Last week was very volatile for growth stocks, more capital markets activity was skewed towards acquisitions rather than public market financings. Aside from the public market volatility, we are very encouraged by a recent techcrunch piece highlighting Shopify’s former employees taking on founder and investor roles, which in our view is very positive for the Canadian tech ecosystem, as are Google’s plans to build a $735 million data centre in Québec. As the energy consumption of Bitcoin has gained a lot of attention in the past week, Canadian bitcoin ETF issuer Ninepoint Partners announced Monday that it is planning to “fully offset” its carbon footprint, as it seeks to reassure investors concerned about the negative environmental impacts of cryptocurrency mining. In the USA, we are anticipating the Bird’s SPAC, as well as Better’s public markets debut, and a potential IPO by Flipkart in India.
Canadian Technology Capital Markets & Company News
U.S. venture giant Bessemer set to lead US$100-million funding of Toronto quantum computing upstart Xanadu, sources say.
U.S. venture capital giant Bessemer Venture Partners has signed on to lead a US$100-million funding of Toronto startup Xanadu Quantum Technologies Inc., as competition intensifies in a global race to bring quantum computers to market. Three sources familiar with the deal, whose composition is still coming together and which has not been finalized, say it would value Xanadu at US$400-million post-transaction. The deal would cement Xanadu’s status as one of a handful of the leading upstart companies in the nascent quantum computing space. Five-year-old Xanadu has previously raised $41-million in 2018 and 2019 from Canadian backers including OMERS Ventures, Georgian Partners, Radical Ventures, Real Ventures and BDC Capital, plus U.S. billionaire Tim Draper. https://tgam.ca/3eM87xQ
Alphawave’s London debut falls victim to global tech selloff.
Alphawave IP Group Plc sank 9.8% on its first day of trading in London as the global tech selloff hammered shares of the semiconductor company. Alphawave, a Canadian company which works on increasing semiconductor power efficiency and speed, priced its shares too expensively given the current environment, investors said. The company raised 856 million pounds (US$1.2 billion) in the initial public offering, implying a valuation of 3.1 billion pounds for the whole firm. “I didn’t think it would fall that sharply, but it has launched into a market where tech stocks are under pressure,” said Gavin Launder, a fund manager at Legal & General Investment Management who decided against participating in the IPO on valuation grounds.Alphawave shares closed at 370 pence in London on Thursday, down from the IPO price of 410 pence a share. Earlier in the day, the stock fell as much as 24%. Alphawave’s slump is the latest disappointment for the U.K., which has lobbied to encourage more tech companies to go public. The company had said it preferred London because of its record of listing large semiconductor companies, such as Arm Group and Imagination Technologies Group Plc. https://bloom.bg/3uQxBQn
Ontario Teachers’ Pension Plan Board to acquire Evoltz from TPG.
Ontario Teachers’ Pension Plan Board (“Ontario Teachers'”) is pleased to announce that it has entered into a definitive agreement with TPG, a global alternative asset firm, to acquire a 100 percent interest in Evoltz Participações S.A. (“Evoltz”), a leading electricity transmission platform in Brazil. Founded by TPG in 2018, Evoltz consists of seven electricity transmission lines that total more than 3,500km across 10 states in Brazil. Ontario Teachers’ has extensive experience investing in regulated electricity transmission and distribution businesses, as well as the broader energy sector. Earlier this year, Ontario Teachers’ acquired a 40 percent stake in Caruna, Finland’s largest electricity distribution company. It has been active in Chile’s transmission and distribution sector for over 12 years through a 50% stake in Saesa. The acquisition of Evoltz represents a significant infrastructure investment adding to Ontario Teachers’ portfolio of high-quality investments in Brazil and across Latin America. https://bit.ly/3w63N2c
Cloud-Based Terrafirma acquired by Dye & Durham (DND-TSX) for $20 million.
Terrafirma is a U.K. property tech business that focuses on location intelligence. The acquisition expands Dye & Durham’s capabilities in the U.K. real estate value chain, adding products which are already utilized by Dye & Durham’s customer base and accessed through its platform today. Through its proprietary workflow technology, Terrafirma provides access to critical intelligence information that enables smarter insights for mission critical decisions. While the acquisition multiple is not disclosed, the Company believes that it will be able to achieve post-synergy returns that are consistent with the Company’s targeted return model. The transaction was funded through cash generated from operations. The Company currently has access to over $1.0 billion in capital which it plans to deploy on accretive acquisitions. https://bit.ly/3bthHnf
Enthusiast Gaming (EGLX-NASDAQ, EGLX-TSX) acquires Tabwire, unveils gaming social network plans.
Toronto-based media and content platform Enthusiast Gaming, the parent company of Luminosity Gaming, has announced plans to develop a subscription-based social network for gamers, code-named Project GG. To facilitate the development of the project, which is expected to be made available later this year, Enthusiast Gaming has entered into a definitive agreement to acquire data platform Tabwire LLC for $11 million. Tabwire provides gamers with the ability to track their player and game stats, by way of a registered user profile, and has built gameplay companion tools for VALORANT and Rainbow Six Siege. According to the release, the platform generated half a billion views last year and garners a reported 13m active users. https://bit.ly/33SYoiN
HIRE Technologies (HIRE-TSXV) announces $5 million private placement of convertible debenture units.
