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These Are The Tech Companies That Went Public in A Blockbuster 2020

Here are the venture-backed companies that have gone public.

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This year has been a wild one for the tech initial public offering market (and the world). The COVID-19 pandemic pretty much halted tech IPOs in the spring, and there was speculation that companies that planned to go public in 2020, like Airbnb, would have to wait until 2021. But the market picked back up over the summer, and what had initially looked like it would be a sluggish year for tech IPOs turned into a blockbuster one. High-profile companies like Palantir and DoorDash were among the big names to go public, and 2020 also saw the largest software IPO of all time with Snowflake.

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“The returns and proceeds really highlight what a strong this year was, especially in the second half as tech and biotech bounced back given their demand in the pandemic,” said Matt Kennedy, a senior strategist at IPO research firm Renaissance Capital. “As the pandemic raged across the economy, investors turned to software companies and health care companies.”

Returns of Renaissance Capital’s IPO index “skyrocketed” more than 100 percent, and the number of billion-dollar deals hit a new record, Kennedy said. Low interest rates helped, and even companies outside of the health and tech sectors were well-positioned for a rebound.

“Those two areas—health and technology—(were) the two legs of the IPO market,” Kennedy said. “IPOs proved resilient, which you might not have expected heading into the second quarter, given there was briefly a flight to safety before risk appetites soared again and the demand for growth companies fueled these record return and high valuations.”

The 2021 IPO pipeline also looks robust. Companies like Roblox, Affirm and Poshmark have all publicly filed to go public, while companies such as Coinbase and Bumble have filed confidential S-1 registration statements with the U.S. Securities and Exchange Commission. In short, 2021 is already shaping up to be a busy IPO year, at least in the first couple of months.

Crunchbase News keeps a running list of tech and tech-ish venture-backed companies that have gone public each year, and we look at their initial post-IPO arc. Of course, an initial post-IPO arc only says so much about a company, as things can change over the course of the year. So, we’ve put together another list looking at each company’s public debut and performance by the end(ish) of the year. Let’s dive in.

One Medical

  • IPO date: Jan. 30, 2020
  • IPO price: $14
  • Last private valuation: Between $1.5 billion and $2 billion, according to CNBC
  • IPO valuation: $1.7 billion
  • EOY Price: $43.26

One Medical marked 2020’s first venture-backed tech-ish IPO. It saw a fairly large pop on its first day of trading of 58 percent, and while its stock price has dipped here and there, including around the time of the first COVID-19 outbreaks, its overall trend has been positive. Its stock opened at $43.26 on Dec. 23, or 209 percent above its IPO price, and about 96 percent above its closing stock price on its first day of trading.

Casper

  • IPO date: Feb. 5, 2020
  • IPO price: $12
  • Last private valuation: $1.1 billion
  • IPO valuation: $476 million, excluding underwriters’ options.
  • EOY Price: $7.48

Casper’s stock has not done well, pretty much from day two. The mattress company dropped its IPO range and slashed its valuation before it began trading back in early February. Its stock opened about 21 percent up on its first day of trading, but has been down pretty much all year. Casper hit a 52-week low of $3.15 back in March, around the time COVID-19 was declared a pandemic, and besides the first day of trading, Casper hasn’t closed out a day of trading at or above its IPO price of $12. The company’s stock performance is arguably the poorest of the tech IPOs this year. It opened at $7.48 on Dec. 23.

Kingsoft Cloud

  • IPO date: May 8, 2020
  • IPO price: $17
  • Last private valuation: Unknown
  • IPO valuation: $3.7 billion
  • EOY Price: $44.33

Kingsoft Cloud was the first Chinese company to go public in the United States after China’s Luckin Coffee was tangled in a scandal surrounding its financials. The company saw its stock pop right away, and though it dipped briefly in May, its shares have trended largely positive. The company ends the year with its stock up more than 160 percent above its IPO price.

ZoomInfo

  • IPO date: June 3, 2020
  • IPO price: $21
  • Last private valuation: Unknown
  • IPO valuation: $8.2 billion
  • EOY Price: $47.10’

ZoomInfo went public at a time when most U.S.-based tech companies refused to do so. The COVID-19 pandemic essentially put all tech IPOs on pause, but the IPO market picked up again with ZoomInfo. The company’s stock closed around 62 percent above its IPO price on its first day of trading and, while it took a dip in September, it’s still remained above its IPO price all year. ZoomInfo opened at $47.10 on Dec. 23—124 percent above its IPO price.

