These four iconic European founders plan to kick the asses of VCs who never started a company

Until recently Taavet Hinrikus, cofounder of Wise, and Sten Tamkivi, cofounder of Teleport, had banded together as a sort of ‘mini Angel brand’ known as “Taavet+Sten”. Tamkivi has done around 50 angel deals, Hinrikus has, reportedly, done as many as 150. But they were effectively pooling their personal capital as Angel investors. However, evidently, this wasn’t enough for either, plus as former co-founders, they were viscerally aware that almost no VC funds in Europe have been founded by actual former entrepreneurs. And if you think about it, they’re right.

Atomico might have Niklas Zennstrom, or PRO Founders has (or rather had, as both are far more concentrated elsewhere) Brent Hoberman (LastMinute.com) and Michael Birch (Bebo). But these are hardly recent entrepreneurs, to put it mildly. In the US, founder-founded VCs are far more in abundance than in Europe, a fact which has not escaped many a European entrepreneur.

So today’s launch of a new project involving Hinrikus and Tamkivi, together with two others, is a tantalizing glimpse of a new wave of European VC, founded and run by former tech startup ‘operators’.

“Plural”, is a new €250m early-stage venture fund started by Ian Hogarth (formerly Songkick), Tamkivi, Hinrikus and Khaled Heloui (a former tech CEO). The fund founders say other tech founder/partners will be unveiled in due course, and that they have ambitions to lead early-stage funding rounds from the earliest stages all the way up to €10m. The band will also focus on 4-5 deals a year per investor, so that they can be “hands-on”.

As the Plural founders point out, less than 10 per cent of investors in Europe are former operators, in contrast to more than half of tech investors in the US. This means founders miss out on the experience of other founders-turned-investors, and it’s a valid criticism.

In a statement Helioui said: “So much opportunity is left untapped today as uncommon founders fail to meet standard investors’ pattern recognition criteria. Sadly investors lack the risk appetite needed to fulfill founders’ ambitions and the full extent of the impact of those founders is not realized. There is so much potential to unlock, especially in Europe, if we change the funding mechanisms that still act as conservative gatekeepers today.”

Tamkivi said: “We are huge optimists for the potential of technology coming from Europe which can benefit the whole world, as well as improve the lives of people across the continent.”

Between them the founders have founded four startups – Wise, Songkick, Teleport and Certific – and played a significant role in three companies, including Skype, Bigpoint and Topia. Companies in their collective existing portfolio include Deliveroo, Hopin, Pipedrive, Chorus, Uber, Zego and Bolt.

They say that as Plural, they have already invested in 14 companies including Feather, NFTport an NFT infrastructure company, energy storage company Field, metaverse company Ready Player Me and student banking challenger MOS. However, the scale of their investments in these companies was not revealed.

In a statement, Hinrikus, said: “We’re the investors we would have liked to have when we were building our own companies. Founding a company is a craft and the best way to learn that craft is to work alongside those who have done it before.” 

Hogarth added: “We call experienced founders ‘unemployables’, because once you’ve experienced the intense authorship that comes with creating something new it’s hard to work for anyone again. We created Plural to give unemployables a place to call home and put their entrepreneurial energy behind missions and founders they deeply believe in.”

Hinrikus co-founded Wise in 2010. Wise completed the first-ever direct listing on the London market, which was also the biggest tech listing ever in the UK. Before co-founding Wise, Taavet was the 1st employee at Skype. Hogarth co-founded Songkick in 2007, sold to Warner Music Group in 2017 and won a $130m settlement against TicketMaster for anti competitive behaviour. Helioui was CEO of Bigpoint from 2013 to 2017 of which he led the sale to Youzu. He was also one of the early backers of Uber, Deliveroo, Bolt Payments and Mos and helped found the Armenian National Interests Fund of which he presides the investment committee. Tamkivi co-founded Teleport, sold to Topia in 2017.

