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Biden Appointees Have A Lot Of Ties To Startup And Venture Spheres

The incoming administration’s level of connection to the tech and VC sphere varies considerably among key government role appointees….

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As President-elect Joe Biden moves ahead with appointments to key government roles, it’s notable that quite a few of the people selected have ties to the tech, startup and venture capital spheres.

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That this would be the case with an incoming Democratic administration is not entirely surprising. Venture capitalists and funded startups overwhelmingly carry out business in Democrat-leaning states, counties and cities, as we’ve documented before.

The incoming administration’s level of connection to the tech and VC sphere varies considerably among appointees, from a full-time VC, to a venture adviser and investor, to a professor at a business school with deep ties to the founder community. Below, we look at individual appointees and their tech and startup connections.

Ron Klain

Ron Klain, Biden’s pick for White House Chief of Staff, is best known for his political experience. The Georgetown- and Harvard-educated attorney served as chief of staff for Biden when he was vice president, and prior to that held a series of high-profile political positions.

But Klain also brings a credential of particular interest to the startup space: He’s executive vice president and general counsel at venture and growth investor Revolution. Co-founded by AOL1 founder Steve Case, the firm has a track record of focusing on promising startups outside the primary coastal tech hubs.

Revolution is also a multistage investor, operating a group of funds, including the Rise of the Rest Seed Funds, Revolution Ventures and Revolution Growth. Revolution invests across a range of sectors, including supply chain and logistic challenges, healthy food, retail and consumer, digital entertainment, software, and health care.

Janet Yellen

Janet Yellen, Biden’s pick for Treasury Secretary, is of course most famous for her stint as Federal Reserve Chair, a position she held from 2014 to 2018. Prior to that, the renowned economist served on the Fed’s Board of Governors and later headed the Federal Reserve Bank of San Francisco.

But Yellen’s longest post is actually an academic one, as a professor in the University of California, Berkeley’s Haas School of Business. She began teaching there in 1980 and remains a professor emeritus. It’s true that her academic focus areas—which include substantial research around income inequality—aren’t particularly techie. However, Haas and Berkeley are deeply tied to the Bay Area startup ecosystem. In addition to running its own incubator programs, Berkeley stands out as the leading U.S. public university for graduating founders of funded startups. We wouldn’t be surprised if more than a few of them sat in on Yellen’s classes.

Kamala Harris

Vice President-elect Kamala Harris is a San Francisco Bay Area native who also attended law school in San Francisco and spent the majority of her career in government in Northern California. So, suffice it to say she’s familiar with the region’s tech-driven economy.

Following Harris’ selection as Biden’s running mate in August, we saw a number of profiles examining the then-candidate’s ties to the Silicon Valley scene. A general observation is that Harris has been an active networker and fundraiser in tech circles, attracting donations from prominent executives including Facebook’s Sheryl Sandberg, Apple’s Jony Ive and Salesforce‘s[ footnote]Salesforce is an investor in Crunchbase. It has no say in our editorial process. For more, head here.[/footnote]’s Marc Benioff. Several key staff members have also held high-level positions in tech.

While politicians on the left and right have been supportive of policies to rein in Big Tech, Harris isn’t known as a major critic of the industry. That said, she has expressed support for some restrictions on tech, speaking in favor of enhanced online privacy and against the spread of cyberbullying.

John Kerry

With such a long political resume—including posts as former Massachusetts Senator, Democratic presidential nominee, and Secretary of State—one might assume John Kerry wouldn’t have time to immerse himself in the startup world.

But Kerry, Biden’s pick as special presidential envoy for climate, actually has a few ties. Two years ago, he joined as a senior adviser of The Rise Fund, a San Francisco-headquartered impact investment outfit founded in 2016 by private equity firm TPG in collaboration with musician and activist Bono and entrepreneur-turned-philanthropist Jeff Skoll. The fund invests across sectors, including portfolio companies in health care, financial services and agtech.

Kerry also has a history of owning stakes in venture capital in growth funds. Back in 2013, when we last found his finances disclosed in a public database, there were 659 line items. (Kerry is married to Teresa Heinz, an heir to the H.J. Heinz fortune.) Holdings included stakes in firms such as Summit Partners, Lux Capital, NGEN, Tiger Global, Polaris Partners and ARCH Venture Fund, among others. The list also included stakes in a number of large-cap technology companies.