Vroom

  • IPO date: June 8, 2020
  • IPO price: $22
  • Last private valuation: $1.45 billion
  • IPO valuation: $2.5 billion
  • EOY Price: $44.47

Vroom was among the first IPOs over the summer to see its stock more than double on its first day of trading, reigniting the IPO vs direct listing discussion. The company closed out its first day of trading at $47.90, more than double its price, even after it had increased its price range and priced above it. Things went up from there, but have settled back down to around where the company was in June. Vroom’s stock opened at $44.47 on Dec. 23.

Agora

  • IPO date: June 25, 2020
  • IPO price: $20
  • Last private valuation: Unknown
  • IPO valuation: About $2 billion, according to TechCrunch
  • EOY price: $43.02

Agora saw its stock price spike on its first day of trading, closing more than 150 percent above its IPO price. It hasn’t kept that momentum since then, though there have been times (like September) when its stock price surged. Agora’s stock opened at $43.02 on Dec. 23.

Lemonade

  • IPO date: July 2, 2020
  • IPO price: $29
  • Last private valuation: $2 billion
  • IPO valuation: $1.6 billion, excluding underwriters’ options
  • EOY price: $122.64

Lemonade was the first high-profile insurtech company to go public this year, also around the time when the tech IPO market started to pick up after a COVID-19-induced lull. It immediately saw its stock surge with its trading debut, closing out its first day of trading at $69.41, 139 percent above its IPO price. Its stock price stayed relatively flat until December, when it started steadily climbing. Lemonade opened at $122.64 on Dec. 23.

nCino

  • IPO date: July 13, 2020
  • IPO price: $31
  • Last private valuation: Unknown
  • IPO valuation: $2.8 billion
  • EOY price: $82.20

nCino’s stock closed 195 percent above its IPO price on its first day of trading, making it one of the largest “pops” of the year. Its first day closing price came out to $91.59, but its stock has dropped considerably since then, opening at $82.20 on Dec. 23.

Jamf

  • IPO date: July 21, 2020
  • IPO price: $26
  • Last private valuation: Unknown
  • IPO valuation: $3 billion
  • EOY price: $34.21

Jamf’s stock has steadily been declining since its first-day trading surge. The company priced its IPO at $26 and had a first-day close of $39.20. Jamf, which deals with Apple enterprise management and was founded in 2002, opened at $34.21 on Dec. 23.

BigCommerce

  • IPO date: Aug. 4, 2020
  • IPO price: $24
  • Last private valuation: Unknown
  • IPO valuation: $1.6 billion
  • EOY price: $72

The Austin-based company saw the largest IPO pop for a VC-backed tech company that went public in 2020, with its stock closing its first day of trading up by around 201 percent. Things have settled down a bit since then, and the company is poised to end the year around the same price it started trading. BigCommerce’s stock opened at $72 on Dec. 23.

Duck Creek Technologies

  • IPO date: Aug. 13, 2020
  • IPO price: $27
  • Last private valuation: Unknown
  • IPO valuation: $3.5 billion
  • EOY price: $45.83

Duck Creek Technologies was another slightly different venture-backed tech IPO. The company is 20 years old, and private-equity firm Apax Partners acquired a majority stake in the company in 2016. Upon going public, Duck Creek’s stock closed at $40, around 48 percent above its IPO price. It’s gone up since then, and opened at $45.83 on Dec. 23.

Snowflake

  • IPO date: Sept. 16, 2020
  • IPO price: $120
  • Last private valuation: $12.4 billion
  • IPO valuation: $33.2 billion
  • $341.16

Snowflake was one of the largest IPOs of this year, along with DoorDash and Airbnb, and came out to be the largest software IPO of all time. Its stock jumped 104 percent on its first day of trading, closing at $253.93. It’s gone up since then, and opened at $341.16 on Dec. 23.

JFrog

  • IPO date: Sept. 16, 2020
  • IPO price: $44
  • Last private valuation: $1 billion
  • IPO valuation: $4 billion
  • EOY price: $67.48

JFrog’s IPO probably didn’t get as much as attention as it should have, as it went public the same day as Snowflake, which took a lot of the spotlight. But still, JFrog had an excellent first day of trading. Its stock opened nearly 62 percent above its IPO price of $44 and closed at $64.79. It’s up a bit since then, opening at $67.48 on Dec. 23.

Sumo Logic

  • IPO date: Sept. 17, 2020
  • IPO price: $22
  • Last private valuation: $1 billion
  • IPO valuation: $2.2 billion
  • EOY price: $33.89

Sumo Logic had a nice pop on its first day of trading, opening 22 percent above its IPO price. The company’s IPO came during a busy week that also saw JFrog and Snowflake go public. Since Sumo Logic went public, its stock price has increased, opening at $33.89 on Dec. 23.