The company has entered into an agreement with Eight Capital to lead a brokered best efforts private placement of up to $5,000,000 aggregate principal amount of convertible debenture units (the “Convertible Debenture Units”) at a price of $1,000 per Convertible Debenture Unit (the “Offering”). Eight Capital will have an option to sell up to 750 additional Convertible Debenture Units for a maximum aggregate gross proceeds from the Offering of $5,750,000. Pursuant to the Offering, each Convertible Debenture Unit will be comprised of one unsecured convertible debenture (the “Convertible Debenture”) of the Company in the principal amount of $1,000 and common share purchase warrants (the “Warrants”) exercisable for 50% of the number of common shares issuable on conversion of a Convertible Debenture. Final terms of the Convertible Debentures and the Warrants will be determined in the context of the market. https://bit.ly/3tRKNTJ
CTI Life Sciences Fund raises $100 million in first close of third venture fund.
Montréal-based venture capital firm CTI Life Sciences Fund has raised $100 million in the first close of its third venture fund. The fund’s limited partners include previous investors such as Fonds de solidarité FTQ, Caisse de dépôt et placement du Québec, Investissement Québec and Teralys Capital. Other investors include BDC Capital’s fund investments team. BDC Capital also invested in CTI’s second fund through the federal government’s Venture Capital Action Plan (VCAP). CTI Life Sciences’ third fund will target life sciences companies, particularly in biotherapeutics. The fund will also look at opportunities in medical technologies and healthcare IT. CTI Life Sciences’ primary focus of investment will remain in Canada where approximately two-thirds of the investments for the third will be located. The remainder of the fund will be for companies based in the United States and Europe. According to data from the Canadian Venture Capital and Private Equity Association, Canadian life sciences companies raised $1.1 billion in venture capital in 2020. https://bit.ly/3bqyBTh
Relay Financial secures $18.2 million to bring financial management solution to more SMBs in US.
Toronto-based FinTech software startup Relay Financial has raised an $18.2 million Series A round to expand its team and help more small businesses across the United States manage their finances. The round, which was led by San Francisco’s Bain Capital Ventures, closed earlier this month, and saw participation from previous investors Better Tomorrow Ventures, Garage Capital, Tribe Capital, Panache, and Amaranthine. The startup plans to use the funding to add customers, grow its engineering and product teams, and better integrate its platform into the small business back office. https://bit.ly/3yg7Fja
Social media firm Mijem (Private, Sophic Client) gets funding from billionaire Calvin Ayre.
The Canada-based social media and technology firm will use the investment to move forward with its aggressive growth agenda that includes creating a cashback loyalty program using Bitcoin SV (BSV) as the token of reward and the Bitcoin SV blockchain as its technological foundation on which the program will be built. Mijem is a social marketplace that connects students from Canada and the United States so they can buy, sell and trade all kinds of goods and services. Its aim is to help students save money and earn extra cash while studying. “Mijem continues to demonstrate the value of the innovative social marketplace model they have pioneered across a growing network of university and college campuses in North America. At Ayre Group Ventures, we share many of the values which have made Mijem successful—speed, efficiency, accessibility—and see a great opportunity to work with their team to further develop the Mijem offering with Bitcoin SV and play a part in their ongoing success story,” Ayre said. https://bit.ly/2RWI8uy
Agnostiq secures $2.4 million to accelerate development of quantum computing software.
Toronto-based software startup Agnostiq has raised a $2.4 million sseed round to bolster its quantum computing platform. The round, which closed in December, was led by New York’s Differential Ventures, and saw participation from Scout Ventures, Tensility Venture Partners, Boost VC, and Green Egg Ventures. https://bit.ly/2SRUFA2
Google plans to build $735 million data centre in Québec.
Google has unveiled plans to build a proposed $735 million data centre in Beauharnois, Québec. According to a company blog post, Google intends to acquire property in Beauharnois, which lies southwest to Montréal, and build the facility following government approval and the completion of certain conditions. Google said the new data centre would employ at least 20 people in skilled roles. The Québec government issued a statement Monday noting the plot of land Google hopes to acquire comprises 62.4 hectares and is currently owned by Hydro-Québec. The land in question is currently zoned as agricultural land, and the province is planning compensation measures in order to mitigate any repercussions the project may have on agricultural activities. This move represents Google’s latest to expand in the province of Québec. The tech giant’s activities in the province data back 17 years, when Google opened its first Montréal office. https://bit.ly/3htTiSs
Shopify (SHOP-NYSE, SHOP-TSX) has produced a lot of wealth, turning former employees into founders and investors.
For an enterprise of Shopify’s size — the 15-year-old, 7,000-person, Ottawa-based outfit boasts a US$130 billion market cap — that’s not a surprise. Still, because of the vast wealth that Shopify has helped create, its former employees look to have an impact on the Canadian entrepreneurial ecosystem like no company before it. https://tcrn.ch/3onAllQ
Bitcoin ETF issuer Ninepoint Partners will look to fully offset its carbon footprint.
Canadian bitcoin ETF issuer Ninepoint Partners announced Monday that it is planning to “fully offset” its carbon footprint, as it seeks to reassure investors concerned about the negative environmental impacts of cryptocurrency mining. The Toronto-based company said it will apply a portion of its management fee towards becoming carbon neutral by partnering with CarbonX, an environmental fintech firm, and The Crypto Carbon Ratings Institute. Both will provide scientific estimates and analysis on bitcoin’s carbon footprint. The investment fund on May 6 completed its conversion of bitcoin trust from a closed-end investment fund into the ETF. “Investors increasingly want real [environmental, social & governance] solutions for their portfolios, while not sacrificing on diversification,” Alex Tapscott, managing director of digital assets at Ninepoint, said in a statement. Ninepoint, which oversees approximately US$8 billion in assets and institutional contracts, also said it is supporting various forest conservation projects in the Amazon specifically through this arrangement. https://bit.ly/3bvDKtr
Global Markets: IPOs, Venture Capital, M&A
Bird plans to go public via SPAC at US$2.3 billion valuation.
