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Uber in talks to sell ATG self-driving unit to Aurora – TechCrunch

Eighteen months ago, Uber’s self-driving car unit, Uber Advanced Technologies Group, was valued at $7.25 billion following a $1 billion investment from Toyota, DENSO and SoftBank’s Vision Fund. Now, it’s up for sale and a competing autonomous vehicle technology startup is in talks with Uber to buy it, according to three sources familiar with the […]…

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Eighteen months ago, Uber’s self-driving car unit, Uber Advanced Technologies Group, was valued at $7.25 billion following a $1 billion investment from Toyota, DENSO and SoftBank’s Vision Fund. Now, it’s up for sale and a competing autonomous vehicle technology startup is in talks with Uber to buy it, according to three sources familiar with the deal.

Aurora Innovation, the startup founded by three veterans of the autonomous vehicle industry who led programs at Google, Tesla and Uber, is in negotiations to buy Uber ATG. Terms of the deal are still unknown, but sources say the two companies have been in talks since October and it is far along in the process.

An Uber spokesperson declined to comment, citing that the company’s general policy is not to comment on these sorts of inquiries. An Aurora spokesperson said it doesn’t comment on speculation.

The talks could falter. But if successful, they have the potential to triple Aurora’s headcount and allow Uber to unload an expensive long-term play that has sustained several controversies in its short life.

Uber has ‘been shopping’

Shedding Uber ATG would follow a string of spin-offs or other deals in recent months that has narrowed Uber’s focus and costs into core areas of ride-hailing and delivery. Two years ago, Uber’s business model could be described as an “all of the above approach,” a bet on generating revenue from all forms of transportation, including ride-hailing, micromobility, logistics, package and food delivery and someday even autonomous robotaxis.

That strategy has changed since Uber went public and has further accelerated as the COVID-19 pandemic has upended the economy and fundamentally changed how people live. In the past 11 months, Uber has dumped shared micromobility unit Jump, sold a stake in its growing but still unprofitable logistics arm, Uber Freight and acquired Postmates. (The Postmates acquisition is expected to close in the fourth quarter of 2020).

Uber ATG has been the company’s last big, expensive holding. Uber ATG holds a lot of long-term promise and high present-day costs; Uber reported in November that ATG and “other technologies” (which includes Uber Elevate) had a net loss of $303 million in the nine months that ended September 30, 2020. In its S-1 document, Uber said it incurred $457 million of research and development expenses for its ATG and “other Technology Programs” initiatives.

Four sources within the industry told TechCrunch that Uber “has been shopping” ATG to several companies, including automakers this year. Sources have also told TechCrunch that Uber ATG was facing a potential down round, which might have been an additional motivator behind the talks with Aurora.

Aurora, which was founded in 2017, is focused on building the full self-driving stack, the underlying technology that will allow vehicles to navigate highways and city streets without a human driver behind the wheel. Aurora has attracted attention and investment from high-profile venture firms, management firms and corporations such as Greylock Partners, Sequoia Capital, Amazon and T. Rowe Price, in part because of its founders Sterling Anderson, Drew Bagnell and Chris Urmson.

Urmson led the former Google self-driving project before it spun out to become the Alphabet business Waymo. Anderson is best known for leading the development and launch of the Tesla Model X and the automaker’s Autopilot program. Bagnell, an associate professor at Carnegie Mellon, helped launch Uber’s efforts in autonomy, ultimately heading the autonomy and perception team at the Advanced Technologies Center in Pittsburgh.

Aurora has grown from a small upstart to a company with 600 employees and operations in the San Francisco Bay Area, Pittsburgh, Texas and Bozeman, Montana, home of Blackmore, the lidar company it acquired in 2019. About 12% of Aurora’s current workforce previously worked at Uber, according to records on LinkedIn.

Despite that growth, Aurora is still dwarfed by Uber ATG, the self-driving subsidiary that is majority owned by Uber. Uber ATG has more than 1,200 employees with operations in several locations, including Pittsburgh, San Francisco and Toronto. Uber holds an 86.2% stake (on a fully diluted basis) in Uber ATG, according to filings with the U.S. Securities and Exchange Commission. Its investors hold a combined stake of 13.8% in Uber ATG.

