Startups

Brooklyn-based sex toy company Dame Products filed a lawsuit yesterday against the Metropolitan Transportation Authority (MTA) after it refused to run ads for female-focused sex toys.Passengers riding the New York City subway can see advertisements for condoms, male libido, and erectile dysfunction that feature images of cacti-shaped phalluses and bare buttocks. If these images have gotten a green light from the MTA, why have the pastel-colored sex toys on a beige background been deemed inappropriate?That’s what Alex Fine, a credentialed sexologist, and Janet Lieberman, an MIT engineer - the two women behind the Dame Products company - would like to find out. They filed a complaint against the transportation authority with the federal court in New York in order to do that.The company, which aims to “close the pleasure gap” between men and women by producing toys for female stimulation, has spent $150,000 on developing and revising its ad campaign.However, the MTA rejected Dame’s ads in December last year because they "promote a sexually oriented business, which has long been prohibited by the MTA's advertising standards." In September 2018, Dame began collaborating with Outfront Media, the MTA’s advertising agency, on creating an ad campaign for its products that was supposed to be featured in NYC subway cars.A couple of months later, Outfront Media informed Dame it had “no objections” to two advertisements for a small wearable vibrator called Fin. The light-green sex toy worn between the fingers was featured on a neutral background with two different text options: "Toys, for Sex" and "Get from Point A to Point O."After working with MTA’s advertising contractor, incorporating its feedback and getting approval for the Fin ad, Dame was shocked to receive a rejection letter for its campaign in early December. According to the lawsuit, the same Outfront Media representative that worked with the sex toy company on the advertisement campaign informed Dame that it was in violation of the MTA’s Advertising Policy and had therefore been rejected. The representative also said the transportation authority was going to release a new

By Ivana V. June 19,2019

A company called Maven is now to run Sports Illustrated for Authentic Brands Group (ABG). Last month, ABG bought Sports Illustrated Magazine from Meredith Corporation for $110 million, and they announced that Meredith Corp. will continue to run the magazine for at least two more years, with the old editor and publisher still onboard. Chris Stone, the Editor-in-Chief, stated that the deal would allow them to keep producing quality, award-winning content and give Sports Illustrated a chance to grow in areas such as e-sports. However, this Monday during an SEC filing, Maven claimed that it has a licensing deal to run the physical copy of the magazine and the website. Ross Levinsohn, the former publisher of the Los Angeles Times, is meant to be the CEO and manage day-to-day operations. Sports Illustrated will soon be changing its name to Sports Illustrated Media. While the terms of the contract were not disclosed, it is known that Maven paid $45 million up front and that it will get publishing rights until 2029. After that, there’s a possibility that they might be renewed. Authentic Brands Group claims that they’re still negotiating the involvement of the new publisher, but Meredith Corporation might still work for the magazine. It would appear that Meredith has long been planning to sell titles that didn’t fit its image, which is how Time magazine ended up in the hands of Marc Benioff. ABG specializes in managing entertainment, fashion, and sports, so acquiring Sports Illustrated is a perfect fit. It will provide the opportunity for brand growth and an expanded reach in social media and the digital domain, which includes sports gambling and e-sports. ABG will be responsible for the marketing and business planning portion, while Maven will manage the creative side. These two companies will split the revenue for the parts of the business that Maven isn’t licensing.Maven is a relatively unknown startup, but last week they acquired TheStreet financial site for $16.5 million. ABG plans to invest in this small company and help it rise to success. It’s also important to note that Ross Levinsohn was recently accused of sexual misconduct and put on paid leave while he was still managing Los Angeles Time magazine. He was consequently cleared of all charges by Tronc company and put in charge of all future Tribune Interactive divisions.

