I’m heading back to Europe to run a pitch-off in Wroclaw and Warsaw, Poland. Are you ready?

The Wrocwal event, called In-Ference, is happening on December 17 and you can submit to pitch here. The team will notify you if you have been chosen to pitch. The winner will receive a table at TC Disrupt in San Francisco.

The Warsaw event, here, is on the 19th. You can sign up to pitch here. I’ll notify the folks I’ve chosen to pitch and the winner gets a table as well.

Special thanks to Dermot Corr and Ahmad Piraiee for putting these things together. It’s always fun to get back to the stary kraj.

Sramana Mitra: You said you have a very big geographical focus? How do you define that geography? How do you constrain that geography? Ray Chan: We do touch on some investments in Canada. We have...

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Contentful, a Berlin- and San Francisco-based startup that provides content management infrastructure for companies like Spotify, Nike, Lyft and others, today announced that it has raised a $33.5 million Series D funding round led by Sapphire Ventures, with participation from OMERS Ventures and Salesforce Ventures, as well as existing investors General Catalyst, Benchmark, Balderton Capital and Hercules. In total, the company has now raised $78.3 million.

It’s been less than a year since the company raised its Series C round and, as Contentful co-founder and CEO Sascha Konietzke told me, the company didn’t really need to raise right now. “We had just raised our last round about a year ago. We still had plenty of cash in our bank account and we didn’t need to raise as of now,” said Konietzke. “But we saw a lot of economic uncertainty, so we thought it might be a good moment in time to recharge. And at the same time, we already had some interesting conversations ongoing with Sapphire [formerly SAP Ventures] and Salesforce. So we saw the opportunity to add more funding and also start getting into a tight relationship with both of these players.”

The original plan for Contentful was to focus almost explicitly on mobile. As it turns out, though, the company’s customers also wanted to use the service to handle its web-based applications and these days, Contentful happily supports both. “What we’re seeing is that everything is becoming an application,” he told me. “We started with native mobile application, but even the websites nowadays are often an application.”

In its early days, Contentful focused only on developers. Now, however, that’s changing, and having these connections to large enterprise players like SAP and Salesforce surely isn’t going to hurt the company as it looks to bring on larger enterprise accounts.

Currently, the company’s focus is very much on Europe and North America, which account for about 80 percent of its customers. For now, Contentful plans to continue to focus on these regions, though it obviously supports customers anywhere in the world.

Contentful only exists as a hosted platform. As of now, the company doesn’t have any plans for offering a self-hosted version, though Konietzke noted that he does occasionally get requests for this.

What the company is planning to do in the near future, though, is to enable more integrations with existing enterprise tools. “Customers are asking for deeper integrations into their enterprise stack,” Konietzke said. “And that’s what we’re beginning to focus on and where we’re building a lot of capabilities around that.” In addition, support for GraphQL and an expanded rich text editing experience is coming up. The company also recently launched a new editing experience.

Firefly, a startup that allows rideshare drivers to make money through digital advertising, is officially launching today. It’s also announced that it has raised $21.5 million in seed funding.

The idea of sticking advertising on a cab isn’t new, but Firefly offers drivers what it calls a “digital smart screen,” allowing advertisers to run targeted, geofenced campaigns. The company has apparently run more than 50 ad campaigns already, during a beta testing period in San Francisco and Los Angeles, with hundreds of cars on the road.

“Being the first at building out the IP is going to be the main differentiator,” said co-founder and CEO Kaan Gunay. “Over half our team are engineers, and we have been extremely focused on developing core IP to make sure it’s scalable.”

In addition, Gunay said that thanks to the combination of Firefly’s targeting capabilities with its “strict” advertising policies (it won’t accept ads for strip clubs, tobacco and cannabis companies, among others), “We’re working with a lot of advertisers who might not even have advertised outdoors before. We believe we are expanding the market.”

One of the main goals is to allow drivers for Uber, Lyft and other ride-hailing services to make more money. In fact, Firefly says the average driver in its network makes an additional $300 per month.