Bird is preparing to merge with Switchback II Corporation, a Dallas-based blank check company focusing on companies reducing carbon emissions, according to documents reviewed by dot.LA. Switchback has been marketing a US$200 million PIPE offering in recent weeks that allows investors to buy shares of Bird at the IPO price. Bird will receive hundreds of million in cash through the deal, which it can use to fund its operations as it struggles to achieve profitability and to expand to more markets. Last month, the company announced plans to double the size of its European operation, spending US$150 million to enter 50 new cities. https://bit.ly/2RWJ9CS
Autonmous truck developer Plus says will merge with a SPAC.
Plus, a developer of self-driving trucks based in the U.S. and China, said on Monday it would go public through a merger with special purpose acquisition company Hennessy Capital V. The transaction would bring the company US$500 million and a valuation of US$3.3 billion. The company said the deal is expected to close in the third quarter and marks the second autonomous truck developer to go public. Plus’ rival TuSimple listed on Nasdaq last month. The Information reported Plus’ SPAC plan and TuSimple’s IPO talks late last year. Other self-driving startups that focus on level-four pasenger vehicles – defined as having a high degree of automation – are also working on trucks as some industry people believe that self-driving trucks will come before driverless passenger cars. Plus said it plans to reach full autonomy with its trucks by the end of 2024 and be cash-flow positive by 2023. https://bit.ly/3eNJ4dG
SoftBank-backed mortgage lender Better going public via US$7.7 billion SPAC.
Digital mortgage lender Better.com announced Tuesday that it will make its market debut by merging with Aurora Acquisition Corp., valuing Better at US$7.7 billion. The company, ranked No. 15 on last year’s CNBC Disruptor 50 list, was most recently valued at US$6 billion following an April 2021 investment from SoftBank. Better’s platform moves the mortgage process completely online, giving customers the ability to upload and eSign documents, and claims to cut the closing time from an industry average of 42 days down to 21 days. Amid a frenzy in pandemic-induced refinancing, Better extended nearly US$25 billion in loans last year and US$14 billion in the first quarter of 2021 alone, according to the Journal. Additionally, the company not only generated US$800 million in revenue last year, but also profits, though its growth has not come without some controversy. The SPAC deal includes a US$1.5 billion private investment in public equity (PIPE) arrangement led by SoftBank. Over 300 SPAC deals occurred in the first quarter 2021, and the housing and mortgage market have been red hot, but SPAC returns have declined sharply over the course of the year. https://cnb.cx/3eOM7Cs
Flipkart in talks to raise $1 billion ahead of IPO.
Indian e-commerce giant Flipkart has hit the market to raise about US$1 billion at up to US$30 billion valuation in a pre-IPO financing round, two people familiar with the matter told TechCrunch. The Bangalore-based startup, which sold majority stake to Walmart for US$16 billion in 2018, initiated fundraise possibilities with some investors earlier this year and has since grown more serious and hired bankers. In recent months, the company has also internally discussed pushing its public listing timeline to early next year, the people said, requesting anonymity as details are private. (The firm still intends to file for an IPO later this year. A listing takes an additional few months. Reuters reported last year that Flipkart might list overseas in 2021). 11 Indian startups have turned unicorn this year, more than half of them last month, as some high-profile investors including Tiger Global and Falcon Edge double down on the world’s second largest internet market. Flipkart, which was last valued at about US$24.9 billion last year when it raised US$1.2 billion in a round led by Walmart, hasn’t finalized the new investment and the deal size as well as the valuation may change, one of the sources said. https://tcrn.ch/3eNJdhe
Chinese social network soul files for Nasdaq IPO.
Soulgate, the operator of Chinese social networking app Soul, filed for an initial public offering on Nasdaq. The Information first reported the company’s IPO plan in March. The company is reportedly seeking to raise as much as US$100 million in the listing. The company says its mission is to build a social mateverse for young people. According to the company’s prospectus, the app had 9.1 million daily active users on average in March and more than 70% of them were born on or after 1990. The company makes money from selling virtual goods and membership subscriptions on the app. In 2020, the company made US$76.3 million, up roughly six times in 2019. However, the net loss also increased from US$46.6 million to US$74.8 million from 2019 to 2020. https://bit.ly/3fkxzJP
Is buying and selling short positions in pre-IPO stock next?
This fintech startup is banking on it. Even the most sanguine industry observer has to be stunned at times by the pace of dealmaking right now. Not quite halfway through 2021, startups are routinely closing new rounds just months apart and sometimes seeing their valuations triple and even quadruple with every new round. Maybe they will all become trillion-dollar companies. It’s more likely, however, that they will not, which is where year-old Caplight comes in. Caplight is developing tech to enable institutional investors to take long and short private company positions via synthetic, cash-settled derivatives, so whether or not they own any actual shares in certain startups, they can bet on their rise or fall. Caplight isn’t the first company drawn to the idea. Another young startup in New York, Apeira Capital, is also looking to “short” overvalued startups. More, Avalos and his cofounder, Justin Moore, a former engineering manager at Forge, could also face competition, from their old firm, for example, as well as Carta, the venture-backed company that makes software to manage equity stakes in other startups. Still, Avalos thinks he’s on to something. Caplight already has US$400 million worth of interest from more than 30 institutions, he says. It also just closed on US$1.7 million in pre-seed funding led by Fin VC, with participation from Susquehanna Private Equity Investments, Clocktower Ventures, and Dash Fund. https://tcrn.ch/3ydhiyR
PayPal to acquire e-commerce returns company Happy Returns.