Antony Blinken

Antony Blinken, Biden’s nominee for Secretary of State, also has a long resume of top political appointments. Before taking a leave of absence earlier this year, he was a partner at private equity firm Pine Island Capital Partners.

Founded in 2018, Pine Island targets mid-sized North American companies across a range of sectors from aerospace and defense to health care to high tech. Blinken is one of a number of political bigwigs listed as Washington, D.C., partners at the firm, which include former senators and defense leaders.

In 2017, Blinken also co-founded WestExec Advisors, a D.C.-based political strategy advisory firm that has reportedly counted Google among its large clients.

Featured image: AP Photo/Andrew Harnik.

Appointee images are public domain headshots courtesy of Wikipedia.

Ron Klain

Source: https://news.crunchbase.com/news/biden-appointees/

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The Briefing: Hailo Lands $136M Series C

Crunchbase News’ top picks of the news to stay current in the VC and startup world.

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Here’s what you need to know today in startup and venture news, updated by the Crunchbase News staff throughout the day to keep you in the know.

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Hailo lands $136M for AI chips

Tel Aviv-based Hailo, a startup developing AI accelerator chips for edge devices, announced that it raised $136 million in a Series C funding round led by Poalim and entrepreneur Gil Agmon. The round brings Hailo’s total funding to $224 million.

— Joanna Glasner

SupportLogic raises $50M Series B

San Jose -based SupportLogic closed a $50 million Series B funding round led by WestBridge Capital Partners and General Catalyst. Existing investors Sierra Ventures and Emergent Ventures also participated in the round.

SupportLogic’s AI-based platform allows businesses to act on customer communications in real-time in order to offer better customer service and support.

Founded in 2016, the company has raised approximately $62 million to date, according to Crunchbase data.

— Chris Metinko

SaaS

GitLab raises IPO range: San Francisco-based GitLab, a provider of development and collaboration tools for programmers, raised the proposed share price range for its upcoming IPO. The company now plans to raise around $700 million by offering 10.4 million shares at a price range of $66 to $69, up from the prior range of $55 to $60.

— Joanna Glasner

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

— Joanna Glasner

Source: https://news.crunchbase.com/news/briefing-10-12-21/

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Square Rolls Up Afterpay As BNPL Market Stays Hot

Payments platform Square plans to buy Afterpay, an Australian buy now, pay later service, in an all-stock deal valued at around $29 billion.

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Payments platform Square plans to buy Afterpay, an Australian buy now, pay later service, in an all-stock deal valued at around $29 billion.

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Melbourne-based Afterpay is publicly traded on Australia’s ASX exchange. It currently counts more than 16 million consumers and nearly 100,000 merchants globally as users of its platform, including major retailers across fashion, homewares, beauty, sporting goods and other categories. The company, backed by investors including Tencent and Coatue, has raised just under $449 million in funding, per Crunchbase data.

Afterpay competes in the increasingly crowded buy now, pay later space, which allows consumers to break up online purchases into smaller payments. Its biggest competitors include Stockholm-based Klarna, which has raised $3.7 billion from private investors to date, and Affirm, which raised $1.5 billion in venture funding before going public in January. Affirm’s share price has since plummeted to less than half of its 52-week high in February, but jumped 14 percent in morning trading on Monday after the Afterpay acquisition was announced.

Another major player in the BNPL space includes fintech giant PayPal, which in 2008 purchased Bill Me Later, an early pioneer in the space.

All told, venture investors poured $1.7 billion into buy now, pay later companies between 2016 and 2020, per Crunchbase data. A Bank of America survey late last year predicted the BNPL market was poised to “grow 10-15 times by 2025 to eventually process between $650 billion and $1 trillion in transactions.”

Venture investors like the BNPL business model because these startups essentially have two revenue streams, Kamran Ansari, a venture partner at Greycroft, which invested in e-commerce pay-over-time financing tool Credit Key, told Crunchbase News earlier this year.

The first revenue source is the actual transaction, when the merchant typically pays between 2 and 3 percent of the purchase price to the BNPL service in exchange for being able to offer that convenience to its customers. The second revenue stream for the BNPL service is interest payments from borrowers.

Square’s shares have surged 105 percent over the past year amid a boom for digital transactions such as its mobile Cash App. It also reported second-quarter earnings on Sunday, revealing that revenue had more than doubled from the same quarter the previous year, to $4.7 billion.

San Francisco-based Square said it plans to integrate Afterpay into its Cash App and seller ecosystem.

