Last week, more than $2-billion was shaved off Lightspeed’s (LSPD-NYSE, LSPD-TSX) market cap in response to a short-seller report. Fintech Propel filed a preliminary prospectus for an IPO. Sophic client, HIRE Technologies (HIRE-TSXV) strengthened its balance sheet by closing a $2.8 million second tranche non-brokered private placement for a total of $4.8 million oversubscribed financing. The company has been growing at higher than market growth rates, a stronger balance sheet should help the company accelerate growth. Canadian tech talent scored another win as Stripe announced its first Canadian office in Toronto. In light of recent market turbulence Allvue Systems postponed its IPO in the USA. However, on Friday, electric vehicle maker Rivian filed for its IPO. Earlier in the week, EV company Polestar announced it would merge with Gores Guggenheim SPAC in a US$20 billion deal. Amazon unveiled a new robot, updated devices, and also revealed it was expanding into the fitness market, putting itself in competition with Apple more directly. TikTok reached 1 billion monthly active users, and also made its first foray into NFTs. The Fed has ‘no intention’ to ban cryptocurrencies, Jerome Powell told Congress. At Sophic Capital, we published notes on GameSquare Esports (GSQ-CSE) as Esports influencer TimTheTatman recently announced that he would join Complexity Gaming and GameSquare Esports and Body and Mind Inc. (BAMM-CSE, BMMJ-OTC), which has a strong brand presence in Nevada and could benefit in that state.
Canadian Technology Capital Markets & Company News
More than $2-billion in market cap zapped as short-seller takes aim at Lightspeed (LSPD-NYSE, LSPD-TSX).
Lightspeed Commerce Inc. shares have been the most important losers on the TSX Wednesday after a short-seller expressed doubts concerning the firm’s buyer counts, income progress, and aggressive place. The corporate’s inventory dipped 11.7 per cent, to $126, wiping out greater than $2-billion in market capitalization. https://tgam.ca/2YcOEAl
Propel files preliminary prospectus for initial public offering of common shares.
The number and price of the common shares to be sold have not yet been determined. Canaccord Genuity and Scotiabank are acting as active joint bookrunners for the Offering.Propel is an online financial technology (“fintech”) company, committed to credit inclusion by providing fair, fast and transparent access to credit with exceptional service using its proprietary online lending platform. Through its operating brands, MoneyKey and CreditFresh, Propel is focused on providing access to credit to the over 60 million underserved U.S. consumers who struggle to access credit from mainstream credit providers. https://bit.ly/2ZQILdc
Wishpond (WISH-TSXV) announces $6 million revolving credit facility from National Bank of Canada.
“The Credit Facility will provide us with an efficient way to optimize our working capital and the ability to retain our flexibility should we need to use proceeds for general corporate purposes or support future acquisitions,” said Juan Leal, Wishpond’s Chief Financial Officer. “We currently have over $7.5 million of cash and no debt on the balance sheet, combined with this new undrawn NBC Credit Facility of $6 million, we are in a strong position to execute on our future expansion and acquisition plans.” Pursuant to the Loan Agreement, the Credit Facility is secured against the assets of the Company. https://bit.ly/3A39BeC
HIRE Technologies (Sophic Client, HIRE-TSXV) strengthens balance sheet by closing $2.8 million second tranche non-brokered private placement for a total of $4.8 million oversubscribed financing.
Including the first tranche financing that closed on August 27, 2021, the Company issued a total of 16,120,378 units at $0.30 per unit for aggregate gross proceeds of $4,836,100, exceeding the initial financing target of $3,000,000. Insiders subscribed for $538,053 or 11% of the last two tranches. “Today we have a solid foundation with seven established brands in Canada and the US, with strong year-over-year organic growth of 44% for Q2-2021, exceeding industry growth rates,” said Simon Dealy, HIRE’s CEO. “With a stronger balance sheet, we are well-positioned to continue improving operations and accelerating revenue growth across our portfolio. As we move forward, we will be selective and measured when evaluating new opportunities to create long-term value for our shareholders.” https://bit.ly/2WxxZHk
Conexiom secures $130 million in growth investment.
Conexiom continues to attract large funding rounds, this time a $130 million growth investment from Warburg Pincus, a leading global growth investor. The SaaS company provides sales order and invoice automation solutions. Over $100 billion in B2B transactions are processed on the Conexiom platform annually, the company claims. In 2020, the company secured $40 million in strategic growth financing. The startup was founded in 2005, under its Canadian legal name, ecMarket. In February 2018, Luminate Capital acquired a majority stake in Conexiom with an undisclosed investment. Warburg Pincus joins existing investors Luminate Capital and ICONIQ Growth. Luminate retains a majority stake in the company. https://bit.ly/3zWBbKf
Semios secures $100 million to further acquisition strategy, become global AgTech leader.
