EV startup Canoo has hired hundreds of employees and is homing in on a production date, but critical milestones including landing a battery supplier remain, according to the company’s second quarter earnings report.
Canoo’s earnings report comes just a few weeks after the company’s first investor relations day when it named Dutch company VDL Nedcar as its contract manufacturing partner for its lifestyle vehicle. At the time, Canoo estimated the Nedcar facility would build up to 1,000 units in 2022 for U.S. and European markets, with a target of 15,000 units in 2023. During Monday’s earnings call, CEO Tony Aquila said the company is now expecting 25,000 units in 2023.
Canoo also provided updates on its plans to build a U.S.-based factory, which it describes as a “mega microfactory” for its pickup truck and multipurpose delivery vehicle. In June, the EV startup announced plans to build its first factory in Oklahoma. The state has committed $300 million in non-dilutive financial incentives to support the facility and Phase 2 of manufacturing.
“This two-pronged strategy is important for a few reasons,” Aquila said during Monday’s earnings call. “As a new OEM, working with Nedcar will allow us to refine our manufacturing process. While augmenting our production expertise, which will be deployed in our Oklahoma manufacturing plant, it will allow us to geographically diversify our manufacturing operations and position us to increase our commitments, products and volumes to adapt to changing market demands and build flexibility in distribution.”
Aquila said about a third of Oklahoma’s investment will be available within the first 36 months. These funds will help the company progress as it moves into its Gamma phase, which means Canoo is getting ready to launch. Year over year, Canoo upped its workforce from 230 to 656 total employees, 70% of which are hardware and software engineers. The startup’s operating expenses have increased from $19.8 million to $104.3 million YOY, with the majority of that increase coming from R&D.
The ramping up of expenses pre-revenue is a signal that Canoo is pushing forward on its production goals, but there’s still work to be done before construction begins on the Oklahoma factory. Aquila said Canoo is in the final process of selecting a construction manager, an architect and an engineering firm and will likely have more updates on the construction progress by next quarter.
The company is still working on making a final decision for a battery partner in the third quarter, a move that is becoming increasingly important as more legacy OEMs work to control their supply chain with battery joint ventures. Canoo is also struggling with semiconductor supply chain issues, as is the rest of the industry, but says its streamlined manufacturing process means its vehicles will require less chips to function.
On IR day, Canoo announced that it had completed 500,000 miles of beta testing. As of June 30, Aquila said the company has locked in engineering and design to commence “gamma” builds.
“We have also sourced 87% of components, compared to 74% in the first quarter of the year, and excluding bulk material, we are 95% sourcing complete,” said Aquila. “Our CTO and his team have completed engineering design for 67% of the lifestyle vehicle components and have moved those into tooling.”
Aquila said Canoo would begin its countdown to standard operating procedure for its lifestyle vehicle during the fourth quarter. The lifestyle vehicle is probably closer to production, but Aquila said out of the 9,500 non-binding refundable preorders, preorders for Canoo’s other two vehicles, the pickup truck and the multipurpose delivery vehicle, are the most popular.
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a16z’s Chris Dixon shares his insights on crypto at TechCrunch Disrupt – TechCrunch
Love it, hate it or barely understand it, crypto continues to draw massive amounts of VC money, despite recent token turbulence casting a shadow over the still-nascent sector. Case in point, in May the venerable Andreessen Horowitz (a16z) closed a crypto megafund for a whopping $4.5 billion.
A16z’s new fund comes hot on the heels of last year’s $2.2 billion Crypto Fund III. That’s a pile of newfangled faith from an investment firm founded back in 2009. All of this activity is why we’re thrilled to announce that Chris Dixon, the founder and managing partner at a16z Crypto, will join us onstage at TechCrunch Disrupt on October 18–20 in San Francisco.
At a time when crypto ecosystems, like Terra and its UST stablecoin, collapse and take billions of dollars down with them, plenty of investors and entrepreneurs remain skeptical. Yet others — like a16z — are doubling down on crypto, NFTs and other uncharted web3 products.
You can bet we’ll ask Dixon about the current crypto market and why he remains bullish. We’re also curious to hear his take on Bill Gates’ opinion that NFTs represent an asset class based on the greater fool theory. We think this promises to be a rich and spicy conversation.
Chris Dixon is a general partner and has been at Andreessen Horowitz since 2012. He founded and leads a16z Crypto, which invests in web3 technologies through its dedicated funds.