Uber’s public leap into autonomous vehicle technology began in earnest in early 2015 when the company announced a strategic partnership with Carnegie Mellon University’s National Robotics Center. The agreement to work on developing driverless car technology resulted in Uber poaching dozens of NREC researchers and scientists. A year later, with the beginnings of an in-house AV development program, Uber, then led by co-founder Travis Kalanick, acquired a self-driving truck startup called Otto.

The acquisition was troubled almost from the start. Otto was founded earlier that year by one of Google’s star engineers, Anthony Levandowski, along with three other Google veterans: Lior Ron, Claire Delaunay and Don Burnette. Uber acquired Otto less than eight months later.

Two months after the acquisition, Google made two arbitration demands against Levandowski and Ron. Uber wasn’t a party to either arbitration. While the arbitrations played out, Waymo separately filed a lawsuit against Uber in February 2017 for trade secret theft and patent infringement. Waymo alleged in the suit, which went to trial but ended in a settlement in 2018, that Levandowski stole trade secrets, which were then used by Uber.

Under the settlement, Uber agreed not to incorporate Waymo’s confidential information into their hardware and software. Uber also agreed to pay a financial settlement that included 0.34% of Uber equity, per its Series G-1 round $72 billion valuation. That was calculated at the time to be about $244.8 million in Uber equity.

In the early days of the Otto acquisition, Uber estimated it could have 75,000 autonomous vehicles on the road by 2019 and be operating driverless taxi services in 13 cities by 2022, according to court documents unsealed and first reported on by TechCrunch. To reach those ambitious goals, the ride-hailing company was spending $20 million a month on developing self-driving technologies.

Uber never came close to hitting those targets, a mission that was derailed by technical hurdles as well as the lawsuit with Waymo, its troubled relationship with Lewandowski and the fatal crash in March 2018 involving one of its self-driving test vehicles in Tempe, Arizona.

Uber halted all testing following the crash and has been slowly ramping up its more public-facing operations over the past 18 months. The expensive undertaking of developing autonomous vehicles prompted Uber to spin out the company in spring 2019 after it closed $1 billion in funding from Toyota, auto parts maker Denso and SoftBank’s Vision Fund.

The spin-out, which occurred about one month before Uber’s debut as a publicly traded company, had been the subject of speculation for months. It was seen as a way for Uber to share the expensive load with other investors and allow it to focus on its core competencies and nearer-term profit goals.

What Aurora gains

Troubles aside, Uber ATG has two important and critical features that make it attractive to Aurora: talent and Toyota.

The Japanese car giant had already invested $500 million into Uber prior to the 2019 injection of cash. At the time, the two companies announced their intention to bring pilot-scale deployments of automated Toyota Sienna-based ridesharing vehicles to the Uber ridesharing network in 2021, “leveraging the strengths of Uber ATG’s self-driving technology alongside the Toyota Guardian advanced safety support system.”

The 2019 investment into the Uber ATG unit deepened Toyota’s relationship with the company.

“While Uber was facing off against Waymo in the trade secrets lawsuit, Aurora launched with a bang. Within 18 months, Auora had secured several kinds of partnerships with Hyundai, Byton and VW Group. Some have fizzled, while there have been new gains, notably with Fiat Chrysler Automobiles. The musical chair-like changes underscores the sheer number of hopeful players in the self-driving business — a market that is still full of commercial and technical unknowns — and the fickleness of incumbent car makers in search of the best tech and deal.”

VW Group, which had touted its Aurora partnership in January 2018, confirmed to TechCrunch in June 2019 that “activities under our partnership have been concluded.” VW Group ultimately put its capital behind Argo AI, another autonomous vehicle technology developer that had locked up backing and a customer deal with Ford.

While Hyundai does have a minority stake in Aurora, it also went ahead and locked in a joint venture in fall 2019 with autonomous driving technology company Aptiv. Under the deal with Aptiv, both parties took a 50% ownership stake in the new joint company that is now called Motional. The combined investment in Motional from both companies will total $4 billion in aggregate value (including the value of combined engineering services, R&D and IP).

Aurora has always stated that its full driving stack — the combined suite of software and hardware that provides the brains for an AV — would be vehicle-agnostic, but some of its early testing and partnerships suggested it was focused on robotaxi applications, not logistics. Aurora started talking more openly last year about applying its technology to long-haul trucking and has become more bullish on that application, particularly following its Blackmore acquisition.