Vancouver startup Semios has secured $100 million in its pursuit to become the leading independent AgTech company globally. The equity financing will further Semio’s acquisition strategy, with which it plans to build out its global presence. Return investor Morningside Group led the round. The Boston-based private equity and venture capital firm also led the $100 million round Semios secured in January 2020. While the majority of the capital comes from Morningside, a few, undisclosed family offices and angel investors also participated in the financing. The all-primary capital brings Semio’s total funding to date to $225 million CAD. Semios provides an IoT network of sensors for farmers. Research shows that monitoring using IoT devices represents the largest revenue opportunity, with the expectation it will reach US$6.99 billion globally by 2026. https://bit.ly/3AW8e2l
MSP Corp secures $35 million from BDC Capital, CIBC to fuel acquisition efforts.
MSP Corp Investments, a Canadian company focused on acquiring and partnering with managed service provider (MSP) businesses in the information technology (IT) sector, has raised $35 million in growth capital. The Guelph, Ontario-based firm’s financing was led by BDC Capital’s Growth Equity Partners’ Fund II, and supported by CIBC. MSP Corp plans to use the fresh funding to support its acquisition and partnership efforts. MSP Corp acquires and partners with high-performing Canadian MSPs, offering these firms the resources, technology, and business support to grow their businesses. According to ChannelE2E, MSP Corp has acquired eight companies to date. https://bit.ly/2Y5wUrj
Zuva closes $20 million Series A round, launches AI document solution.
Zuva announced September 29 that it had closed a $20 million Series A funding round as it launched its first product. New York-based global private equity and venture capital firm, Insight Partners, led the round, which closed September 1. A document intelligence company that uses AI to help businesses understand the details of their documents, Zuva is a new firm created this summer. It is a spin-out from Kira Systems, a contract analysis and AI business for lawyers. A global legal technology firm, Litera, acquired Kira Systems for an undisclosed amount in August. Peter Sobiloff, managing director at Insight Partners, will join the board at Zuva. In 2018, Insight Partners also led a $65 million Series A funding round for Kira. Insight has previously funded such Canadian companies as Shopify and Hootsuite. https://bit.ly/3kV4SqP
Samdesk secures $13.5 million to fuel expansion of crisis detection and monitoring platform.
Edmonton-based software startup Samdesk, which offers a disruption monitoring tool for businesses and first responders, has raised $13.5 million in Series A financing to expand the reach of its platform. Samdesk’s all-equity, all-primary round was led by Toronto-based McRock Capital and supported by fellow new investors Boston-based HarbourVest and Export Development Canada. Calgary’s Adventure Capital, which led Samdesk’s $3.6 million seed round in 2020, also participated in the round, alongside several other undisclosed existing shareholders. The new capital brings Samdesk’s total funding to date to $20 million. The Series A financing follows the startup’s recent rebrand from Social Asset Management (SAM) to Samdesk and a strong year of sales fuelled by COVID-19, as the pandemic led companies to invest in risk detection and mitigation strategies. https://bit.ly/3iniLwh
Stripe to open Canadian office in Toronto, announces new products.
Stripe is opening its first Canadian office in Toronto. The San Francisco-based FinTech company also announced the launch of several new products in Canada. Stripe’s recruiting page on its website shows 15 open positions in Toronto. The bulk of which are for engineers and software, as well as for a technical recruiter, and a centralized HR operations knowledge manager. Founded in 2010, Stripe has developed software to help startups and enterprises accept online payments and with other financial operations. The company’s products include payments, billing, analytics, fraud prevention, and more. Stripe’s expansion into Canada isn’t entirely unexpected, given that the company has relationships with a number of major Canadian tech firms, including Shopify and Lightspeed. One of the earliest users of Stripe in Canada may be SkipTheDishes. The food delivery network began using Stripe in 2015. https://bit.ly/3m5XB72
Gatik reveals Goodyear as strategic investor, announces partnership deal.
