The Stanford connections behind Latin America’s multi-billion dollar startup renaissance

The houses along the tree-lined blocks of Josina Avenue in Palo Alto, with their big back yards, swimming pools and driveways are about as far removed from the snarls of traffic, sputtering diesel engines, and smoggy air of South America’s major metropolises as one can get.

But it was in one of those houses, about a twelve-minute bicycle ride from Stanford University, that the seed was planted for what has become a renaissance in technology entrepreneurship in Latin America.

Back in 2010, when Adeyemi Ajao, Carlo Dapuzzo, and Juan de Antonio were students at Stanford’s Graduate School of Business they could not predict that they would be counted among the vanguard of investors and entrepreneurs transforming Latin America’s startup economy.

At the time, Ajao was negotiating the sale of his first business, the Spanish social networking company, Tuenti, to Telefonica (in what would be a $100 million exit). Carlo Dapuzzo was in Palo Alto taking a break from his job at Monashees, which at that time was a small, early-stage investment fund based in Brazil focused on investing in Latin America. Juan de Antonio had left a job as a consultant at BCG to attend Stanford’s business school on a Fulbright scholarship.

In just two years, Ajao would be a founding investor in de Antonio’s ride-hailing business, Cabify, focused on Latin America and Europe; and Dapuzzo would be seeding the ride-hailing service 99Taxis. Today, Cabify is worth over $1 billion and has focused its business primarily on Latin America while 99 was sold to the Chinese ride-hailing company Didi for $1 billion — making it one of the largest deals in Latin America’s young startup history.

The three men are now at the center of a vast web of startups whose intersection can, in many cases, be traced back to the house on Josina Avenue where Dapuzzo and de Antonio lived and where Ajao spent much of his free time.

“It’s the same dynamics as the PayPal Mafia,” says Ajao. “The new unicorn batches which started in Colombia, Mexico, and Brazil. Although they’re all trans-national, they all know each other and literally they are all friends and all co-investors in each other’s companies and they all have links to Silicon Valley… and… more importantly… to Stanford.”

Carlo Dapuzzo, Adeyemi Ajao, and Juan de Antonio at Stanford University

Stalled Economic Engines

If Ajao’s enthusiasm sounds familiar, that’s because it is. There was another wave of interest in Latin America that started surging nearly a decade ago, but crashed nearly five years into what was supposed to be the time of the region’s explosive growth in the global scene.

Back in 2008, as the U.S. was sliding into recession, global economists cast about for countries whose economic might could potentially provide some antidote to the toxic assets that were poisoning the global financial system in America and Western Europe. It was then that the concept coined by a Goldman Sachs economist back in 2001 (in the aftermath of another financial shock) baked Brazil, Russia, India and China into a BRIC — a group of nations that, as a bloc, could create enough growth to keep the global economy moving upwards.

All of them were growing at a rapid clip, albeit at different speeds and from different starting trajectories. But they were still all humming. Investment — from large financial institutions, private equity and venture capital firms — all began flowing into the four countries.

In Brazil and across Latin America, companies from the U.S. began to cast their eyes South for growth. That’s when Groupon began to make inroads into the region. When Groupon acquired the Chilean company ClanDescuento, it served as a starting gun for activity across multiple geographies.

Two years after that acquisition by Groupon, Redpoint’s Brazilian investment vehicle, Redpoint eVentures was able to close on a $130 million fund for Brazilian and Latin American investments in just under four months. While Brazil held the bulk of the capital, many of the largest startup companies were being launched out of Buenos Aires in Argentina.

Globant, Despegar, MercadoLibre, and OLX were all lucrative deals for the investors who made them. Today, they remain solid companies, but they didn’t create the ecosystem that both local investors and entrepreneurs were hoping for. Brazil’s Peixe Urbano was also a rising star at the time, but it too wound up selling, in its case to Chinese internet Baidu. Indeed, the Peixe Urbano funding gave investors like Benchmark’s Matt Cohler their first exposure to the region.

A 2012 default on Argentinian debt derailed the economy and Brazil’s economy began seizing up at around the same time. Then, in 2014, Brazil was hit by both an economic and political collapse that shook the country’s stability and ushered in a two-year-long recession.

Ultimately, the Brazilian component of the BRIC miracle, that would have potentially ushered in a brighter future for the broader region, didn’t materialize.

The next starting gun

Ajao began investing in Latin America as an angel investor during the beginnings of the downturn in Brazil and when Argentina was also seizing up. It’s also when Dapuzzo made the initial bet on 99Taxis — bringing Ajao in as an investor — and Cabify launched, eventually bringing its service to Mexico and seeing huge growth in the Latin American market.

