Tech News

Sun King, a provider of off-grid solar energy products in Africa and Asia, has secured a $70 million equity investment led by LeapFrog Investments. It’s an extension of the $260 million Series D round the solar company announced this April, which was led by BeyondNetZero, the climate investing venture of General Atlantic and M&G Investments’ Catalyst and Arch Emerging Markets Partners. Thus, Sun King has closed its Series D round at $330 million and as a result, raised over $550 million in debt and equity since its inception.

Many African households and communities cannot access affordable and reliable solar technology, limiting their ability to generate their electricity and reducing their reliance on grid-based power. Direct-to-consumer, pay-as-you-go (PAYG) solar distribution networks are offered by businesses like Sun King, enabling households and individuals to get electricity on the cheap.

Sun King asserts to be the largest of this kind globally. According to the company, it has delivered solar energy to 165,000 homes per month across eight African countries — and in Kenya, where it has operated for over a decade, over 1 in 5 people use its product for light and power, accounting for 22 million Kenyans served to date. On a much larger scale, Sun King pointed out that since its founding in 2007 by chief executive officer Patrick Walsh and Anish Thakkar, its products have provided light and power to 95 million people throughout its African and Asian markets, including Cameroon, Mozambique, and Togo, three countries it recently expanded into.The solar energy company has also provided more than $500 million in solar purchase finance through a network of over 20,000 field agents, 36% of whom are women.

“We are proud that LeapFrog is investing in Sun King to expand access to energy with renewable solar power,” said Thakkar. “LeapFrog brings a wealth of experience meeting the needs of customers in the countries where we are working to make solar energy solutions easily accessible to everyone.”

Sun King claims to be profitable and has grown its business by 95% year-over-year since the initial Series D investment nine months ago. We stated in April that a large portion of the initial investment would be used to expand its PAYG solutions and introduce larger setups capable of powering appliances like refrigerators and scale the business’ presence. This extension, which includes $38 million of additional primary investment, will capitalize on this effort. The extension also has an additional secondary investment which will be used to exit all of Sun King’s prior institutional investors completely, the company said in a statement.

Sun King’s founders will continue to hold voting control. Aspart of the deal, LeapFrog, which in May invested in African fintech giant Interswitch, joins Sun King’s board, which now includesGeneral AtlanticandM&G Investments, as well as Prabha Sinha, the company’s first investor.

“Sun King is leading the way in providing sustainable, safe and reliable electricity access to emerging consumers in Africa and Asia. The company’s off-grid solar systems will be vital in filling the growing electricity accessibility gap and ensuring these emerging countries avoid the carbon dioxide emissions and detrimental health impacts that result from energy sources like diesel generators, wood burners and kerosene,” said Karima Ola, partner at LeapFrog Investments.

“Through innovative payment models, Sun King ensures that consumers don’t bear the upfront cost of a clean energy transition, allowing them to leapfrog directly to less carbon-intensive consumption. We are pleased to be partnering with Sun King for the next stage of their impressive growth journey.”

Sun King, a provider of solar energy products in Africa and Asia, expands Series D to $330M by Tage Kene-Okafor originally published on TechCrunch

Even after billions of venture capital raised and invested into the digital health space, it’s still difficult to access quality healthcare. And while that may raise questions on if a scrappy startup has a fighting chance at fixing things, to entrepreneur Akili Hinson, it just means that Juno needs to be even smarter about the neighborhoods it targets.

Hinson, Juno’s founder and CEO and a physician by trade, is building a healthcare model that offers in-person care in diverse neighborhoods across the country. The startup’s modern take on a health care visit means that it competes with heavyweights such as One Medical and CityBlock Health. But that hasn’t stopped investors from recently leading a $12 million Series A in the startup, a round co-led by Serena Ventures and NEXT ventures.

The proof might be in the focus. Hinson explained that CityBlock Health focuses exclusively on patients who are eligible for Medicaid and Medicare, who tend to be some of the sickest patiences in the healthcare system; while One Medical, on the other end of the spectrum, shows up as a sort of exclusive membership program often paid for by employers. Juno wants to be for people who don’t fit into either category, which it thinks is 99% of the population.

“Our approach is to be open access and to create additional products for folks who want an extra dose of convenience, savings and support,” Hinson said, adding that Juno is more focused on offering family care at scale. In action, that means Juno works to provide services from pediatrics to OBGYN. “What that means is, unlike an exclusive membership model, anybody can come in and get their care… from all walks of lives in these neighborhoods.” The company also offers higher acuity services, such as X-Rays.

To be truly open access, and also offer everything from adult primary care to same-day care, comes with its costs – ergo why so many companies aiming to offer a one-stop shop have to raise nine-figure rounds. Juno recently began offering additional plans that range between $20 to $50 a month for families who want more convenient experience, such as night and weekend appointments or better savings. Its challenge will be scaling this service, beyond its brick and mortar locations, in a way that makes its newfound venture backers happy.

With new capital under its belt, Juno is looking to expand its team and services into East Atlanta, Greenwood, and Inglewood.