Major tire manufacturer Goodyear and autonomous trucking startup Gatik have announced a strategic partnership that sees the two companies collaborating on advanced mobility solutions for the autonomous B2B short-haul logistics industry. Gatik announced on September 28 that the partnership is part of a strategic investment from Goodyear’s venture capital arm, Goodyear Ventures. The firm participated in Gatik’s recent Series B round where the startup secured CAD$107 million. The company has attracted the attention of notable retailers in the past four years, including Walmart. Earlier this year, Gatik’s oversubscribed Series B round attracted investors like American billionaire Charles Koch, Intact Ventures, and the VC firm of former Google CEO and executive chairman Eric Schmidt. https://bit.ly/3ihOgIi
Global Markets: IPOs, Venture Capital, M&A
Allvue Systems postpones its IPO over adverse market conditions.
Allvue Systems Holdings Inc. , a Florida-based technology provider for investment managers, said Wednesday it has decided to postpone its initial public offering because of adverse market conditions. The major indexes suffered steep losses on Tuesday with the S&P 500 seeing its worst day since May 12. Stocks sold off as investors anticipate the Federal Reserve moving away from the accommodative policy it set during the early months of the pandemic on concerns over elevated inflation. Allvue said its decision to postpone came “despite receiving strong interest and positive indications from the broader institutional investor market.” The company was aiming to raise up to US$291 million at a valuation of US$1.62 billion. https://on.mktw.net/3kUYKij
Electric vehicle maker Rivian files for IPO.
Rivian filed for an initial public offering Friday, the latest electric vehicle company to opt for a public listing. In doing so, Rivian revealed it has lost US$2.4 billion in the past two and a half years. The maker of electric pickup trucks and SUVs, which has a deal to deliver 100,000 vans to Amazon by 2025, lost US$994 million in the first half of this year. That followed a loss of just over US$1 billion last year, which in turn was more than double the losses in 2019. Electric vehicle companies have had mixed success on the public markets. While some companies like Tesla and Lucid Motors have seen their share prices rise, others like Lordstown Motors and Nikola have struggled. The company applied to list their stock on the Nasdaq under the symbol “RIVN.” https://bit.ly/39XBLx1
EV company Polestar to merge with Gores Guggenheim SPAC in US$20 billion deal.
Swedish electric vehicle company Polestar announced Monday it is going public via special purpose acquisition company Gores Guggenheim, Inc. in a deal worth roughly US$20 billion. Established in 2017 by Volvo Cars and Zhejiang Geely Holding, Polestar joins several other electric vehicle companies which have decided to go public via SPAC mergers, including Tesla, Nikola and Lucid Group. Polestar currently has two electric cars on the market and expects to launch three more models by 2024, according to a press release. While SPAC mergers involving electric vehicle companies have been popular since the spring, IPO filings among new SPACs indicate that might change going forward. The sector has seen mixed success, with companies like Tesla continuing to see their share price rise, while companies like Nikola have struggled to turn itself around after an investment firm claimed the company misled investors about its product. The deal is expected to close in the first half of 2022, and the newly merged company plans to be listed on the Nasdaq under the symbol “PSNY.” https://bit.ly/3mgJjk5
Permira-backed technology company Informatica files for IPO.
Technology company Informatica Inc., which is backed by Permira and Canada Pension Plan Investment Board, has filed for an initial public offering. The company disclosed its financials in a registration statement with the U.S. Securities and Exchange Commission Friday. It said it would raise $100 million in an offering, a placeholder figure that will likely change. https://bloom.bg/2YjFPFw
SoftBank-backed Oyo files for US$1.16 billion IPO.
The eight-year-old Indian budget hotel giant Oyo has filed for an initial public offering, in which they are planning to raise US$1.16 billion. SoftBank plans to sell stake worth over US$175 million, Oyo said in the filing. The company has not provided much detail about what it is looking for from retail investors, but we do know that Oyo is seeking a valuation of over US$12 billion in the IPO, and that their young founder Ritesh Agarwal has no intentions to sell his shares in the public offering. As for many hospitality and travel firms, Oyo suffered during the pandemic and stated that at one point its business was down 60% as countries implemented lockdowns. https://tcrn.ch/3DiH3Qn
Endeavor to buy sports betting software company OpenBet for US$1.2 billion.
Entertainment company Endeavor Group Holdings has reached a deal to acquire sports betting software company OpenBet from Scientific Games Corporation for US$1.2 billion, mostly in cash. The acquisition reflects a surge of interest in sports betting caused by its legalization in numerous states. Endeavor already owns sports video streaming and data provider IMG Arena but this deal will reinforce its presence in the market. OpenBet currently works with several popular sports betting companies, including DraftKings and FanDuel, according to a press release. The deal comes a week after DraftKings made a US$22.4 billion offer to acquire U.K-based sports betting company Entain. The deal is expected to close in the second quarter of 2022. https://bit.ly/39ZY8Sw
Zoom and Five9 abandon $14.7 billion acquisition.
