Securitization platform Cadence surpasses $125M deal volume and raises $4M

Securitization is a critical function of the modern financial system. Banks “package” individual loans, say a mortgage or an auto loan, into a group with similar characteristics and sell them to other investors. That gets the debt off the originator’s balance sheet so that they can offer more loans, while also offering private investors alternative investment opportunities to buy up.

Despite the scale of the market — the trade association SIFMA’s research shows that the volume for asset-backed securities reached more than $300 billion in 2019 (excluding mortgages) — much of that structuring remains relatively ad hoc, with structuring agents and buyers constantly seeking each other out.

Much in the way that real estate and startup crowdsourcing platforms democratized access to those alternative investments, Cadence wants to expand access to securitized products while increasing the velocity of transactions for originators and lowering prices. Founder and CEO Nelson Chu said that “our job is to bring transparency and efficiency to this market and through all the various things that we do.” The company operates on top of the Ethereum blockchain network.

Founded in 2018 and launched publicly in 2019, the New York City-based capital markets startup has now structured $88 million in notes across 76 offerings and 12 originators according to the company. The firm’s public leaderboard shows that the largest originators were Sellers Funding with more than $23 million and Wall Street Funding with almost $26 million in transaction volume. Chu said that “I think we are the 21st largest structuring agent the United States in 2020 so far,” which is not a bad place to be for a young startup in a massive multi-trillion dollar market.

In addition to that $88 million volume processed on the company’s retail platform, Cadence also structured a $40 million whole business securitization with FAT Brands, the owner of restaurant chains like Fatburger and Yalla Mediterranean. The company notes that the structuring reduced the company’s interest costs by $2 million.

The company has hit a number of milestones over the past two years. It closed a seed round of $4 million in December led by Revel VC, with Revel’s Thomas Falk, Navtej S. Nandra, former President of E*Trade, and portfolio manager Oliver Wriedt joining the company’s board.

In addition, back in 2019, the company said that it also became the first digital asset company to launch a digital asset ticker on Bloomberg Terminal and also the first to join the Bloomberg App Portal. It also secured the first financial debt rating for a digital asset.

The company has a variety of revenue streams from different areas of its platform. It takes transaction fees on each deal, but also derives revenues from hosting data related to the performance of the underlying loans. Given the company’s technology stack, it has better and more verified data about how the underlying assets that back each security are performing, giving all investment holders a much more robust look at the health of their portfolio.

Longer term, Cadence’s goal is to move to a mostly SaaS model for originators and buyers. “We can be very, very beneficial to every single counterparty involved when we become that,” Chu said, adding “we essentially are Switzerland … because our incentives are all aligned.”

I asked about how the company is responding to the COVID-19 situation, and Chu said that as the world saw in the 2008 global financial crisis, “there are pockets of opportunity here that we continue to find, and we allow retail, accredited investors to get access to that.” Chu gave the example of game developers waiting on payments from Apple and Google who need short-term loans to cover costs.

In addition to Revel, other investors in the seed round included Morgan Creek Digital, Nimble Ventures, Argo, Tuesday Capital, Manatt, and Recharge Capital. R&R Venture Partners, a joint VC firm of former Citi chairman Richard D. Parsons and Clinique chairman Ronald S. Lauder, also participated.

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Jack Dorsey creates $1B COVID-19 relief fund using Square equity

Jack Dorsey announced in a series of tweets today that he is shifting $1 billion in his Square equity to create a fund dedicated to COVID-19 relief. The Twitter and Square CEO is calling the fund Start Small and posting a tally of disbursements and recipients in a public spreadsheet.

Dorsey said in his announcement that the new initiative will shift the focus to other causes at some point.

The first Start Small contribution listed is $100,000 to America’s Food Fund — an effort led by Leonardo DiCaprio and Laurene Powell Jobs dedicated to providing meals to vulnerable populations disrupted by the COVID-19 pandemic.

Other top backers of America’s Food Fund include Oprah Winfrey ($1 million) and Apple ($5 million), according to the organization’s GoFundMe page.