Gunay explained that if the driver meets a certain threshold for hours on the road, the company will pay them a flat fee to carry its advertising — but he also said the company is exploring different ways to “maximize the revenue that we share with the drivers and give the maximum benefit to the drivers.”

It’s an issue on regulators’ minds as well, with New York recently approving new rules around driver compensation.

Earlier this year, Uber partnered with a startup called Cargo to allow drivers to make additional income by selling goods like gum, snacks and phone chargers. Firefly doesn’t have an official relationship with the ride-hailing companies, but Gunay said, “In our conversations with these large companies … they’ve said the drivers are free to do what they want to do. This is why it’s a win for everyone.”

Gunay also said these displays will become the foundation for a “smart city data network.” In other words, they will collect data that Firefly plans to share with local governments and nonprofit groups. For example, he said the company has already been sharing air quality data with the Coalition for Clean Air, and it’s also looking to include temperature sensors and accelerometers.

Apparently Gunay doesn’t plan to make money from this side of the business. He told me, “We want to be able to add value to how cities operate … We’re not planning to monetize that.”

Getting back to the funding, $21.5 million is a huge seed round, but Gunay said the company’s success thus far was able to”justify a larger raise and a higher valuation.” The round was led by NFX with participation from Pelion Venture Partners, Decent Capital (founded by Tencent’s Jason Zeng) and Jeffrey Housenbold of SoftBank Vision Fund (yes, that SoftBank Vision Fund).

Vive la France — that was the dominant message of the day during a tour of the French tech ecosystem. But is it time to invest in French startups?

Around 40 partners of venture capital firms, as well as limited partners, came to Paris to talk about tech in France, from Andreessen Horowitz to Greylock Partners, Khosla Ventures and more. The two-day roadshow took place at Station F, the Vision Institute, iBionext and the Elysée Palace.

I grew up in France and it always surprises me that the same clichés come up again and again. When Symphony founder and CEO David Gurle answered questions about what it’s like to build an engineering team in France, it could have been easy to predict the questions — labor law is not flexible enough, French people are lazy, they go on strike all the time…

According to Gurle, who is great at storytelling, Symphony has been looking at around 15 countries for their next office. They first selected Singapore but couldn’t put a team together.

“We went to the board and said the next step is to invest in France,” Gurle said. At first, the board was really reluctant, citing the same concerns.

Chairman of Business France and Ambassador for International Investments Pascal Cagni has been dealing with those concerns for years. For instance, when it comes to labor law, he says the regulatory framework is now predictable and limited — unlike in the U.K. or Germany, for instance. You can fire people whenever you want. It means that you’ll have to pay a severance package, but everything is laid out.

Silicon Valley is overheating right now. It’s become increasingly expensive and challenging to build a company — the tech industry is getting bigger and the biggest tech companies now dominate the talent market. That’s also part of the reason why Silicon Valley veterans are looking outside of their comfort zone.

Speeding things up

The question wasn’t about whether startups in France are a thing or not. The tone of the conversation was about pace and intensity. Is it time to invest now or should we wait?

“We’ve noticed that we started investing more in European startups without even thinking about it — not just French startups, but all over Europe,” Battery Ventures General Partner Chelsea Stoner told me.

Depending on the study, France and the U.K. are battling to be the first European country when it comes to the number of VC deals and the total amount of money raised.

But even more important than hard facts, the momentum has been pretty stunning. A few years ago, I could cover every single deal over $1 million. Now there are so many startups valued at hundreds of millions of dollars that it’s hard to keep track of all funding rounds above $20 or $30 million.

France has some of the best engineering schools in the world. And now, most students want to work for a startup. So if France has a lot of capital and a big pool of talent, what’s missing? Should French startups get more support from the French government?

“Five or six years ago, I would have said keep the government as far away as possible and I was wrong,” former Cisco CEO John Chambers told me. Chambers is now ambassador for La French Tech and doesn’t invest in French startups in order to avoid conflicts of interest. “When I said three and a half years ago that France would be the tech leader in Europe, nobody believed that — and it’s happening,” he said.