‘We don’t think like you should have to click 35 times just to understand what your vital signs were at your last appointment or to see your labs,” Hinson said. “The Juno story is much more about technology being an enabler for excellent care – I wouldn’t even call us a digital health company, we’re a high-tech enabled healthcare service.”

Juno raises millions to provide family-first healthcare from Inglewood to Harlem by Natasha Mascarenhas originally published on TechCrunch

Welcome back to Chain Reaction.

If you’re reading this, I’m willing to bet you probably weren’t arrested this week and are now sitting in a Bahamian jail. But, you know who was arrested and is sitting in a Bahamian jail right now? Yep, FTX’s former CEO, Sam Bankman-Fried.

Seems like the majority of the headlines have been on SBF and FTX lately — and for good reason. This week’s chatter was surrounded by his anticipated testimony at the U.S. House Financial Services Committee’s hearing on FTX’s collapse, which he never spoke at because he was arrested the night before.

After being denied bail, SBF is being held in the Bahamas Department of Correctional Services in the prison’s max security infirmary with five other inmates in a “dorm-style setting,” according to The Nassau Guardian. And don’t worry, Bahamas’ acting commissioner of corrections Doan Cleare said SBF is in “good spirits” and that the prison is no longer infested with rodents.

Now we can all sleep soundly tonight.

If someone forwarded you this message, you can subscribe on TechCrunch’s newsletter page.

this week in web3

Here are some of the biggest crypto stories TechCrunch has covered this week.

SEC, CFTC and SDNY attorney’s office charge FTX’s Sam Bankman-Fried with defrauding investors

The U.S. Securities and Exchange Commission (SEC) has officially charged disgraced FTX founder Sam Bankman-Fried (aka SBF) with defrauding investors, it revealed on Tuesday morning following his arrest in the Bahamas. The SEC said in a press release that in addition to being charged with fraud regarding equity investors in FTX, he’s also being investigated regarding other securities law violations — and noted that there are ongoing investigations pending against others involved as well. The SEC isn’t the only one getting a hand on this ball, however: Both the Southern District of New York’s attorney’s office and the Commodity Futures Trading Commission (CFTC) also filed charges against SBF in “parallel actions.”

US attorney says ‘we are not done’ charging individuals for FTX collapse

Multiple U.S. government agencies held a press conference Tuesday afternoon regarding the indictment of FTX’s former CEO, Sam Bankman-Fried. When asked whether the entities will bring charges against other individuals allegedly involved in the FTX collapse, Damian Williams, the U.S. attorney for the Southern District of New York, said during the event, “I can only say this: Clearly, we are not done.”

FTX’s new CEO, John Ray, details crypto exchange’s downfall in US House testimony (TC+)

As mentioned above, the U.S. House Financial Services Committee held a hearing Tuesday morning focused on FTX’s collapse. John J. Ray III, FTX’s CEO of four weeks, sat as the only witness for the hearing as SBF made an appearance in a Bahamian court for his arraignment. The four-hour hearing covered a lot of ground and left many questions unanswered, but several parts stood out from Ray’s testimony. Given that we presume you couldn’t catch the entire session live, feel free to crib off of our notes.

PayPal and MetaMask team up to make it easier to buy crypto

PayPal is primarily known as an online payment method. But the company wants to become an easy way to get started with cryptocurrencies. In that regard, ConsenSys, the company behind MetaMask, announced that it would add an integration in its crypto wallet so that users can buy cryptocurrencies using their PayPal account.

Coinbase launches asset recovery tool for unsupported Ethereum-based tokens

Coinbase, the second-largest crypto exchange globally, has launched a new tool to help its customers recover more than 4,000 unsupported ERC-20 tokens sent to its ledger, the company exclusively told TechCrunch. “ERC-20 token” is technical terminology for any cryptocurrency created using the Ethereum blockchain. While Coinbase supports hundreds of cryptocurrencies, there are thousands that it doesn’t. The ERC-20 self-service asset recovery tool allows customers to recover different kinds of tokens sent to a Coinbase address.

the latest pod

Chain Reaction’s first season ended earlier this month and we’ll be bringing new content back in the New Year.

Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to keep up with the latest episodes, and please leave us a review if you like what you hear!

follow the money

Aztec Network raised $100 million in a round led by a16z to build an encrypted blockchain
Nillion raised over $20 million to build a non-blockchain decentralized network
Crypto insurance firm Evertas raised $14 million in a Series A
Forum3 raised $10 million to help companies build web3-enabled loyalty rewards programs
Web3 licensing protocol Spaceport raised $3.6 million in a pre-seed round

This list was compiled with information from Messari as well as TechCrunch’s own reporting.

SBF’s handcuffs aren’t loosening up anytime soon by Jacquelyn Melinek originally published on TechCrunch

The fight over whether gig workers are independent contractors or employees has been heating up this week on both state and federal levels. The stakes? A once disruptive business model could soon be disrupted itself.

On the state level, this week has seen developments in the Proposition 22 saga as companies relying on gig workers put forth a slew of arguments against last year’s ruling that the law was unconstitutional and therefore unenforceable. Prop 22, a California ballot initiative, passed into law in 2020, allowing app-based ride-hail and delivery companies to continue classifying gig workers as independent contractors rather than employees. In August 2021, Alameda County Superior Court Judge Frank Roesch found the law conflicts with the state Constitution by restricting the legislature’s ability to regulate workers’ compensation rules.