Zoom said in July that it was acquiring Five9 in an all-stock purchase for US$14.7 billion. This would be Zoom’s first billion-dollar-plus purchase, and at the time the second-biggest tech deal of the year. However, on Thursday the agreement to buy the cloud contact center software was scuttled, after Five9 shareholders rejected the deal. Five9 shareholders were ultimately unsatisfied with the small premium that Zoom was set to pay. At the agreed upon price, Five9 shareholders were to receive only a 13% bump in value of their shares, which given the momentum in cloud software, a higher premium was likely expected. https://cnb.cx/3B4bWah
Apple suppliers halt production as China restricts energy use.
A crackdown on energy usage in China has seen a number of key Apple suppliers halt production, according to a new report. One supplier to both Apple and Tesla said that it had been forced to suspend production from Sunday until this coming Friday, while another said it would need to cease production in two cities until the end of the month. The move comes at a bad time for Apple, which is already struggling to keep up with demand for the iPhone 13, and where component shortages are also causing production delays. https://bit.ly/3ATSe0U
Amazon unveils new robot, updated devices.
Amazon rolled out a wider range of smart-home gadgets, and also revealed it was expanding into the fitness market, putting itself in competition with Apple more directly. The ecommerce-and-cloud giant is introducing an updated version of its Fitbit-like health tracker as well as Halo Fitness, offering “hundreds of studio-quality workout classes.” That’s on top of a blizzard of other devices, including a new video doorbell, updated versions of existing devices such as its video calling portal. Amazon also said the indoor flying drone that was unveiled last year will shortly go on sale. The wide array of new devices highlights how Amazon is now competing in the hardware arena with numerous companies, including Apple, Google, Facebook and even Peloton in the fitness classes. But Amazon releases so many devices, without giving any much marketing power, that it may not have much of an impact. https://bit.ly/3l2YYE2
Cruise gets the green light to give driverless rides to passengers in San Francisco.
Cruise and Waymo, two of the leading autonomous vehicle companies in the US received permits to offer rides to passengers in their robotaxis. While Cruise was approved to give rides in its fully driverless vehicle, Waymo is only allowed to deploy its autonomous vehicle with a human monitor behind the wheel. Cruise vehicles are approved to operate between 10PM and 6AM at a maximum speed of 30MPH, and can even drive in light rain and fog. Rob Grant, senior vice president of government affairs and social impact, said the permit ‘Brings Cruise one step closer to achieving our mission to make transportation safer, better, and more affordable in cities. https://bit.ly/2Y9pJxz
Nreal announces lighter, cheaper Nreal Air AR glasses.
Augmented reality company Nreal is launching a cheaper, iOS-compatible, more compact version of its smart glasses. The new Nreal Air glasses are supposed to ship starting in December 2021 across Japan, China, and South Korea. The price isn’t set, but Nreal says they’ll cost “a fraction of the price” of its earlier Nreal Light glasses, which started selling for around $600 last year. Nreal intends to expand the Air glasses’ rollout in 2022, and a spokesperson says the US is a “major market” for the company, although it hasn’t announced plans to ship there. https://bit.ly/3ma5x7q
Can SenseTime become a Chinese AI champion?
Three years ago, Tang Xiao’ou joked to an audience at the Massachusetts Institute of Technology that it was his company, SenseTime, rather than Google that instantly came to mind when people talked about artificial intelligence. Today SenseTime, one of China’s brightest hopes for its plan to lead the world in AI, is preparing for a US$2 billion public listing in Hong Kong that may come before the end of the year. https://on.ft.com/3F42y9d
Media, Streaming, Gaming & Sports Betting
S.Korea broadband firm sues Netflix after traffic surge from ‘Squid Game’.
South Korean Internet service provider SK Broadband has sued Netflix to pay for costs from increased network traffic and maintenance work because of a surge of viewers to the U.S. firm’s content, an SK spokesperson said on Friday. The move comes after a Seoul court said Netflix should “reasonably” give something in return to the internet service provider for network usage, and multiple South Korean lawmakers have spoken out against content providers who do not pay for network usage despite generating explosive traffic. Netflix said it will review SK Broadband’s claim, and seek dialogue and explore ways in the meantime to work with SK Broadband to ensure customers are not affected. The popularity of the hit series “Squid Game” and other offerings have underscored Netflix’s status as the country’s second-largest data traffic generator after Google’s YouTube, but the two are the only ones to not pay network usage fees, which other content providers such as Amazon, Apple and Facebook are paying, SK said. Netflix’s data traffic handled by SK jumped 24 times from May 2018 to 1.2 trillion bits of data processed per second as of September, SK said, riding on the success of several Netflix productions from Korea including “Squid Game” and “D.P.” https://reut.rs/3mmuZ9C
TikTok reached 1 billion monthly active users.