PayPal Holdings Inc. plans to acquire Happy Returns, a company focused on improving the process for e-commerce returns. The company works with retail brands to let customers visit “return bars” to send back online purchases without having to box and ship items themselves. Happy Returns previously partnered with PayPal and said in a blog post announcing the acquisition that it would be focused on ” improving our platform and expanding our footprint, all with the goal of providing more customers with the most seamless, cost-effective and environmentally friendly way to make and process returns.” PayPal expects the deal to close in the second quarter, according to a spokesperson. The company didn’t announce the financial terms of the deal. Shares of PayPal are off 0.3% in Thursday afternoon trading. They’ve gained 66% over the past 12 months as the S&P 500 has risen 45%. https://on.mktw.net/3olSpfO
Companies extend Cloud to the Edge.
Companies are expected to raise spending over the next few years on technology designed to power data-processing tools installed directly on factory-floor machinery, cellphone towers, train-track signals or store-checkout hardware—instead of in a data center. Companies world-wide are on pace to spend US$240.6 billion on edge computing through 2024, investing in hardware, software and services, at a compound annual growth rate of more than 15%, according to the latest forecast by tech industry research firm International Data Corp. Beyond big data, the race to install edge capabilities is also accelerating alongside the growth of the Internet of Things, a network of connected equipment and other devices used in manufacturing or retail sales, among other sectors. Industrial giants such as General Electric Co. , Siemens AG and Robert Bosch GmbH are using edge-computing technology to optimize production-line machines in real time. Typically powered by artificial intelligence, edge-computing systems parse production data at the source and make tiny near-instantaneous tweaks, such as adjusting the electrical current load in welding robots or the force applied by a machine press. Gartner expects companies world-wide to spend roughly US$332 billion on cloud services by the end of the year, up from US$270 billion in 2020, or about 23%. Big tech firms are investing in data centers as they compete for the US$214 billion cloud computing market. https://on.wsj.com/2ST0BZz
More than 60% of Apple customers say they plan to buy AirTags.
A survey of more than 3,000 owners of Apple products found that 61% of them plan to buy AirTags, and the majority of those intend to buy multi-packs. Over six in 10 (61%) iPhone and iPad users intend to buy the new AirTag, while 39% aren’t interested. 54% think what Apple charges for AirTags is a good deal, 32% think it is reasonable, 14% feel it is expensive and should be cheaper. https://bit.ly/3brpphO
Media, Streaming, Gaming & Sports Betting
Disney misses on subscriber expectations, parks revenue still hurt by Covid restrictions.
Disney reported second quarter results Thursday, posting lower-than-expected revenue and subscriber counts for its streaming service. The company’s stock dipped around 3.5% in after-hours trading. The company missed on subscriber estimates for Disney+, coming in at 103.6 million paid subscribers. It was expected to post 109 million, according to FactSet. “This quarter’s numbers were exactly as we projected internally, so no disappointment here,” CEO Bob Chapek told CNBC’s Julia Boorstin. Average monthly revenue per user dipped 29% year over year to US$3.99, which the company attributed to the launch of Disney+ Hotstar. The service has lower average monthly revenue per paid subscriber than traditional Disney+ in other markets, pulling down the overall average for the quarter. https://cnb.cx/3uSGcBQ
Roku will launch original programming fueled by Quibi’s content on May 20.
Roku today announced the launch of its own original programming, which will initially become available to viewers in the U.S., U.K. and Canada through the media platform’s free streaming hub, The Roku Channel, starting on May 20th. The debut lineup will include 30 titles, including both the scripted and reality programming Roku acquired from the short-form streaming service Quibi earlier this year, following its shutdown. Quibi, of course, launched at an inopportune time for a service that was designed for on-the-go viewing, when it arrived in the middle of a pandemic. But some have argued that much of Quibi’s content wasn’t compelling enough to pull in the number of subscribers to make the service a success. It will be interesting to see how well that same content now fares on Roku where it will no longer be “mobile-first,” but will more likely be streamed on a big-screen TV. These and others will become Roku’s first original programs, joining the more than 40,000 other free movies and TV shows on The Roku Channel. This free streaming hub has been growing rapidly, in part due to the pandemic, which forced people to stay at home, but also because of broader demand for free streaming content. In the fourth quarter of 2020, The Roku Channel reached 63 million people in U.S. households, up more than 100% year-over-year. Streaming hours also doubled year-over-year — growth that’s twice as fast as the overall Roku platform itself, the company notes. In the first quarter of 2021, The Roku Channel grew to reach an estimated 70 million people. Roku will also leverage the existing ad breaks Quibi had built into its content, it says. That means after every eight to 10-minute long “episode,” a one-minute ad will play. That’s still a lighter ad load than traditional TV, Patel notes. The same ad-selling structure that The Roku Channel uses today will also apply to Originals, including the potential for brand sponsorships. https://tcrn.ch/2Rluyky
Streaming TV commercials are bewildering, repetitive, and growing like crazy.