By Julija A. June 18,2019

MoneyGram International Inc, a money transfer company, partnered with a blockchain company Ripple. The plan is to use Ripple’s product for cross-border payment and foreign exchange settlement. Ripple has bought $39 million worth of shares and warrants in Moneygram, starting a two-year partnership. MoneyGram sold off its stock at $4.10 per share, a premium of around 183% to its Monday closing price. Its shares grew about 77% to $2.56 after the closing bell.Ripple might also buy up to $20 million in additional common stock or warrants, at a minimum price of $4.10 per share, according to MoneyGram’s statement.Ripple’s xRapid will be the focus of this new partnership. xRapid is a cross-border payment platform that uses XRP, a blockchain-powered virtual currency, to send and receive money.“Through Ripple’s xRapid product, we will have the ability to instantly settle funds from U.S. dollars to destination currencies on a 24/7 basis, which has the potential to revolutionize our operations and dramatically streamline our global liquidity management,” said Alex Holmes, Moneygram’s Chief Executive Officer.Ripple uses RippleNet to connect bankers and payment providers, offering a single, seamless experience of sending and receiving money on a global scale. Leveraging the power of blockchain, Ripple’s growing worldwide network called RippleNet provides instant, reliable, and cost-effective customer payment processing for financial institutions. XRP is a particularly useful digital asset that helps banks and payment providers access new markets, and reduce their costs. Ripple has offices in San Francisco, New York, London, Mumbai, Singapore, and Sydney, serving over 200 customers worldwide.MoneyGram International Inc. is a U.S.-based money transfer company headquartered in Dallas, Texas. With regional and local offices scattered all over the world, MoneyGram also has an operations center in St. Louis Park, Minnesota. MoneyGram works with Financial Paper Products and Global Funds Transfers. Its network of agents and financial institutions provides services to businesses and individuals alike. The second most prominent money transfer provider in the world, MoneyGram operates in over 200 countries, its global network spanning to 347,000 agent offices.

By Andrea June 18,2019

Joydrive, a startup disrupting the car-buying process with its online vehicle marketplace, raised $1.1 million last month alone and is now live in 14 states.Buying a car used to entail spending hours on end at different car dealerships, talking to overly eager dealers and taking the vehicle for only a couple of test-drives, until the Seattle-based startup revolutionized it.The company, which was founded in 2016, works with more than 140 traditional dealerships, operating as an intermediary between them and prospective buyers. Joydrive currently offers over 30,000 vehicles, both used and new, to customers who can pick a car from the convenience of their homes, have it delivered to their front door, test it for five days and return it if they aren’t satisfied with it.Hunter Gorham, the company CEO who came up with this business model a few years ago, says dealerships are catching onto this new trend and are joining his company in order to cater to a growing number of eCommerce-oriented modern consumers.The fact that less than 1% of shoppers have taken advantage of Joydrive’s 5-day return policy instills confidence in the service.The 15-person startup has raised a total of $10 million in funds since it was established. The last round of funding, which started in February, brought a $5.7 million influx of cash, including the $1.1 million secured in May.What’s interesting is that the financing isn’t coming from traditional venture capitalists but from brick-and-mortar car dealerships who are not afraid of the shift in the industry. “These strategic dealers are industry influencers uniting together to lead the change in auto sales,” said Joydrive CEO Hunter Gorham to GeekWire.Even though Joydrive is among the pioneers who are laying the groundwork for moving the experience of purchasing or leasing a car online, it is not alone in this endeavor. Other startups, like Carvana, Vroom, Shift, and Tred are creating online marketplaces of their own. The fact that Shift, a startup with a business model similar to Joydrive’s, has brought in $135 million in revenue last year is an indicator of how well shoppers are responding to this trend. These startups go above and beyond to make the car-purchasing experience as simple and as transparent as possible and the consumers appreciate it.With haggling out of the picture and information about the vehicles on offer readily available on these companies' websites, more and more shoppers are migrating to online auto marketplaces.Gorham says the reason behind starting up Joydrive was simplifying a process that was unnecessarily complicated and that required shoppers to keep an eye out for scams. “I couldn’t send my own mom in to buy a car unless I went and protected and guarded her every step of the way,” he told GeekWire. “Joydrive hopes to change that.”