Previously, Dixon co-founded two startups — SiteAdvisor and Hunch — serving as CEO at both. SiteAdvisor, an internet security company, was acquired by McAfee in 2006, while Hunch, a recommendation-tech company, was acquired by eBay in 2011.
Dixon also co-founded Founder Collective, a seed venture fund, and he has personal angel investments in various technology companies.
TechCrunch Disrupt takes place on October 18–20 in San Francisco. Buy your pass now and save up to $1,100. Student, government and nonprofit passes are available for just $295. Prices increase September 16.
Elon Musk sells nearly $7 billion in Tesla shares – TechCrunch
Tesla CEO Elon Musk is at it again selling shares of his electric vehicle company, per regulatory filings. Since Friday, the executive has sold 7.9 million shares, which totals about $6.9 billion. This is the first time Musk has sold shares in Tesla since April, when he disposed of 9.6 million shares, worth about $8.5 billion.
Musk appears to be selling the shares to stock up on cash in case he’s forced to go through on his $44 billion Twitter acquisition. The executive tweeted Tuesday evening that he was done selling for the moment.
“In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” tweeted Musk.
Last month, Musk told Twitter he’s killing the deal because he believed the social media company to be misleading in its bot calculations. However, over the weekend, the executive waffled a bit, tweeting: “If Twitter simply provides their method of sampling 100 accounts and how they’re confirmed to be real, the deal should proceed on original terms. However, if it turns out that their SEC filings are materially false, then it should not.”
Musk also tweeted Tuesday evening that if the Twitter deal doesn’t close, he’ll buy back his shares. Perhaps he’ll wait until Tesla issues its three-to-one stock split, which Tesla shareholders approved last week, so he can buy them back on the cheap.
Over the last ten months, Musk has sold around $32 billion worth of stock in Tesla.
Tesla shares were down 2.44% today but are trading relatively flat in after-hours, suggesting the stock sales are yet to have an effect on Tesla’s share price. Tesla’s stock took a hit late last year when Musk sold off more than $16 billion worth of sales after polling his Twitter fans on whether he should trim his stake, a move that got him in hot water with the Securities and Exchange Commission.
This article has been updated with confirmation from Elon Musk that the stock sales are related to his Twitter acquisition.
How investors can still get strong returns from late-stage tech startups – TechCrunch
Last year was a record 12 months for the tech industry, with immense amounts of money flowing into both early- and late-stage companies as well as an all-time-high number of IPOs. But it feels like 2022 has been exactly the opposite.
This year has proven that there is always risk in any investment, whether it’s a public stock or a private startup. While the last couple of years may have allowed many people to put on their blinders about those risks, ups and downs are natural and should be expected.
Still, there are ways to mitigate risk when investing in late-stage companies. For investors, now is a good time to start seeing the opportunities while also protecting themselves against potential risks down the line.
What’s affecting late-stage startup valuations in tech?
Risk exists even in the “good times.”
Tech companies — private and public — have seen strong corrections to their valuations. Some companies that went public in the last year or two have lost more than 75% of their value.
Here’s how things have changed for companies of all stripes:
As even high-growth companies see their values being halved or worse, it’s no surprise that private investors and venture capitalists have slowed down their capital deployments, especially to late-stage companies.
Many of these companies were forced to delay their IPOs until the markets calmed down and had to start conserving cash and extending their runways for longer than they anticipated. Some have already lowered their valuations, either in response to these market corrections ahead of a future IPO or to attract investors.
Many tech startups can still outrun the down market
The current market is impacting high-growth companies that consistently lose money the hardest. But it’s also rewarding those that are prioritizing profitability, which is why many companies are reducing spending and costs.
Game firms request India PM Modi ‘uniform and fair treatment to all’ following BGMI ban – TechCrunch
A group of game companies in India has requested Prime Minister Modi to offer a “uniform and fair treatment” to all entities operating in the South Asian market weeks after the country banned Krafton’s BGMI title.
In a letter to Modi this month, the group described the ban on Battlegrounds Mobile India as an “unfortunate event,” and said such “arbitrary decisions run counter to established principles and will deny opportunities to an entire generation of youth in India.”
The letter, signed by founders of Outlier Games, Story Pix, Lucid Labs, Roach Interactive, Godspeed Games, Uniplay Digital and four other firms, says India has been “lagging considerably in creating high skilled entrepreneurs” and global gaming giants have taken a “long-term vision” on fostering the local ecosystem.