500 Startups expanded to Mexico around the same period, in what turned out to be a prescient move. Because even as the broader economies were slowing, technology adoption — fueled by rising smartphone sales and new internet-enabled mobile services — was speeding up.

Groupon’s push into the region taught a new consumer market about the pleasures of venture-backed e-commerce, but it was ride-hailing that truly paved the way for Latin America’s future success. Many factors played a role, from the rise of smartphones to the stabilization and growth of economies in the region outside of Argentina and Brazil and the return of a generation of founders who gained exposure and experience in Silicon Valley.

Here again, the house on Josina Street and the friends that were made over the course of the two-year grad school program at Stanford would play a critical role.

“99 was the second start and this new generation of founders,” said one investor with a deep knowledge of the region.

A taxi driver uses the 99 taxi app for smartphones in Sao Paulo, Brazil, on October 11, 2018. (Photo via Nelson Almeida/AFP/Getty Images)

A herd of unicorns

Ajao also sees 99 as ground zero for the network that has spawned a unicorn stampede in Latin America. It’s a group of companies that covers everything from financial services, mobility and logistics, food delivery and even pet care.

In some ways it’s an extension and culmination of the American on-demand thesis, with allowances for the unique characteristics of the region’s varied economies and cultural experience, investors and entrepreneurs said.

“In my mind 99 had a lot to do with what is happening right now with the current PayPal mafia [of Latin America] because they became the first big new exit on the continent,” Ajao says.

Entrepreneurs from 99 spun out to form Yellow, a dockless scooter and bike-sharing company that was initially backed by Monashees, Grishin Robotics and Base10 Ventures — the venture firm that Ajao co-founded and which closed a $137 million venture fund just nine months ago.

Monashees and Base10 also co-invested in Grin, a Mexico City-based dockless scooter company. Together the two companies managed to raise over $100 million before merging into one company earlier this. That deal ultimately provided a challenger to the automotive-based ride-sharing businesses that were beginning to encroach on the scooter business.

The growth of 99Taxis and the rise of startups in Latin America ultimately convinced David Velez, a former venture investor with Sequoia Capital to return to Brazil and try his hand at entrepreneurship as well. A year behind Ajao, de Antonio and Dapuzzo at Stanford, Velez was also friendly with the group.

Velez worked at Sequoia Capital and saw the opportunity that Latin America presented as an investment environment. After starting Sequoia Capital Latin America he transitioned into an entrepreneurial role and became the co-founder of Nubank, which would be Sequoia’s first Latin America investment. Now a $4 billion financial technology powerhouse, the Nubank deal was yet another proof point that the Latin American market had come of age — and another branch on a tree that has its roots in Stanford’s business school and the Silicon Valley venture community.

The final piece of this intersecting web of investments and relationships is Rappi — the Colombian delivery service business that was also backed by Monazhees and Base10. The first company from Latin America to enter YCombinator and the first investment from the new Silicon Valley power player, Andreessen Horowitz, Rappi epitomizes the new generation of Latin American startups.

“The way we think about this part of the world is as a massive market with 700 million people living on the continent and really dense cities,” says Rappi co-founder and president, Sebastian Mejia. “And it’s a region where the tech stack hasn’t been built, which gives you an opportunity to solve problems and create digital champions that look more similar to China than the U.S.”

Mejia epitomizes what Ajao calls a new breed of startup entrepreneur that doesn’t necessarily look to other markets for inspiration or business models, but solves local problems for a local customer, rather than a global one.

“Being local was more of a competitive advantage than a disadvantage and we can solve problems in a better way than a Silicon Valley company or a Chinese company could,” says Mejia. “What we’re starting to see now is that those changes in perspective allow us to build bigger companies.”

In all, Monashees and Base10 have invested in companies operating in Latin America that have a combined valuation of over $6 billion between them. Through the extended network of Stanford connections and the startups that Velez has brought to the table that number is higher than $10 billion.

A bicycle courier working for Colombian online delivery company “Rappi”, rides his bike in Bogota, on October 11, 2018. (Photo via John Vizcaino/AFP/Getty Images)

The next $10 billion

If the Latin American market was once overlooked by venture investors like Sequoia Capital, Andreessen Horowitz, Benchmark or Accel, that’s certainly no longer the case.

Funds are pouring into the region at an unprecedented clip, driven by SoftBank and its interest on the continent following its commitment to launching a new $2 billion fund in the region and its subsequent $1 billion investment in Rappi.