By Ivana V. June 18,2019

Guy and Maki Kaplinsky, the founders of New Future Transportation (NFT), are developing a flying, autonomous vehicle, expected to start selling by 2025.Their Silicon Valley-based startup unveiled the design plans last week at Israel’s EcoMotion conference, the largest smart mobility event in the country. The testing of Aska Drive & Fly, the electric flying vehicle, will start in 2020. Aska (“flying bird” in Japanese) will take commuters door-to-door at a reduced cost and environmental impact. This sleek vehicle with wings spanning 40 feet in flying mode will be able to take off vertically and fly autonomously – no pilot required – for a range of up to 150 miles (240 kilometers), according to NFT. Covering a significant distance, it will be built to fly for about an hour at a time. The long-awaited dream of many Sci-Fi enthusiasts has been in its developmental stages for over a year now. The New Future Transportation operates an R&D center in Netanya, with Israeli experts and engineers working hard on designing and producing the vehicle’s flying and autonomous features. Users will be able to drive to a helipad, located in central places throughout the city, where the vehicle will employ vertical take-off (and landing) to fly off autonomously to the desired destination. Flight changes and adjustments will also be possible in case of unfavorable weather conditions, turbulence, or even users’ preferences. NFT assures that the flying vehicle design is in agreement with the Federal Aviation Administration (FAA) safety requirements, such as safe landings in case of power failure, back-up systems, and the overall high reliability. Aska’s starting cost will amount to somewhere between $200,000-$300,000. As indicated by the NFT, the ultimate goal is to make the car affordable for broader audiences and reduce the cost to around $50,000.“The target market for Aska is families with kids,” said Elena Olvovsky, algorithm leader at the Netanya R&D Center, at the EcoMotion event. “It has to be practical and affordable without anyone needing a flying license.”A subscription-based model will be employed by 2025 when Aska hits the market, and customers will be able to use the car when need be. While buying the car will still be an option, most people aren’t expected to resort to this solution, as paying by the hour will be more cost-efficient. With Aska roaming the skies, the overall quality of life is expected to improve, also reducing the living costs in large cities. Eventually, traffic congestion could become little more than a distant memory. “Our main target is enabling people to move out of the major cities because of the cost of living,” Kaplinsky said. “If you can commute at a reasonable cost, you can have a better quality of life.”Aska, an electric, autonomous flying car by NFT. Image courtesy.

By Andrea June 17,2019

On Sunday in Intel has announced a new start-up initiative to help Israel develop cutting-edge AI (artificial intelligence), and autonomous systems. Intel and industry experts are to train 15-20 Israeli startups in a 20-week business and technical mentorship. Tzahi Weisfeld, former global head of Microsoft for Startups will be leading the program. The initiative called Ignite will be based in Tel Aviv. Israeli start-ups are the prime target this year. Intel also announced it expects to expand to other countries in case the Israeli efforts achieve positive impact. According to Bob Swan, Intel’s CEO, "Intel has always worked in concert with open ecosystems to scale new technologies so they can be transformational for our customers, business and society." "Israel has the deep skill base in AI, autonomous systems, and the underlying technologies critical to these inflections that make it a natural choice to launch our Ignite program.”Intel and IsraelThe Intel Corporation, based in Silicon Valley, is one of the biggest exporters and employers in Israel. Many of Intel’s new technologies are developed there. In early 2019, it decided to invest $11 billion in a new production plant, bringing thousands of jobs to the blue-collar area of Kiryat Gat, Isreal.In 2017, it acquired Mobileye, an Israeli autonomous-vehicle technology for $15.3 billion. This was a part of Intel’s plan to strengthen its position in the autonomous vehicle industry.Mobileye’s REM platform was to be used in a variety of autonomous systems for a number of carmakers. Its HD mapping solution is based on data collected by REM compatible vehicles. The info collected will allow autonomous cars to share information such as weather data, construction info, or even incident reports, and help drivers avoid traffic jams and find the shortest, most enjoyable driving routes.Additionally, one of Intel’s biggest markets is China. This adds some weight to the fact that the U.S. Commerce Department banned Huawei Technologies from buying components and parts from U.S. companies without the approval of the U.S. government.As Huawei is one of Intel’s most important customers, this decision could have far-reaching consequences. An effort to expand and invest in alternative markets seems like a logical step. “What we intend to do is be very focused on serving customers around the world but at the same time abide by the rules. We aren’t shipping anything that’s specified on the entity list,” said Swan.