In response to Roesch’s ruling, the very same coalition of major gig companies — like Uber, Lyft, DoorDash and Instacart — that spent millions on advertising to convince Californians to vote for Prop 22 filed an appeal to overturn the court ruling. On Tuesday, they called the challenge to Prop 22 an “attack on voters’ direct democracy powers” and out of line with California’s legacy of “guard[ing] voter initiative powers and uphold[ing] their acts wherever possible.”

The rehashing of this issue comes as the public comment period for the U.S. Department of Labor’s proposed independent contractor rule comes to a close. The rule, put forward in October, would tighten Trump-era laws on worker classification, making it easier for contractors to gain full employment status if they are “economically dependent” on a company.

The scope of the proposal is limited to areas like minimum wage enforcement, which has been a sticking point among labor activists fighting for gig worker protections. Prop 22 advocates say that the law ensures workers earn 120% of their local minimum wage. Critics say that app-based companies only count the time spent actively driving to pick up and drop off a customer or deliver a meal as “active time,” which leaves out the hours drivers spend driving to busier areas or simply waiting online for a gig.

One study found that by only counting active time, gig workers in Massachusetts could earn as little as $4.82 per hour if a similar law were passed in the state. (This subminimum wage has been backed up by gig workers TechCrunch has interviewed in the past.) In June, a Massachusetts court voted to throw out the ballot proposal.

Despite Judge Roesch’s ruling, because of the appeal, Prop 22 has remained in effect throughout the year. The appellate court is required to make its decision within 90 days, but attorneys involved in the case think it’ll happen much sooner.

On the federal level, those following the public comment period expect a ruling on the employment status of gig workers in the U.S. any day. It’s not yet clear how a passing of the DOL’s rule would affect Prop 22, if California’s appellate court allowed the ballot initiative to stick.

What would employee-driven ride-hail even look like?

There’s a reason why companies relying on gig workers feel threatened by what could be a complete upheaval of their entire business models, so we can expect to see them continue to fight any changes through a variety of appeals and countersuits. In the background, some companies have made it a point not to rely on gig workers, perhaps sensing the way the legislative wind is blowing.

In New York City, Revel offers an all-Tesla, all-employee ride-hail service, which I’ve used and drivers have told me they love. Another on-demand ride-hail service that relies on employees is Alto, which operates in certain parts of Dallas, Houston, Los Angeles, Miami, San Francisco and Washington, D.C.

In Alto’s comment on the DOL’s ruling, the company pointed to the responsibility and costs it bears that its competitors shirk via the independent contractor model, like paying employees by the hour for all hours they spend driving, rather than only paying them for engaged time. Alto said that while this lowers competitors’ costs, it also encourages an oversupply of drivers on public roads leading to congestion and higher emissions.

“With independent contractor drivers, currently large-scale ride-hail operators intentionally over supply the market because it does not add to their costs and creates a ‘free’ (to the companies) consumer surplus through lower wait times,” reads the comment. “But, artificially lowering wait times with oversupply is unsustainable for drivers and leads to many making far less than minimum wage in the jurisdiction in which they work when measured on a total time (and not engaged time) basis.”

Alto called on the DOL to recognize the economic reality of the ride-hail industry — drivers are integral to ride-hailing as a business. Drivers’ work depends on the existence of ride-hail companies. Therefore, drivers are economically dependent on ride-hail companies, which puts them in the category of employees, according to Alto.

The battle over gig worker status is heating up by Rebecca Bellan originally published on TechCrunch

Heartex, the well-funded machine learning data labeling startup, is launching a major update to its platform today that will open up new use cases for its tools by making annotating audio files in the commercial and open source versions of its Label Studio a lot easier for its users. These updates include a new user interface, optimized for working with audio files, the ability to annotate longer files (up to two hours in length) and millisecond controls in the built-in annotation tool. There is also now a new rendering engine for displaying waveforms. In a previous update, Heartex also added to its tool features like frame-by-frame video object tracking and an overhauled annotation UI.

The company says about 150,000 users are currently relying on Label Studio, with more than 95 million annotations created so far.

“When we were originally thinking about building the data labeling solution, we did a lot of data scientist interviews,” Heartex co-founder and CEO Michael Malyuk told me. “And what we figured out is that many of them say they don’t have enough flexibility with existing tools. There is a tool for images, but you can only put a single image on the screen. There is a tool for our audio, but it’s very hard-coded in terms of the use case. And we thought that for the Label Studio, when the data scientists would have a question mark inside their heads ‘does it support my use case?’ The answer always has to be yes — it always has to support your use case.”

And, of course, to label data, all you need to be is a subject matter expert, not a software engineer. The idea behind Label Studio is to enable virtually anyone to label your data. “We think that every AI company is going to transform into a data labeling company or a dataset development company,” Malyuk said. Essentially, he said, Heartex wants to make Label Studio the de facto IDE for dataset development.

Looking ahead, he noted that the company plans to invest heavily in its user community — and it plans to host its first Label Studio user conference next year.