OpenClassrooms co-founder and CEO Pierre Dubuc said during a panel that one piece of regulation that has helped his startup quite a lot is the French Tech Visa. Thanks to this program, the company can get visas for future employees in just a matter of weeks.

Chambers says that it works both ways. American employees apply to the French Tech Visa, work for French startups for a while and then come back to the U.S. It moves the needle when it comes to changing mindsets in the U.S.

The French tech ecosystem also needs time. While there are a ton of good engineers, multiple people told me sales people and marketing talent are nowhere near the level of American tech companies.

Some employees will need to go through 3 or 4 different companies and experience many different situations to become better. At this point, they can reinvest their knowledge into startups.

Big, late-stage VC funds can also help speed things up. “Many people misunderstand the value of venture capital,” Chambers told me. Well-established funds have strong processes and know how to hire top management. That’s why bringing those VCs and LPs to Paris could help change things.

Macron’s macroeconomics

Without turning this article into a political piece, it’s hard to talk about foreign investors coming to Paris without mentioning the yellow vests movement.

LVMH Chief Digital Officer Ian Rogers had a nuanced take on the changes in the tech ecosystem. “It’s clear that they are [changing the mindset] and it’s clear that there’s opposition,” he said. “This is an exciting moment, it’s also probably a bubble. Let’s see what’s on the other side.”

In other words, tech can be a destructive industry. Nobody wanted to state that so directly, but everybody had that in mind.

Ron Conway even told me that Airbnb could be the solution to address inequalities. “This whole yellow coats issue, that’s about income inequality,” he told me. There are 500,000 hosts in France generating $3 billion in revenue — and there should be more according to him. But I don’t think startups can solve everything, unfortunately.

“There are going to be a few setbacks along the way and we’re seeing that with the social movement, but we shouldn’t lose the end goal,” Chambers told me.

Of course, seeing France implode is in no one’s interest. VC firms are also looking at different opportunities because Donald Trump and Brexit make the future unpredictable.

But it’s unclear if minimizing social movements is wishful thinking or long-term thinking.

Moving as a group

What was interesting about today’s visit is that some people are already investing quite a lot in French startups while others are completely new to the French tech ecosystem. When you hear Tony Fadell say that he’s invested in French startups with Xavier Niel for a few years, it creates a fear of missing out.

“You see how the valley goes, it moves as a group,” Chambers told me.

Bringing dozens of investors to Paris created some form of emulation. Nobody wants to be the first one to invest in something new, but nobody wants to be the last one, either.

List of investors:

+ 17 limited partners

First, background checks at startups, then Huawei’s finance chief is arrested, SoftBank’s IPO is subscribed and I am about to record our next edition of TechCrunch Equity. It’s Thursday, December 6, 2018.

TechCrunch is experimenting with new content forms. This is a rough draft of something new — provide your feedback directly to the author (Danny at This email address is being protected from spambots. You need JavaScript enabled to view it.) if you like or hate something here.

The dilemma of continuous background checks

My colleague John Biggs covered the Series A round for Israel-based Intelligo, a startup that provides “Ongoing Monitoring” — essentially a continuous background check that can detect if (when?) an employee has suddenly become a criminal or other deviant. That’s a slight pivot from the company’s previous focus of using AI/ML to conduct background checks more efficiently.

Background checks are a huge business. San Francisco-based Checkr, perhaps the most well-known startup in the space, has raised $149 million according to Crunchbase, driven early on by the need to on-board thousands of contingent workers at companies like Uber. Checkr launched what it calls “Continuous Check,” which also actively monitors all employees for potential problems, back in July.

Now consider a piece written a few weeks ago by Olivia Carville at Bloomberg that explored the rise of “algorithmic auditors” that actively monitor employee expenses and flags ones it feels are likely to be fraudulent:

U.S. companies, fearing damage to their reputations, are loath to acknowledge publicly how much money they lose each year on fraudulent expenses. But in a report released in April, the Association of Certified Fraud Examiners said it had analyzed 2,700 fraud cases from January 2016 to October 2017 that resulted in losses of $7 billion.