By Andrea June 17,2019

General Electric (GE) is considering selling GE Ventures, a startup that has invested in over 100 early-stage companies.The world-renowned conglomerate and employer of two Nobel prize winners has been short on cash for years now, after a series of poorly-timed acquisitions and generous share buybacks. GE Ventures owns stakes in many successful startups, including Elon Musk’s high-speed transportation business - Virgin Hyperloop One. Other examples include PingThings, a big data and machine-learning company, and a smart window manufacturer called View."During this time of transformation for GE, we are evaluating strategic options for GE Ventures to continue delivering returns for our shareholders and partners," GE stated on Thursday. News of a potential sale of GE Ventures was reported earlier by CNBC.A wide array of companies GE Ventures is interested in backing are listed on its website. The startups come from sectors such as logistics and medical technology, as well as ones dealing with cutting-edge AI and blockchain. GE offered no comments on sales-related details, but it did mention a plan on remaining "committed to supporting our portfolio companies, business units and partnering with the entrepreneurial ecosystem." The exact amount of money the GE Ventures sale could generate is uncertain. The sale of GE Ventures is the latest in a series of GE business sales, some of which are integral to the company’s public image and perceived identityAnother long-standing representative that had to go is BioPharma unit, a drug maker instrument and software manufacturer. BioPharma was sold to Danaher for over $21 billion. GE is also likely to get rid of most of its stake in Baker Hughes (BHGE), the oil services company GE acquired only 2 years ago, under its former CEO, Jeff Immelt. GE has also been working on selling its famous light bulb unit for years now, but to no avail. Still, according to Fitch Ratings, even if it fails to sell the light bulb unit, GE ought to be able to raise at least $37 billion from the announced transactions. So far in 2019, GE has succeeded in improving its financial situation to a degree, with its shares spiking more than 40%Wall Street has complimented the immediacy with which GE has approached the business sales and raising cash under CEO Larry Culp. If it keeps up the pace, it could do a lot to stabilize the business.Also, as Fitch noted, GE is leveraged higher than its peers, and this position is threatened unless the balance sheet is fixed, and the company manages to turn its business around. 

By Andrea June 14,2019

Bitrefill has just closed a $2 million seed round led by Coin Ninja, with participation from Litecoin creator Charlie Lee, Fulgur Ventures and BnkToTheFuture. This veteran startup provides cryptocurrency gift cards for big brands and mobile refills. It’s also building Lightning Network-based products and services. In addition to previous funding from Boost VC and others, the new seed round adds up to $2.4 million total in Bitrefill capital. At the moment, Bitrefill is only offering its services to U.S. and European clients. The new funding round will enable its expansion to new jurisdictions, and help it launch other innovative products. As their CCO John Carvalho stated for CoinDesk, they plan on achieving “worldwide coverage within the year.” It’s also highly likely Bitrefill will hire new people and expand its creative staff. Charlie Lee and Bitrefill stated in a press release that the startup’s increased participation in the lighting network ecosystem “opens up even more potential for Bitcoin and beyond.” In 2019, Bitrefill launched its Thor & Thor Turbo products to facilitate onboarding to the Lightning Network. This enabled users to give lightning channels to other people with no need for new setup on the recipient’s end. 1ML.com claims that Thor is the main lightning network capacity increasing service in terms of value with almost $19,000 worth of Bitcoin. Thor is also the top service provider running nodes on the network.Although Carvalho refused to comment on the exact revenue his 16-person team generated in 2019, he stated cryptocurrency gift card sector is growing at a breakneck speed. With regards to broader plans for allocating this capital in 2019, Sergej Kotliar, the Bitcoin startup’s founder and CEO added:“We see it as a big token of trust that investors from the Bitcoin and broader cryptocurrency community have chosen to put their money behind us and support us in our growth journey.” One should bear in mind that several funding rounds are often a necessary step in the startup growth lifecycle, according to the 2019 Startup Failure Deep Dive Report. In fact, every subsequent seed round is increasingly more difficult to obtain. Of the 1,098 tech companies CBInsights tracked that raised seed rounds in the US during a two-year period, 46%, could raise a second seed round, and only 14% had successfully raised a fourth round of funding. With proper backing by Coin Ninja, Bitrefill is much more likely to rise to more ambitious, innovative outcomes, and work with more Bitcoin businesses to grow the network.