Heartex’s Label Studio makes labeling audio for ML easier by Frederic Lardinois originally published on TechCrunch

As ChatGPT has so aptly demonstrated, AI is now truly entering the mainstream consciousness. That’s why we weren’t very surprised when a slew of investors told us they rarely see a biotech startup that doesn’t incorporate AI in some form or other these days.

“Most of the companies we have seen have an AI component to support the discovery or development processes,” Francisco Dopazo, a general partner at Humboldt Fund told TechCrunch recently.

But despite becoming quite the buzzword, AI’s apparent ubiquity in biotech isn’t actually driving deal flow or higher valuations. So to get a better idea of how AI is affecting biotech in 2022, we asked six investors to tell us what they look for in a biotech startup today.

For Franck Lescure, a partner at Elaia Partners, in biotech, having an AI component isn’t an automatic deal closer. “We do not favor biotech startups with extant AI over those without: Bio-revolution is not only digital. Digital is one tool; the other major tool is the living organism,” he said.

VCs are also increasingly looking for what biotech startups can do with AI beyond just R&D, and are wary of companies that use the technology as a marketing tool.

“When evaluating ‘AI for drug discovery companies,’ I view AI as a tool,” Shaq Vayda, principal at Lux Capital, told TechCrunch. “Much like how any modern biotech company is using the latest and greatest tools, AI is becoming more and more common as part of biotech workflows. The bigger question for investors is getting a better understanding of what exactly AI is attempting to model and predict.”

Also, just because a startup uses AI doesn’t mean it can escape being compared to struggling public biotech comparables. “The public markets are the final arbiters of value, and the valuations coming back to earth this year have begun to flow through to startup funding,” said Sarah Guo, founder of Conviction. “I expect we’ll continue to see some digestion through the next year or two, as many mid-stage companies have built major war chests and don’t yet need to come back to market.”

The survey also covers the implications of U.S sanctions on China for startups in the space, considerations for startups thinking of taking capital from government bodies, how to pitch these investors, and more.

We spoke with:

Robert Mittendorff MD, general partner and head of healthcare, B Capital
James Coates, health & human performance principal, Decisive Point
Shaq Vayda, principal, Lux Capital
Franck Lescure, partner, Elaia Partners
Francisco Dopazo, general partner, Humboldt Fund
Sarah Guo, founder, Conviction

Robert Mittendorff MD, general partner and head of healthcare, B Capital

The NASDAQ Biotechnology Index peaked in 2021. Have declines in the public-market valuations of biotech companies impacted your investments in the sector?

Public market biotechs are dramatically down as interest rates rise and the focus on near-term development outweighs the promise of longer-term results and approvals. As a result, a significant proportion of biotech companies are trading below cash.

Given the substantial and positive flow of data in the space, we view market sentiment as overly negative. These valuations have affected private-market rounds’ size, pricing and structure. Private biotechs are considering the reprioritization of their assets — deciding whether to partner second or third assets with strategics, and evaluating structure in tranched financings to reach their fundraising targets.

Of the biotech startups you’ve seen lately, how many had an AI component? Do you favor biotech startups with extant AI capabilities over those without?

AI has become a very important part of next-generation drug discovery in both the small molecule and biologics spaces. Boston Consulting Group (BCG) partner Chris Meier reported in the March 22 Issue of Nature Reviews Drug Discovery that 24 “AI native” drug discovery companies have a combined 160 disclosed discovery programs. We are many more above this.

Recently our own portfolio companies Atomwise and InSilico each inked $1.2 billion deals with Sanofi. Still, the majority of biotechs raising capital are not “AI-enabled.” This isn’t a necessary condition for us, but in many spaces, computational approaches can rapidly improve drug discovery success and speed, at a potentially lower cost.

We also see AI being used in the biologics space, although the technology is used there far earlier. AI-enablement doesn’t increase our interest unless the technology is robust, mature and adds value to the platform in a meaningful way.

IBM sold Watson Health to private equity in 2022 after investing billions into it. What can biotech startups and investors learn from what could be seen as a cautionary tale?

Biotech companies will ultimately be measured largely by their therapeutic pipelines and portfolios rather than by their tech platform.

AI for AI’s sake doesn’t hold water anymore. Results, whether in the form of novel therapeutic programs, diagnostic capabilities, or other clinically meaningful outcomes, are necessary.

We know quite a few startups are working on AI-assisted drug or protein discovery. Where else can AI play a role in healthtech?

AI is a capability, or more accurately described as a set of computational capabilities that can be applied to a set of problems where conventional techniques have demonstrable limitations. AI technology can play a role in biologics, small molecules, and even cell therapy.

We have witnessed its application in every aspect of a biopharmaceutical’s business — from discovery, clinical development, and applications in real-world evidence creation to go-to-market motions and post-market patient engagement.

AI is not a monolith; as a set of capabilities, the power of learning systems affords benefits to many previously difficult or intractable problems.

How commercially viable will personalized medicine be in the next five years?

Personalized medicine is already here. See the success in oncology over the last decade, from targeted therapies that are based upon tumor genomics to cell therapies that are N-of-one therapies, where a patient’s own immune cells are engineered to attack the cancer.