“While capital and infrastructure are critical to the survival and development of the industry, the leading global video gaming companies with their experience and next-generation technology are needed for establishing a robust gaming eco-system in India. Therefore, we seek a uniform and fair treatment of all entities operating in India,” added the letter, a copy of which was reviewed by TechCrunch.
India banned Krafton’s Battlegrounds Mobile India late last month. Prior to the ban, BGMI had amassed over 100 million registered in the country. Reuters reported that the country blocked the title exercising section 69A of the local IT law and over concerns that it was sharing data with China.
The development followed a growing tension between India and China, two nuclear-armed neighboring nations that have been especially at odds since deadly skirmishes along the Himalayan border in 2020.
India has reacted to the move by banning over 300 China-linked apps including PUBG and TikTok, both of which counted India as their largest overseas market by users. Of the hundreds of apps that New Delhi has banned in the country, Krafton’s PUBG was the only title that had made a return — though with a completely revamped avatar.
“There is a greater need for a clear set of standards and framework to ensure fairness and uniformity to all stakeholders. The industry wishes to proactively engage with the government in forming a robust set of video games-centric policies based on global best practices,” the letter adds.
“This will go a long way in creating an enabling and conducive environment which facilitates the growth of the video game industry allowing the industry to compete globally. We request your urgent intervention in the matter and seek your counsel and guidance on working towards a more comprehensive dialogue and discussion in the future.”
The Prime Minister office did not respond to a request for comment Monday afternoon.
‘Winter may be longer’ because unicorns won’t accept down rounds, says SoftBank leader – TechCrunch
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.
Hey, folks! A quick word on pitching. If you are starting your fundraising journey, apply to be part of the 2-minute life pitch practice on our TechCrunch Live series. If you’ve already raised some money, Haje is always on the lookout for pitch decks to feature as part of his Pitch Deck Teardown series on TechCrunch+. There’s more info about how to submit your deck here. If you have more questions about either, email Haje, and he may be able to help! —Christine and Haje
PS. Both of us wrote guides to what we write about — here’s Christine’s and Haje’s, respectively. Both documents include our email addresses so you can whisper sweet nothings (i.e., press releases) into our electronic ears.
The TechCrunch Top 3
- Brrr, it’s cold in here: Manish writes that a “venture capital winter” will last a little longer, according to SoftBank’s Masayoshi Son. It’s a bit interesting, though, that a firm often known for pouring large amounts of capital into companies, cough, WeWork, cough, seems shocked that companies aren’t willing to give up on the large valuations when they are out raising new funding. Meanwhile, Alex gives his take in a TechCrunch+ version looking at SoftBank’s Vision Fund losses.
- Hook, line, but hopefully no sinker: Twilio confirmed that hackers gained unauthorized access to corporate login credentials under the disguise of telling employees their passwords had expired, Carly reports.
- Another big private equity deal: Vista Equity Partners is set to acquire automated tax compliance company Avalara in an all-cash deal valued at $8.4 billion, Paul writes. There have been some other large private equity deals this year, including another acquisition Vista made earlier this year of Citrix and Thoma Bravo’s two of Anaplan and Ping Identity.
Startups and VC
We had so many incredible things get published over the weekend, it’s hard to choose what to feature in this here Ye Olde Lettre of Neues.
We loved today’s Equity podcast, “How to lose money, SoftBank edition.” Rebecca’s transportation and mobility roundup, the Station, was particularly good too, breaking down what is happening in the land of micromobility and much more. (Also, her update from earlier in the week had a lot more Cybertruck earnings call info.)
The collapse of Three Arrows Capital and the counterparties wrapped in the crypto hedge fund’s troubles have drawn questions about the soundness of the heady digital asset investment space. For the industry’s survivors, watching their rivals fall to pieces overnight has been an alarming experience. Bitmain’s co-founder welcomes crypto regulation to help stabilize things, Rita reports.
- Cryptically entering South Korea: Singapore-based cryptocurrency platform Crypto.com has acquired two startups in South Korea for an undisclosed amount, Kate reports.
- Geek+: All ur warehouse r belong to us: The Beijing-based warehouse robotics firm Geek+ just raised another $100 million in funding (the company calls it a “Series E1,” whatever that means), Brian reports.
- Virtually office-ially virtual: Kyle reports that Kumospace closed a $21 million Series A, just a year after the company raised $3 million in a seed round, to replace physical offices with virtual ones.