Peacock, Paramount+, Discovery+, and HBO Max are elbowing into the big, messy US$11.3 billion market of streaming TV ads. Fans of streaming services also say the commercials can be too loud or prone to freezing. In spite of such complaints, which are commonplace on social media these days, the market for streaming TV ads is growing fast. This year U.S. advertisers will spend US$11.36 billion on streaming TV commercials, according to EMarketer, up from US$8.11 billion in 2020. The boom is being driven, in part, by a slate of new services catering to consumers willing to sit through a few commercials in exchange for paying less to access the programming. Some services with ads, such as Pluto TV and Fox Corp.’s Tubi, are free, while others, like Discovery+, Paramount+, and Peacock, typically cost US$5 to US$6 a month. Paramount+ and Peacock also charge US$10 a month to go commercial free. In June, WarnerMedia will roll out a new ad-supported version of HBO Max. Executives at AT&T Inc., which owns HBO Max, have yet to say how much it will cost. According to CNBC, the service will initially be priced at US$9.99 a month. The newcomers are competing for ad dollars with older services including Hulu and YouTube, streaming platforms like Roku and Amazon, and even the makers of smart TVs, such as Samsung, that sell ads inside their apps or inside other streaming services. In the year ended in January 2021, ad-supported services grew their share of U.S. streaming homes to 26%, from 24%, according to Nielsen. https://bloom.bg/3hpSZrL
Adtech, Privacy & Regulatory
Colonial Pipeline reportedly paid nearly $5 million to the hackers who shut off service to the largest fuel line in the US.
The hackers who shut down the largest US fuel pipeline last week apparently got rich from the attack: The group received nearly US$5 million to restore service, Bloomberg reported on Thursday. That ransom was paid in untraceable cryptocurrency, two people familiar with the transaction told Bloomberg. Though previous reports said no money had changed hands, the Bloomberg report said Colonial Pipeline paid the ransom within hours of the attack last Friday. Representatives for the company didn’t immediately respond to requests for comment. According to Bloomberg, in exchange for the nearly US$5 million in cryptocurrency, Colonial Pipeline got a decryption tool to help restore the company’s computer systems that had been hobbled in the so-called ransomware attack. https://bit.ly/3w6Jemi
Darkside ransomware gang says it lost control of its servers & money a day after Biden threat.
A day after US President Joe Biden said the US plans to disrupt the hackers behind the Colonial Pipeline cyberattack, the operator of the Darkside ransomware said the group lost control of its web servers and some of the funds it made from ransom payments. In addition, the Darkside operator also reported that cryptocurrency funds were also withdrawn from the gang’s payment server, which was hosting ransom payments made by victims. The funds, which the Darkside gang was supposed to split between itself and its affiliates (the threat actors who breach networks and deploy the ransomware), were transferred to an unknown wallet, Darksupp said. This sudden development comes after US authorities announced their intention to go after the gang. In two conferences this week, on Monday and Thursday, US President Biden himself came out and said the US would go after the group after one of its attacks crippled a major fuel transport pipeline that impacted half of the US East Coast, leading the US to declare a state of national emergency in order to ensure gasoline was delivered to impacted regions. https://bit.ly/3bu27rm
Court overturns Amazon’s US$300 million European tax bill.
A European court has overturned Amazon’s $300 million tax bill, striking another blow against regulators’ efforts to levy large taxes on U.S. tech giants. The court in Luxembourg handed down the ruling Wednesday morning, reversing a 2017 decision from the European Commission to charge Amazon with hundreds of millions in unpaid taxes. The Commission can appeal the decision to Europe’s highest court. It’s the second time this court has ruled against Europe’s regulator recently. Last year, Apple won its case against Europe’s efforts to recover $15 billion in taxes, which is currently being appealed. https://bit.ly/3uUEZKg
Facebook ordered to stop processing WhatsApp data in Germany.
A regulator in Germany has ordered Facebook to stop processing WhatsApp data for use with Facebook’s main social media platform, adding to the company’s headaches around changes to the messaging platform’s terms of service. The Hamburg Commissioner for Data Protection—a German provincial regulator—issued an emergency order on Tuesday claiming Facebook’s plans to modify WhatsApp’s terms of service are illegal under Europe’s strict data privacy regime. The order relates to Facebook’s proposal to combine more data across its various social platforms. Facebook’s changes sparked a public outcry over privacy concerns when they were announced in January. It led to the company pushing back the timeline for users accepting the new conditions to this month. Facebook appears to be pushing on regardless of Tuesday’s order in Germany. A WhatsApp spokesperson issued a statement which described Hamburg’s understanding of the changes as “wrong,” while adding that “the order will not impact the continued roll-out of the update.“ It’s not only Germany where Facebook faces opposition, with Indian autorities conducting a similar investigation. https://bit.ly/2SIwTGr
State attorneys general pressure Facebook to abandon plans for children’s Instagram.
In an open letter, the National Association of Attorneys General called on Facebook to abandon plans for an Instagram platform focused on children under the age of 13. The letter is signed by 44 different state-level attorneys general (including non-states like Guam, Puerto Rico, and the Northern Mariana Islands), representing a majority of US territories. “It appears that Facebook is not responding to a need, but instead creating one, as this platform appeals primarily to children who otherwise do not or would not have an Instagram account,” the letter reads. “The attorneys general urge Facebook to abandon its plans to launch this new platform.” Plans for the child-focused Instagram were first reported by Buzzfeed News in March, and subsequently confirmed by the company. But while internal emails reported by Buzzfeed identified the project as a company priority, Facebook insisted at the time that there was no specific timeline for release. While the letter has no formal legal power, it emphasizes the significant legal risk Facebook will face in undertaking the project. In the US, children under 13 are subject to enhanced legal protections under the Children’s Online Privacy Protection Act (or COPPA), which places particularly stringent rules against data collection. https://bit.ly/3fju1HH
UK unveils law to fine social media firms which fail to remove online abuse.