Personalized medicine as a viable business has already borne out. The question of how far we can go with personalized therapy is the one being answered in the market today.

Clearly, many therapies do not need hyper-personalization, but as we learn more about cancer, metabolic disease, and neurological disorders, we are enabled with advancements in biologic and computational science to customize or configure therapies for each patient.

Y Combinator welcomed a significant number of healthtech startups in its recent batches. Has YC’s presence had any impact on early-stage valuations?

Y Combinator has been a net positive force in driving innovative experimentation at the early stages of company development. Their healthtech cohorts are solid, and their apprentice model works well there.

They are still perfecting their approach to projects that focus on biologic science, but I remain optimistic. They have had far less of an effect on valuations for us than the larger momentum firms that recently moved into healthcare over the last few years.

How has due diligence in this space changed in 2022?

We have welcomed the investment environment of 2022 as both companies and venture investors can diligence each other at a more natural pace. Venture capitalists and founders need time in the process of diligence to understand each other, and the fervent environment of 2021 diminished and, in some ways, attempted to commoditize both.

As venture capitalists, we focus on selecting teams and projects that have the highest merit as transformative companies. This exercise takes significant effort and a clear understanding of a number of areas that cannot be accomplished in a day.

Diligence is more efficient now than in 2019, but we have returned to a far healthier pace for both founders and VCs.

Is Big Pharma interacting more with biotech startups this year than in prior years? When approaching yet-private companies in the space, do the majors favor M&A or corporate venture activity?

We are starting to see more deal-related activity pick up, but with a heavy tilt towards business development deals, and some corporate venture activity. Biotech has proven its worth as the engine of innovation for the biopharmaceutical industry, and larger strategics have clear programs for engaging with smaller venture-backed entities.

One would imagine given the valuations we are seeing in the venture-backed ecosystem that more M&A would occur given the quality of many of these assets relative to price, but we are at the early stages of that curve.

We heard that U.S. sanctions on China could extend to biotech. What impact could this have on AI-enabled biotech startups elsewhere?

Clearly, CFIUS continues to have important implications on venture financing across all sectors. Biotech is no different, and there may be more sensitivity moving forward, especially as it relates to advanced technologies, particularly in tech and biology.

This may have a modest cooling effect on the pricing of some assets, but I doubt it will affect whether quality companies and teams are funded properly.

Should AI-enabled biotech startups take non-dilutive capital from government entities? Why or why not?

This is a complex question. If the entity is a U.S. government affiliate, the answer is maybe. For other governments, in particular those outside the U.S. or Europe, it is a more challenging question.

Government funding nearly always has conditions of some kind that have to be clearly balanced with the future path of the company. If the funding is from a military source, the implications of dual-use technologies must be considered, and so must be the strategic drift that such funding might encourage.

Are you open to cold pitches? How can founders reach you?

Yes, but warm pitches are usually better. You likely have someone in your network who is also in mine. My email is rmittendorff@bcapgroup.com.

James Coates, health and human performance principal, Decisive Point

The NASDAQ Biotechnology Index peaked in 2021. Have declines in public-market valuations of biotech companies impacted startup investment in the sector?

Definitely. Going public is a preferred exit strategy for many, and those valuations have just been cut by more than 80%, driving down demand for all but the highest-quality startups. As evidenced by the XBI itself, such cycles are part of the sector.

Of the biotech startups you’ve seen lately, how many had an AI component? Do you favor biotech startups with extant AI capabilities over those without?

The ubiquity of AI in pitches that I see is striking. It’s hard for a biotech company to convince me they are doing more than just using AI as a component of their R&D (which they probably ought to be!).

IBM sold Watson Health to private equity in 2022 after investing billions into it. What can biotech startups and investors learn from what could be seen as a cautionary tale?

Commercialization and market expansion are not necessarily immediate downstream consequences of innovation for companies.

We know quite a few startups are working on AI-assisted drug or protein discovery. Where else can AI play a role in healthtech?

Anything involving data, be it electronic health records or imaging and image-guided procedures. We’re particularly excited by cognitive neuroscience and human performance in this context.

Y Combinator welcomed a significant number of healthtech startups in its recent batches. Has YC’s presence had any impact on early-stage valuations?

We work closely with many innovative ecosystems in health and life sciences. None of the investments we are most excited about are from YC (at this time).

How has due diligence in this space changed in 2022?

As I mentioned in my TechCrunch article: cash run-way, non-dilutive capital and market size have reemerged as the key metrics in determining whether or not to invest alongside the science.

Should AI-enabled biotech startups take non-dilutive capital from government entities? Why or why not?

If it aligns with the commercial trajectory of the company, then yes. If the grant or contract doesn’t align with what the company aims to accomplish, they should not take the funding (unless in life support mode!).

Are you open to cold pitches? How can founders reach you?

6 investors discuss why AI is more than just a buzzword in biotech by Anna Heim originally published on TechCrunch

Silicon Valley law firm Cooley recently reported that it “handled 298 disclosable venture capital financings for Q3 2022, representing $8.1 billion of invested capital, continuing a downward trend for both metrics and representing the lowest for both since Q4 2019.”