In an interview Hinrikus offered some fighting talk: “The only VCs are all spreadsheet junkies, bankers, consultants, they have no idea what it means to run a company, how to build a company. So that’s the problem we’re solving. We’re building an investment platform, where all the GPs are former founders. And we’re going to scale this to a large number, an irresistible army of ‘unemployables’, who will be your side when you’re building your company.”

Hogarth added: “We’re trying to do something that is really a lot more of a peer-to-peer structure, where, the next ‘unemployable’ that joins has the same economic rights as Taavet and I, and ultimately has the same autonomy and freedom to make good investment decisions. So it’s an attempt to respect the fundamental independence of former founders and operators. We also think that that structure is the only way to scale, and this hasn’t really been done ever before by anyone. Ask any founder who’s going to raise money, it’s the entrepreneurs who are a few years ahead of them that they prefer.”

Hogarth went on: “Because a lot of existing VCs who invest haven’t built companies, they tend to fixate on the story of this young person who stumbles into great market opportunity and builds a massive company, right? But actually, if you look at the really, really iconic companies for the last couple of decades, a huge percentage of them are started by second time founders, right? So Stripe, second time founder, Deep Mind, second time founder, Netflix, second time founder. It’s a really long list. And we think that at heart that’s because you can become a better founder. The longer you do it, the longer you invest in the craft of building companies, the better you get at it. So we think one way to take someone who wants to solve a really seriously hard problem, but hasn’t done it before, is to surround them with founders who have, so they get this like, you know, like, you know, ‘speed up’ on that skill development.”

Hinrikus continued: “I’ve been on plenty of board meetings versus a well-respected venture capitalist. And he’s asking about the legal expenses last quarter. Yes, it’s probably an important question, but it’s not what makes the company better at an early stage.The last thing they need is an is someone obsessed with an Excel spreadsheet.”

Both told me that Plural’s investment themes will be climate, health, the ‘future of governance’ (such as with DAOs) and ‘opportunity gap reduction’ (access to finance or education, more traditionally called Impact).

Hogarth concluded: “The dream for us would be to find the startup that’s going to build the first working scalable fusion reactor. It’s going to be an incredibly valuable business, and it’s going to have a lot of impact. So we’re sort of looking for that intersection where you have a tonne of impact on a really big important societal issue, like climate change, clean energy, but you also need to do it in a way that scales with capitalism.”

Federal, State Agencies' Aid Programs Face Synthetic Identity Fraud

If a person loses their state ID or their driver’s license, they may — depending on the regulations of their state — need to take a trip to the Secretary of State’s office or Department of Motor Vehicles and wait in line with a handful of significant documents proving their identity in order to replace it.

That is, until COVID-19.

As states closed their government buildings in the early stages of the coronavirus pandemic, government agencies were forced to reckon with how unprepared their antiquated systems were to provide digitized services during a once-in-a-lifetime pandemic requiring the public to shelter in place. Simultaneously, the public and the private sector faced cyberattacks that left valuable, sensitive information in the hands of threat actors.

So, how do government agencies administering public benefits prevent fraud and protect valuable personal data? That question was the subject of “Future of Identity Fraud Roundtable,” an online panel hosted on June 17 by Socure and Venable. During the discussion, experts weighed in on the unique challenges government agencies face when verifying people’s identities, providing government assistance, and preventing synthetic identity fraud, in which cybercriminals combine real information with fabricated information to build a fake identity

“I think pretty much every state and government entity is seeking to deliver good quality digital experiences to our constituents,” said J.R. Sloan, CIO for the State of Arizona, during the panel. “During the pandemic phase … this was a public safety issue. We needed to be able to deliver no-touch experiences.”

Estimates on just how much fraud occurred during the coronavirus pandemic vary. An academic paper published by researchers at the University of Texas — Austin found $64.2 billion worth of potentially misreported loans. A higher estimate from the Small Business Administration (SBA) identified at least $78.1 billion in possibly fraudulent loans and grants. Excluding data on coronavirus fraud cases brought by the Justice Department, the Secret Service reportedly said that nearly $100 billion had been stolen from coronavirus relief programs for businesses and individuals, a conclusion it reached using its own cases and data from the US Department of Labor and the SBA.