By Andrea June 14,2019

Small business owners seem to be in high spirits since May 2019. According to the National Federation of Independent Business, the index of small business optimism is the highest it’s been since October—105.0 points. This surpasses economists’ predictions (102.0 points) and indicates a positive change for a lot of companies. The index had been in decline before February 2019, when it started slowly increasing, eventually reaching historically high numbers last month as six components improved, one fell, and three were unchanged. Reports show that 30% of firms plan to increase their capital spending, while the share of companies expecting to raise selling prices fell to 20%, which may slow down pricing power. Despite trade uncertainty, businesses are expecting more favorable prospects. Based on a survey of 650 small businesses, 9% of firms reported higher nominal sales in the past three months. Here’s some more interesting data: according to the NFIB survey, 62% of small businesses are trying to hire more workers in their field, but 54% of them report difficulties with finding competent employees for the positions that need to be filled. This seems to be a common struggle for a lot of small companies, as 24% of owners said that finding qualified workers is the single biggest challenge they face. According to some economists, the claim that there aren’t enough professionals available is grossly overstated. Businesses could find better workers if they increased pay and benefits, especially in highly-competitive industries. Despite these claims, NFIB states that the increase in compensation is the highest it’s been since 1973. More owners are starting to understand the benefits of offering competitive salaries when searching for talent. It’s important to bear in mind that there are fewer Americans in the labor force now than there were a decade ago. An impressive 64% of companies also reported increased spending on capital equipment, which is a six-point gain since February 2018. This general optimism is driving the workforce forward and encouraging firms to hire more skilled workers. We can also expect more startup openings in the upcoming months, as analysts predict positive reports will motivate people to open their own firms. Given the May readings, it would seem that most small businesses are looking forward to branching out and growing their companies. This kind of enthusiasm needs to be nurtured if we are to ensure healthy economic progress.

