed 12.4 trackers. Compared to April, however, this represents a decline of 7.5%.

“On ecommerce sites, the average number of trackers decreased by 6.9% to 9.5 per page. For recreation websites, the decrease is 6.7%, which corresponds to 10.7 trackers per page. A similar trend is observed for almost all other website categories. The only exception are banking sites, on which 7.4% more trackers were active in July than in April. However, the average number of trackers per page is only 2.6.”

Shifting marketshare

In the blog post they also argue that their snapshot comparison of tracker prevalence of April 2018 against July 2018 reveals “a clear picture” of GDPR’s impact on adtech marketshare — with “especially” smaller advertising trackers having “significantly” lost reach (which they are using as a proxy for marketshare).

In their analysis they found smaller tracker players lost between 18% and 31% reach/marketshare when comparing April (pre-GDPR) and July (post-GDPR).

They also found that Facebook suffered a decline of just under 7%.

Whereas adtech market leader Google was able to slightly increase its reach — by almost 1%.

Summing up their findings, Cliqz and Ghostery write: “For users this means that while the number of trackers asking for access to their data is decreasing, a tiny few (including Google) are getting even more of their data.”

The latter finding lends some weight to the argument that regulation can reinforce dominant players at the expense of smaller entities by further concentrating power — because big companies have greater resources to tackle compliance.

Although the data here is just a one-month snapshot. And the additional bump in marketshare being suggested for Google is not a huge one — whereas a nearly 7% drop in marketshare for Facebook is a more substantial impact.

Cliqz shared their findings with TechCrunch ahead of publication and we put several questions to them about the analysis, including whether or not the subsequent months (August, September) indicated this snapshot is a trend, i.e. whether or not Google sustained the additional marketshare.

However the company had not responded to our questions ahead of publication.

In the blog post Cliqz and Ghostery speculate that the larger adtech players might be winning (relatively speaking) the compliance game at the expense of smaller players because website owners are preferring to ‘play it safe’ and drop smaller entities vs big known platforms.

In the case of Google, they also flag up reports that suggest it has used its dominance of the adtech market to “encourage publishers to reduce the number of ad tech vendors and thus the number of trackers on their sites” — via a consent gathering tool that restricts the number of supply chain partners a publisher can share consent with to 12 vendors. 

And we’ve certainly heard complaints of draconian Google GDPR compliance terms before.

They also point to the use of manipulative UX design (aka dark patterns) that are used to “nudge users towards particular choices and actions that may be against their own interests”, suggesting these essentially deliberately confusing consent flows have been successfully tricking users into clicking and accepting “any kind of data collection” just to get rid of cryptic choices they’re being asked to understand. 

Given Google’s dominance of digital ad spending in Europe it stands to gain the most from websites’ use of manipulative consent flows.

However GDPR requires consent to be informed and freely given, not baffling and manipulative. So regulators should (hopefully) be getting a handle on any such transgressions and transgressors soon.

The continued existence of nightmarishly confused and convoluted consent flows is another complaint we’ve also heard before — much and often. (And one we have ourselves, frankly.)

Overall, according to the European Data Protection Board, a total of more than 42,000 complaints have been lodged so far with regulators, just four months into GDPR.

And just last week Europe’s data protection supervisor, Giovanni Buttarelli, told us to expect the first GDPR enforcement actions before the end of the year. So lots of EU consumers will already be warming up the popcorn.

But Cliqz and Ghostery argue that disingenuous attempts to manipulate consent might need additional regulatory tweaks to be beaten back — calling in their blog post for regulations to enforce machine-readable standards to help iron away flakey flows.

“The next opportunity for that would be the ePrivacy regulation,” they suggest, referencing the second big privacy rules update Europe is (still) working on. “It would be desirable, for example, if ePrivacy required that the privacy policies of websites, information on the type and scope of data collection by third parties, details of the Data Protection Officer and reports on data incidents must be machine-readable.

“This would increase transparency and create a market for privacy and compliance where industry players keep each other in check.”

It would also, of course, provide another opportunity for pro-privacy tools to make themselves even more useful to consumers.

Nubank is now worth $4 billion after Tencent’s $180 million investment

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent. Tencent has long been interested in financial services startups, and with its $90 million direct investment and another $90 million investment in the secondary market, the company now has access to what is arguably the largest digital banking company […]

Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.

Tencent has long been interested in financial services startups, and with its $90 million direct investment and another $90 million investment in the secondary market, the company now has access to what is arguably the largest digital banking company in the world.

With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.

News of the investment was first reported by The Information, which included the $4 billion figure.

For Nubank co-founders David Velez and Cristina Junqueira, the investment from Tencent means the addition of a strategic partner whose financial services products and transaction platform is unmatched by anything in Western Europe or the U.S.

Velez stressed that Nubank, which had raised $150 million in a February financing round led by DST, did not need the additional capital. “We found so much value in partnering with Tencent,” Velez said. “Particularly everything there is to learn about the Chinese financial market.”

Velez hopes to take those lessons and apply them back to the market in Brazil. China is in the forefront of financial services globally because of its technology companies’ ability to offer multi-product platforms. “They have built the playbook of how to use mobile.”

Through the investment, Tencent will gain an understanding of how Nubank has managed to service 5 million credit card holders, and the game plan the company is deploying to develop its own savings accounts and other banking services.

“Over 20 million people have applied for the card,” said Velez. “There are active, engaged, customers that want to get everything from us.”

Junqueira estimates the company will soon be able to serve tens of millions of Brazilians with either a savings account, a checking account or credit.

The opportunity could be even bigger as Brazil’s central bank investigates the possibility of instant payments as well, looking to India’s experiment with demonetization as an example.