That’s what we know so far from a tweet posted Tuesday afternoon by the American tech entrepreneur who co-founded and leads not one, but two publicly listed companies.

I’m moving $1B of my Square equity (~28% of my wealth) to #startsmall LLC to fund global COVID-19 relief. After we disarm this pandemic, the focus will shift to girl’s health and education, and UBI. It will operate transparently, all flows tracked here: https://t.co/hVkUczDQmz

— jack (@jack) April 7, 2020

There’s still a lot to learn about Dorsey’s new initiative, including how it will be managed, whether it will make investments (along with donations) and how to apply for funding. TechCrunch has asked Square for additional details and will update this post when we hear back.

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WhatsApp introduces new limit on message forwards to fight spread of misinformation

WhatsApp is imposing additional restriction on how frequently a message can be shared on its platform in its latest effort to curtail the spread of misinformation.

The Facebook-owned instant messaging service said today that any message that has been forwarded five or more times will now face a new limit that will prevent a user from forwarding it to more than one chat (contact) at a time.

A spokesperson told TechCrunch that WhatsApp will roll out this change to users worldwide today.

Today’s move builds on WhatsApp’s effort from last year when it limited users from forwarding a message to more than five users at once. The service, used by more than 2 billion users, said the move allowed it to reduce the volume of message forwards globally by 25%.

The end-to-end encryption on WhatsApp — which the company is fighting for in several markets — prevents it from reading the content of a message, so it relies on metadata of a message to gauge its spread.

“Is all forwarding bad? Certainly not,” the company wrote in a blogpost today. “However, we’ve seen a significant increase in the amount of forwarding which users have told us can feel overwhelming and can contribute to the spread of misinformation. We believe it’s important to slow the spread of these messages down to keep WhatsApp a place for personal conversation.”

More than a dozen deaths in recent years — several in WhatsApp’s biggest market, India — have been linked to viral circulation of misinformation on Facebook’s service.

Facebook has moved to take several efforts in recent weeks as the world grapples with the coronavirus pandemic. Last month, it announced free developer tools for Messenger to combat COVID-19, and introduced an info centre atop of the news feed to prominently showcase reliable information.

Additionally, the company is also working with nonprofit organizations such as the WHO to build helplines, and has committed to donate millions of dollars. The World Health Organization’s helpline on Messenger and WhatsApp has already reached more than 10 million users, days after its launch. The Indian government also launched a helpdesk bot on WhatsApp last month.

But the vast reach of Facebook has also attracted scammers. “Unfortunately, scammers may try to take advantage of people’s vulnerability and generosity during this time,” wrote Stan Chudnovsky, VP of Messenger.

WhatsApp has also been testing a feature on the beta version of its Android app that gives users the ability to quickly comb through the web with the text or video they have received for more context.

Images credit: @shrinivassg

A spokesperson said the platform plans to roll out this feature in the near future.

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COVID-19 crisis spurs triple-digit growth for refurbishing startup Back Market

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Eva Yoo is founder of Seek Road, the project wherein she cycles from Seoul to London while interviewing startups on the Silk Road.

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While a number of startups have been hard hit by efforts to curb the spread of the COVID-19 virus, refurbishing firm Back Market is showing increased growth globally.

The Paris-based startup encourages customers to send in their old devices so they can be refurbished and resold into the e-commerce secondhand market. The growth achieved in the midst of the COVID-19 crisis is partly due to increased laptop sales as people seek better devices to work remotely.

For people who are unsure whether refurbished products are reliable, Back Market permits customers to send in old devices, exchange them for newer versions and pay the difference. CEO Thibaud Hug de Larauze said this payback service is currently possible only in France, but starting in Q2, it will be available in other markets.

Founded in 2014, Back Market has raised a total of €48 million in funding over two rounds, most recently a Series B in June 2018. The company is profitable and reportedly still has money to spend from its last funding round.

“We don’t release the gross merchandise volume, but it’s a three-digit growth rate,” Hug de Larauze told TechCrunch. “We saw an increase in demand for laptops, printers and other devices needed for working at home. Demand for refurbished phones is going down as people seek to get the first necessity items, like food for their situation.”