Aurora announced in July 2020 that it was expanding into Texas and planned to test commercial routes in the Dallas-Fort Worth Area with a mix of Fiat Chrysler Pacifica minivans and Class 8 trucks. A small fleet of Pacificas were expected to arrive first. The trucks will be on the road in Texas by the end of the year, according to the company.

The Jump precedent

What’s unclear is how an acquisition of Uber ATG might be structured; and more importantly, if it will retain any interest in the enterprise. Even with the expected depletion in Uber ATG’s valuation, it would be seemingly out-of-range for Aurora unless it was able to secure additional outside investment or structure the deal in a way that would allow Uber to keep some equity. 

There is precedent for the latter. Earlier this year, Uber led a $170 million investment round into Lime. As part of the complex arrangement, Uber offloaded Jump, the bike and scooter-sharing unit, to Lime.

Rumors that Uber CEO Dara Khosrowshahi was keen to get rid of Uber ATG have popped up from time to time in the past year. But as the COVID-19 pandemic took hold, Khosrowshahi and other executives began to focus on its core competency of ride-hailing and double down on delivery. In addition to its micromobility unit and the Uber Freight spin-off, it has divested itself internationally of a number of regional operations that were proving too costly to grow in competition with strong local rivals.

It was on the heels of the Jump deal that interest in selling off Uber ATG ramped up, according to two sources.

One investor in the industry described it as an interesting Plan B for Uber, a deal that would allow the company to take ATG off the books, while potentially getting to benefit from a little upside.

Source: https://techcrunch.com/2020/11/13/uber-in-talks-to-sell-atg-self-driving-unit-to-aurora/

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South Korean antitrust regulator fines Google $177M for abusing market dominance – TechCrunch

The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in the Android operating system (OS) market. The U.S. tech company has restricted market competition by prohibiting local smartphone makers like Samsung Electronics and LG Electronics from customizing their Android OS, through Google’s anti-fragmentation agreements (AFA), […]

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The Korea Fair Trade Commission (KFTC) said on Tuesday it fined Google $177 million for abusing its market dominance in the Android operating system (OS) market.

The U.S. tech company has restricted market competition by prohibiting local smartphone makers like Samsung Electronics and LG Electronics from customizing their Android OS, through Google’s anti-fragmentation agreements (AFA), according to the antitrust regulator statement.

Under the AFA, smartphone developers are not allowed to install or develop “Android forks”, modified versions of Android.

The KFTC banned Google LLC, Google Asia Pacific and Google Korea from imposing local smartphone developers to sign the AFA and make changes on details about the existing version. The new measure in South Korea will be applied to not only mobiles devices but also other Android-powered smart devices including watches and TVs.

Android has spurred innovation among Korean mobile operator owners and software developers and that has led to a better user experience for Korean consumers, Google said in its statement. “The KFTC’s decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers. Google intends to appeal the KFTC’s decision,” a spokesperson at Google said.

The commission has been investigating Google over the anti-competition practice in OS market since July 2016, a spokesperson at KFTC said.

Google’s global mobile OS market share excluding China has been increased to 97.7% in 2019 from 38% in 2010, as per KFTC’s announcement.

Google’s AFA has also limited to launch tech companies’ new devices like smart watches and TVs using the operating system (OS) including Samsung’s smart watch in 2013, LG Electronics’ LTE smart speaker in 2018 as well as Amazon’s smart TV in 2018.

South Korea’s watchdog is probing into three other cases including the Play Store app market, billing system and the advertisement market.

Meanwhile, South Korea’s “anti-Google law”, takes effect on 14 September, based on Korea Communications Commission’s press release.

In late August, South Korea passed a bill to curb global tech companies including Google and Apple from imposing their own proprietary in-app payment service and commissions on app developers.

Source: https://techcrunch.com/2021/09/14/south-korean-antitrust-regulator-fines-google-177m-for-abusing-market-dominance/

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The SEC and the DOJ just charged this startup founder with fraud, saying he lied to Tiger and others – TechCrunch

Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile app testing company Headspin, with fraud. The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him for serving as a corporate […]

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Today, both the U.S. Department of Justice and the Securities and Exchange Commission charged Manish Lachwani, cofounder of a mobile app testing company Headspin, with fraud. The SEC says he violated antifraud provisions, and the civil penalties it’s seeking include a permanent injunction, a conduct-based injunction, and to bar him for serving as a corporate executive or board member.