“By combining with Square, we will further accelerate our growth in the U.S. and globally, offer access to a new category of in-person merchants, and provide a broader platform of new and valuable capabilities and services to our merchants and consumers, Afterpay co-founders and co-CEOs Anthony Eisen and Nick Molnar said in a statement announcing the deal.

Illustration: Li-Anne Dias.

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Another major player in the BNPL space includes fintech giant PayPal, which in 2008 purchased Bill Me Later, an early pioneer in the space.

Source: https://news.crunchbase.com/news/square-rolls-up-afterpay-as-bnpl-market-stays-hot/

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Cryptocurrency Experts Say These 4 Factors Are Driving Change In The Industry

The COVID-19

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The COVID-19 pandemic accelerated acceptance of digital currencies like Bitcoin and the underlying blockchain technologies that power them. And while Bitcoin volatility continues — with the currency hitting its lowest point in months this week — investors are optimistic momentum will continue even as the world slowly starts to return to normal.

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The crypto and blockchain sector has attracted nearly $12.4 billion in venture investment into U.S.-based companies since 2017 and $19.4 billion globally, Crunchbase numbers show. In fact, data so far for 2021 shows dollars were nearly 3x from 2020 for both global and U.S. investments. But the sector also faces continued opportunities and challenges going forward, including more widespread adoption and new regulatory pressures from governments around the world.

Case in point: Earlier this month, El Salvador became the world’s first country to adopt bitcoin as legal tender. At the same time, Thailand’s Securities and Exchange Commission ordered its exchanges to delist meme coins, such as Dogecoin, as well as NFTs, exchange tokens and fan tokens, saying those tokens have “no clear objective or substance or underlying [value].”

Stepped-up efforts by China’s government to rein in the crypto space had the largest impact on valuations. On Friday, authorities in China’s Sichuan province, one of the country’s largest mining centers, reportedly ordered cryptocurrency miners to shut down their operations,

Cryptocurrency experts say these kinds of polarizing events put a spotlight on the space.

“Blockchain was accelerated five years in the pandemic,” according to Alon Goren, founding partner at blockchain fintech venture studio Draper Goren Holm.

Here’s a closer look at four factors that are likely to drive big changes in the cryptocurrency space in years to come.

1) Mainstream adoption

Cryptocurrency startups are working to make the process of using, buying, trading and finding digital currencies easier, driving greater consumer awareness and adoption.

Increasingly, mainstream adoption of cryptocurrencies is “crazy important” to the growth of the sector, according to Goren. Still, some of that adoption has come from less serious applications of digital currencies, including “meme coins” — assets based on jokes but with no real value other than those given to them by social indicators — a phenomenon that also concerns Goren because they reinforce the notion that cryptocurrency isn’t legitimate.

“Publicly traded companies can show quarterly earnings, you can follow the CEO on Twitter and you know their opinions on things,” Goren added. “In crypto, you don’t have those kinds of things to show legitimacy.”

Meanwhile, Hsuan Lee, CEO of Portto/Blocto, said the adoption of NFTs — non-fungible tokens — is one of the biggest factors that has changed the industry in the past year. Portto is a Taiwan-based company that aims to make blockchain simple for users and developers.

Although NFTs have been around since 2017, they were initially not appealing for typical use, but that all changed when they became approachable by retail investors, including when sports organizations got involved in selling digital clips and cards, he said.

“The National Basketball Association doesn’t market itself as a blockchain, but offering collectibles on it appeals to fans,” Lee said in an interview. “With those kinds of applications, even introducing a music NFT would potentially attract existing music fans. With that kind of people joining the party, it will make crypto more mainstream.”

Muneeb Jan, a cryptocurrency and fintech expert operating out of Hong Kong, said the investor base for cryptocurrency is still largely retail investors, while major financial institutions are in the discovery phase.

Still, new companies are announcing on a daily basis that they will accept bitcoin and other cryptocurrencies, and banks are facing crypto investor demand to get more involved in the space, Jan said.

“Crypto funds are increasingly viewed as an asset class,” he said in an interview. “There is not much of a use case currently, but they want to jump onto the bandwagon. If more large institutional investors come in, there will be price stability, and it will improve the legitimacy.”

2) Price volatility

Jan believes two of the biggest headwinds slowing more mainstream cryptocurrency adoption are price volatility and the fact that bitcoin as a mode of payment is not yet completely viable due the current inability to quickly process transactions.