- Data in, data out: Equalum wants to help companies build data pipeline and closed a $14 million Series C round to help do just that, Kyle reports.
- You wouldn’t download a solar panel from the internet, would you? Online-only home solar seller bags $23 million, pledging “dramatically lower prices,” Harri writes in her newest piece.
3 ways to optimize SaaS sales in a downturn
“In a downturn, money saved is worth even more than money earned,” which means SaaS sales strategies should shift from driving growth to helping customers conserve their resources, writes Sahil Mansuri, CEO of Bravado.
“If you can frame your product as a way to boost revenue or cut costs, people will find a budget.”
Mansuri, who started out in software sales during the Great Recession, shares multiple strategies SaaS startups can use to “tailor your approach, show prospects unexpected opportunities and focus on the money.”
(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)
Big Tech Inc.
Google is taking Sonos to court again over patent infringement. Ivan writes that two new lawsuits “center around various patents involving keyword detection, charging using ‘technologies invented by Google’ and determining what speaker from a group should respond to the keyword.” Both companies have already won against each other in previous lawsuits, so we’ll see with whom the court sides with this time.
Get ready for more in-car advertising if you frequent Lyft. The ride-hailing company has created a new digital advertising business, called Lyft Media, that will put infotainment in cars and promises some of that ad revenue will go to drivers, Jaclyn reports.
- “To public and back”: Over in TechCrunch+ territory, Ron talks about “long, strange startup trips” with Ping Identity CEO Andre Durand, whose company, as you may have read above, is now in an acquisition deal with Thoma Bravo after being public for several years.
- Maybe dry clean next time: Carly and Anita paired up to lay out what happened over at Tornado Cash, which is being sanctioned by the U.S. Treasury after being accused of laundering stolen cryptocurrency.
- Not into playing games: Netflix is not finding any subscriber love over in its mobile games division. Lauren reports less than 1% of Netflix’s subscribers want to play them.
- Get into my driverless car: Chinese internet giant Baidu is gearing up to put its fully driverless commercial robotaxi in Wuhan and Chongqing after securing a permit, Rebecca reports.
- Climate tech changing the world: To stay up to date on the developments across climate tech, AI, and more, sign up for the Emerging Tech Brew newsletter for free.
Bitmain co-founder welcomes crypto regulation to restore market confidence – TechCrunch
The collapse of Three Arrow Capital and the counterparties wrapped in the crypto hedge fund’s troubles have drawn questions about the soundness of the heady digital asset investment space. For the industry’s survivors, watching their rivals fall to pieces overnight has been an alarming experience.
To understand where the industry might be going after the market turmoil, we spoke with John Ge, chief executive officer at Matrixport, a Singapore-based digital asset manager with over $10 billion in assets under management and custody.
Ge was formerly the head of investment and financing as well as a founding partner at Bitmain, the world’s biggest maker of Bitcoin mining machines. Together with Bitmain’s co-founder and former CEO Jihan Wu, Ge co-founded Matrixport in 2018.
Three Arrow Capital, known as 3AC in the crypto community, was one of the world’s largest crypto hedge funds before its fall from grace. Its success was predicated on a risky strategy: it borrowed aggressively from crypto lenders and in turn invested that money in other crypto projects.
When cryptocurrency prices began to plummet earlier this year, the firm, as well as other similar outfits that bet on rising crypto prices, failed to repay their creditors and plunged into liquidation. The crypto market is down by $1.8 trillion since its peak in November, led by the slide in Bitcoin and Ethereum prices.
The recent market crash is “inevitable”, Ge says in an interview with TechCrunch. “The core issue is that we saw players whose business model is like a black box. They borrow money from investors without giving transparency over how the money will be used.”
The other problem is that these crypto managers are acting both as the player and referee, Ge contends. “Many of them are providing both asset management and proprietary trading. An asset manager should not be doing proprietary trading, and if it does, it needs to follow stringent leverage requirements.”
“Even the most conservative investment strategy has risks and may result in losses, but the principle is to be transparent with your customers, not fraudulent, deceptive, or misleading,” the founder says.
Matrixport, which serves individuals as well as over 500 institutions across Asia, Europe, and North America, was exposed to 3AC and has lodged a claim alongside other creditors. But Ge assures that the firm’s exposure is “relatively small” when compared to the exposure other industry players faced and is considered “minor” when compared relative to Matrixport’s equity.