Both Junqueira and Velez said the opportunity for financial services startups to achieve significant scale was far higher in emerging markets like Brazil than in developed markets, because the barriers to banking are so much higher.

Financial services, Velez said, has been controlled by massive oligopolies that have erected unfair obstacles to wealth creation for the masses. Nubank and other companies like it are working to change that.

Now the company has the benefit of Tencent’s guidance as it continues to push the envelope.

Africa Roundup: Paga goes global and 4 startups raise $99M in VC

Jake Bright Contributor Jake Bright is a writer and author in New York City. He is co-author of The Next Africa. More posts by this contributor Polestar unveils first production EV with aim to overtake Tesla Liquid Telecom goes long on Africa’s startups as future clients Nigerian digital payments startup Paga is gearing up for international expansion […]

Nigerian digital payments startup Paga is gearing up for international expansion with a $10 million round led by the Global Innovation Fund.

The company is exploring the release of its payments product in Ethiopia, Mexico, and the Philippines—CEO Tayo Oviosu told TechCrunch.

Paga looks to go head to head with regional and global payment players, such as PayPal, Alipay, and Safaricom according to Oviosu.

“We are not only in a position to compete with them, we’re going beyond them,” he said of Kenya’s MPesa mobile money product. “Our goal is to build a global payment ecosystem across many emerging markets.”

Launched in 2012, Paga has created a multi-channel network and platform to transfer money, pay bills, and buy things digitally 9 million customers in Nigeria—including 6000 businesses.

Since inception, the startup has processed 57 million transactions worth $3.6 billion, according to Oviosu. He joined Cellulant CEO Ken Njoroge and Helios Investment Partners’ Fope Adelowo at Disrupt San Francisco to discuss fintech and Africa’s tech ecosystem.

South African fintech startup Jumo raised a $52 million round (led by Goldman Sachs) to bring its fintech services to Asia. The company—that offers loans to the unbanked in Africa—has opened an office in Singapore to lead the way.

The new round takes Jumo to $90 million raised from investors and also saw participation from existing backers that include Proparco — which is attached to the French Development Agency — Finnfund, Vostok Emerging Finance, Gemcorp Capital, and LeapFrog Investments.

Launched in 2014, Jumo specializes in social impact financial products. That means loans and saving options for those who sit outside of the existing banking system, and particularly small businesses.

To date, it claims to have helped nine million consumers across its six markets in Africa and originated over $700 million in loans. The company, which has some 350 staff across 10 offices in Africa, Europe and Asia, was part of Google’s Launchpad accelerator last year. Jumo is led by CEO Andrew Watkins-Ball, who has close to two decades in finance and investing.

Lagos based Paystack raised an $8 million Series A round led by Stripe.

In Nigeria the company’s payment API integrates with tens of thousands of businesses, and in two years it has grown to process 15 percent of all online payments.

In 2016, Paystack became the first startup from Nigeria to enter Y Combinator, and the incubator is doing some follow-on investing in this round.

Other strategic investors in this Series A include Visa and the Chinese online giant Tencent, parent of WeChat and a plethora of other services. Tencent also invested in Paystack’s previous round: the startup has raised $10 million to date.

Paystack integrates a wide range of payment options (wire transfers, cards, and mobile) that Nigerians (and soon, those in other countries in Africa) use both to accept and make payments. There’s more about the company’s platform and strategy in this TechCrunch feature.

South African startup Yoco raised $16 million in a new round of funding to expand its payment management and audit services for small and medium-sized businesses as it angles to become one of Africa’s billion-dollar businesses.

To get there the company that “builds tools and services to help SMEs get paid and manage their business” plans to tap $20 billion in commercial activity that the company’s co-founder and chief executive, Katlego Maphai estimates is waiting to move from cash payments to digital offerings.

Yoco offers a point of sale card reader that links to its proprietary payment and performance software at an entry cost of just over $100.

With this kit, cash-based businesses can start accepting cards and tracking metrics such as top-selling products, peak sales periods, and inventory flows.

Yoco has positioned itself as a missing link to “solving an access problem” for SMEs. Though South Africa has POS and business enterprise providers — and relatively high card (75 percent) and mobile penetration (68 percent) — the company estimates only 7 percent of South African businesses accept cards.

Yoco says it is already processing $280 million in annualized payment volume for just under 30,000 businesses.

The startup generates revenue through margins on hardware and software sales and fees of 2.95 percent per transaction on its POS devices.

Yoco will use the $16 million round on product and platform development, growing its distribution channels, and acquiring new talent.

Emerging markets credit startup Mines.io closed a $13 million Series A round led by The Rise Fund, and looks to expand in South America and Asia.

Mines provides business to consumer (B2C) “credit-as-a-service” products to large firms.

“We’re a technology company that facilitates local institutions — banks, mobile operators, retailers — to offer credit to their customers,” Mines CEO and co-founder Ekechi Nwokah told TechCrunch.

Most of Mines’ partnerships entail white-label lending products offered on mobile phones, including non-smart USSD devices.

With offices in San Mateo and Lagos, Mines uses big-data (extracted primarily from mobile users) and proprietary risk algorithms “to enable lending decisions,” Nwokah explained.

Mines started operations in Nigeria and counts payment processor Interswitch and mobile operator Airtel as current partners. In addition to talent acquisition, the startup plans to use the Series A to expand its credit-as-a-service products into new markets in South America and Southeast Asia “in the next few months,” according to its CEO.

Nwokah wouldn’t name specific countries for the startup’s pending South America and Southeast Asia expansion, but believes “this technology is scalable across geographies.”

As part of the Series A, Yemi Lalude from TPG Growth (founder of The Rise Fund) will join Mines’ board of directors.