The firm said that deal volume, dollar volume and deal size for financings of life sciences companies also continued to decline in Q3 2022 compared to Q2 2022 and 2021.

Yet, November was also when U.S. bank JP Morgan chose to announce the launch of its healthcare venture capital practice, which will invest in early- to growth-stage companies in the space.

JP Morgan’s announcement comes at a time when, in the words of B Capital general partner and head of healthcare Robert Mittendorff M.D, “public market biotechs are dramatically down as interest rates rise and the focus on near-term development outweighs the promise of longer-term results and approvals.”

Mittendorff isn’t alone in feeling this way. Six active biotech investors we surveyed recently told us that the macro environment has definitely had a big impact on deal flow, valuations and M&A in biotech.

Where does that leave private biotechs? Mittendorff says that startups in the space are “considering the reprioritization of their assets, deciding whether to partner second or third assets with strategics, and evaluating structure in tranched financings to reach their fundraising targets.”

However, Big Pharma’s M&A appetite isn’t as strong as people expected, said Lux Capital principal Shaq Vayda.

“While the broader capital markets were forecasting a highly acquisitive appetite from the top pharma companies due to depressed valuations, in practice, it appears they prefer partnerships plus royalty agreements for the later-stage programs and corporate VC as a tool for earlier-stage involvement.”

This isn’t necessarily bad news for venture capitalists, who seize opportunities that others aren’t even looking at. For instance, Mittendorf noted that he and his B Capital colleagues “view market sentiment as overly negative.”

Among the opportunities biotech VCs are seeing, it is more and more common for an AI component to be involved. “The ubiquity of AI in pitches that I see is striking,” Decisive Point health and human performance principal James Coates told TechCrunch.

You may already have heard of AI being involved in drug discovery, but there’s more, said Conviction founder Sarah Guo.

“We’ve seen amazing progress over the past few years in AI models for protein folding and docking — key scientific problems. But when we look to the commercial side, there are also opportunities for richer use of data and smarter software workflows to increase efficacy and efficiency across the board in healthcare: from diagnostics, telemedicine, clinical trials, patient engagement and clinician decision support to revenue cycle management and claims processing,” she said.

However, investors are also being more thorough in their due diligence than in previous years, and not just because of Theranos. For instance, Elaia Partners partner Franck Lescure said that his firm saw “an exponential increase in concern about climate and environmental issues, whatever the project is — which used to be only a ‘nice to have.’”

Among other trends, the impact of worsening U.S.-China relations is on investors’ minds. “We already have seen CFIUS impacting some of the deals we have participated in,” Humboldt Fund general partner Francisco Dopazo confirmed.

If U.S. sanctions on China were to extend to biotech, Dopazo said that “the impact could go from financing (e.g., companies will not be able to tap strong and strategic Chinese capital) and scaling (e.g., more difficult access to sophisticated CROs) to business development and commercialization (e.g., fewer options for business development deals). Clearly a negative short-term/midterm impact to the industry as a whole.”

To find out more about how investors are thinking about the implications of U.S sanctions on China, what startups should consider when capital from government bodies, how to pitch these investors, and more, read the full survey here.

As AI pervades biotech, what are investors looking for in 2023? by Anna Heim originally published on TechCrunch

A short one this week, as I’m taking some time off. I didn’t want to leave you hanging, so I’ve spoken with some leading names in the field to keep Actuator chugging along. Last week, we spoke to MassRobotics’ chief of operations, Joyce Sidopoulos. Next week, we’ll be talking to U.C. Berkeley’s Ken Goldberg.

Right now, we’ve got some insight from the VC side. Peter Barrett is a co-founder of Palo Alto–based Playground Global, which has invested in a number of key robotics firms, including Agility, RightHand, FarmWise, Fabric, Canvas Technology and Owl Labs.

Q&A with Peter Barrett

TC: What was the biggest robotics story of 2022?

PB: The Great Autonomous Vehicle Capitulation. Ford and VW abandoning robotaxis are another indication that autonomous vehicles are decades from ubiquity. Autonomous vehicles may be inevitable, but they are certainly not imminent despite lots of very clever people and eye-watering amounts of capital pouring into the domain.

We have had autonomous vehicles driven by neural networks since the ’80s. I think we are about halfway there.

The good news is that in the interim, we do have a mature technology that improves traffic 30% and reduces fatalities at intersections by 90%. It is called a roundabout.

What are your biggest robotics predictions for 2023?

The biggest trend in 2023 will be the realization that robots are best used to amplify people rather than replacing them. Robots as collaborators that work for people in human environments is the best way of exploiting the unique capabilities of both.

How profound of an impact has the pandemic had on robotics?

There are 500,000 unfilled jobs in logistics in the U.S. at the moment. Similar gaps exist in other critical domains, in farming, mining, etc. We need more scalable and practical automation technologies to make people more productive and take on the dull, dirty or dangerous jobs that are otherwise going unfilled.

What under-addressed category deserves more focus from robotics startups and investors?

Life science is yet to have its industrial revolution. Individualized lifesaving therapies (think CAR T) are preposterously expensive, largely due to lack of scalable automation and logistics. Lab operations are stymied by islands of incompatible automation and no common ontologies or data formats, and humans are not integrated into the process. Companies like Artificial are tackling the software layer to orchestrate labs and pharma, but new classes of automation systems are needed to tackle the physical layer.