Over the past two years, federal government agencies’ public benefit programs have been under attack from cybercriminals in other countries, as well as domestic cybercriminals using synthetic identities to intercept benefits meant for the American public, said Jordan Burris, senior director for product market strategy at Socure.

Cybercriminals have been sharing information and digital guides on using stolen personal information to apply for government benefits, said Linda Miller, principal of advisor services at Grant Thornton and former deputy executive director of the US Pandemic Response Accountability Committee, during the panel.

“The game has completely changed. And it’s not going to change back,” Miller said during the panel. “They’re only going to get more and more sophisticated and more skilled as the government continues to be challenged to effectively deal with this problem.”

Hurdles to Going Digital

Unlike the private sector, government agencies have to serve the public, which often entails reaching people who don’t have addresses or bank accounts, Miller said. Verifying the identities of these vulnerable groups could prove to be harder, because there are fewer data points available for the government to cross-check, she explained.

While government agencies can use some basic indicators, such as a foreign IP address, to screen out fraudsters, there is no one-size-fits-all solution for agencies to manage populations of people who are harder to authenticate, she said.

“These problems around how do we solve this identity proofing problem in a way that is going to ensure equity across a lot of different types of groups that need government benefits, is not going to create a ton more problems for the constituents, and sell to the citizens as they’re trying to get access to their benefits,” Miller said. “What we need to think about is using data in a smarter way, and meeting people where they are in terms of how much data do we have on an individual.”

Though sharing data between government agencies could allow them to verify benefit applicants’ identities easily, one challenge government agencies face is the regulations for what data they can and cannot share with each other, Burris said. For some pieces of information to be shared — including a Social Security number, a taxpayer identification number, alien registration numbers, or passport numbers — permission to share data among various government agencies could require Congress to pass federal laws allowing it.

Recent Progress in Data Policy

Though regulations currently bar government agencies from sharing certain personal information, there are proposals to change agency processes that could allow them to test safe data sharing, Suzette Kent, CEO of Kent Advisory Services and former US CIO, said during the panel. Such proposals could allow, for example, military to share and recover veteran or retirement data following a disaster, Kent said.

“We have to look at what information agencies are authorized to gather, and how they may use it, and ensure that those things are fit [for] purpose for the types of things that we’re doing,” Kent said. “That may require law, policy, technology, and engagement with the particular citizen set that you’re serving.”

A recent example of biometric authentication gone wrong was the IRS’ attempt to implement facial recognition technology for verifying the identities of people opening new online accounts. The agency announced on Feb. 7 that it abandoned its plans
to use a third-party facial recognition company for authenticating new accounts.

With remote biometric identity proofing came issues around privacy, access, and equity, which was met with immediate backlash, Miller said. As government agencies try to use this technology, they’re also required to comply with the National Institute of Standards and Technology’s “highest level of identity authorization.” But it has become clear that many federal and state government agencies aren’t ready to address the numerous complexities of NIST compliance and the other issues that emerge, she said.

Regardless of the remote authentication tool, government agencies need to maintain public trust and be transparent about how they’re using biometric technologies, Burris said.

Failing to maintain public trust “erodes the ability to leverage innovation in order to combat what we’re seeing from a fraud standpoint,” Burris said. “I would say any vendor working in this space, again, needs to be transparent with practices, so that we don’t have that erosion.”

Daily Crunch: Truth Social says federal grand jury probe could block its planned SPAC merger

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

Hello, friends! I’m back from being OOTO for the past week. My inbox is a hot mess, but the beach was very relaxing, and I’m still thinking of those watermelon margaritas. As you can see, my partner in crime, Haje, is still enjoying his adventures, but we have a full day of news to dive into, so shall we get started? — Christine

P.S. Want to bring a friend for free to TechCrunch Disrupt? You’re in luck because we have our July 4th two-for-one flash sale.