 

Digital infrastructure company Liquid Telecom is betting big on African startups by rolling out multiple sponsorships and free internet across key access points to the continent’s tech entrepreneurs.

The Econet Wireless subsidiary is also partnering with local and global players like Afrilabs and Microsoft­­ to create a cross-border commercial network for the continent’s startup community.

“We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s Head of Innovation Partnerships Oswald Jumira told TechCrunch.

With 13 offices on the continent, Liquid Telecom’s core business is building the infrastructure for all things digital in Africa.

The company provides voice, high-speed internet, and IP services at the carrier, enterprise, and retail level across Eastern, Central, and Southern Africa. It operates data centers in Nairobi and Johannesburg with 6,800 square meters of rack space.

Liquid Telecom has built a 50,000 kilometer fiber network, from Cape Town to Nairobi and this year switched on the Cape to Cairo initiative—a land-based fiber link from South Africa to Egypt.

Though startups don’t provide an immediate revenue windfall, the company is betting they will as future enterprise clients.

“Step one…in supporting startups has been….supporting co-working spaces and events with sponsorships and free internet,” Liquid Telecom CTO Ben Roberts told TechCrunch. “Step two is helping startups to adopt…business services.”

Liquid Telecom provides free internet to 30 hubs in seven countries and is active sponsoring startup related events.

On the infrastructure side, it’s developing commercial services for startups to plug into.

“At the early stage and middle stage, we’re offering startups connectivity, skills development, and access to capital through the hubs,” said Liquid Telecom’s Oswald Jumira.

“When they reach the more mature level, we’re focused on how we can scale them up…and be a go to market partner for them. To do that they’ll need to leverage…cloud services.”

Microsoft and Liquid Telecom announced a partnership in 2017 to offer cloud services such as Microsoft’s Azure, Dynamics 365, and Office 365 to select startups through free credits—and connected to comp packages of Liquid Telecom product offerings.

On the venture side, Liquid Telecom doesn’t have a fund but that could be in the cards.

“We haven’t yet started investing in startups, but I’d like to see that we do,” said chief technology officer Ben Roberts. “That can be the next move onwards… from having successful business partnerships.”

And finally, tickets are now available here for Startup Battlefield Africa in Lagos this December. The first two speakers were also announced, TLcom Capital senior partner and former minister of communication technology for Nigeria Omobola Johnson and Singularity Investment’s Lexi Novitske will discuss keys to investing across Africa’s startup landscape.

More Africa Related Stories @TechCrunch

African Tech Around the Net

N26 is launching its bank in the UK

Nearly a year after German fintech startup N26 announced that it would launch its service in the U.K., the company is launching in the U.K. N26 is already quite popular in the Eurozone, with more than 1.5 million customers. In this new market, it will face tough competition from existing players, such as Revolut, Monzo, […]

Nearly a year after German fintech startup N26 announced that it would launch its service in the U.K., the company is launching in the U.K. N26 is already quite popular in the Eurozone, with more than 1.5 million customers. In this new market, it will face tough competition from existing players, such as Revolut, Monzo, Starling and many others.

N26 is going to roll out its product in multiple phases. Some lucky few will be able to open an account right away. The startup will then go through its waiting list — 50,000 people already left their email addresses to express interest. After that, anybody will be able to download the app and sign up.

This might sound like a convoluted process, but N26 expects a full public launch in just a few weeks. So it should be quite quick if everything goes as planned.

So what can you expect exactly? British customers will get all the basic N26 stuff with one killer feature — U.K. account numbers and sort codes. This way, customers will be able to receive payments and share banking information with their utility providers just like they would with a regular Barclays or Lloyds account.

When you open an N26 account, you get a true bank account and a MasterCard. Basic accounts are free, and N26 has a proper banking license — your deposits up to €100,000 are guaranteed by the European deposit guarantee scheme. You can then send and receive money and pay with your card. Sending money to other N26 users is instantaneous (they call it MoneyBeam).

N26 recently launched Spaces, a new feature that lets you create sub accounts and put some money aside. It’s still limited, but the company plans to add more features.

Your MasterCard works like any other challenger bank. Every time you use it, you receive a push notification. You can set payment and withdrawal limits, lock your card if you lose it and reset your PIN code. N26 will also bring Black and Metal plans to the U.K.

How does it compare to Revolut?

Let’s be honest, the elephant in the room is Revolut . The company has hundreds of thousands (if not over a million) customers in the U.K. N26 lets you do many of the things you can already do with your Revolut account.

So let me point out a few differences. As I noted, N26 has a banking license and U.K. banking information. N26 cards work in Apple Pay and Google Pay.

When it comes to international payments, N26 lets you pay with your card anywhere in the world without any additional fee. The company uses MasterCard’s conversion rates. Revolut first converts the money with its forex feature and then lets you spend your money.

There are an infinite number of forum posts about the exchange rates you’ll get. Sometimes Revolut is cheaper, sometimes N26 is cheaper. It mostly depends on the day of the week (Revolut conversion rates are more expensive on the weekend) and the currency. Unless you plan to spend tens of thousands of GBP during your vacation, you won’t see a huge difference on your bank statement.

Revolut also has many more features than N26. You can insure your phone, buy bitcoins, buy travel insurance, create virtual cards and more. It’s clear that N26 and Revolut have two different styles.

Revolut has a bigger user base than N26. But it’s always been a bit hard to compare them, as N26 wasn’t available in the U.K. Of course, they will both say there are tens of millions of people relying on old banks — multiple challenger banks can grow at the same time if they capture market share from those aging players. Still, the battle between N26 and Revolut is on.