How will automation impact the workforce of the future?

Human dexterity and cognition will be amplified by strong, trustworthy, collaborative robots that literally do the heavy lifting. As stated above, it is all about amplifying people, not replacing them.

Are home robotics finally having their moment?

The Roomba is over 20 years old and is still the only non-toy robot that has any useful role to play in the home. The simple genius of the original design has been replicated countless times but is rarely improved upon: ask Rodney Brooks about the unwarranted innovation of SLAM versus random bumping.

We still don’t have robots that can cook or clean or be generally useful around the house, largely because we don’t have the cognition or dexterity to do a credible job in unstructured environments. Like the technology gaps that need to be filled to deliver autonomous vehicles, these capabilities will eventually emerge but don’t hold your breath.

What more can/should the U.S. do to foster innovation in the category?

How about a robotics/AI equivalent of the CHIPS Act?

Investing in the future of robotics by Brian Heater originally published on TechCrunch

Just a few months after buying fellow robotic software firm Vicarious, Alphabet-owned Intrinsic has acquired several divisions within Open Robotics, the company behind the widely-used robotics software packages Gazebo and Robotic Operating System (ROS).

Specifically, Intrinsic is buying Open Source Robotics Corporation (OSRC), the for-profit arm of Open Robotics, and Open Source Robotics Corporation Singapore (OSRC-SG), the portion of the business that led efforts on a project called Open-RMF for interoperability between fleets of robots and physical infrastructure (e.g. doors and elevators). Open Robotics’ nonprofit arm, Open Source Robotics Foundation (OSRF), won’t be impacted by the deal outside of several new executive appointments, according to Open Robotics co-founder and former CEO Brian Gerkey.

In a blog post announcing the acquisition, Gerkey assures that there won’t be any disruption in day-to-day activities with respect to OSRF’s oversight of the ROS robotics middleware, the Gazebo 3D robotics simulator and Open-RMF. OSRF will remain in charge of the open source intellectual property, project governance and growing the ROS, Gazebo and Open-RMF communities after the deal closes. It’ll also continue to administrate the Github organizations, run the respective project websites, put together the annual ROSCon convention, and support TurtleBot, the low-cost robot kit manufactured by Open Robotics in partnership with Clearpath Robotics and ROBOTIS.

“Together we will give the robotics community great new features in ROS, Gazebo, and Open-RMF, while also building new products and services on top … You can expect ROS 2 Iron Irwini to be available in May 2023 on schedule,” said Gerkey, who will join Intrinsic as part of the OSRC team post-acquisition but continue to serve on the board of OSRF. “We will continue to improve ROS, Gazebo, and Open-RMF so that they can be used in even more domains, with ever-higher demands for software quality, testing, and platform support.”

Headquartered in Mountain View, OSRF — which predates Open Robotics — was founded in 2012 with the mission of supporting “the development, distribution and adoption of open source software for use in robotics research, education and product development.” Its beginning can be traced to Willow Garage, a robotics research lab and incubator created by Scott Hassan, an early Google engineer-turned-billionaire tech entrepreneur. Willow Garage was gradually dissolved into a number of spin-offs, including OSRF.

OSRC launched in September 2016 and together with OSRF became known as Open Robotics. In 2018, Open Robotics opened OSRC-SG and announced collaborations with the Singapore government to work on robotics applications for the healthcare sector.

Open Robotics funds its operations through the contributions of various public and private entities including DARPA, NASA, Amazon, Bosch, Nvidia and the Toyota Research Institute. DARPA awarded OSRF its first contract to support open source simulation software for the DARPA Robotics Challenge, and OSRF has in turn provided resources to support NASA’s Space Robotics challenge and the DARPA Subterranean Challenge.

Intrinsic got its start more recently. Spun out of Alphabet’s X R&D lab and led by Wendy Tan-White, the former VP of Moonshots at Alphabet, the company is focused primarily on developing control software for industrial robots. As my colleague Brian Heater notes, Intrinsic has mostly stayed silent since its launch, opting instead to focus on building out some technology pilots with manufacturing firms. But Tan-White did reveal in a recent interview with TechCrunch that Intrinsic plans to launch a software layer next year that will be able to interface with automotive assembly, electronics manufacturing, and logistics robots, allowing users to create apps and test them in a simulator before deploying them on real-world machines.

“Our mission is to democratize access to robotics. We believe that the long-term support for developers of the global ROS community is key to this mission,” Intrinsic said in a statement about the Open Robotics acquisition today provided to The Robot Report. “Our team is eager to welcome and work with our new colleagues, expand our use and integration of ROS tools, and build the Intrinsic platform. As we work together to support and serve developers, we see immense value in creating a software platform that expands access to intelligent robotics in a way that’s compatible, useful, and open, while creating countless opportunities where they didn’t exist before.”