As to how to restore investor confidence in the crypto sphere, Ge believes regulators are on the right track to bring more oversight over consumer-facing crypto products and protection for retail investors, as is the case in Singapore.
But it’s “unrealistic” to have regulators design risk control models for institution-focused asset managers. “The pace of regulations tends to fall behind that of industry development.”
Ge thinks investors have “lost a certain level of confidence” in the crypto market and the industry will take time to recover. On the other hand, he thinks competition has waned for survivors like Matrixport because “many of the other players are gone.”
Matrixport told Bloomberg last year that it planned to go public in three to five years and Ge said that plan “hasn’t changed.” It’s too early to say which market the company is floating its shares but the U.S is a “likely” option given investors there are more “welcoming of crypto innovation.”
Baidu to operate fully driverless commercial robotaxi in Wuhan and Chongqing – TechCrunch
Chinese internet giant Baidu has secured permits to offer a fully driverless commercial robotaxi service, with no human driver present, in Chongqing and Wuhan via the company’s autonomous ride-hailing unit, Apollo Go.
Baidu’s wins in Wuhan and Chongqing come a few months after the company scored a permit to provide driverless ride-hailing services to the public on open roads in Beijing. The difference here is the service in Beijing is still not a commercial service — Baidu is offering free driverless rides in the name of R&D and public acceptance — and Beijing’s permit still requires a human operator in the front passenger seat of the vehicle.
When Baidu launches in Wuhan and Chongqing, it’ll be the first time an autonomous vehicle company is able to offer a fully driverless ride-hailing service in China, Baidu claimed. Meanwhile in the U.S., Cruise recently began offering a driverless commercial service in San Francisco, and Waymo has been offering one in Arizona since 2020.
“This is a tremendous qualitative change,” said Wei Dong, vice president and chief safety operation officer of Baidu’s Intelligent Driving Group, in a statement. “We believe these permits are a key milestone on the path to the inflection point when the industry can finally roll out fully autonomous driving services at scale.”
In Wuhan, Baidu’s service will operate from 9 a.m. to 5 p.m and cover a 13 square kilometer area in the city’s Economic and Technological Development zone, which is known as China’s ‘Auto City.’ Chongqing’s service will run from 9:30 a.m. to 4:30 p.m. in a 30 square kilometer area in Yongchuan District. Each city will have a fleet of five Apollo 5th generation robotaxis, according to Baidu.
The zones where Baidu will operate aren’t densely populated, and they feature many new, wide roads that make it easier to operate autonomous systems. Both cities provide favorable regulatory and technological environments for Baidu to kick off its first commercial driverless service. In Chongqing, the Yongchuan District has been a pilot zone for autonomous driving, in which 30 robotaxis have accumulated 1 million kilometers’ worth of test driving.
The zone in Wuhan where Apollo Go will operate has revamped 321 kilometers of roads for testing AVs since 2021, which includes 106 kilometers’ worth that are covered by 5G-powered vehicle-to-everything (V2X) infrastructure. AVs can rely on V2X technology to collect real time information about their surrounding environment and share those perceptions with other vehicles or infrastructure, essentially giving the robotaxis another form of sensor to fall back on, aside from onboard lidar, radar and cameras. V2X infrastructure also helps Baidu monitor vehicles remotely and pilot the vehicles if necessary.
Last month, Baidu revealed the designs for its sixth generation electric robotaxi, the Apollo RT6 EV, which is a cross between an SUV and a minivan that comes with a detachable steering wheel. The company said it was able to trim production costs by developing the battery electric architecture in house, bringing the per-vehicle cost to $37,000 per unit. This will help Baidu get to a point of small scale testing and deployment of the RT6 by next year, branching out to large scale in 2024.
Aside from its new service in Wuhan and Chongqing and its driverless service in Beijing, Apollo Go also has a presence in Shanghai, Shenzhen, Guangzhou, Changsha, Cangzhou, Yangquan and Wuzhen. Baidu said it plans to expand its ride-hailing service to 65 cities by 2025 and 100 cities by 2030. By the end of this year, Baidu expects to add another 300 Apollo 5th gen robotaxis to its existing fleet, the company said.
Joe Exotic Presses ’90 Day Fiancé’ Pal Jesse Meester For Biden Pardon
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a16z’s Chris Dixon shares his insights on crypto at TechCrunch Disrupt – TechCrunch
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