“Latin America is on the cusp of becoming one of the most important economic regions in the world, and we anticipate significant growth in the decades ahead,” said Masayoshi Son, chairman and CEO of SBG, in a statement when SoftBank launched its fund.

“SBG plans to invest in entrepreneurs throughout Latin America and use technology to help address the challenges faced by many emerging economies with the goal of improving the lives of millions of Latin Americans,” he added.

Son is likely thinking about the 375 million internet users in Latin America and the 250 million smartphone users across the region. It’s also worth noting that retail e-commerce has been a huge driver of economic growth despite other economic obstacles. The region’s e-commerce has grown to $54 billion in 2018 up from $29.8 billion in 2015.

Even more critically, there are some key areas where innovation and new services are still sorely needed. Access to transportation isn’t great for the roughly 79% of the 700 million people across South America who live in cities. Then there are 400 million people across Latin America who are either unbanked or underbanked. Healthcare is another area where a lack of investment to date could create potential opportunities for new startups.

More generally, poor infrastructure remains a significant problem that companies like Rappi and another SoftBank investment, Loggi, are looking to make inroads into.

“Latin America was for many years, underinvested,” says de Antonio, whose Cabify business has managed to score a valuation of over $1 billion largely based on the opportunities ahead of it in the Latin American market. “You will see a bit more money to catch up. The market is big… and potentially huge… I’m a big believer that it’s a good moment now to invest.”

For de Antonio, Cabify, Rappi, and other startups are only now hitting their stride. In the future, they stand to enable a host of other opportunities, he believes.

“The entrepreneurial mindset is really ingrained in Latin America… the difference is maybe there wasn’t an ecosystem to help these ideas to scale.. .there are huge fortunes in the region but they typically… they have a lot of their assets invested in the region… but they need to diversify,” said de Antonio. “Until recently there hasn’t been an active funding market for all of these startups.”

For de Antonio and Ajao, one of the critical lessons that they learned from their time at Stanford and being exposed to the broader Silicon Valley ecosystem was the notion of collaboration.

“This is something we learned from San Francisco,” de Antonio said. “The way companies help each other is something that we haven’t seen people do before. And usually when you are a young company this can be the difference between being successful or a failure.

Amazon launches physical kiosks in UK train stations, a local extension of its Treasure Trucks

After announcing a year-long pilot of pop-up shops in the UK earlier this week to sell items from smaller marketplace merchants, Amazon has added another development to its brick-and-mortar efforts in the country. Starting today, the company is setting up physical kiosks, initially in train stations, to sell passers-by a rotating range of items at discounted prices.

The first of these will be in London, where Amazon is situating them in rail stations — Charing Cross, King’s Cross, Paddington, Liverpool Street and my local station London Bridge — and will start off by selling Boodles Mulberry Gin for £14.99 a bottle (a 40% discount on the normal price, Amazon notes).

The kiosks, Amazon says, are an extension of the company’s Treasure Truck concept, which sees a large vehicle doing the rounds across various towns — currently London, Manchester, Liverpool, Sheffield, Leeds, York, Birmingham, Coventry, Portsmouth, Southampton, Nottingham, Leicester, Windsor, Maidenhead, Reading and Slough (for US readers: the original site of The Office) — offering a rotating selection of items at discounted prices. These have been operating in the UK for a couple of years now.

With Treasure Truck in the UK, you sign up for the service (by texting “truck” to 87377) and Amazon texts you to let you know when the truck is coming your way. Users can pre-order and pay for items to collect them from the truck. It looks like the same format will apply to the kiosks, which will also become pick-up points. To incentivise more signups, Amazon said that new users will get an additional introductory discount of £5 per bottle.

Kiosks are a practical adaptation of the Treasure Truck concept for Amazon: as with other cities in Europe, the locations Amazon visits in the UK have narrow streets sometimes clogged with traffic and generally not designed for speedy arrivals of giant vehicles, and the population is more dense.

Also, situating kiosks in rail stations to catch people during their commutes means more may buy knowing they are on their way home or to an office so will not have to carry items around all day.

“Kiosks are a natural extension of the exciting shopping experience of Amazon’s Treasure Truck. Whether you’re on the way to work or heading home for the day, Amazon customers and passersby will have a fun and convenient way to shop for an amazing deal, get their hands on a trending product or take part in a fun event. Kiosks will help turn an ordinary day into something a bit more special,” said Suruchi Saxena Bansal, Country Leader, Amazon Treasure Truck, in a statement.

More generally, Amazon has been slowly increasing the different channels that it uses to connect with potential customers beyond its basic website and mobile app.