How smartphone apps could help keep health records accurate

Ben Moscovitch Contributor Share on Twitter Ben Moscovitch directs The Pew Charitable Trusts’ health information technology project. Robert S. Rudin Contributor Share on Twitter Robert S. Rudin is an information scientist with the nonprofit, nonpartisan RAND Corporation. Suppose that the next time you go to a new doctor’s office, you wouldn’t have to balance a clipboard on […]

Suppose that the next time you go to a new doctor’s office, you wouldn’t have to balance a clipboard on your knee, write down your whole medical history, remember the five-syllable name of every medication you’re taking, and list all your allergies. Suppose that your smartphone could simply tap into the office’s computer system, where you could upload your entire medical history safely, securely, and accurately.

Such an app could ease the frustration patients feel when they fill out the forms for a new doctor. More importantly, it could help solve a serious but lesser-known problem that plagues hospitals and clinics: While the increased use of electronic health records has helped streamline record-keeping, providers aren’t always able to reliably pull together records for the same patient that are held in different hospitals, clinics, and doctor’s offices.

That was the scene in Boston in 2015, when emergency room doctors were struggling to treat a patient named Maureen Kelly—only to discover five different electronic records for Maureen Kelly, each with the same birthday and ZIP code. They had no way of knowing which record matched the patient in front of them. Was she the Maureen Kelly with diabetes? The Maureen Kelly who had only one kidney? And if they were to decide to send her record to a specialist outside the hospital, how could they know which of the five to send?

Fortunately, Maureen Kelly recovered. But to make the best possible medical decisions in cases like hers, doctors need immediate access to accurate patient data—including those from records held in other facilities. Digital systems should be able to seamlessly match records from a pediatrician in Pittsburgh or a surgeon in San Diego each and every time. An inability to do so—which could mean physicians not having important details, such as a patient’s drug allergies, chronic illnesses, or past surgeries—can mean the difference between life and death.

Doctors using digital tablet together in hospital (Photo: Ariel Skelley/Getty Images)

It’s hard enough keeping records straight within a single large hospital system; transferring them among different doctors’ offices and other hospitals is even more challenging. As digital health care systems have proliferated, they’ve used a variety of formats to record essential pieces of information, such as addresses and birthdates, that don’t easily transfer from one system to another. And, of course, patients’ identifying information isn’t static—birthdates don’t change but people move, change names through marriage or adoption, and more. Matches among different systems have also been stymied by data entry errors.

And while patient harm is the primary risk posed by inaccurate records, cost is no small consideration. The Office of the National Coordinator for Health Information Technology reported that each instance of a misidentified record cost the Mayo Clinic roughly $1,200—and that’s just within the Mayo system. These administrative costs are magnified when data are exchanged on a nationwide scale.

No one solution can solve every patient-matching problem. But The Pew Charitable Trusts is investigating several ideas. Pew recently asked the nonprofit RAND Corporation to evaluate solutions that would let patients exercise more control over how their records are matched. RAND looked at a variety of options and concluded that the growing use of smartphones offers a particularly promising opportunity to improve record matching in two ways.

Photo: Hero Images/Getty Images

First, smartphones could allow patients to verify their phone numbers at the point of care, perhaps by responding to a text message—a strategy already used in banking, travel, retail, and other industries. Once a number was confirmed by the patient, the hospital’s computer could use it automatically to match other records against that number with a higher degree of certainty.

Second, patients could use an app to enter their information—such as an address or even a driver’s license number—and have that information sent directly to the hospital when they check in for their visit. This would let patients update their information and voluntarily provide more accurate data to facilitate a match. Smartphone apps could eventually aggregate and transfer even more information—such as medication lists or health histories—and replace the paper on clipboards used today.

The smartphone approach will not solve this problem by itself. There are potential limitations—patients would need to own phones and know how to use them, and the system might not work in emergency situations when a patient didn’t have or couldn’t operate a smartphone—but the Pew Research Center found earlier this year thatmore than three-quarters of Americans now use smartphones, including nearly half of people older than 65.

To address the larger problem of patient matching, stakeholders must pursue a variety of solutions, including smartphone apps. Technology developers would be wise to advance and start pilot projects now of smartphones and a variety of other solutions, and demonstrate how they could be used to save lives, improve care, and reduce health care costs.

NYC wants to build a cyber army

Empires rise and fall, and none more so than business empires. Whole industries that once dominated the planet are just a figment in memory’s eye, while new industries quietly grow into massive behemoths. New York City has certainly seen its share of empires. Today, the city is a global center of finance, real estate, legal […]

Empires rise and fall, and none more so than business empires. Whole industries that once dominated the planet are just a figment in memory’s eye, while new industries quietly grow into massive behemoths.

New York City has certainly seen its share of empires. Today, the city is a global center of finance, real estate, legal services, technology, and many, many more industries. It hosts the headquarters of roughly 10% of the Fortune 500, and the metro’s GDP is roughly equivalent to that of Canada.

So much wealth and power, and all under constant attack. The value of technology and data has skyrocketed, and so has the value of stealing and disrupting the services that rely upon it. Cyber crime and cyber wars are adding up: according to a report published jointly between McAfee and the Center for Strategic and International Studies, the costs of these operations are in the hundreds of billions of dollars – and New York’s top industries such as financial services bare the brunt of the losses.

Yet, New York City has hardly been a bastion for the cybersecurity industry. Boston and Washington DC are far stronger today on the Acela corridor, and San Francisco and Israel have both made huge impacts on the space. Now, NYC’s leaders are looking to build a whole new local empire that might just act as a bulwark for its other leading ecosystems.

Today, the New York City Economic Development Corporation (NYCEDC) announced the launch of Cyber NYC, a $30 million “catalyzing” investment designed to rapidly grow the city’s ecosystem and infrastructure for cybersecurity.