The TechCrunch Top 3

  • Truth Social SPAC hits a snag: A New York–based federal grand jury sent subpoenas to members of Digital World’s board, Ivan reported. That’s the special purpose acquisition company getting ready to acquire Donald Trump’s media group responsible for Truth Social. According to an SEC filing, the subpoenas are an effort to gather more information about “Digital World’s S-1 filings, communications with or about multiple individuals, and information regarding Rocket One Capital.” We’re sure there is more to the story, so stay tuned.
  • Today’s car infatuation is brought to you by the letters ID.AERO: Volkswagen has us drooling over its new concept car that, Jaclyn writes, will be the basis for the car maker’s first electric vehicle. If you can’t get enough of cars, we suggest subscribing to Kirsten’s The Station newsletter.
  • Plastic packaging be gone: Over in the UK, Magical Mushroom Company is conjuring up a replacement for plastic packages using mycelium, also known as the root structure of a mushroom, mixed with agricultural waste, Mike reports. The company raised £3 million to build a production facility that will churn out packaging that will biodegrade in 45 days. For those of you not keen on mycelium being used to make healthier meat products, you might like this use a bit better.

Startups and VC

Let’s begin with Stardust. By now you’ve heard the Supreme Court overturned Roe v. Wade. While some states had trigger laws that went into effect already, we are still trying to figure out what all of this means. That includes what to do with data from period-tracking apps, should that become an avenue for future prosecution in states that outlawed abortion. Sarah and Zack looked at one such period-tracking app, Stardust, which saw its app rise to the top of the U.S. Apple App Store following the SCOTUS decision, after the company “promised it will encrypt its users’ private data to keep it out of the hands of the government.” The story takes a look at how they plan to keep that promise.

Now let’s head over to some venture capital firm news: Eloho Omame was named partner at TLcom Capital. The move follows the first close of the firm’s TIDE Africa Fund II, which is going after $150 million in capital commitments. Tage writes that this is a strategic move on TLcom’s part to focus on pre-seed startups. This is a stage Omame knows well as co-founder and general partner of FirstCheck Africa, an early-stage firm that invests in pre-seed and seed-stage startups with at least one female founder or co-founder.

Speaking of investments in early-stage companies led by female founders, True Wealth Ventures, led by Sara Brand and Kerry Rupp, closed on $35 million in new capital for their firm’s second fund. Something cool to ponder: All of True Wealth’s investments under its first fund are still operational, which is “no small feat for a group of early-stage startups that have had to weather a global pandemic,” Anita wrote.

More ahead:

Right-size your tech stack to withstand the downturn

Vernier caliper measure brown egg on rusty grunge background

Image Credits: Aguus (opens in a new window) / Getty Images

Reducing headcount is often the first place founders look for savings, but it couldn’t hurt to take a closer look at your tech stack.

Early-stage startups don’t have a formal purchasing process, which means companies growing at scale are left paying for unused software licenses or automatically renewing contracts locked in at high rates.

“The question is not whether there is waste or inefficiency, but rather how much,” says David Campbell, CEO and co-founder of Tropic. Campbell shares three ways to assess startup software spending.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

You’ll want to pin this one. A California judge ruled that a lawsuit against Pinterest could move ahead. As Ivan reports, a marketer claiming to be friends with one of the company’s co-founders said she was asked to “salvage a failed shopping app” that eventually became Pinterest. She didn’t have a formal agreement with the social media company but was expecting compensation for the rescue effort and for creating some of its features. Sorry, that’s a #pinterestfail.

Hunks of metal are being launched to the moon by Rocket Lab, but don’t worry, it is all in the name of establishing a lunar space station, Aria writes. Tune in for the launch on June 28, when the CAPSTONE will start its 6-month journey to the moon.

Over at TechCrunch+, Ron goes a bit deeper into Zendesk’s decision to sell to a group of private equity firms from last week. Tl;dr: One of Zendesk’s investors was not thrilled that the company turned down a previous buyout offer. Now Ron writes that some industry analysts are not surprised by this new move, with most suggesting “it could bring some relief to the beleaguered company.”