Britain said on Wednesday a planned new law would see social media companies fined up to 10% of turnover or 18 million pounds (US$25 million) if they failed to stamp out online abuses such as racist hate crimes, while senior managers could also face criminal action. The Online Safety Bill also seeks to strengthen the right to freedom of expression, and ensure democratic political debate and journalistic content is protected, the government said. “It’s time for tech companies to be held to account and to protect the British people from harm. If they fail to do so, they will face penalties,” interior minister Priti Patel said. https://reut.rs/33Mb2Ad
You can now buy NFTs on eBay, and ‘blockchain-driven collectibles’ are coming soon.
eBay is now allowing NFTs to be sold on its platform, making the digital collectibles available side by side with physical ones. Whether you’re looking for a physical Dogecoin replica or a digital representation of Elon Musk holding Doge, eBay is apparently now the place to get both. At the moment, eBay wants to make sure that NFTs are listed by trusted sellers, and only in certain categories like trading cards, music, entertainment, and art. The company does say, though, that it hopes to expand its policies and tools in the future to allow more categories after it’s gathered feedback from the community with the current crop of NFTs. https://bit.ly/3oiJSul
Fintech, Blockchain & Cryptocurrency
Square to let developers build on top of its online platform.
Square Inc. said Thursday that it would begin allowing developers to build on top of the Square Online platform. The company announced at its Unboxed developer conference that its new Snippets API function would let developers make plugins to enhance the online-shopping experience. “The ability to build extensions for Square Online was one of the most requested developer features over the past year due to the rapid growth of online selling,” the company said in a blog post. Square Online has seen its number of active sellers more than double each quarter since the beginning of 2020, according to the release. The company also announced new application programming interfaces (APIs) for loyalty rewards programs and web payments. https://on.mktw.net/3fp6vJm
Facebook’s cryptocurrency project pivots again to the U.S.Facebook’s dreams of a global cryptocurrency are officially over.
The independent association the social network stood up to govern the project from Switzerland said Wednesday that it’s relocating to the U.S. and plans to only issue a digital currency backed by the dollar. It’s the latest in a long series of twists and turns the embattled project has taken since Facebook first announced it in 2019, when it pitched a borderless, digital token backed by a basket of government-issued currencies. That idea didn’t sit well with regulators. Fearing the sway it could have on monetary policy, they have so far blocked the initiative from launching, leading to multiple rebrands and a string of early leadership departures. Now the Diem Association—which will manage the USD coin and counts Facebook as a member—plans to partner with Silvergate Bank to operate in the U.S. and register with the Department of the Treasury. Facebook has said it will let its users transact with the currency in its apps once it is made available. https://bit.ly/3eQgqIZ
Coinbase reaches #1 on U.S. Apple App Store for first time since 2017.
According to data compiled by The Block Research, Coinbase broke top 10 charts in mid-April before reaching the #2 slot on April 14. This was the same day the crypto exchange became a publicly traded company on NASDAQ. The app dipped below the top 10 apps for a short period before climbing up on May 4, the same time the art auction house Sotheby’s partnered with Coinbase to accept bitcoin and ether for physical art payments. https://bit.ly/3tQTcGP
As much as US$365 billion wiped off cryptocurrency market after Tesla stops car purchases with bitcoin.
Hundreds of billions of dollars were wiped off the entire cryptocurrency market after Tesla CEO Elon Musk tweeted that the electric vehicle maker would suspend car purchases using bitcoin. At around 6 p.m. ET on Wednesday when Musk made the announcement, the value of the whole cryptocurrency market stood at around US$2.43 trillion, according to data from Coinmarketcap.com. By 8:45 p.m., the market capitalization had dropped to around US$2.06 trillion, wiping off around US$365.85 billion. The market has since pared some losses, and by around 3:00 p.m. on Thursday, the cryptocurrency market had seen around US$290 billion wiped off its value since Musk’s tweet. Bitcoin was down 10.6% at around US$48,500, according to Coin Metrics data, its first time below the US$50,000 since Apr. 24. https://cnb.cx/3fiMILL
Dogecoin spikes 30% after Elon Musk says he might take it as payment for Tesla.
Dogecoin spiked 30% after Elon Musk said he might accept it as a payment method for Tesla, after having stopped payments for his company’s products in bitcoin over environmental concerns. Dogecoin rose 30.2% to $0.54 as of 8:20 a.m. in New York, according to CoinBase. It initially jumped in value at on Thursday evening after Elon Musk’s tweet about considering the cryptocurrency as a payment method for Tesla. “Working with Doge devs to improve system transaction efficiency. Potentially promising.” he said. Dogecoin is the fourth largest cryptocurrency in circulation based on market capitalization. After Musk’s tweet, the value of the dogecoin market rose by over US$10 billion to around US$67 billion, as trading volume accelerated. On top of dogecoin, Musk may explore cryptocurrencies including ether, Cardano’s ADA, XRP and Chia, all of which have a less significant environmental footprint compared to bitcoin. https://bit.ly/2RfhFIS
Steve Cohen’s Point72 has plans to ‘get big in crypto,’ new report says.
Billionaire Steve Cohen’s Point72 Asset Management is reportedly planning to make a major entrance into the US$2 trillion cryptocurrency market, The Block reported on Thursday. A source told The Block that Point72 plans to “get big in crypto” and is in the process of hiring people. Point72 – which has US$22.1 billion of assets under management as of April 1 – will be investing from its venture capital arm, Point72 Ventures, and from its hedge fund, according to The Block. Cohen, who also owns the New York Mets, is wading into crypto at a time when more and more big name investors and institutions are warming to digital assets. Bridgewater Associate boss Ray Dalio said this week that the future of cryptocurrencies is “exciting and unknown.” https://bit.ly/3uUVE0y
The SEC says bitcoin’s volatility means it’s a highly speculative asset – and hints it may not be suitable to back an ETF.