James Patchett, CEO of New York City Economic Development Corporation. (Photo from NYCEDC)

James Patchett, CEO of NYCEDC, explained in an interview with TechCrunch that cybersecurity is “both an incredible opportunity and also a huge threat.” He noted that “the financial industry has been the lifeblood of this city for our entire history,” and the costs of cybercrime are rising quickly. “It’s a lose-lose if we fail to invest in the innovation that keeps the city strong” but “it’s a win if we can create all of that innovation here and the corresponding jobs,” he said.

The Cyber NYC program is made up of a constellation of programs:

  • Partnering with Jerusalem Venture Partners, an accelerator called Hub.NYC will develop enterprise cybersecurity companies by connecting them with advisors and customers. The program will be hosted in a nearly 100,000 square foot building in SoHo.
  • Partnering with SOSA, the city will create a new, 15,000 square foot Global Cyber Center co-working facility in Chelsea, where talented individuals in the cyber industry can hang out and learn from each other through event programming and meetups.
  • With Fullstack Academy and Laguardia Community College, a Cyber Boot Camp will be created to enhance the ability of local workers to find jobs in the cybersecurity space.
  • Through an “Applied Learning Initiative,” students will be able to earn a “CUNY-Facebook Master’s Degree” in cybersecurity. The program has participation from the City University of New York, New York University, Columbia University, Cornell Tech, and iQ4.
  • With Columbia University’s Technology Ventures, NYCEDC will introduce a program called Inventors to Founders that will work to commercialize university research.

NYCEDC’s map of the NYC Cyber initiative. (Photo from NYCEDC)

In addition to Facebook, other companies have made commitments to the program, including Goldman Sachs, MasterCard, PricewaterhouseCoopers, and edX.org. Two Goldman execs, Chief Operational Risk Officer Phil Venables and Chief Information Security Officer Andy Ozment, have joined the initiative’s advisory boards.

The NYCEDC estimates that there are roughly 6,000 cybersecurity professionals currently employed in New York City. Through these programs, it estimates that the number could increase by another 10,000. Patchett said that “it is as close to a no-brainer in economic development because of the opportunity and the risk.”

From Jerusalem to New York

To tackle its ambitious cybersecurity goals, the NYCEDC is partnering with two venture firms, Jerusalem Venture Partners (JVP) and SOSA, with significant experience investing, operating, and growing companies in the sector.

Jerusalem-based JVP is an established investor that should help founders at Hub.NYC get access to smart capital, sector expertise, and the entrepreneurial experience needed to help their startups scale. JVP invests in early-, late-, and growth-stage companies focused on cybersecurity, big data, media, and enterprise software.

JVP will run Hub.NYC, a startup accelerator that will help cybersecurity startups connect with customers and mentors. (Photo from JVP)

Erel Margalit, who founded the firm in 1993, said that “If you look at what JVP has done … we create ecosystems.” Working with Jerusalem’s metro government, Margalit and the firm pioneered a number of institutions such as accelerators that turned Israel into an economic powerhouse in the cybersecurity industry. His social and economic work eventually led him to the Knesset, Israel’s unicameral legislature, where he served as an MP from 2015-2017 with the Labor Party.

Israel is a very small country with a relative dearth of large companies though, a huge challenge for startups looking to scale up. “Today if you want to build the next-generation leading companies, you have to be not only where the ideas are being brewed, but also where the solutions are being [purchased],” Margalit explained. “You need to be working with the biggest customers in the world.”

That place, in his mind, is New York City. It’s a city he has known since his youth – he worked at Moshe’s Moving IN NYC while attending Columbia as a grad student where he got his PhD in philosophy. Now, he can pack up his own success from Israel and scale it up to an even larger ecosystem.

Since its founding, JVP has successfully raised $1.1 billion across eight funds, including a $60 million fund specifically focused on the cybersecurity space. Over the same period, the firm has seen 32 successful exits, including cybersecurity companies CyberArk (IPO in 2014) and CyActive (Acquired by PayPal in 2013).

JVP’s efforts in the cybersecurity space also go beyond the investment process, with the firm recently establishing an incubator, known as JVP Cyber Labs, specifically focused on identifying, nurturing and building the next wave of Israeli cybersecurity and big data companies.

On average, the firm has focused on deals in the $5-$10 million range, with a general proclivity for earlier-stage companies where the firm can take a more hands-on mentorship role. Some of JVP’s notable active portfolio companies include Source Defense, which uses automation to protect against website supply chain attacks, ThetaRay, which uses big data to analyze threats, and Morphisec, which sells endpoint security solutions.

Opening up innovation with SOSA

The self-described “open-innovation platform,” SOSA is a global network of corporations, investors, and entrepreneurs that connects major institutions with innovative startups tackling core needs.

SOSA works closely with its partner startups, providing investor sourcing, hands-on mentorship and the physical resources needed to achieve growth. The group’s areas of expertise include cybersecurity, fintech, automation, energy, mobility, and logistics. Though headquartered in Tel Aviv, SOSA recently opened an innovation lab in New York, backed by major partners including HP, RBC, and Jefferies.

With the eight-floor Global Cyber Center located in Chelsea, it is turning its attention to an even more ambitious agenda. Uzi Sheffer, CEO of SOSA, said to TechCrunch in a statement that “The Global Cyber Center will serve as a center of gravity for the entire cybersecurity industry where they can meet, interact and connect to the finest talent from New York, the States, Israel and our entire global network.”

SOSA’s new building in Chelsea will be a center for the cybersecurity community (Photo from SOSA)

With an already established presence in New York, SOSA’s local network could help spur the local corporate participation key to the EDC’s plan, while SOSA’s broader global network can help achieve aspirations of turning New York City into a global cybersecurity leader.