Google Hangout users, it’s time to move it, move it on over to Chat. If you used Hangouts today from your mobile device, you may have seen a notification that you need to start using Chat in Gmail or the Chat app. Aisha writes that Chat was provided better functionality, making it easier for consumers to use. You may remember Chat was more of a business feature before. Better get started transferring your data before Hangouts hangs up on you.

Max Q: Acronyms rule everything around me

Hello and welcome back to Max Q. In this issue:

  • NASA sees a future for nuclear energy on the moon
  • Epsilon3 closes funding for space industry OS
  • News from AWS, SpaceX and more

Don’t forget to sign up to get the free newsletter version of Max Q delivered to your inbox.

In a rather cool bit of news, NASA said that it’s contracting three suppliers for nuclear fission energy system concept designs for use on the lunar surface. Lockheed Martin, Westinghouse and IX (a joint venture from Intuitive Machine and X-Energy) were the three winning bidders. Each will work with partners to develop “initial concepts,” and will receive around $5 million for that work, which is expected to take around 12 months.

NASA is aptly partnering with the Department of Energy (DOE) on this project, and the specs include a 40-kilowatt power-generation capability, capable of generating that for at least a decade. That’s about what a full charge on a current entry-level Nissan Leaf contains — but as a fission generator it would obviously provide that continuously.

It may not seem like much, but deployed singularly or in groups to support a lunar base, it could solve a lot of the challenges of the kind of prolonged occupancy of the moon that NASA plans to eventually establish through its Artemis program, which seeks to return humans to our largest natural satellite for ongoing science missions.

NASA nuclear fission concept

Image Credits: NASA

Epsilon3, founded in early 2021 by SpaceX veteran Laura Crabtree, Max Mednik from Epirus and former Googler Aaron Sullivan, started with a simple (on the face of it, at least) idea: to create an operating system for the modern space industry. Now, the company has closed $15 million in new investment led by Lux Capital, with participation from Moore Strategic Ventures, Y Combinator (of which Epsilon3 is a graduate) and MaC Venture Capital.

To be clear, Epsilon’s OS isn’t seeking to innovate on Windows or macOS; instead, it wants to improve the software tools that have been used in the space industry for decades. Although the company is quite young, its software is already being used by many companies. “We looked at year to date launches, and 20% of those teams are using Epsilon3,” Mednik told TechCrunch.

Image Credits: Epsilon3

More news from TC and beyond

  • Arianespace successfully launched the Ariane 5 rocket from a European spaceport in French Guiana. The rocket carried two geostationary communications satellites to orbit.
  • AWS sent a Snowcone edge computing and storage device to space on the Axiom mission to the International Space Station.
  • China successfully launched a Kuaizhou-1A rocket to space, sending the Tianxing-1 satellite to orbit. It marked the twentieth launch for China this year.
  • Isar Aerospace, a German rocket startup, signed a launch services agreement with Italy’s D-Orbit to send its orbital transfer vehicle to space no earlier than 2023.
  • NASA is preparing two alternate timelines for its Artemis program, indicating that the agency is readying itself for major delays and budget constraints, according to leaked documents obtained by ArsTechnica.
  • OneWeb is aiming to resume launches in the fourth quarter of this year, via launch agreements with SpaceX and NewSpace India Ltd. The company’s operations experienced a major hiccup after Western sanctions on Russia prohibited the use of Soyuz rockets.
  • Sierra Space has signed a Memorandum of Understanding with Spaceport America to potentially use the latter company’s New Mexico site as a landing site for Sierra’s Dream Chaser space vehicles.
  • SpaceX called on the U.S. Federal Communications Commission to investigate whether Dish Network and RS Access, an affiliate of billionaire Michael Dell, submitted misleading reports on the best use for the 12-gigahertz frequency band. SpaceX said 5G networks sharing the band with orbital broadband constellations could lead to an interruption of Starlink service for users.
  • SpaceX is setting up shop in the Austin area. The company is hiring for two roles, in addition to taking control of nearly 50 acres in Bastrop County, transferred from Elon Musk’s other company, The Boring Company.
  • The U.K. government is launching a Space Sustainability Plan, to work with private industry to develop sustainability standards, and to incentivize sustainability and investment in the U.K. space sector.
  • Viasat stockholders approved the acquisition of British satellite communications company Inmarsat, in a deal valued at $7.3 billion. SpaceX has previously objected to the deal.