This is because “omnichannel” is the order of the day in commerce: in markets that are especially competitive and mature, we’ve seen a big shift among retailers to cater to a wider variety of audiences and sell to them in whichever channel where they are spending time and discovering things.

That’s included selling on social media (Instagram for one is making a big push with this), through email (see: Mailchimp’s efforts here), and of course doing things the old-fashioned way, by selling in person (something that efforts from the likes of Square and PayPal have also helped to grow).

That in-person experience is something that Amazon — born in the virtual world of cyberspace — has been doubling down on for years to reach a wider set of shoppers.

Its efforts have included bookstores near college campuses, cashier-free Amazon Go stores, the whopping acquisition of Whole Foods, and — as of earlier this week — setting up pop-up shops.

The latter are particularly ironic, given that the Amazon name is regularly invoked when people discuss how brick-and-mortar shops — and in the UK, “high street” shopping precincts — have died a death.

A year ago, there was a rumor that Amazon was negotiating in the UK to acquire a selection of large retail locations that were being vacated by the bankrupt hardware and DIY chain Homebase.

These sprawling locations, situated often in town outskirts among other large stores with huge parking lots, are a far cry from little kiosks in crowded train stations. And indeed, the Homebase deal, if it was every really on the cards, never came to pass.

But the report and Amazon’s wider track record are sure signs that the commerce is only going to get more physical, not less. It’s not a question of “if”, but rather of how and when.

Getsafe, the German insurance app, scores $17M Series A

Getsafe, the German insurance startup targeting millennials, has raised $17 million (€15m) in a Series A funding.

The round is led by Earlybird, with CommerzVentures and other existing investors also participating, while the capital will be used for European expansion. Notably, the company plans to launch in the U.K. by the end of the year.

Founded in May 2015 by Christian Wiens (CEO) and Marius Blaesing (CTO), Getsafe initially launched as a digital insurance broker but has since pivoted to a direct to digital consumer insurance offering of its own (its brokerage business was sold to Verivox).

The startup claims it is the market leader in the digital-first 20 to 35-year-old segment, with 60,000 customers, although competitors such as Wefox’s One may disagree.

Getsafe customers can take out renters insurance and liability insurance. The latter includes bike and drone coverage, with additional products to be added soon.

More broadly, Getsafe says it is “reinventing insurance”. The insurtech startup, based in Heidelberg, says its tech uses AI to help customers identify the insurance protection they might need. “With a few clicks, customers can learn about, buy, and manage insurance on their smartphone,” says the company. Claims can be done entirely digitally, too, via the Getsafe app and chatbot.

As part of the investment, Getsafe plans to grow its team from the current 50 employees to more than 100. The recruitment drive will span customer care, software development and data science. The startup also plans to raise further funds over next twelve months.

Google appeals $1.7BN EU AdSense antitrust fine

Like clockwork, Google has filed a legal appeal against the €1.49 billion ($1.7BN) antitrust penalty the European Commission slapped on its search ad brokering business three months ago.

The Telegraph reported late yesterday that the appeal had been lodged in the General Court of the European Union in Brussels.

A Google spokesperson confirmed the appeal has been filed but declined to comment further.

Reached for comment, a Commission spokesperson told us: “The Commission will defend its decision in Court.”

The AdSense antitrust decision is the third fine for Google under the Commission’s current antitrust chief, Margrethe Vestager — who also issued a $5BN penalty for anti-competitive behaviors attached to Android last summer; following a $2.7BN fine for Google Shopping antitrust violations, in mid 2017.

Google is appealing both earlier penalties but has also made changes to how it operates Google Shopping and Android in Europe in the meanwhile, to avoid the risk of further punitive penalties.

In the case of AdSense, the Commission found that between 2006 and 2016 Google included restrictive clauses in its contracts with major sites that use its ad platform which Vestager said could only be seen as intending to keep rivals out of the market.

Restrictions had included exclusivity provisions and premium ad placement requirements that gave Google’s ads priority and plumb positioning on “the most visible and most profitable parts of the page”. Another illegal clause put controls on how partner websites could display rival search ads.

The restrictions were only removed by Google when the Commission issued its formal statement of objections in 2016 — signalling the start of serious scrutiny.

As well as going on to fine Google €1.49BN for AdSense antitrust breaches, the Commission’s enforcement decision requires that Google does not include any other restriction “with an equivalent effect” in its contracts, as well as stipulating that it must not reinstate the earlier abusive clauses.

Mirakl Connect lets sellers list products on multiple e-commerce marketplaces

Mirakl is launching a new product called Mirakl Connect. As the name suggests, this central dashboard lets you control which marketplace you’re working with, and which seller you want to list on your marketplace.