The US Securities and Exchange Commission on Tuesday warned mutual fund investors of the risks attached to bitcoin futures. Calling it a “highly speculative” investment, the regulator said its investment management division will assess the impact of mutual-fund investments in bitcoin futures. “As such, investors should consider the volatility of bitcoin and the bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying bitcoin market,” the SEC said in a statement. This warning follows new SEC chairman Gary Gensler dampening hopes for a bitcoin ETF after telling Congress last week the crypto market “could benefit from greater investor protection.” He also said new rules could be required to tackle the gamification of trading popularized by apps like Robinhood. The SEC now says it will “consider whether, in light of the experience of mutual funds investing in the bitcoin futures market, the bitcoin futures market could accommodate ETFs.” Most crypto advocates hoped Gensler’s confirmation as SEC Chair would be good for cryptocurrencies, but his new warnings and a long regulatory to-do list perhaps indicate the space isn’t one of his first priorities. https://bit.ly/3oiOznM
Binance faces probe by U.S. money-laundering and tax sleuths.
Binance Holdings Ltd. is under investigation by the Justice Department and Internal Revenue Service, ensnaring the world’s biggest cryptocurrency exchange in U.S. efforts to root out illicit activity that’s thrived in the red-hot but mostly unregulated market. As part of the inquiry, officials who probe money laundering and tax offenses have sought information from individuals with insight into Binance’s business, according to people with knowledge of the matter who asked not to be named because the probe is confidential. Led by Changpeng Zhao, a charismatic tech executive who relishes promoting tokens on Twitter and in media interviews, Binance has leap-frogged rivals since he co-founded it in 2017. The firm, like the industry it operates in, has succeeded largely outside the scope of government oversight. Binance is incorporated in the Cayman Islands and has an office in Singapore but says it lacks a single corporate headquarters. Chainalysis Inc., a blockchain forensics firm whose clients include U.S. federal agencies, concluded last year that among transactions that it examined, more funds tied to criminal activity flowed through Binance than any other crypto exchange. https://bloom.bg/3eNKnJC
Korea unveils US$450 billion push for global chipmaking crown.
South Korea unveiled ambitious plans to spend roughly US$450 billion to build the world’s biggest chipmaking base over the next decade, joining China and the U.S. in a global race to dominate the key technology. Samsung Electronics Co. and SK Hynix Inc. will lead more than 510 trillion won of investment in semiconductor research and production in the years to 2030 under a national blueprint devised by President Moon Jae-in’s administration. They’ll be among 153 companies fueling the decade-long push, intended to safeguard the nation’s most economically crucial industry. Moon got a briefing from chip executives on the initiative Thursday during a visit to the country’s most advanced chip factory, a Samsung plant south of Seoul. Samsung is boosting its spending by 30% to US$151 billion through 2030 while Hynix is committing US$97 billion to expansion at existing facilities in addition to its US$106 billion plan for four new plants in Yongin, co-Chief Executive Officer Park Jung-ho said during the event. The effort comes at a time when the U.S., China and the European Union seek to shore up their semiconductor capabilities after a global chip shortage exposed a reliance on just a handful of Asian manufacturers and hobbled efforts to repair pandemic-scarred economies. The shortages are now spreading from autos to smartphones and displays, elevating semiconductors onto the agendas of governments from Washington to Brussels and Beijing. In terms of direct contributions, the country wants to help train 36,000 chip experts between 2022 and 2031, contribute 1.5 trillion won toward chip research and development and will start discussing legislation tailored to assist the semiconductor industry. https://bloom.bg/3btkYDc
Apple, Google, and others lobby US Congress for US$50 billion chip manufacturing subsidies amid global shortage.
Tech industry heavyweights including Apple, Microsoft, Alphabet, Amazon, and more are forming a coalition to lobby the US government to fund additional production capacity for chip fabrication. The “Semiconductors in America Coalition” is backing the CHIPS for America Act, in which President Biden is requesting Congress fund for US$50 billion. The money will be used to build out additional chip manufacturing capacity in the United States. The main casualty of the global chip shortage is carmakers like Ford, but Apple admitted on its last earnings call that supply of some MacBook and iPad models will be affected too. The coalition includes tech giants like Apple, infrastructure companies including AT&T and Verizon, semiconductor firms like Intel, among others. https://bit.ly/2RXUh2x
IPhone maker Hon Hai again warns components crunch worsening.
Hon Hai Precision Industry Co. warned that the global supply crunch that has hit the consumer electronics and automaking industries will worsen this quarter, after it weathered component shortages to post better-than-expected quarterly profits. The world’s largest contract electronics manufacturer and main assembler of iPhones reported net income of NT$28.2 billion(US$1 billion) in the three months ended March, beating the average NT$24.4 billion of adjusted analyst estimates. Revenue in the second quarter will likely be steady from the previous three months, as growth in its consumer electronics and components divisions is countered by a slowdown in its server and computer divisions, in part because of parts shortages, the corporation said Friday. “Component shortages in the second quarter will be more severe than the first quarter,” Chairman Young Liu said on a conference call. He reiterated previous comments that shortages may persist until the second quarter of 2022 and that the impact on its businesses won’t exceed 10%. https://bloom.bg/3hsW6yZ
First commercial-scale offshore wind farm in the US gets federal approval.