Photo of the week

Image Credits:Image Credits: HUM Images/Universal Images Group via Getty Images

This photo, taken on February 7, 1984, shows astronaut Bruce McCandless II on an untethered space walk. In this photo he’s approaching his maximum distance from the Space Shuttle Challenger. Far out.

Max Q is brought to you by me, Aria Alamalhodaei. If you enjoy reading Max Q, consider forwarding it to a friend. 

LockBit 3.0 Debuts with Ransomware Bug Bounty Program

The LockBit ransomware group just released its latest ransomware-as-a-service offering, LockBit 3.0, and along with it a first for the Dark Web: a bug-bounty program.

The bounty program offers up rewards for personal identifiable information (PII) on high-value targets, security exploits, and more, according to screen grabs of messages that appear to have been shared by LockBit actors.

“We invite all security researchers, ethical and unethical hackers on the planet,” the group reportedly posted, offering payments for website bugs, locker bugs, TOX messenger exploits, and information to fuel doxxing campaigns, with payments starting at $1,000. The group is even willing to pay for fresh cybercrime ideas, the ad say.

LockBit is on a roll. In the wake of Conti’s shutdown, LockBit 2.0 emerged as the dominant ransomware-as-a-service group in May, with the dubious distinction of being behind 40% of all ransomware attacks during the month. LockBit operators seem poised to capitalize with a new, malicious twist on bug-bounty programs.

‘No Honor Among Ransomware Operators’

“I wish this surprised me,” Mike Parkin, senior technical engineer at Vulcan Cyber, said in reaction to the LockBit bug-bounty launch. “But malware gangs have
reached a level of maturity that they are, literally, professionally run
businesses.”

While the innovation is noteworthy as a development in the ransomware business, John Bambenek, principal threat hunter at Netenrich, said he doubts anyone would actually submit something and expect to collect the bounty.

“This development is different; however, I doubt they will get many takers,” Bambenek said in a statement provided to Dark Reading. “I know that if I find a vulnerability, I’m using it to put them in prison. If a criminal finds one, it’ll be to steal from them because there is no honor among ransomware operators.”

Deals: Apple's 16-inch MacBook Pro dips to $2,279 & it's in stock


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B&H Photo has issued a steeper price drop on Apple’s M1 Pro MacBook Pro 16-inch, bringing the standard model in Space Gray down to $2,279 ($220 off), the cheapest price of 2022. Plus, get free expedited shipping.

Exclusive 16″ MacBook Pro discount

The exclusive MacBook Pro deal delivers cash savings of $220 off* Apple’s standard 16-inch MacBook Pro in Space Gray, bringing the cost down to $2,279 — the lowest we’ve seen this year.

This particular spec features the Apple Silicon M1 Pro chip with a 10-core CPU and a 16-core GPU. It also has 16GB of unified memory and a 512GB SSD. Best of all, it’s in stock at B&H and ready to ship with free expedited delivery in the contiguous U.S. That puts the machine in your hands nearly two months quicker than ordering from Apple itself — without even factoring in the exclusive savings.

Looking to extend the savings even further? Payboo cardholders in qualifying states can save on sales tax, potentially putting another $180+ back in your wallet.

This exclusive discount is in addition to several other deals going on now on 14-inch and 16-inch MacBook Pros, which can be found in this deal roundup, along with our Mac Price Guide.

Additional exclusive bargains

(*) Activation instructions

To activate the exclusive pricing, you must shop through the B&H pricing links in this post from a laptop or desktop computer. We’re sorry, but the offers cannot be redeemed in B&H’s mobile app at this time.

Even more tech bargains

Best Apple prices

Apple resellers are also running specials on additional hardware that will not only deliver the lowest prices on many of the items, but also throw in bonus savings on accessories, software and more. Here are just a few of the deals running the last week of June:

Robinhood almost imploded during the Gamestop meme stock chaos

The House Committee on Financial Services released a report late last week offering a harrowing glimpse inside Robinhood during the frenzy around Gamestop stock early last year.