By Julija A. June 12,2019

Payless ShoeSource is calling it quits. The 62-year-old chain is liquidating its assets and closing down its stores in the largest retail liquidation by store count to date in the US.The once-giant retailer is shutting all of its 2,500 North American shops. "Our liquidation sales will continue to run through the end of June 2019, during which we are offering amazing deals at up to 80% off," the company said via a statement on its website. "Stores are closing on a rolling basis through June."What led to the decline of this decades-old shoe store chain?Payless has been struggling to stay in business for the past two years. In 2017 it filed for Chapter 11 in hopes of reorganizing its debt. Things were starting to look up in August that year when the company cleared $435 million of debt. With plans to provide for omnichannel features like ship-to-home and pickup-in-store, the crisis seemed to have been averted, and the company appeared to be catching up with its competitors.However, optimism in the company’s revival was short-lived. Payless ShoeSource accumulated more debt due to an inventory-flow disruption during the 2017 holiday season. And the 2018 back-to-school season was met with yet another crisis. As a result of a computer breakdown, the retailer overstocked and was forced to sell millions of pairs of shoes at discounted prices during this holiday season. These two inventory-related issues in two consecutive years cost Payless $66 million. The plan for introducing the omnichannel improvements was put into action in only 200 brick-and-mortar stores. Without those features, the shoe retailer couldn't address the needs of modern shoppers, forcing it out of business.The final nail in Payless’s coffin was entering Chapter 22 bankruptcy in February 2019. After that, its creditors decided that liquidating the 2,500 North American stores was the most profitable solution for its lenders-turned-owners. And so began the largest retail liquidation to date, in terms of the number of stores being shut down. In order to sell off the entire inventory of the US shoe retailer - estimated at $1 billion - two of the largest liquidation companies needed to team up. Change in legislation limits retailers’ optionsAs David Wander, an attorney with Davidoff Hutcher & Citron points out to Retail Dive - the critical point was reached in 2005 when the U.S. Bankruptcy Code changed. Until then, he explains, retailers facing bankruptcy had a chance to revise their inventory, replace their suppliers and management team, cut down on the number of stores, and take other actions. Most importantly, the timeframe for evaluating the effects of those changes was a couple of years. It takes time to test new strategies and their impact on the financial bottom line. Following the changes in the bankruptcy code, the law now gives retailers only 210 days to reorganize. This is not enough time to terminate leases and reduce store footprints.The new law has been viewed as a contributing factor behind the recent bankruptcies of Toys R US, Bon-Ton and most recently Payless ShoeSource.

By Ivana V. June 11,2019

The United Arab Emirates has finally approved the $3.1 billion Uber-Careem deal. With proper regulatory approval, the deal has been finalized. That’s $1.7 billion in convertible notes and $1.4 billion in cash - the most successful startup exit ever in the Middle East & North Africa. The early investors, such as STC Ventures, got 100x returns on their original investment.MENA’s entrepreneurial ecosystem is bound to see severe changes in the aftermath of the acquisition. The former biggest rival in the Middle East can now offer a strong foothold in the region for Uber. Mudassir Sheikha, the co-founder, and CEO of Careem offered his take on the deal, noting it’s probably a significant lift-off moment for the Middle Eastern market.Uber is to acquire Careem’s delivery, mobility, and payments business across the entire region. Luckily, Careem is allowed to maintain its brand identity and merely become Uber’s subsidiary. The co-founder and CEO Mudassir Sheikha will remain in the leading position, and all three co-founders are staying with the company.Uber will cut its losses in the Middle East by taking over its main competitor. They will also gain unique access to Morocco, Iraq, and Palestine, making use of the existing infrastructure. Back in 2012, Careem started as a corporate chauffeur service. In 2012, McKinsey consultants Mudassir Sheikha and Magnus Olsson, two former McKinsey consultants, created their first mobile app. With high ambitions for the future, Careem initiated their first round of external investment. They went for around $600,000, too much for some investors. Luckily, some angel investors as well as STC Ventures, and Oqual Investment Network raised $1.7 million, more than three times the original sum. Scaling quickly became an issue for this astonishingly successful company, and the simple pitch deck continued to evolve. Their innovative, local solutions took on quickly in the Middle East, changing the urban mobility landscape. In his letter to Careem employees, Mudassir Sheikha said that “A transaction of this magnitude puts the region’s emerging technology ecosystem squarely on the map of regional and foreign investors. It will radically and irreversibly enhance the support and funding opportunities for local entrepreneurs. Every ecosystem needs a landmark transaction, and we hope this will be ours.”Still, the deal is not without minor inherent setbacks. Back in 2017, when Careem was to expand to the Egyptian market, government officials agreed to allow access to users’ location data. Uber declined the offer, and Careem provided real-time access to the Egyptian government. As a result, 14 million users were affected in a 2018 data breach. Uber will assist Careem in solving the issue, offering advice and counseling to Careem’s security and legal teams. With Uber by its side, Careem is likely to expand their business at a faster pace, overcome past mistakes, and launch the region into a brighter digital future.