TikTok announced in a blog post Tuesday that 1 billion people use TikTok every month. That means that on this big rock in space that we call home, about one in seven-and-a-half people are regularly watching short-form videos. For context, Facebook said that in June it had 2.9 billion monthly active users, up 7% year over year. But TikTok’s growth is rapid — this new user data marks a 45% increase in monthly active users since July 2020, when it had 689 million users. Plus, this July, TikTok became the first non-Facebook app to reach 3 billion global downloads, per app analytics firm SensorTower. https://tcrn.ch/3zPtQML
Facebook launches its TikTok-copycat feature Reels in the US.
If creating Instagram Reels is not enough for you, Facebook is expanding its TikTok-copycat feature to its main app in the US. The company says it’s committed to investing over US$1 billion in creators through 2022, while also offering a new bonus program to help creators earn money when people view their reels. The Reels Play bonus will initially be invite-only, beginning in the US and potentially expanding globally over time. https://bit.ly/3AYw0L8
Facebook puts a ‘pause’ on Instagram Kids initiative.
Facebook Inc. announced in a Monday blog post that it was putting a “pause” on efforts to create a version of Instagram for kids under 13. Facebook had been planning to create an ad-free Instagram experience for tweens that would allow parents to supervise how their children spend time on the app and who they follow. Shares of Facebook have gained about 3% over the past three months as the S&P 500 has risen 4%. https://on.mktw.net/3CThll7
Adtech, Privacy & Regulatory
Google faces a lawsuit over DeepMind’s access to 1.6 million UK patients’ records.
In 2016, an investigation showed that DeepMind had gained access to 1.6 million patients’ data as part of an arrangement with with London’s Royal Free NHS Trust. In 2017, the UK’s data regulator ruled that the Royal Free Trust had breached the UK law because the patients hadn’t been properly informed. This controversy pre-empted Google to take over the control of DeepMind and wind down the clinical trials they had been doing. Fast forward to this week and a London law firm announced the plans to bring action against Google, in attempt to address the public concern about large-scale access to private health data. https://bit.ly/2Yi2ZMj
Australia latest to eye laws to curb Google’s adtech dominance.
Australia’s competition watchdog is the latest to push for legal powers to curb Google’s dominance in the adtech sector. It has made the call as it published its final report on an inquiry examining competition concerns in the digital advertising sector. In the report, the Australian Competition and Consumer Commission (ACCC) concludes that new regulatory solutions are needed to address Google’s dominance and competition to the adtech sector — “for the benefit of businesses and consumers”. The tech giant’s grip on first party data is a particular focus in the report, with the regulator floating the idea of special measures being needed to tackle Google’s dominance — such as data separation powers or data access requirements. https://tcrn.ch/3uiB9LD
Google lowers its cloud marketplace revenue share to 3% from 20%.
Google is reducing the amount of revenue it keeps when customers buy software from other vendors on its cloud marketplace, as the top tech companies face increasing pressure to lower their so-called take rates. In July Google also decreased the percentage it keeps from purchases through its Play Store, where consumers buy apps, to 15% from 30% for the first US$1 million in revenue a developer earns each year. Also this year, Apple provided the same reduction for app developers with under US$1 million in annual sales. Meanwhile, in August, Microsoft lowered the percentage of sales it keeps from game purchases from its Windows app store to 12% from 30%. https://cnb.cx/3umX44u
Roblox settles music publisher copyright lawsuit.
Virtual world-building platform Roblox has settled a lawsuit with the National Music Publishers’ Association (NMPA) and is negotiating potential deals with individual music publishers. The NMPA sued Roblox in June for letting users upload copyrighted songs into its shared library of game-building assets. Roblox quickly signed individual deals with BMG and Sony, but the new agreement settles all claims involving NMPA members. Roblox has yet to sign broad-ranging deals that cover users legally adding songs to their experiences — something platforms like YouTube have done — although it offers access to some tracks through a licensing agreement with APM Music. https://bit.ly/39NLDcx
Alibaba offers WeChat Pay on apps as China cracks down on tech.