The stock trading and investing app was blindsided by the surge in interest from the first big “meme stock” after Redditors and other retail investors rallied around $GME and sent its price into the stratosphere.

For Robinhood, which offers individual investors a relatively frictionless way to dive into the stock market, the saga was simultaneously a massive windfall of new users and brand interest and an existential threat that almost did the company in.

Robinhood famously froze trades around Gamestop and some adjacent hot stocks as the company teetered on the edge of what its platform — and its pocketbook — could handle. With demand surging, suddenly Robinhood was on the hook for more than it held in collateral to settle the sudden spike in trades.

House Financial Services Committee Chairwoman Maxine Waters (D-CA) called for a deep dive into what happened behind closed doors, and the new report, “Game Stopped: How the Meme Stock Market Event Exposed Troubling Business Practices, Inadequate Risk Management, and the Need for Regulatory and Legislative Reform,” collects the committee’s findings. The report, embedded below, is culled from a number of hearings, 95,000 pages of documents and 50 interviews.

“My Committee’s investigation into the matter showed we need better market regulation to address the troubling business practices that were uncovered during our investigation,” Waters said. “Payment for order flow and gamification make it profitable for a new generation of trading apps to push retail investors to make as many trades as possible, making the markets more volatile than ever.”

The committee described Robinhood’s business as “troubling,” citing its preference for aggressive growth without adequate risk management. The report also found that the majority of financial firms the committee examined don’t have any plans in place to prepare for another risky phase of “extreme” market volatility.

According to the report:

On the morning of January 28, 2021, Robinhood had approximately $696 million in collateral already on deposit with the NSCC, leaving it with a collateral deficit of approximately $3 billion, which it was required to post to satisfy the NSCC’s clearing fund requirement or risk being in violation of the NSCC’s rules and potentially losing the ability to clear trades for their customers altogether.

[President and Chief Operating
Officer for Robinhood’s clearing operation] Swartwout confirmed that this amount came as a surprise to Robinhood and explained to Committee staff that they had anticipated and prepared for the $1.4 billion of collateral deposit requirements that represent “core” charges, but because they did not model for Excess Capital Premium charges, Robinhood therefore did not expect and had not arranged adequate funding for the additional $2.2 billion Excess Capital Premium charge. On the morning of January 28, 2021, Jim Swartwout texted Gretchen Howard at 6:29 a.m. EST, writing “Huge liquidity issue.”

Within Robinhood, the company’s executive leadership team held an all-hands to brainstorm about ways for the company to leverage the attention and its massive influx of new users, even as the team tasked with seeing its trades settled scrambled to “keep the lights on” with “things barely held together.”

Ultimately, the company secured a waiver for its collateral requirements, paused some trades and averted disaster but there’s no guarantee that history won’t repeat itself and shake out a different way. In light of the report, Waters called for “significant” legislative reforms to prevent another Robinhood-style near-meltdown.

One way Robinhood was circumspect? Knowing that the company was in store for some serious scrutiny.

“The biggest concern now is can we handle our scale,” Robinhood’s senior director of clearing operations wrote. “If we fail to deliver something like this due to us not being able to handle our own volume, it would not bode well with [the clearinghouse] or the regulators.”

At NASA’s Lunabotics competition, students design mining robots for the moon

If this year’s Lunabotics competition is any indication, there’s a bright future ahead for the surface of the moon — and below it.

The NASA-hosted challenge saw 39 teams of university students building lunar mining robots, which were tasked with digging up rocks in simulated regolith (the material making up the lunar surface) at a final competitive event recently.

The teams use NASA’s Systems Engineering Process to design and build the robots at their home universities before heading to the Center for Space Education (CSE) in Florida, located on NASA’s Kennedy Space Center Visitor Complex, for the in-situ demonstration of their robots. Announced on June 10, the grand prize—the Joe Kosmo Award for Excellence—went to the team from the University of Alabama, which scored the most points.

students inspect lunar mining robot

Students from the University of Alabama inspect their robot before their demonstration.