Amwell Health

  • IPO date: Sept. 17, 2020
  • IPO price: $18
  • Last private valuation: Unknown
  • IPO valuation: $3.96 billion
  • EOY price: $29

This year has been a big one for telehealth and telemedicine companies. IPOs for telehealth companies Amwell and One Medical were notable for that reason. Amwell closed its first day of trading at $23.07, above its IPO price of $18. Its stock has risen since then, opening at $29 on Dec. 23.

Unity

  • IPO date: Sept. 18, 2020
  • IPO price: $52
  • Last private valuation: More than $6 billion
  • IPO valuation: $13.7 billion
  • EOY price: $174.89

Video game software development company Unity Technologies has had a big year, with gaming and entertainment seeing a boost because of the large number of people staying home this year. Its stock has also surged to more than triple its IPO price from around four months ago after a strong stock market debut. The company’s stock opened at $174.89 on Dec. 23.

Palantir

  • IPO date: Sept. 30, 2020
  • Reference price: $7.25
  • Last private valuation: $10.5 billion, according to CNBC
  • IPO valuation: $22 billion
  • EOY price: $28.95

Palantir’s long-awaited public debut came in the form of a direct listing. It began trading at $10, 38 percent above its reference price of $7.25, but closed its first and second days of trading below $10. Its stock has gone up since then and opened at $28.95 on Dec. 23.

Asana

  • IPO date: Sept. 30, 2020
  • Reference price: $21
  • Last private valuation: At least $2 billion, per Crunchbase
  • IPO valuation: $5.5 billion
  • EOY price: $30.50

Because Asana went public through a direct listing rather than a traditional IPO, there was no first-day stock surge, though the stock did open higher than its reference price of $21. The project management software co-founded by Facebook co-founder Dustin Moskovitz was one of two notable direct listings this year. Asana’s stock has steadily climbed since then, opening at $30.50 on Dec. 23.

McAfee

  • IPO date: Oct. 22, 2020
  • IPO price: $20
  • Last private valuation: Unknown
  • IPO valuation: $8.6 billion
  • EOY price: $17.46

McAfee’s stock hasn’t performed well since it went public (for the second time) in October. The company’s stock closed its first day of trading at $18.70, lower than its IPO price of $20. Its stock has declined further since then, opening at $17.46 on Dec. 23.

Root Insurance

  • IPO date: Oct. 28, 2020
  • IPO price: $27
  • Last private valuation: $3.65 billion
  • IPO valuation: $6.7 billion
  • EOY price: $19.50

Root Insurance was another buzzy insurtech company to go public in 2020, following Lemonade. The Ohio-based company’s IPO ended up being the largest in the state’s history, according to Investopedia. However, Root’s stock hasn’t performed as well as Lemonade’s, or that well in general. The company closed its first day of trading at $27, the same as its IPO price, which is a little odd during a time when companies see their stock surge on the first day of trading. Its stock has fallen since then, and opened at $19.50 on Dec. 23.

C3.ai

  • IPO date: Dec. 9, 2020
  • IPO price: $42
  • Last private valuation: Unknown
  • IPO valuation: $9.6 billion
  • EOY price: $166.90

C3.ai was one of the lesser-known companies to go public the week of Dec. 9, as consumer-facing household names like Airbnb and DoorDash also started trading on the public markets. But the enterprise artificial intelligence company has had a stellar performance so far, nonetheless. Its stock more than doubled on its first day of trading, closing at $92.49. C3.ai has continued to climb, with its stock opening at $166.90 on Dec. 23.

DoorDash

  • IPO date: Dec. 9, 2020
  • IPO price: $102
  • Last private valuation: $16 billion
  • IPO valuation: $39 billion
  • EOY price: $155

DoorDash’s business saw a boom this year with so many people stuck at home and ordering food. And the company ended a big year with one of the largest IPOs of 2020. DoorDash’s stock surged 85 percent on its first day of trading, though the company’s stock has trickled off since then, with its stock opening at $155 on Dec. 23.

Airbnb

  • IPO date: Dec. 10, 2020
  • IPO price: $68
  • Last private valuation: $18 billion, per CNBC, down from $31 billion pre-COVID.
  • IPO valuation: $47 billion
  • EOY price: $162.81

While Airbnb faced several challenges this year because of the COVID-19 pandemic’s effects on travel, the company still went public in 2020, as it said it would last year, and ended up being the largest tech IPO of the year. Its stock more than doubled during its first day of trading. While it hasn’t been trading for long on the public markets, Airbnb’s stock price has gone up, opening at $162.81 on Dec. 23.