Alibaba Group Holding Ltd. added rival Tencent Holdings Ltd.’s payment system to some of its apps, further widening cracks in the internet giants’ walled-off ecosystems. Services including food-delivery app Ele.me, online ticketing platform Damai, e-book reader Shuqi and Kaola, a site for imported goods, now offer WeChat Pay alongside existing payment options like Ant Group Co.’s Alipay, according to checks by Bloomberg News on Tuesday. https://bloom.bg/3EZ8zDZ
Fintech, Blockchain & Cryptocurrency
Affirm to debut crypto, debit products in push toward super app.
Affirm Holdings Inc. is planning to debut a debit card and allow customers to buy and sell crypto directly from savings accounts they have with the company as part of a broader push to become a one-stop shop for consumers’ financial needs. Affirm — known for letting customers split up purchases and pay them off over time — is also weighing expanding internationally, the San Francisco-based company said Tuesday at an investor presentation. https://bloom.bg/3D00j4R
Coinbase will let you direct-deposit your paycheck and convert it to crypto.
Coinbase Global on Monday unveiled a new feature that will allow users to deposit their paychecks directly into their accounts on the cryptocurrency exchange, further integrating digital assets into the realm of traditional banking. The feature, which will roll out in the next weeks, will also allow the largest US crypto exchange to convert paychecks into any of the more than one hundred cryptocurrencies it has with no transaction fees. A limit applies, and users can also opt to keep their funds in US dollars. The company has partnered with Fortress Investment Group, M31 Capital, Nansen, and SuperRare Labs so their employees can use this feature. https://bit.ly/2Y07rPZ
PayPal and Visa are among the companies that will help the Bank of England work on a UK digital currency.
The Bank of England and the UK Treasury department said Wednesday that PayPal, Amazon and Visa will be among the corporate representatives participating in two advisory groups that are exploring a possible central bank digital currency.”Britcoin” is what British finance minister Rishi Sunak dubbed a possible BoE-backed cryptocurrency. Earlier this year, the UK formed the advisory groups – the Technology Forum and the Engagement Forum – as well as a separate task force to coordinate exploratory work on a potential CBDC. Among the group’s members is Edwin Aoki, PayPal’s chief technology officer for blockchain, cryptocurrency and digital currencies; and David MacKeith, principal technology advisor at Amazon Web Services. Visa’s head of solution architecture, Max Malcolm, as well as Mastercard’s vice president of blockchain and digital assets, Patrick O’Donnell, are also part of the Technology Forum. The majority of the world’s central banks are studying the benefits and drawbacks of CBDCs, according to a survey by the Bank for International Settlements. https://bit.ly/2ZzLxDl
Biden admin wants to regulate stablecoin companies as banks.
The Biden administration is reportedly looking to regulate stablecoin issuers as banks, The Wall Street Journal said Friday. Stablecoins, which are cryptocurrencies that have their value tied to an outside asset like the U.S. dollar, have been a point of contention among regulators, with many calling for more rules to govern their usage amid concerns that they could contribute to financial instability. Stablecoin issuers include Circle and Coinbase, which jointly issue the USD Coin, as well as Paxos and Tether. Facebook has been helping to develop one called diem as well. The Biden administration is expected to encourage Congress to consider creating a special-purpose banking charter for these companies that would be specified to their business models, the report said. An upcoming report on stablecoins from the President’s Working Group on Financial Markets is supposed to include the Biden administration’s recommendations. The group, which is led by the Treasury Department, was supposed to release the report this month, but it has since been pushed to late October, the report said. The group includes Treasury Secretary Janet Yellen, Securities and Exchange Commission Chair Gary Gensler and Federal Reserve Chair Jerome Powell, all of whom have called for more regulation of stablecoins. https://bit.ly/3D4n07Y
The Fed has ‘no intention’ to ban cryptocurrencies, Jerome Powell tells Congress.
In a meeting on Thursday this week Federal Reserve Chairman Jerome Powell was asked if it was his intention to ban or limit the use of cryptocurrencies like being done in China. Powell responded by saying he had no intention on banning them. This announcement doesn’t mean that Powell doesn’t plan on implementing some regulation on the coins though. Powell stated, “Stablecoins are like money market funds, are like bank deposits, but they’re to some extent outside the regulatory perimeter and it’s appropriate that they be regulated. Same activity, same regulation.” https://bit.ly/3D79WhY
New Zealand is considering launching its own digital currency as it sees opportunity for payment innovation.