The DOJ, which arrested Lachwani earlier, has accused him of one count of wire fraud and one count of securities fraud, and the associated penalties if he’s found guilty are are more harsh, including, for wire fraud, a maximum sentence of 20 years in prison and a fine of $250,000. If he’s found guilty of securities fraud, he faces a maximum sentence of 20 years in prison and a fine of $5,000,000.

Both the the SEC and the DOJ say Lachwani — who led the six-year-old company as CEO until May of last year — defrauded investors out of $80 million by falsely claiming that his company, Headspin, had “achieved strong and consistent growth in acquiring customers and generating revenue” when he was pitching its Series C round to potential backers.

By the SEC’s telling, his fabrications were designed to help secure the round at a so-called unicorn valuation. That apparent plan worked, too, with Palo Alto-based Headspin attracting coverage in Forbes in February of last year after Dell Technologies Capital, Iconiq Capital and Tiger Global provided the company with $60 million in Series C funding at a $1.16 billion valuation. Forbes reported at the time that the valuation was double the valuation investors assigned HeadSpin when it closed its Series B round in October 2018.

The SEC also says that Lachwani was looking to enrich himself, saying he did so “by selling $2.5 million of his HeadSpin shares in a fundraising round during which he made misrepresentations to an existing HeadSpin investor.” (It isn’t clear from its complaint whether the SEC is referring to the Series C or an earlier round.)

The DOJ’s federal complaint suggests that Lachwani’s alleged scheming dates back to at least November 2019, when the company was fundraising. It says it was then that the success of Palo Alto-based Headspin — which helps apps and devices work in different environments around the world – was being knowingly misrepresented to investors by Lachwani.

More specifically, the complaint alleges that “in materials and presentations to potential investors, Lachwani reported false revenue and overstated key financial metrics of the company. . . he maintained control over operations, sales, and record-keeping, including invoicing, and he was the final decision maker on what revenue was booked and included in the company’s financial records.”

In the investigation that led to the DOJ’s charges, the FBI discovered “multiple examples” of Lachwani “instructing employees to include revenue from potential customers that inquired but did not engage Headspin, from past customers who no longer did business with Headspin, and from existing customers whose business was far less than the reported revenue,” says the department.

How far off were these collective calculations? The complaint says that ultimately, Lachwani “provided investors false information that overstated Headspin’s annual recurring revenue . . . by approximately $51 to $55 million.”

According to the complaint, Lachwani’s fraud unraveled after the company’s board of directors conducted an internal investigation and revised HeadSpin’s valuation down from $1.1 billion to $300 million. Indeed, in August of last year, The Information reported that the company was planning to lower the value of its Series C stock by nearly 80%.

The outlet reported at the time that Lachwani had already been replaced by another executive. That person, according to LinkedIn, is Rajeev Butani, who joined Headspin as its chief sales officer around the time its Series C round was being announced in February of last year.

Nikesh Arora, a former SoftBank president, the current CEO and chairman of Palo Alto Networks helped lead the internal review as a then-director on the board of Headspin, said The Information.

The SEC says it’s investigation is continuing. Meanwhile, the DOJ notes in its announcement that “a complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.”

Either way, the outlook doesn’t look very promising right now for Lachwani, who, according to Forbes, previously sold a mobile cloud business to Google and wound up co-founding Headspin after Yahoo cofounder Jerry Yang introduced him to Brien Colwell, a former Palantir and Quora engineer was working at the time on a different startup.

Colwell remains with Headspin as its CTO. He has not been named in either the SEC or the DOJ’s complaints relating to Headspin.

The company itself, which says it has been cooperating with the government’s investigation, was also not charged.

Pictured above, left to right, Headspin founders Lachwani and Colwell.

The DOJ’s federal complaint suggests that Lachwani’s alleged scheming dates back to at least November 2019, when the company was fundraising. It says it was then that the success of Palo Alto-based Headspin — which helps apps and devices work in different environments around the world – was being knowingly misrepresented to investors by Lachwani.

