Sources: Apple is preparing for a legal fight with the DOJ, similar to San Bernardino, which was not legally resolved before FBI dropped the case — The Silicon Valley giant is preparing for a legal fight over encryption, even as it works to reduce tensions with the Justice Department.
Obvious Ventures, the firm co-founded by Medium CEO and Twitter co-founder Ev Williams, announced today that it has closed its third fund “OV3” at $271,828,182, a number that the graphing calculator-owning among us may recognize as e or Euler’s number.
When asked whether the firm had to return any LP money just so it could land at its magic number, Obvious’s Gabe Kleinman threw a “no comment” my way.
The firm has a bit of a tradition in being cutesy with its fund sizes. Their first fund was $123,456,789 and the second fund clocked in at $191,919,191. The focus on the naming scheme isn’t an accident, there isn’t too much to draw attention to with this fund in terms of changes to Obvious’s investment strategies, Kleinman tells TechCrunch.
“We’re investing in companies that are reimagining trillion dollar categories,” Kleinman tells TechCrunch. “… and these play out across our three themes, which are sustainable systems, healthy living and ‘people power.'”
Obvious saw some successful exits in 2019, including the public offering of Beyond Meat.
For Silicon Valley’s potential startup millionaires, compensation packages staked on future promises of wealth are where the action is, but what happens when these employees get laid off or have to leave before an exit?
When Wouter Witvoet left a startup that he had joined as employee #4, he felt relatively prepared, having set aside $50,000 to exercise his available stock options, only to be informed by HR that he was also liable to pay taxes on said options so he was about $1.8 million short with 90 days to settle up.
“I ended up losing my entire equity stake,” Witvoet tells TechCrunch.
Witvoet later founded Secfi, which is just one of a handful of entities looking to establish itself in the hot “pre-wealth” management space with what it calls forward purchase agreements enabling startup employees to exercise stock options and wait until an IPO or exit to make payments.
Looking to leverage paper wealth is hardly a new trend, but more institutional investors are eyeing the non-traditional opportunity as high-growth startups get harder to access. For some of the hedge funds and private equity funds playing around in this space, these deals represents a back door into the paydays of mature IPO-bound startups at a discount.
There are a number of players with hundreds of millions at play. Section Partners has $120M in committed capital and calls it option exercise financing a “lifeline” for employees facing option expiration. Troy Capital Group’s Quid has partnered with Oaktree Capital Management on a $200 million fund. The Bay Area ESO Fund has been providing this financing to startup employees since its founding in 2012.
Secfi, which has raised $7 million in venture funding from investors including Rucker Park Capital, Social Leverage and the Weekend Fund, had previously been acting as a go-between for multiple firms, but is announcing today that they’ve partnered with New York hedge fund Serengeti Asset Management, locking down a $550 million debt facility.
Taking out run-of-the-mill loans to exercise options with the assumption that a great exit inevitably awaits your startup is an awful call. These forward purchase agreements are backed by the options themselves so the recourse is limited to the options in question. If your startup succeeds, you’ll be paying the company back the principal, plus an interest rate and an equity rate, i.e. a good chunk of your upside. If your startup endures a WeWork-like fiasco, no one is coming after your car.
With more late-stage startups pumping the brakes on spending and eyeing layoffs, there aren’t many great resources for affected employees looking to see what their options are worth. Many end up finding themselves going down Quora rabbit holes, browsing for information that is rarely one-size-fits-all. Educating on an individual basis has its merits, but most of these options financing firms are also trying to get HR departments at companies to do a bit of the marketing for them through partnerships with the startups themselves.
As more money gets directed from these behemoth funds toward “pre-wealth” financial services, you can expect to see more startups like Secfi popping up hoping to offer potential startup millionaires a platform that extends beyond the pathway to options upside.
In a tweet, Trump criticizes Apple for refusing to unlock phones of violent criminals, says his administration helps Apple “all of the time” on trade — - In a tweet, president Donald Trump addressed the conflict between the FBI and Apple over locked iPhones used by the suspected Pensacola shooter.
In a little over a week, the travel metasearch engine Hipmunk will shut down. It’s an abrupt and disappointing end for a product acquired by SAP Concur around three and a half years ago.
It didn’t have to go this way, though. We’re now hearing that Hipmunk co-founders Adam Goldstein and Reddit CEO Steve Huffman (both of whom left Hipmunk in years prior) made an offer to buy the company back rather than have it shut down, to no avail.
As first reported by Skift and confirmed with our own sources, Hipmunk employees at an all-hands meeting today asked about the buyback offer and were told it wasn’t going to happen.
Why SAP Concur would opt to shut down Hipmunk rather than spin it back out isn’t entirely clear, though these things are undoubtedly more complicated than the parent company saying “Oh, you want it back? Sure! Take it!”
A few years post-acquisition, Hipmunk DNA has intertwined with Concur’s to some degree — including a product for small-to-medium businesses straight up called “Concur Hipmunk” — so there’s presumably interest on SAP Concur’s end in keeping engineers who know all the relevant codebases around. Hipmunk also had patents that switched hands in the acquisition (and more were approved post-acquisition), and it’s possible SAP doesn’t want to let those go. It’s also entirely feasible that the offer came too late, or just wasn’t significant enough, for a company as large as SAP to slam the brakes and start detangling things.
A rep for SAP Concur declined to comment.
Sony Interactive Entertainment will skip E3 again this year and participate instead in “hundreds of consumer events across the globe,” the company told GamesIndustry.biz today. The company, which is preparing to launch the PlayStation 5 before this holiday season, missed the show for the first time last year, after two decades of being one of its biggest exhibitors.
A Sony Interactive spokesperson told GamesIndustry.biz that the company has “great respect for the ESA as an organization, but we do not feel the vision of E3 2020 is the right venue for what we are focused on this year.” Instead, it will “build upon our global events strategy in 2020 by participating in hundreds of of consumer events across the globe.”
As TechCrunch’s Devin Coldewey noted last year, Nintendo hasn’t held a formal E3 press conference in years, but still has a booth where attendees can play their games and hosts a live stream. Before skipping the event last year, Sony used E3 to debut new consoles and flagship games, though focusing on other events gives it more flexibility for when it announces major news.
TechCrunch has contacted Sony Interactive and ESA, the organizers of E3, for comment.
In Q4, Gartner estimates global PC shipments grew 2.3% to 70.6M units; IDC estimates 4.8% growth to 71.8M units; both say Lenovo and HP lead PC shipment growth — After years of bad news, the PC market has a reason to celebrate before computer makers start shipping 5G and dual-screen devices.
After AG Barr called on Apple to unlock Pensacola shooter's iPhones, Apple releases statement rejecting backdoors but highlighting its help in the investigation — “We reject the characterization that Apple has not provided substantive assistance in the Pensacola investigation," the company said in a statement.
Cheng Ting-Fang / Nikkei Asia : MediaTek says it has started to use Intel Foundry's advanced chip packaging in addition to TSMC's...