Wish

  • IPO date: Dec. 16, 2020
  • IPO price: $24
  • Last private valuation: $11.2 billion
  • IPO valuation: $14.1B billion
  • EOY price: $22.22

Wish was one of the last venture-backed tech companies to go public this year. It’s only been on the public markets for about a week, so take its end-of-year price with a grain of salt. The company’s opening trade when it went public was $22.75, according to CNBC, and it closed its first day of trading at $20.05 after pricing at $24. Its stock is still down, opening at $22.22 on Dec. 23.

Illustration: Li-Anne Dias

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Source: https://news.crunchbase.com/news/tech-cos-gone-public-in-2020/

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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

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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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Zenefits Payroll Glitch Results In Delayed Paychecks For Small-Business Employees

Employees of several small businesses weren’t paid Friday after payroll and benefits platform Zenefits closed for the Juneteenth holiday and experienced a glitch, two people affected told Crunchbase News.

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Employees of several small businesses were paid late Friday after payroll and benefits platform Zenefits closed for the Juneteenth holiday and experienced a glitch, two people affected told Crunchbase News.

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Zenefits provides tools for businesses to handle HR, onboarding, benefits and payroll. It’s used by many small and medium-sized businesses. The San Francisco-based company has raised at least $584 million in known venture funding, per Crunchbase data, and was most recently valued at $4.5 billion by private investors when it raised funding in 2015.

On Friday, several people took to the comments section of a Facebook post Zenefits made in honor of Juneteenth, which this week became a federal holiday celebrating the end of slavery in the U.S., to complain that their employees hadn’t been paid, despite their respective companies processing payroll.

The post was soon deleted.

John Bazyk, CEO of Connecticut-based security system company Command Corp., told Crunchbase News that he realized Friday morning that his company’s employees hadn’t been paid after one of them contacted him.

Command usually sees a tax withdrawal and employees’ net pay come out of its bank account on Wednesday, but this week only the tax withdrawal was taken on Wednesday, Bazyk said.

The payroll amount was taken out this morning, but had yet to be disbursed to employees as of 4 p.m. Eastern, he said.

Bazyk said he spent four hours Friday trying to deal with the issue, and hadn’t received any communication from Zenefits such as an email alerting him of the issue.

Some employees have bills that automatically debit from their bank accounts, he said, and not being paid could put them in a bind.

“The employees are upset at me, they think I didn’t run payroll,” Bazyk said. “Some of these are new employees. They’re joining a new company and it’s like, ‘Wait I’m not getting paid?’ ”

Usually preceding a holiday, Zenefits will remind customers to run payroll early, Bazyk said, but that wasn’t the case this week. He noted that he understands it’s a unique situation — with President Biden on Thursday signing legislation that made Friday a new federal holiday in celebration of Juneteenth — but the situation and lack of communication from Zenefits were frustrating.

“Even if they make it right, we’re probably going to leave them because it’s an unacceptable mistake,” Bazyk said.

It’s not clear how many of Zenefits’ customers or their employees were impacted by the error.

Nancy, a controller and HR administrator at a company in the Washington, D.C., area, said she was notified by two employees Friday that they hadn’t been paid. Around 2:15 p.m. Eastern, she saw a notification in the Zenefits portal acknowledging the issue. Nancy did not want to share her full name because she was not authorized to speak on behalf of her employer.

“Businesses can make mistakes,” she said. “Whatever caused the debit to not go out is not good. But then to not be there to answer what happened … that’s bad.”

A Zenefits spokeswoman said in an email to Crunchbase News that the issue causing the payroll delay was resolved, and that employees would receive payment by 5 p.m. Pacific time.

“Today, Zenefits experienced an issue that resulted in a delay for some employees’ direct deposits,” the statement read. “This has been resolved and we can confirm that employees who did not receive their direct deposit this morning will receive it today by 5 PM PT. All employees will be paid and the funds have already been processed. We are currently waiting on the banks to send them out this afternoon.”

Another Zenefits spokeswoman said in an email at 2:40 p.m. Pacific time that the issue was resolved and affected employees had been paid.

Illustration: Li-Anne Dias

Editor’s Note: This story was updated after it was first published to reflect that payment for affected employees had gone through late Friday afternoon, after Crunchbase News first spoke with sources.

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

On Friday, several people took to the comments section of a Facebook post Zenefits made in honor of Juneteenth, which this week became a federal holiday celebrating the end of slavery in the U.S., to complain that their employees hadn’t been paid, despite their respective companies processing payroll.

Source: https://news.crunchbase.com/news/zenefits-payroll-glitch-results-in-small-business-employees-not-getting-paid/

zenefits-payroll-glitch-results-in-delayed-paychecks-for-small-business-employees

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