Over the past two weeks, Back Market saw skyrocketing demand from Italy, a nation with a high coronavirus death toll where citizens were warned they would be confined to their homes for four weeks.

Another factor that helped the platform’s growth: Smartphone brands like Apple and Samsung closed their retail stores, a move that turned Back Market into a major supply channel. While offline retailers and carriers are shut down in Europe, Hug de Larauze says Chinese offline retailers and refurbishing factories are starting to get back to work.

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Apple has sourced over 20 million protective masks, now building and shipping face shields

As it mobilizes its supply chain, employees, and partners to provide personal protective equipment to medical workers and others working to stop the spread of the COVID-19 epidemic, Apple has sourced over 20 million face masks and is now building and shipping face shields, according to a statement from chief executive Tim Cook.

Apple is dedicated to supporting the worldwide response to COVID-19. We’ve now sourced over 20M masks through our supply chain. Our design, engineering, operations and packaging teams are also working with suppliers to design, produce and ship face shields for medical workers. pic.twitter.com/3xRqNgMThX

— Tim Cook (@tim_cook) April 5, 2020

The company is working with governments around the world to distribute its supply of face masks to where it’s needed most.

Meanwhile, the first delivery of the company’s Apple face shields went out to Kaiser hospital facilities in the Santa Clara valley earlier this week, according to Cook.

As Cook noted, the masks pack flat and ship 100 to a box. They can be assembled in less than two minutes and are fully adjustable. Cook said that the company would ship 1 million by the end of the week and will expect to ship an additional 1 million face shields weekly, with a goal to expand distribution beyond the U.S. 

“For Apple this is a labor of love and gratitude and we will share more of our efforts over time,” Cook said. 

Apple is joining an effort that several 3D printing startups and maker facilities have already spent time working on.

Private tech companies mobilize to address shortages for medical supplies, masks and sanitizer

In Canada, INKSmith, a startup that was making design and tech tools accessible for kids, has now moved to making face shields and is hiring up to 100 new employees to meet demand.

“I think in the short term, we’re going to scale up to meet the needs of the province soon. After that, we’re going to meet the demands of Canada,” INKSmith CEO Jeremy Hedges told the Canadian news outlet Global News.

3D-printing companies like Massachusetts-based Markforged and Formlabs and Brooklyn’s Voodoo Manufacturing are all making personal protective equipment like face shields in the US.

 

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Internet of Elephants launches Wildeverse, an AR game about endangered animals and conservation

On Friday, the Kenyan augmented reality game developer Internet of Elephants launched its latest game in partnership with the conservation science experts from the Borneo Nature Foundation, Goualougo Triangle Ape Foundation, Zoo Atlanta and Chester Zoo.

The new game, called “Wildeverse”, uses AR to create a virtual forest that players can explore to find certain animals — or clues to an animal’s whereabouts.

Though the game was intended to be played outdoors, the COVID-19 crisis forced the team to pivot, creating an option that lets people move about virtually using in-game controls, or walk around in more confined spaces.

The game starts with a chat-based segment introducing players to the gameplay and setting up some context around the virtual environment players will be exploring. Its graphics aren’t focused on recreating a completely immersive jungle environment, but create an abstracted forest and canopy of trees which players explore. A timer keeps track of how long a player takes to complete a mission, which involve identifying certain animals or looking for traces of their presence in the AR-created forest.

Once a mission is complete, the player runs through a scripted interaction with an actual conservationist who helped the Internet of Elephants game developers come up with the concept for the game and provided research assistance and support for the actual animals represented in the gameplay.

Image courtesy of Internet of Elephants

The game can be played on any iOS or Android device that support ARKit or ARCore.

Challenges range from searching for the animals themselves or their footprints, food leftovers or poop to looking for illegal human activity and threats to the habitat of four real orangutans, chimpanzees, gorillas and gibbons.