It is no coincidence that both of the EDC’s venture partners are familiar with the Israeli cybersecurity ecosystem. Israel has long been viewed as a leader in cybersecurity innovation and policy, and has benefited from the same successful public-private sector coordination New York hopes to replicate.

Furthermore, while New York hopes to create organic growth within its own local ecosystem, the partnerships could also benefit the city if leading Israeli cybersecurity companies look to relocate due to the limited size of the Israeli market.

Big plans, big results?

While we spent comparatively less time discussing them, the NYCEDC’s educational programs are particularly interesting. Students will be able to take classes at any university in the five-member consortium, and transfer credits freely, a concept that the NYCEDC bills as “stackable certificates.”

Meanwhile, Facebook has partnered with the City University of New York to create a professional master’s degree program to train up a new class of cybersecurity leaders. The idea is to provide a pathway to a widely-respected credential without having to take too much time off of work. NYCEDC CEO Patchett said, ”you probably don’t have the time to take two years off to do a masters program,” and so the program’s flexibility should provide better access to more professionals.

Together, all of these disparate programs add up to a bold attempt to put New York City on the map for cybersecurity. Talent development, founder development, customer development – all have been addressed with capital and new initiatives.

Will the community show up at initiatives like the Global Cyber Center, pictured here? (Photo from SOSA)

Yet, despite the time that NYCEDC has spent to put all of these partners together cohesively under one initiative, the real challenge starts with getting the community to participate and build upon these nascent institutions. “What we hear from folks a lot of time,” Patchett said to us, is that “there is no community for cyber professionals in New York City.” Now the buildings have been placed, but the people need to walk through the front doors.

The city wants these programs to be self-sustaining as soon as possible. “In all cases, we don’t want to support these ecosystems forever,” Patchett said. “If we don’t think they’re financially sustainable, we haven’t done our job right.” He believes that “there should be a natural incentive to invest once the ecosystem is off the ground.”

As the world encounters an ever increasing array of cyber threats, old empires can falter – and new empires can grow. Cybersecurity may well be one of the next great industries, and it may just provide the needed defenses to ensure that New York City’s other empires can live another day.

Qonto raises $23 million to improve business banking

French startup Qonto has raised a $23 million funding round for its fintech product. The company is trying to make business banking cheaper, faster and more efficient. Existing investors Valar Ventures and Alven are once again leading the round. The European Investment Bank Group is also participating. If you are running a small company or […]

French startup Qonto has raised a $23 million funding round for its fintech product. The company is trying to make business banking cheaper, faster and more efficient.

Existing investors Valar Ventures and Alven are once again leading the round. The European Investment Bank Group is also participating.

If you are running a small company or work as a freelancer, Qonto wants to replace your professional bank account. When you sign up, you get a French IBAN, one or multiple debit cards and the ability to send and receive money.

And then, it works pretty much like any challenger bank. You can create virtual cards, order more cards for your team, get real time notifications and freeze cards. This is a breath of fresh air compared to traditional business banks and their time-consuming processes.

You can then sync your transactions with accounting and invoicing services, and grant access to your accountant. Premium plans let you select multiple administrators and create a validation workflow to approve expensive transfers for instance.

With today’s funding round, the company plans to double the size of the team and create its own payment infrastructure. Qonto currently relies heavily on Treezor for the back end. The startup also plans to expand to Germany, Italy and Spain in 2019.

Qonto now has 90 employees and 25,000 clients. The company has managed $2 billion in total transaction volume so far. The fact that the same VC funds keep investing more money into Qonto is a great vote of confidence.

Mobile bank Chime picks up credit score improvement service Pinch in all-stock deal

Chime, the no-fees mobile bank valued at $500 million as of its last round, has put some of its funds to use with its first acquisition. The deal is for Pinch, a startup that was focused on helping millennials and other young adults build better credit. It was best known for a service called PinchRent, […]

Chime, the no-fees mobile bank valued at $500 million as of its last round, has put some of its funds to use with its first acquisition. The deal is for Pinch, a startup that was focused on helping millennials and other young adults build better credit. It was best known for a service called PinchRent, which allowed users to increase their credit scores over time by reporting on-time rent payments to credit bureaus.

Millennials can sometimes struggle to improve their credit, or are uneducated about what their credit scores mean, studies have shown. And like any younger demographic, they may also be afflicted with shorter credit histories, which impacts those scores, too.

Many in this age group have said that their low credit scores are holding them back, and millennials prefer debit to credit, Visa has reported.

Pinch’s focus was to provide a different way for its users to increase their scores, rather than simply using credit cards or making loan payments on time.

It did this by aggregating the information on rent payments and submitting that to the credit bureaus. (The bureaus can take rental information, but they don’t work with individual landlords. That’s where Pinch came in.)

Since its founding in 2016, more than 80% of people on its service increased their scores from 10 to 100 points.

The startup was preparing to announce a $1.8 million seed round of funding from Homebrew and Collaborative ahead of its acquisition.

Pinch had only been in beta testing prior to joining Chime, and was also planning to do a full public launch. Instead, it shut down its service by alerting users via email that its last day of business would be June 27, 2018.

At the time of the service’s closure, it was in talks with Chime. But the deal itself only closed this Tuesday, we understand.

Chime declined to share the deal terms, but noted it’s an all-stock transaction and investors were happy.

The acquisition includes Pinch’s core team (5-10 people, depending on how the offers play out) plus founders Maia Bittner and Michael Ducker, who will now help the mobile bank launch credit and lending products over the next six months.

Bittner previously co-founded subscription startup Rocksbox, and worked as a Sequoia Capital scout. Ducker, meanwhile, hailed from Microsoft and Twitter before starting Pinch.