Alphabet’s Intrinsic acquires DARPA-backed firm behind open source robotics software by Kyle Wiggers originally published on TechCrunch

In September, the FBI warned that more than half of connected medical devices in hospitals had known critical security vulnerabilities, and these flaws are leading to a surge in attacks on the healthcare industry. As Carly Page reported, MedCrypt raised a $25 million round to help device manufacturers think security-by-design when creating the next generation of medical devices.

The company is a Y Combinator graduate that provides software for anything the U.S. Food and Drug Administration would consider a medical device where cybersecurity could be a concern, from insulin pumps and heart rate monitors to AI-based radiology tools and autonomous robots. I’m sure we can all agree that we don’t want to live in a world where people get blackmailed so hackers won’t send their critical health devices on the fritz, so let’s take a look at the story MedCrypt shared with its investors to raise its Series B.

We’re looking for more unique pitch decks to tear down, so if you want to submit your own, here’s how you can do that.

Slides in this deck

The MedCrypt Series B deck is a tidy 12-slide deck. The company’s COO, Vidya Murthy, who shared the deck with me, said that it’s as-pitched, except that some of the customer adoption information has been redacted. Makes sense; security is sensitive business, and I imagine keeping the customer list under your hat might be a smart move. The company does claim that three of the top five device manufacturers use their products.

Cover slide
Problem slide
Target audience/market size slide
Opportunity slide
Mission slide
Product slide: Vulnerability tracking
Product slide: Behavior monitoring
Product slide: Cryptography
Product slide: MedISAO
Team slide
Summary/traction slide
Closing slide

Three things to love

MedCrypt’s slide deck shows that it is a mature organization with a broad product lineup and even the beginnings of an ecosystem influence play. The deck is pretty unusual in that it is missing a fair amount of information that I’d expect to see in a deck from a company at this stage, but the narrative is clean and (mostly) easy to follow.

A surprising amount of the deck focuses on the company’s product lineup, with four of the 10 content slides dedicated to that. It makes sense to tell the story of a company through its products, but the deck itself doesn’t do a great job of that; it’s obvious that it needs a voice-over to contextualize this information.

Rallying the industry

This slide is at once very good and pretty lacking. When it first came up, I was confused about what MedISAO was and why it was on the company’s slide deck. It shows that this deck was designed with a voice-over in mind, rather than being readable on its own. This slide comes after three slides that explain MedCrypt’s products and uses the same design. Perhaps that should have been the tip-off that this is also one of the company’s products, but I found it confusing at first. Why is it good that the FDA recommends ISAO memberships? What the hell even is an ISAO? (I had to Google it; it’s an information sharing and analysis organization). Why is it important that MedISAO is good for MDM? (I know, I know. I had to google that, too: medical device manufacturer). Yay, sales pipeline, I suppose?

When I visited the MedISAO website, it finally clicked. The site’s FAQstates that “MedISAO is organized by MedCrypt, Inc., a healthcare-first cybersecurity company.”

So! We got there in the end, which isn’t really a good thing to say about a pitch deck. Whatis tremendously impressive, though, is that if MedCrypt is able to be the central repository for sharing security information across all medical devices, it has an opportunity to keep a finger on everything that’s going on across its entire industry. It’s a really powerful position to be in.

Of course, there’s nothing on this slide about how successful it is so far, and its website says “MedISAO does not publish a complete list of member organizations, but you can see a partial list of members on the home page.” It’s hard to gauge whether this is a mature, successful initiative that’s helping cement MedCrypt in its space or a website the company flung up over a couple of afternoons. I would have loved to see some metrics here, specifically about the value of the sales pipeline from the site and what impact it has.

A gut punch of an opportunity slide

One of the big questions an investor asks themselves is whether there is a market for a product or company. Regulatory shifts can be a powerful driver for adoption. For example, before GDPR legislation went into effect in May 2018, every website in Europe and every company that wanted to do business with EU countries very quickly needed to make changes. That created a booming industry for web development houses that specialized in privacy.

Well, it seems like the same is happening in the medical device industry; this slide claims that more than $1 trillion worth of devices need to get secured to be in compliance. Unlike web development, however, this is a pretty specialized industry. If you thought GDPR was wild, get a load of HIPAA. On top of that, it’s often non-trivial to update the firmware on embedded electronic devices (that’s part of the reason we are in this mess in the first place).

This slide is an absolute slam dunk: It doesn’t take a lot of imagination to see how there’s an enormous market with a lot of money at stake (and a lot of money to spend) — with a ticking clock. It’s a perfect storm, and MedCrypt has built a boat that just might be able to weather it.

Strong summary slide

Personally, I’m not a fan of READING LARGE AMOUNTS OF TEXT IN ALL CAPS; it’s shouty and reader-unfriendly. It also means that people who are adept at speed-reading aren’t able to use their speed-reading skills. That aside, this slide is a great one to end on. It includes a huge amount of really good information: It summarizes the market opportunity, products, number of customers and previous fundraises, and helps set the tone for the Q&A at the end. Another approach would have been to move the summary slide to the beginning of the deck to set the tone, but it works either way.

In the rest of this teardown, we’ll look at three things MedCrypt could have improved or done differently, along with its full pitch deck!

Pitch Deck Teardown: MedCrypt’s $25M Series B deck by Haje Jan Kamps originally published on TechCrunch