Here’s a question that bugs me though: We have continuous criminal monitoring and expense monitoring. Most corporations monitor web traffic and email/Slack/communications. Everything we do at work is poked and prodded to make sure it meets “policy.”

And yet, we see vituperative attacks on China’s social credit system, which …. monitors criminal records, looks for financial frauds and sanctions people based on their scores. How long will we have to wait before employers give us “good employee behavior” scores and attach it to our profiles in Slack?

The conundrum, of course, is that no startup or company wants (or can avoid) background checks. And it probably makes sense to continually monitor your employees for changes and fraud. If Bob murders someone over the weekend, it’s probably good to know that when you meet Bob at Monday’s standup meeting.

But let’s not pretend that this continuous monitoring isn’t ruinous to something else required from employees: trust. The more heavily monitored every single activity is in the workplace, the more that employees feel that if the system allows them to get away with something, it must be approved. Without any checks, you rely on trust. With hundreds of checks, policy is essentially etched into action — if I can do it, it must meet policy.

In China, where social trust is extremely low, it likely makes sense to have some sort of scoring mechanism to substitute. But for startups and tech companies, building a culture of trust — of doing the right thing even when not monitored — seems crucial to me for success. So before signing up for one of these continuous services, I’d do a double take and consider the potentially deleterious consequences.

If I was a startup employee, I would think twice (maybe thrice?) before traveling to China

Last weekend, Trump and Xi agreed to delay the implementation of tariffs on Chinese goods, which led to buoyant Chinese (tech) stocks Monday in Asia time zones. I wrote about how that doesn’t make any sense, since delaying tariffs doesn’t do anything to solve the structural issues in the US/China conflict:

To me the market is deeply misjudging not only the Chinese economy, but also the American leadership as well.

And specifically, I wrote about constraints on Huawei and ZTE:

In what world do these prohibitions disappear? The U.S. national security agencies aren’t going to allow Huawei and ZTE to deploy their equipment in America. Like ever. Quite frankly, if the choice was getting rid of all of China’s non-tariff barriers and allowing Huawei back into America, I think the U.S. negotiators would walk out.

So it was nice to learn (for me, not for her) that the head of finance of Huawei was arrested last night in Canada at the United States’ request. From my colleague Kate Clark:

Meng Wanzhou, the chief financial officer of Huawei, the world’s largest telecom equipment manufacturer and second-largest smartphone maker, has been arrested in Vancouver, Canada on suspicion she violated U.S. trade sanctions against Iran, as first reported by The Globe and Mail.

Huawei confirmed the news with TechCrunch, adding that Meng, the daughter of Huawei founder Ren Zhengfei, faces unspecified charges in the Eastern District of New York, where she had transferred flights on her way to Canada.

If you wanted to know how the Trump administration was going to continue to fight the trade war outside of tariffs, you now have your answer. This is a bold move by the administration, targeting not just one of China’s most prominent tech companies, but the daughter of the founder of the company to boot.

China has since demanded her return.

Here is how this is going to play out. China is preventing the two American children of Liu Changming from leaving the country, essentially holding them hostage until their father returns to the mainland to face a criminal justice process related to an alleged fraud case. America now has a prominent daughter of a major Chinese company executive in their hands. That’s some nice tit-for-tat.

For startup founders and tech executives migrating between the two countries, I don’t think one has to literally worry about exit visas or extradition.

But, I do think the travel security operations centers at companies that regularly have employees moving between these countries need to keep very keen and cautious eyes on these developments. It’s entirely possible that these one-off “soft hostages” could flare to much higher numbers, making it much more complicated to conduct cross-border work.

Quick Bites

SoftBank’s IPO raises a lot of dollars

Takahiko Hyuga at Bloomberg reports that SoftBank has sold its entire book of shares for its whopping $23.5 billion IPO. The shares will officially price on Monday and then will trade on December 19. This is a critical and important win for Masayoshi Son, who needs the IPO of his telecom unit to deleverage some of the risk from SoftBank’s massive debt pile (and also to continue funding his startup dreams through Vision Fund, etc.).