Chime, whose user base is 90% millennials, may or may not relaunch Pinch’s rent-paying service, but it will be soon moving into credit.

“I think, particularly, post the 2008 crisis, there’s been just a general distrust of big banks. But also, people have seen how the amount of credit [they have] can create challenges in their life,” says Chime CEO Chris Britt, discussing the struggles its users face in terms of building their credit.

“And younger consumers are so saddled with with student loan debt that the last thing they want to do is get more debt on a credit card,” he adds, explaining why young people turn to debit cards.

He says Chime’s goal now is to helping serve this group’s needs around credit with a set of millennial-focused products.

“The reality is the typical debit card and checking account do nothing to build your credit score. So as we think about the future set of products that we want to roll out, we’re very focused on helping our members with that part of their life,” he adds.

Chime is now one of several millennial-focused mobile banks on the market, which do away with traditional banking fees as well as brick-and-mortar location. Others like Simple and Stash are also available, but Chime has raised over $110 million, making it the largest in terms of funding.

The company today also shared new numbers – it says it has over 1.7 million bank accounts on its platform, and is opening more than 150,000 accounts per month – in line with Wells Fargo. It expects to surpass 2 million bank accounts and $10 billion in total transaction volume by year-end.

Further down the road, Chime may venture into investing, but not until its user base is ready.

“So we’re very deliberate in how we think about helping our members along their financial journey. We start with the checking account, we make sure you’re paying all your bills, then we make sure you have a savings account balance – because you should have a savings account balance before you start day trading,” Britt says.

“It’s sort of irresponsible to be encouraging day trading if you don’t have the financial means…I think investment accounts and retirement accounts come first,” he notes.

It’s the end of crypto as we know it and I feel fine

Watching the current price madness is scary. Bitcoin is falling and rising in $500 increments with regularity and Ethereum and its attendant ICOs are in a seeming freefall with a few “dead cat bounces” to keep things lively. What this signals is not that crypto is dead, however. It signals that the early, elated period […]

Watching the current price madness is scary. Bitcoin is falling and rising in $500 increments with regularity and Ethereum and its attendant ICOs are in a seeming freefall with a few “dead cat bounces” to keep things lively. What this signals is not that crypto is dead, however. It signals that the early, elated period of trading whose milestones including the launch of Coinbase and the growth of a vibrant (if often shady) professional ecosystem is over.

Crypto still runs on hype. Gemini announcing a stablecoin, the World Economic Forum saying something hopeful, someone else saying something less hopeful – all of these things and more are helping define the current market. However, something else is happening behind the scenes that is far more important.

As I’ve written before, the socialization and general acceptance of entrepreneurs and entrepreneurial pursuits is a very recent thing. In the old days – circa 2000 – building your own business was considered somehow sordid. Chancers who gave it a go were considered get-rich-quick schemers and worth of little more than derision.

As the dot-com market exploded, however, building your own business wasn’t so wacky. But to do it required the imprimaturs and resources of major corporations – Microsoft, Sun, HP, Sybase, etc. – or a connection to academia – Google, Netscape, Yahoo, etc. You didn’t just quit school, buy a laptop, and start Snapchat.

It took a full decade of steady change to make the revolutionary thought that school wasn’t so great and that money was available for all good ideas to take hold. And take hold it did. We owe the success of TechCrunch and Disrupt to that idea and I’ve always said that TC was career pornography for the cubicle dweller, a guilty pleasure for folks who knew there was something better out there and, with the right prodding, they knew they could achieve it.

So in looking at the crypto markets currently we must look at the dot-com markets circa 1999. Massive infrastructure changes, some brought about by Y2K, had computerized nearly every industry. GenXers born in the late 70s and early 80s were in the marketplace of ideas with an understanding of the Internet the oldsters at the helm of media, research, and banking didn’t have. It was a massive wealth transfer from the middle managers who pushed paper since 1950 to the dot-com CEOs who pushed bits with native ease.

Fast forward to today and we see much of the same thing. Blockchain natives boast about having been interest in bitcoin since 2014. Oldsters at banks realize they should get in on things sooner than later and price manipulation is rampant simply because it is easy. The projects we see now are the Kozmo.com of the blockchain era, pie-in-the-sky dream projects that are sucking up millions in funding and will produce little in real terms. But for every hundred Kozmos there is one Amazon .

And that’s what you have to look for.

Will nearly every ICO launched in the last few years fail? Yes. Does it matter?

Not much.

The market is currently eating its young. Early investors made (and probably lost) millions on early ICOs but the resulting noise has created an environment where the best and brightest technical minds are faced with not only creating a technical product but also maintaining a monetary system. There is no need for a smart founder to have to worry about token price but here we are. Most technical CEOs step aside or call for outside help after their IPO, a fact that points to the complexity of managing shareholder expectations. But what happens when your shareholders are 16-year-olds with a lot of Ethereum in a Discord channel? What happens when little Malta becomes the de facto launching spot for token sales and you’re based in Nebraska? What happens when the SEC, FINRA, and Attorneys General from here to Beijing start investigating your hobby?

Basically your hobby stops becoming a hobby. Crypto and blockchain has weaponized nerds in an unprecedented way. In the past if you were a Linux developer or knew a few things about hardware you could build a business and make a little money. Now you can build an empire and make a lot of money.

Crypto is falling because the people in it for the short term are leaving. Long term players – the Amazons of the space – have yet to be identified. Ultimately we are going to face a compression in the ICO and, for a while, it’s going to be a lot harder to build an ICO. But give it a few years – once the various financial authorities get around to reading the Satoshi white paper – and you’ll see a sea change. Coverage will change. Services will change. And the way you raise money will change.