In a report Thursday, New Zealand said they are looking at the potential of creating a digital currency, and said that such a project could further innovate the country’s payment system. The statement pointed out that the use of cash had dropped to 19% for household transactions in 2019, from 30% in 2007. This shift away from cash has increased the number of people turning to phone-based payment apps and digital wallets, as well as other new and private technologies that make transactions more convenient. The statement said that, “The declining use, acceptance and availability of cash in New Zealand, and emerging innovation in private money, namely stablecoins, makes this an opportune time to consider a central bank digital currency.” https://bit.ly/3imT3ba
A third of El Salvador’s population is actively using its bitcoin wallet Chivo, President Nayib Bukele says.
El Salvador President Nayib Bukele has said a third of the country’s population is actively using the Chivo cryptocurrency wallet, after the government made bitcoin legal tender earlier this month. Bukele tweeted at the weekend that 2.1 million Salvadorans were actively using the wallet. The claim from Bukele is the latest insight into how El Salvador’s controversial adoption of bitcoin is panning out. El Salvador officially launched bitcoin as legal tender on September 7, meaning businesses have to accept it as payment, but the rollout was far from smooth. The decision was criticized by the International Monetary Fund and met with street protests by some Salvadorans. On the day of the launch, bitcoin fell sharply after the government had to take the Chivo wallet offline due to capacity problems. https://bit.ly/39J7Yrx
Chamath Palihapitiya reveals he’s put hundreds of millions into bitcoin – and says cryptocurrencies are hard to kill.
The billionaire investor was asked what he thinks of SEC Chair Gary Gensler saying the crypto market is “rife with fraud” and Ray Dalio saying regulators will try to “kill” bitcoin if it becomes really successful. “I think it’s very hard to kill,” Palihapitiya said. “So technically, it’s very difficult. Just the way that it’s architected, it is the most profound iteration of the internet that we’ve seen.” Google and Facebook dominated the first two versions of the internet by creating, or organizing, everything that now exists on it, while decentralized finance and cryptocurrencies are part of the next stage of the evolution to what is known as Web 3.0, he said. Bitcoin was last trading 3% higher on the day at $43,073 per coin on Thursday, according to data from CoinDesk. It’s risen about 50% so far this year, according to Coinbase data. https://bit.ly/2Y5s5OF
Miami’s crypto-friendly mayor is pitching bitcoin miners on the city’s nuclear facilities to shrink their carbon footprint.
Concerns about bitcoin’s heavy environmental impact are pushing miners toward carbon-free nuclear energy as cities like Miami look to capitalize on the trend, according to a Wall Street Journal report. Miami Mayor Francis Suarez, who has fast become a beloved figure in crypto circles, told the Journal that he has been pitching bitcoin mining firms on his city’s nuclear facilities and crypto friendliness. A Miami-based nuclear plant owned by Florida Power & Light has been in talks with bitcoin miners over how to get ahold of cheap land near the facility to host mining rigs, Suarez told the Journal. https://bit.ly/3F0HPCT
Alibaba will block sales of crypto mining equipment beginning October 8 to comply with China’s clampdown.
Alibaba announced it will block sales of cryptocurrency mining equipment and cryptocurrencies themselves on its platforms beginning October 8, in step with China’s recent blanket ban on all crypto-related transactions. The Chinese e-commerce giant said it took into account the “instability of laws and regulations on virtual currencies.” Alibaba said merchants who violate the new policies beginning October 15 will face consequences, such as the deletion of their products or the shutting down of their accounts. China’s central bank on September 24 declared all cryptocurrency-related transactions illegal and said overseas exchanges are banned from providing services to Chinese residents. https://bit.ly/2ZMyi2n
TikTok makes first foray into NFTs.
TikTok on Thursday announced its first-ever collection of NFTs, the one-of-a-kind digital collectibles that use the same blockchain technology powering cryptocurrencies. The short-form video app will turn six popular videos featuring pop star Lil Nas X, creator Bella Poarch and others into NFTs. The ByteDance-owned company said digital collectibles are a way for creators to be “recognized and rewarded for their content, and for fans to own a culturally-significant moment on TikTok.” A spokesperson did not say whether it would launch an NFT marketplace open to more creators. Creators will keep most of the proceeds from NFT sales, although TikTok didn’t disclose an Sexact percentage. The move speaks to the growing overlap between creators and crypto, as well as a trend of consumer-oriented companies developing NFTs to preserve special moments. The National Football League this week partnered with blockchain startup Dapper Labs to develop NFTs of video highlights from professional football games. Eternal, an NFT marketplace focused on “collecting moments” from game streaming history, recently raised US$4.5 million in new funding from investors including Mark Cuban and Coinbase Ventures. https://bit.ly/2Yd4dIA
2021 smartphone production being hit hard by chip shortage.