Bitcoin has been particularly volatile in recent days. After surging above $40,000 about a week ago, the currency fell below $30,000 this week, recovering to around $32,400 as of Tuesday afternoon. Over the past year, the price grew to a peak of more than $60,000 before falling back to half that at the end of May.

Just processing transactions is not a sustainable use long-term due to the expensive transaction fees associated with it, even though people want bitcoin to be able to do that, he added.

“Other cryptocurrencies are not volatile because the community investing in them have come to a consensus on the price,” Jan said.

Lee said price volatility will be aided by regulations, especially as cryptocurrency is adopted more broadly. Price volatility will only be fixed with time, he said.

“This is a very young market and it has attracted attention, which makes prices volatile,” he added. “It can be dangerous to get into a space without established regulations. Being at an early stage, there is a lot of imagination that can be had for these cryptocurrencies. At the same time, when bad news comes out, it can easily dump harder on crypto than other companies.”

3) Regulatory pressure

Regulations proposed for cryptocurrency have gained steam since the beginning of 2021.

Among them: The U.S. Department of the Treasury announced in May that it will require any transfer worth $10,000 or more to be reported to the Internal Revenue Service as part of an effort to curb tax evasion.

“I’m happy to see regulations come into place because it will be good for the industry overall,” Lee said. “It will minimize possible scams or malicious use cases and make it better for everyone to get on board.”

The government is also examining possible regulations of cryptocurrency exchanges with a focus on protecting investors and preventing market manipulation, as well as financial account reporting as it relates to cryptoasset exchange accounts and payment service accounts that accept cryptocurrencies.

Goren called a focus on Bitcoin, Etherium and the public markets “a double-edged sword.” Any real value is eroded when inflation occurs, but Bitcoin is a decentralized currency, so its value holds up well against inflation.

And the more institutions that participate, the more legitimacy it creates so regulators are less likely to fight it, he said.

“Most lawmakers know crypto is not used by criminals, but the people who put them in office are large financial institutions that are cheering when they say that happens,” Goren said.

While he understands why there have to be IRS reporting requirements for tax purposes, he disagrees when government regulations don’t consider Bitcoin a currency, but then treats it like cash.

By instead treating cryptocurrency as a capital asset, the IRS is taxing capital gains, which could also have implications on the venture capital world, he added.

Goren said other countries have a bit more clarity, but there is still misunderstanding in the U.S. when it comes to how cryptocurrencies should be reported financially, and it won’t change until there is clear categorization of cryptocurrencies.

4) Beyond Bitcoin

Rocketfuel Blockchain founder Peter Jensen said it will take time for the public to understand and be comfortable with cryptocurrency, much as people had to acclimate to the idea of online banking and ATM cards before that.

Jensen’s company, based in San Francisco, processes crypto payments. He believes people are distracted by the price volatility of Bitcoin, although it is just one out of some 200 cryptocurrencies.

“We need to move people’s minds away from Bitcoin because who knows if cryptocurrency will survive,” Jensen said in an interview. “There are many cryptocurrencies pegged to the dollar, which means they have zero volatility. If you take those and use them for payment, then you get the benefits of that.”

Global developments — such as El Salvador adopting cryptocurrency and both Sweden and Dubai issuing their own digital currencies — bring promise for the future of the industry, and Jensen predicts the U.S. will eventually issue a digital version of the dollar.

He sees a world where when you get a job, you will have the choice of receiving your paycheck in dollars or cryptocurrency, and there will be no volatility because those funds will be guaranteed by the U.S. government.

“We feel that the U.S. has an opportunity to be ahead, even though China is adopting cryptocurrency faster, as well as those with less-efficient banking systems,” Jensen added. “If we don’t stay in front, we are going to be last.”

Crunchbase Pro queries listed for this article

The query used for this article was “Global Cryptocurrency Companies,” in which “Bitcoin,” “cryptocurrency” and “virtual currency” were the organizational industry search terms. The data was then separated out by changing the headquarters location to “United States.”

All Crunchbase Pro Queries are dynamic with results updating over time. They can be adapted with any company or investor name for analysis.

Illustration: Dom Guzman

Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.

Stepped-up efforts by China’s government to rein in the crypto space had the largest impact on valuations. On Friday, authorities in China’s Sichuan province, one of the country’s largest mining centers, reportedly ordered cryptocurrency miners to shut down their operations,

Source: https://news.crunchbase.com/news/cryptocurrency-experts-say-these-4-factors-are-driving-change-in-the-industry/

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