Source: https://techcrunch.com/2021/08/25/the-sec-and-the-doj-just-charged-this-startup-ceo-with-fraud-saying-he-lied-to-tiger-and-others/

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Blockchain startup XREX gets $17M to make cross-border trade faster – TechCrunch

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a dollar shortage. Blockchain startup XREX was launched to help cross-border businesses in emerging markets perform faster transactions with products like a payment escrow service and crypto-fiat exchange platform. The Taipei-headquartered company announced today it has […]

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Blockchain startup co-founders Winston Hsiao and Wayne Huang in front of the company's logo

XREX co-founders Winston Hsiao and Wayne Huang

A substantial portion of the world’s trade is done in United States dollars, creating problems for businesses in countries with a dollar shortage. Blockchain startup XREX was launched to help cross-border businesses in emerging markets perform faster transactions with products like a payment escrow service and crypto-fiat exchange platform.

The Taipei-headquartered company announced today it has raised $17 million in pre-Series A funding led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a $7 million seed round in 2019.

Part of the new round will be use to apply for financial licenses in Singapore, Hong Kong and South Africa, and partner with banks and financial institutions, like payment gateways.

“We specifically wanted to build a regulatory-friendly cap table,” XREX co-founder and chief executive officer Wayne Huang told TechCrunch. “It’s really hard for a startup like us to raise from banks and public companies, but as you can see, this round we deliberately to do that and we were successful.”

Huang sold his previous startup, anti-malware SaaS developer Armorize Technologies, to Proofpoint in 2013. Armorize analyzed source code to find vulnerabilities, and many of its clients were developers in Bangalore and Chennai, so Huang spent a lot of time traveling there.

“We ran into all sorts of cross-border money transfer issues. It seemed almost unstoppable,” Huang said. “Growing up in the U.S. and then in Taiwan, we were not exposed to those issues. So that planted a seed, and then when Satoshi [Nakamoto] published the bitcoin white paper, of course that was a big thing for all cybersecurity experts.”

He began thinking of how blockchain can support financial inclusion in emerging markets like India. The idea came to fruition Huang teamed up with XREX co-founder Winston Hsiao, the founder of BTCEx-TW, one of Taiwan’s first bitcoin exchanges. Hsiao grew up in India and founded Verico International, exporting Taiwan-manufactured semiconductors and electronics to other countries, so he was also familiar with cross-border trade issues.

XREX Crypto Services give merchants, especially those in countries with low U.S. dollar liquidity, tools to conduct trade in digital fiat currencies. “They have to get quick access to the U.S. dollar and be able to pay it out quick enough for them to secure important commodities that they want to import, and that’s the problem we want to solve,” said Huang.

To use the platform, merchants and their customers sign up for XREX’s wallet, which includes a commercial escrow service called Bitcheck. Huang said it is similar to having a standby letter of credit from a commercial bank, because buyers can use it to guarantee they will be able to make payments. Bitcheck uses digital currencies like USDT and USDC, stablecoins that are pegged to the U.S. dollar.

Merchants pay stablecoin to suppliers and XREX escrows the funds until the supplier provides proof of shipment, at which point it moves the payment to them. XREX’s crypto-fiat exchange allows users to convert USDT and USDC to U.S. dollars, which they can also withdraw and deposit through the platform.

Part of XREX’s funding will be used to expand its fiat currency platform, though Huang said it doesn’t plan to add too many cryptocurrencies “because we’re not built for crypto traders, we’re built for businesses and brand really matters to them. Brand and compliance, so whatever the U.S. Comptroller of the Currency says is a good stablecoin is what they’re going to use.”

Some of XREX’s partners include compliance and anti-money laundering providers like CipherTrace, Sum&Substance and TRISA. Part of XREX’s funding will be used to expand its security and compliance features, including Public Profiles, which are mandatory for customers, and user Reputation Index to increase transparency.

In a statement about the funding, CDIB Capital Innovation Fund head Ryan Kuo said, “CDIB was an early investor in XREX. After witnessing the company’s fast revenue growth and their commitment to compliance, we were determined to double our investment and lead this strategic round.”

The Taipei-headquartered company announced today it has raised $17 million in pre-Series A funding led by CDIB Capital Group. The oversubscribed round also included participation from SBI Investment (a subsidiary of SBI Holdings), Global Founders Capital, ThreeD Capital, E.Sun Venture Capital, Systex Corporation, MetaPlanet Holdings, AppWorks, BlackMarble, New Economy Ventures and Seraph Group. XREX’s last funding was a $7 million seed round in 2019.

Source: https://techcrunch.com/2021/08/22/blockchain-startup-xrex-gets-17m-to-make-cross-border-trade-faster/

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