VC used to be about a team and a dream. Now it’s about a team, $1 million in monthly revenue, and a dream. The risk takers are gone. The dentists from Omaha who once visited accelerator demo days and wrote $25,000 checks for new apps are too shy to leave their offices. The flashy VCs from Sand Hill have to keep Uber and Airbnb’s plates spinning until they can cash out. VC is dead for the small entrepreneur.

Which is why the ICO is so important and this is why the ICO is such a mess right now. Because everybody sees the value but nobody – not the SEC, not the investors, not the founders – can understand how to do it right. There is no SAFE note for crypto. There are no serious accelerators. And all of the big names in crypto are either goldbugs, weirdos, or Redditors. No one has tamed the Wild West.

They will.

And when they do expect a whole new crop of Amazons, Ubers, and Oracles. Because the technology changes quickly when there’s money, talent, and a way to marry the two in which everyone wins.

It’s the end of crypto as we know it and I feel fine

Watching the current price madness is scary. Bitcoin is falling and rising in $500 increments with regularity and Ethereum and its attendant ICOs are in a seeming freefall with a few “dead cat bounces” to keep things lively. What this signals is not that crypto is dead, however. It signals that the early, elated period […]

Watching the current price madness is scary. Bitcoin is falling and rising in $500 increments with regularity and Ethereum and its attendant ICOs are in a seeming freefall with a few “dead cat bounces” to keep things lively. What this signals is not that crypto is dead, however. It signals that the early, elated period of trading whose milestones including the launch of Coinbase and the growth of a vibrant (if often shady) professional ecosystem is over.

Crypto still runs on hype. Gemini announcing a stablecoin, the World Economic Forum saying something hopeful, someone else saying something less hopeful – all of these things and more are helping define the current market. However, something else is happening behind the scenes that is far more important.

As I’ve written before, the socialization and general acceptance of entrepreneurs and entrepreneurial pursuits is a very recent thing. In the old days – circa 2000 – building your own business was considered somehow sordid. Chancers who gave it a go were considered get-rich-quick schemers and worth of little more than derision.

As the dot-com market exploded, however, building your own business wasn’t so wacky. But to do it required the imprimaturs and resources of major corporations – Microsoft, Sun, HP, Sybase, etc. – or a connection to academia – Google, Netscape, Yahoo, etc. You didn’t just quit school, buy a laptop, and start Snapchat.

It took a full decade of steady change to make the revolutionary thought that school wasn’t so great and that money was available for all good ideas to take hold. And take hold it did. We owe the success of TechCrunch and Disrupt to that idea and I’ve always said that TC was career pornography for the cubicle dweller, a guilty pleasure for folks who knew there was something better out there and, with the right prodding, they knew they could achieve it.

So in looking at the crypto markets currently we must look at the dot-com markets circa 1999. Massive infrastructure changes, some brought about by Y2K, had computerized nearly every industry. GenXers born in the late 70s and early 80s were in the marketplace of ideas with an understanding of the Internet the oldsters at the helm of media, research, and banking didn’t have. It was a massive wealth transfer from the middle managers who pushed paper since 1950 to the dot-com CEOs who pushed bits with native ease.

Fast forward to today and we see much of the same thing. Blockchain natives boast about having been interest in bitcoin since 2014. Oldsters at banks realize they should get in on things sooner than later and price manipulation is rampant simply because it is easy. The projects we see now are the Kozmo.com of the blockchain era, pie-in-the-sky dream projects that are sucking up millions in funding and will produce little in real terms. But for every hundred Kozmos there is one Amazon .

And that’s what you have to look for.

Will nearly every ICO launched in the last few years fail? Yes. Does it matter?

Not much.

The market is currently eating its young. Early investors made (and probably lost) millions on early ICOs but the resulting noise has created an environment where the best and brightest technical minds are faced with not only creating a technical product but also maintaining a monetary system. There is no need for a smart founder to have to worry about token price but here we are. Most technical CEOs step aside or call for outside help after their IPO, a fact that points to the complexity of managing shareholder expectations. But what happens when your shareholders are 16-year-olds with a lot of Ethereum in a Discord channel? What happens when little Malta becomes the de facto launching spot for token sales and you’re based in Nebraska? What happens when the SEC, FINRA, and Attorneys General from here to Beijing start investigating your hobby?

Basically your hobby stops becoming a hobby. Crypto and blockchain has weaponized nerds in an unprecedented way. In the past if you were a Linux developer or knew a few things about hardware you could build a business and make a little money. Now you can build an empire and make a lot of money.

Crypto is falling because the people in it for the short term are leaving. Long term players – the Amazons of the space – have yet to be identified. Ultimately we are going to face a compression in the ICO and, for a while, it’s going to be a lot harder to build an ICO. But give it a few years – once the various financial authorities get around to reading the Satoshi white paper – and you’ll see a sea change. Coverage will change. Services will change. And the way you raise money will change.

VC used to be about a team and a dream. Now it’s about a team, $1 million in monthly revenue, and a dream. The risk takers are gone. The dentists from Omaha who once visited accelerator demo days and wrote $25,000 checks for new apps are too shy to leave their offices. The flashy VCs from Sand Hill have to keep Uber and Airbnb’s plates spinning until they can cash out. VC is dead for the small entrepreneur.

Which is why the ICO is so important and this is why the ICO is such a mess right now. Because everybody sees the value but nobody – not the SEC, not the investors, not the founders – can understand how to do it right. There is no SAFE note for crypto. There are no serious accelerators. And all of the big names in crypto are either goldbugs, weirdos, or Redditors. No one has tamed the Wild West.

They will.

And when they do expect a whole new crop of Amazons, Ubers, and Oracles. Because the technology changes quickly when there’s money, talent, and a way to marry the two in which everyone wins.