To make the game, Internet of Elephants developers led by company founder Gautam Shah, actually went to the jungles of Borneo and Congo to speak with conservationists about their work and scout for wildlife to use in te game, the company said in a statement. The game developers tracked several families of monkeys 

 

“Ape populations are being decimated across the world. Wildlife protection will only become a global priority if enough people take an interest. Conservationists on the ground are fighting an uphill battle with the support of only a handful of people,” said Shah in a statement. “We are on a mission to turn the 2 billion people playing games today, into wildlife lovers and supporters of conservation efforts.”

For Shah, the newest launch for Internet of Elephants continues the company’s mission, which began in 2015 when the American-born Shah forsook a career in consulting to launch his AR-based gaming company. Other members of the Internet of Elephants team have equally interesting stories, including product lead, Jake Manion, who had spent six years as the creative director for Aardman Animations, the Academy-award winning studio behind Wallace & Gromit and Shaun the Sheep.

Internet of Elephants uses AR to get up close to endangered species, turns their migrations into a game

Shah sees three primary conservation elements to the Wildeverse game. First, he says, it creates a link between players and the conservation societies that the company works with, giving people a better sense of what conservation organizations actually do. The game also forces players to confront issues like forest fires, illegal logging, poaching, and the challenges surrounding conservation work that are exacerbated by development and human consumption changing the composition of the jungles these animals call home. Finally there’s an educational element to the game.

“You really really do learn a lot of juicy stuff and we don’t shy away from getting technical,” says Shah. “All that collectively is about creating a connection between you sitting in St. Louis and someone in Borneo trying to study orangutans,”

Originally, the game was meant to be played outdoors, with a thirty-meter radius of space to get the full sense of the gameplay, but it can work in a small studio apartment in Los Angeles equally well, given the modifications the team made before the game’s launch.

The text component of the game is informative and gives players a chance to learn about the foods orangutans eat, their habitat and their lives in the jungle. The script is slightly clunky, but not tiresome, and is based on conversations with the actual conservationists working in these different forests.

Ultimately Shah hopes to expand the number of habitats and the breadth of the game so players can explore different geographies and learn about endangered species on every continent.

There’s no monetization in the game yet and it will remain free-to-play, but Shah hopes to add some revenue-generating elements as development continues along with multi-player features, he said.

Ultimately, the game is about connecting and educating a new generation to the wonders of nature conservancy through the newest tech tools and gameplay.

“We want to make wildlife a positive, exciting topic of daily conversation for millions of people currently unconnected to conservation. We want to make Fio, Buka, Chilli and Aida celebrities, just like Kim Kardashian, Messi, and Donald Trump,” says Shah. “People’s attention matters so much more than they think.”

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This Week in Apps: Zoom has issues, Pinterest founder’s new COVID-19 research app, record Q1 spending

Welcome back to This Week in Apps, the Extra Crunch series that recaps the latest OS news, the applications they support and the money that flows through it all.

The app industry saw a record 204 billion downloads and $120 billion in consumer spending in 2019, according to App Annie’s “State of Mobile” annual report. People are now spending 3 hours and 40 minutes per day using apps, rivaling TV. Apps aren’t just a way to pass idle hours — they’re a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus.

In this Extra Crunch series, we help you keep up with the latest news from the world of apps, delivered on a weekly basis.

This week, we’re continuing our special coverage of how the COVID-19 outbreak is impacting apps and the wider mobile app industry — or rather, the boost many apps are receiving as a result. In fact, the first quarter saw consumer spending hit record levels in Q1 as everyone was staying indoors. But as some apps shoot up the charts, scrutiny over their practices increases. This week saw No. 1 app Zoom defending itself against a host of complaints over security issues, for example, while social video app Houseparty defended itself against a possible smear campaign. There’s also a new app from the Pinterest CEO for tracking the spread of COVID-19.

Also this week: more leaks about the new version of iOS, Apple bought Dark Sky, Niantic pivoted, TikTok moved up the charts and more.

Coronavirus/COVID-19 special coverage

Pinterest CEO, scientists team up on COVID-19 tracking app

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