By Andrea June 11,2019

According to the 2019 Startup Outlook Report, 50% of US startups are concerned that trade policy between the US and China will hurt their businesses. What’s more, 33% are somewhat worried, while 17% are very concerned. This rising anxiety is due to China’s ‘Made in China 2025’ plan, a strategic project issued by the Chinese Premier Li Keqiang and his cabinet in May 2015. In short, China is working towards producing the highest value products and services and becoming a high-tech manufacturing superpower. The industries in for a makeover include information technology, AI, IoT, robotics, and others.How will China achieve this goal? Firstly, China’s domestic content of core materials will increase to 40% by 2020 and 70% by 2025. They also plan on investing in quality-driven product innovation as opposed to production. Secondly, China is investing heavily in Russian and European US competitors.‘Made in China 2025’ Plan For Tech World Domination China has more Unicorn companies than the US, in spite of the US being the primary source of venture capital, according to a Churnbase study. In 2014, 150 scientists and scholars drew up the 2525 plan, under the supervision of the Ministry of Industry and Information Technology.Miao Wei, China’s industry and information technology minister, stated for the South China Morning Post that it would take at least 30 years for China to become a manufacturing superpower. Still, the desire to keep up with the US and eventually surpass their tech monopoly is part of President Xi Jinping’s “Chinese dream” and a matter of national pride.The Threat of Cyber Attacks and the Theft of Intellectual PropertyUS startups and powerful corporations alike are raising eyebrows at China’s ambition, focusing particularly on the threat of cyber warfare and the theft of intellectual property. In 2015, presidents Obama and Xi Jinping reached an agreement that they would end mutual industrial espionage. According to a 2016 report by FireEye, China honored this agreement, with the number of Chinese cyber attacks on the US falling by 83%.In 2018, president Trump cut the deal off. According to an NSA spokesperson, digital attacks against the United States’ financial, transportation, energy, and healthcare sectors have been on the rise after a brief ceasefire. Right now, According to a Time magazine article, 70% of America’s corporate intellectual property theft is believed to originate from China. China Investing in US CompetitorsSmall businesses survival rate, currently at 30% past the 10-year milestone, might drop because of this economic shift, with competition rising overseas. After Huawei, the world’s largest manufacturer of telecommunications equipment, was blacklisted by US companies, tensions rose significantly. The US stated that they would refuse to supply Huawei with goods and services, threatening to choke off China’s access to key technologies. Soon after, Beijing announced it would release a similar list of “unreliable” foreign entities, and even stop supplying the US with rare earths and other resources. China also resorted to investing a bucketload of capital into US competitors from Russia and Europe. In the most recent case, Chinese fintech startup Pingpong announced they would invest over  €100 million ($113 million) in Luxembourg startups in the coming years. The immense funding will drive collaboration between Luxembourg and Pingpong on various fronts, such as Chinese exports to the EU, Pingpong’s local payments, and online banking projects.Also, China’s Alibaba and Russia’s RDIF sovereign wealth fund plan on investing $100 million in a shared, Russian venture. The plan is for Megafon, the Russian mobile phone operator to sell a9.97% stake in internet group Mail.ru to Alibaba. Megafon will also get 24.3% in the JV, with Mail.ru will adding its Pandao e-commerce business to the JV and $182 million in cash. The Consequences for US Tech StartupsAn innovation-powered US economy is aware of the Chinese threat. According to a 2018 Global Startup Ecosystem Report, advanced manufacturing and robotics are the most lucrative tech subcategory at a growth rate of 189.4%. With the US attempting to stay at the forefront of global technology, the threat of data breaches and intellectual property theft could be truly damaging to startups and technology leaders. The cyber attack deal has long been abandoned, and we are yet to see a Huawei sales ban backlash. The consequences of potential Chinese rise to tech power is unlikely to affect US startups at the current time. Still, the more successful startups striving for unicorn-status are already falling behind and facing an uncertain future in several decades’ time.

By Julija A. June 10,2019