The first commercial-scale offshore wind project in the US just got the green light from the Biden administration. The approval has the potential to dramatically grow the nation’s wind energy sector after years of regulatory limbo for proposed offshore projects. The Interior Department (DOI) granted the Vineyard Wind project permission to install up to 84 turbines off the coast of Massachusetts. Once completed, the project will be able to generate up to 800 megawatts (MW), enough electricity for 400,000 homes. That’s a dramatic scaling up of existing offshore wind capacity in the US. There are currently only two small developments off the East Coast and those can only generate a combined 42 megawatts of electricity. The Biden administration has big ambitions for offshore wind. It set a goal of getting 30,000 MW of energy from offshore wind by 2030. That’s part of a bigger plan to tackle climate change by reaching 100 percent clean electricity by 2035. https://bit.ly/3fp6Ewo
Fisker soars 17% after reaching deal with Foxconn for development of an electric vehicle.
Shares of Fisker sharply jumped Friday after the company finalized a deal to jointly develop and manufacture electric vehicles with Foxconn, the manufacturer of Apple iPhones. Financial terms of the agreements were not disclosed. The companies will invest in a program named Project PEAR, or Personal Electric Automotive Revolution, that’s aimed at creating a “new breakthrough electric vehicle,” they said in a statement issued late Thursday. The vehicle will have a starting price of less than US$30,000 before incentives and be sold under the Fisker brand. Shares of Fisker popped up 17% to $11.65. The stock this year had turned lower for a loss of about 32%. The vehicle will be sold in markets including North America, Europe, China, and India, and manufacturing is slated to begin in the US in 2023. Fisker is preparing to begin production on its first vehicle, the Ocean SUV, in Europe in the fourth quarter of 2022. https://bit.ly/3tPMQaI
India offers US$2.46 billion incentive to boost domestic production of batteries.
India’s cabinet on Wednesday approved Department of Heavy Industry’s proposal to provide incentives to boost domestic production of batteries with advanced energy storage, the latest in a series of efforts by New Delhi to make the world’s second-largest internet market less reliant on other nations for various electronics goods and shrink its trade deficit. The government’s new US$2.46 billion plan, dubbed “National Programme on Advanced Chemistry Cell (ACC) Battery Storage,” is aimed at cutting the nation’s import volume, said Prakash Javadekar, India’s Minister of Heavy Industry and Public Enterprises, in a news conference. The ministry said the firms that are granted the incentives will be expected to set up manufacturing facilities in India, conduct research and development to achieve high energy sensitive and cycles, invest around US$6.1 billion in ACC battery storage manufacturing projects and facilitate demand creation for battery storage in the country. https://tcrn.ch/3ffvGOA
Sophic Capital Client Insights
GameSquare Esports Inc. (GSQ-CSE): The Real Deal in Esports Marketing.
Customer targeting is critical in digital marketing, which can be extended to esports as well. GameSquare Esports has demonstrated that it can connect big brands to esports audiences, expanding brands’ reach. GameSquare’s M&A strategy, and execution, which is already off to a great start, could further accelerate the company’s growth in this secular growth market. https://bit.ly/3y9pksR
The information and recommendations made available here through our emails, newsletters, website, press releases, collectively considered as (“Material”) by Sophic Capital Inc. (“Sophic” or “Company”) is for informational purposes only and shall not be used or construed as an offer to sell or be used as a solicitation of an offer to buy any services or securities. You hereby acknowledge that any reliance upon any Materials shall be at your sole risk. In particular, none of the information provided in our monthly newsletter and emails or any other Material should be viewed as an invite, and/or induce or encourage any person to make any kind of investment decision. The recommendations and information provided in our Material are not tailored to the needs of particular persons and may not be appropriate for you depending on your financial position or investment goals or needs. You should apply your own judgment in making any use of the information provided in the Company’s Material, especially as the basis for any investment decisions. Securities or other investments referred to in the Materials may not be suitable for you and you should not make any kind of investment decision in relation to them without first obtaining independent investment advice from a qualified and registered investment advisor. You further agree that neither Sophic, its employees, affiliates consultants, and/or clients will be liable for any losses or liabilities that may be occasioned as a result of the information provided in any of the Company’s Material. By accessing Sophic’s website and signing up to receive the Company’s monthly newsletter or any other Material, you accept and agree to be bound by and comply with the terms and conditions set out herein. If you do not accept and agree to the terms, you should not use the Company’s website or accept the terms and conditions associated to the newsletter signup. Sophic is not registered as an adviser under the securities legislation of any jurisdiction of Canada and provides Material on behalf of its clients pursuant to an exemption from the registration requirements that is available in respect of generic advice. In no event will Sophic be responsible or liable to you or any other party for any damages of any kind arising out of or relating to the use of, misuse of and/or inability to use the Company’s website or Material. The information is directed only at persons resident in Canada. The Company’s Material or the information provided in the Material shall not in any form constitute as an offer or solicitation to anyone in the United States of America or any jurisdiction where such offer or solicitation is not authorized or to any person to whom it is unlawful to make such a solicitation. If you choose to access Sophic’s website and/or have signed up to receive the Company’s monthly newsletter or any other Material, you acknowledge that the information in the Material is intended for use by persons resident in Canada only. Sophic is not an investment advisory, and Material provided by Sophic shall not be used to make investment decisions. Information provided in the Company’s Material is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. Sophic and/or its principals and employees may have positions in the stocks mentioned in the Company’s Material and may trade in the stocks mentioned in the Material. Do not consider buying or selling any stock without conducting your own due diligence and/or without obtaining independent investment advice from a qualified and registered investment advisor.