SoftBank Vision Fund math, part 2

Arman and I talked yesterday about the complicated math behind just how many dollars are in SoftBank’s Vision Fund. More details, as Jason Rowley pointed out at Crunchbase News:

In an annual Form D disclosure filed with the Securities and Exchange Commission this morning, SBVF disclosed that it has raised a total of approximately $98.58 billion from 14 investors since the date of first sale on May 20, 2017. The annual filing from last year said there was roughly $93.15 billion raised from 8 investors, meaning that the Vision Fund has raised $5.43 billion in the past year and added six new investors to its limited partner base.

I said yesterday that the fund size should be “$97 billion or $96.7 billion with precision, assuming this $5 billion reaches a final close.” So let’s revise this number again to $99 billion or $98.6 billion with precision, since it seems the $5 billion did indeed close.

What’s next

I am still obsessing about next-gen semiconductors. If you have thoughts there, give me a ring: This email address is being protected from spambots. You need JavaScript enabled to view it..

Thoughts on articles

Hopefully more reading time tomorrow.

Reading docket

What I’m reading (or at least, trying to read)

Mark Redlus: The providers could range from a licensed clinical therapist to a social worker. Those providers will look at it and spend maybe two or three minutes. Typically, in a first intake visit...

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In its 3,000-square-foot warehouse in San Francisco’s Mission District, Farmstead founders Pradeep Elankumaran and Kevin Li, a pair of former Yahoo product managers, plot the future of grocery shopping.

“Think of us as if Whole Foods was rebuilt from scratch by tech founders,” Elankumaran, Farmstead’s chief executive officer, told TechCrunch. “Of course we do delivery because it’s 2018 and no one wants to go to the store anymore.”

Elankumaran launched San Francisco-based Farmstead in 2016 after Amazon and Instacart’s food delivery services repeatedly disappointed him. The startup leverages artificial intelligence-powered predictive analytics and machine learning to accurately predict supply and demand of its inventory, a move Elankumaran says has helped the company significantly reduce waste, as well as complete deliveries to Bay Area residents in less than an hour.

“I had a lot of trouble getting food delivered consistently,” he said. “My daughter had just turned two and she started drinking a lot of milk and I found myself going to the grocery store three to four times a week to buy the same things.”

“So I posted on Nextdoor asking if anyone was interested in a milk, eggs and bread delivery service and in two days, 200 people said yes.”

Two-plus years later, the company is today announcing an additional seed round of $2.2 million, bringing its total raised to date to $7.5 million. ARTIS Labs, Resolute Ventures and Red Dog Capital participated in the round, along with Y Combinator . Farmstead completed the Silicon Valley accelerator program in 2016 shortly before its initial launch, similar to Instacart, which graduated from Y Combinator in 2012. Elankumaran said the company plans to use the capital to hire aggressively and expand beyond the Bay Area in 2019. 

Farmstead’s business may sound a lot like Instacart, a very well-funded grocery delivery service worth an astounding $7.6 billion, but the startup says the differences are notable. Instacart is a tech layer on top of a supermarket that provides delivery, whereas Farmstead is the supermarket and the delivery service. Elankumaran says this — storing groceries in large, centralized warehouses and making the deliveries — is a highly scalable model destined to defeat Instacart.

Resolute Ventures general partner Mike Hirshland said in a statement that Farmstead could “become a monster company.”

“To replace a trip to the grocery store, so many things have to go right, from ordering the right inventory to last-mile delivery. Farmstead has cracked the code on making grocery delivery profitable and rapidly scalable,” he said.

The company has also recently partnered with Udelv, an autonomous vehicle startup, to make deliveries via the company’s modified GEM eL XD electric trucks.

According to a Energias Market Research report, the global ride-sharing market is estimated to grow 16% annually over the next few years to become a $148.7 billion industry by 2024 driven by the...

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