This year’s event marked the first time the competition has been held indoors, in a specially designed regolith simulant arena.

“An interesting effect was that the regolith simulant was drier than when it was outdoors in a tent, so the competitors noticed a change in its shear strength, causing it to fluff up, making it harder to drive on — just like the Moon!,” Robert Mueller, a senior technologist and principal investigator in Kennedy’s Exploration Systems and Development Office who co-founded the competition, said in a press release. He has also served as lead judge since the first event in 2010.

Despite the challenges facing the teams with these new conditions — many of which were returning contestants — the young engineers persevered. And they did more than mine rocks in the simulated regolith. The Lunabotics competition also includes public outreach and the submission of engineering papers. Awards are given across these additional categories, too.

students inspect a lunar mining robot

The team from the University of Portland in Oregon prepare their robot for demonstration

“Just like the Apollo missions sparked a fire of curiosity and perseverance in the hearts of students so many years ago, Artemis is challenging this generation to dream bigger, think differently, innovate more critically, and be inspired like never before,” said Kennedy Space Center Director Janet Petro. “We are looking to the next generation of STEM students and encouraging their innovation, determination, and imagination as we return to the Moon and explore beyond.”

Check out the full list of winners here, and for a limited time, you can watch recordings of the competitor’s mining demonstrations here.

Google backs Progcap, a startup delivering working capital to small retailers in India

Google has invested in Progcap, an Indian startup that provides working capital to small and medium-sized businesses, the firms said Tuesday, making a new push into a category that has attracted the attention of Facebook and Amazon in recent years.

The investment is part of a $40 million fresh funding Progcap has raised, it said. Creation Investments and Tiger Global led the five-year-old startup’s Series C financing round, which nearly tripled its valuation to $600 million since September last year. Existing backer Sequoia India and Southeast Asia also participated in the round, Progcap said.

The new investment extends the startup’s Series C, the first tranche of which it closed in September, to $70 million. With the fresh funding, the Delhi-headquartered startup’s all-time raise has surged past $100 million.

Progcap serves over 700,000 small retailers, who dot hundreds of Indian cities and towns. The startup extends a revolving credit line of $10,000 to $12,500 to retailers, providing them with much needed capital to buy new inventories and grow their businesses.

As we have previously written, a significant number of retailers in India struggle with access to working capital. “The gap in the working capital financing market is around 98%,” said Pallavi Shrivastava, co-founder of the startup, in an interview with TechCrunch. “The market is completely unorganized and insufficiently addressed.”

The startup, which uses its own underwriting tech and access to retailers’ finances to determine their creditworthiness, also provides retailers with tools to check their account statement, invoices, make online payments and track disbursals.

Progcap aims to become “a full-stack retailer-focused digital bank that digitizes, automates and eases capital movement across the supply chain,” she said.

Progcap says it has disbursed in the past four years about $1 billion to retailers, which operate in a wide-range of sectors, a figure it is currently on track to disburse this year. The retailers Progcap serves have a yearly cash flow of about $125,000, the startup said.

“We are delighted that our existing investors have continued to deepen their conviction in Progcap and thrilled that Google has joined us on this journey,” said Shrivastava and Himanshu Chandra, Progcap’s other co-founder.

“Progcap is becoming the core operating engine for all the transactions of its customers, providing them with credit and technology solutions that make their businesses more efficient.”

Google, which already serves many of these small businesses, is the latest firm to show interest in helping these retailers with their finances. Facebook launched a program in India last year to help small and medium-sized businesses secure loans.

The social giant is working with CDC Group-backed Indifi to give small ticket loans — ranging between 500,000 Indian rupees ($6,720) to 50,00,000 ($67,200) — at a predefined interest rate of 17%-20% per annum and won’t require the businesses to provide any collateral or joining fee, it told TechCrunch.

“We’re delighted to invest once again behind the Progcap team as they expand their product offering and further serve last-mile retailers in India,” said Tyler Day, a partner at Creation Investments, in a statement.