A global chip shortage has been brought about by a combination of three factors. First, a steep increase in demand for chips as a result of increasing use within the automotive sector. Second, production disruption caused by the pandemic. Third, the long lead time involved in bringing new chip fabrication capacity online, meaning that chipmakers cannot quickly boost production to meet demand. Apple’s buying power and supply chain expertise means that the company is able to negotiate priority supplies a long way in advance, insulating itself from much of the disruption. However, the company warned investors that its own production is not immune, and that Mac and iPad would be hit first, followed by iPhone. However, some smartphone OEMs and vendors are reporting they had only received 80% of their requested volumes on key components during Q2 2021, and the situation seems to be getting worse as we move through Q3 2021. https://bit.ly/3uprtim
Foxconn will build EVs for Lordstown Motors and Fisker at Ohio plant.
On Thursday, Foxconn announced they will build electric vehicles for Fiskar and Lordstown Motors at the former GM factory in Ohio. The company said that they came to a nonbinding agreement which will see Foxconn purchase the 6.2 million square-foot factory from Lordstown, who purchased the factory in 2019 from GM. The agreement states that Foxconn will pay US$230 million for the facility, but will exclude certain assets such as Lordstown motor assembly line, battery module and packing line assets. Foxconn will also buy US$50 million of Lordstown common stock. The companies said in its announcement that the goal of the partnership, is to present both Lordstown Motors and Foxconn with increased market opportunity in scaleable electric vehicle production. This includes Foxconn’s existing partnership with EV company Fiskar Inc. https://tcrn.ch/3D1KM4u
Sophic Capital Client Insights
Sophic Client GameSquare Esports (GSQ-CSE, Sophic Client): Esports influencer TimTheTatman recently announced that he would join Complexity Gaming and GameSquare Esports. TimTheTatman has built a following of over 4 million on YouTube, 3.4 million on Instagram, and 2.6 million on Twitter. Influencer advertising is growing as it gains acceptance with marketers – and TimTheTatman adds to GameSquare’s audience reach and engagement. Investors liked this development, sending GameSquare’s stock up by about a third since the announcement. https://bit.ly/3CSNCso
Sophic Client Body and Mind Inc. (BAMM-CSE, BMMJ-OTC): Fueled by a booming Las Vegas post-pandemic tourist boom, Nevada could see cannabis sales reach US$900 million by the end of 2021. Cannabis licenses in Nevada, the Battle Born state, are scarce, but newly introduced cannabis lounges could pave the way for increased retail growth. Body and Mind has a strong brand presence in Nevada that could benefit. https://bit.ly/3AUHL5c
The information and recommendations made available through our emails, newsletters, website and press releases (collectively referred to as the “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. In accessing or consuming the Materials, 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, directors, officers, shareholders, 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 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 or dealer under the securities legislation of any jurisdiction of Canada or elsewhere 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 advisor nor does it maintain any registrations as such, 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 or securities regulatory authority 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. The Company has not independently verified any of the data from third party sources referred to in the Material, including information provided by Sophic clients that are the subject of the report, or ascertained the underlying assumptions relied upon by such sources. The Company does not assume any responsibility for the accuracy or completeness of this information or for any failure by any such other persons to disclose events which may have occurred or may affect the significance or accuracy of any such information. The Material may contain forward looking information. Forward-looking statements are frequently, but not always, identified by words such as “expects,” “anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible,” “projects,” “plans,” and similar expressions, or statements that events, conditions or results “will,” “may,” “could,” or “should” occur or be achieved or their negatives or other comparable words and include, without limitation, statements regarding, projected revenue, income or earnings or other results of operations, strategy, plans, objectives, goals and targets, plans to increase market share or with respect to anticipated performance compared to competitors, product development and adoption by potential customers. These statements relate to future events and future performance. Forward-looking statements are based on opinions and assumptions as of the date made, and are subject to a variety of risks and other factors that could cause actual events/results to differ materially from these forward looking statements. There can be no assurance that such expectations will prove to be correct; these statements are no guarantee of future performance and involve known and unknown risks, uncertainties and other factors. Sophic provides no assurance as to future results, performance, or achievements and no representations are made that actual results achieved will be as indicated in the forward looking information. Nothing herein can be assumed or predicted, and you are strongly encouraged to learn more and seek independent advice before relying on any information presented.