Mirakl is a French startup that recently raised a $70 million funding round. The company works with e-commerce platforms so that they can add a marketplace of third-party sellers in addition to their own inventory.

Marketplaces are increasingly popular on e-commerce websites, and Mirakl powers the marketplaces for Darty, Office Depot, Best Buy in Canada, etc. The company also powers B2B marketplaces.

But now that marketplaces are booming, it becomes increasingly complicated for sellers to list their products on different marketplaces and reach as many clients as possible.

Thanks to Mirakl Connect, sellers can create a company profile and promote products on multiple marketplaces at once. On the other side, e-commerce platforms that are just starting can find third-party sellers more easily.

If you’re running a small e-commerce website, third-party sellers don’t want to waste time and efforts to list products if it doesn’t lead to a lot of sales. By minimizing efforts, it should boost smaller marketplaces.

Sellers and marketplace owners can discuss together on Mirakl Connect with a built-in chat feature. Yes, Mirakl Connect sounds a bit like a marketplace of marketplaces — double marketplaces all the way.

Monzo, the U.K. challenger bank, now lets you pay ‘Nearby Friends’

Monzo, one of a plethora of U.K. fintech startups aiming to re-invent current account banking, has launched a new feature that makes it even more frictionless to transfer money to friends. Dubbed ‘Nearby Friends’, the new geolocation functionality uses Bluetooth to let you see anyone else that uses Monzo who is nearby so that you can initiate a payment without needing their phone number to be in your contact book first.

One of the ways Monzo has increased its virality from the get-go is by making friend-to-friend payments easy, either to people who already bank with the startup, or via the Monzo.me service, which gives users a payment link to share with friends. The idea, as Monzo co-founder often explains, is that unlike traditional incumbent banks that basically have zero network effects (perhaps beyond joint accounts), the challenger bank is designed to become more useful the more people who join it.

Revolut has a similar feature called 'Near Me'

Revolut has a similar feature called ‘Near Me’

“Thanks to the magic of Bluetooth, you can see anyone else that uses Monzo nearby. To protect people’s privacy, you’ll only find people who also have the feature open at the same time. With just a couple of taps, you can send people money, without the need to swap numbers or do any other admin,” writes Andy Smart, iOS Platform Lead at Monzo, on the company’s blog.

Under the hood, Monzo’s ‘Nearby Friends’ uses Google Nearby, Google’s peer-to-peer networking API that allows apps to “easily discover, connect to, and exchange data with nearby devices in real-time, regardless of network connectivity”. Specifically, here is how Monzo says its implementation works:

  1. When you open Nearby Friends, we send an anonymous token (a random string of text) to Google
  2. That token is broadcast via Bluetooth to devices nearby
  3. At the same time, your Monzo app starts searching for other devices near you
  4. When your Monzo app discovers a device nearby, it receives the device’s token. Using the Monzo API, it exchanges that token for your friend’s name and profile picture
  5. We also receive an identifier which we can use to work out who to make the payment to

The token does not identify you personally outside of Monzo’s systems, which means we don’t share any of your personal information with third parties during the process. The token we send to Google expires after a short period of time, meaning your personal data is unidentifiable.

Meanwhile, competitor Revolut recently — and relatively quietly by its standards — rolled out a very similar feature, as it is wont to do. Called ‘Near Me’, I understand it will be formally unannounced in a company blog post as soon as tomorrow and is another clear sign of how fast the $1.7B valued banking startup is moving.

Google is banning Irish abortion referendum ads ahead of vote

Google is suspending adverts related to a referendum in Ireland on whether or not to overturn a constitutional clause banning abortion. The vote is due to take place in a little over two weeks time.

“Following our update around election integrity efforts globally, we have decided to pause all ads related to the Irish referendum on the eighth amendment,” a Google spokesperson told us.

The spokesperson said enforcement of the policy — which will cover referendum adverts that appear alongside Google search results and on its video sharing platform YouTube — will begin in the next 24 hours, with the pause remaining in effect through the referendum, with the vote due to take place on May 25.

The move follows an announcement by Facebook yesterday saying it had stopped accepting referendum related ads paid for by foreign entities. However Google is going further and pausing all ads targeting the vote.

Given the sensitivity of the issue a blanket ban is likely the least controversial option for the company, as well as also the simplest to implement — whereas Facebook has said it has been liaising with local groups for some time, and has created a dedicated channel where ads that might be breaking its ban on foreign buyers can be reported by the groups, generating reports that Facebook will need to review and act on quickly.

Given how close the vote now is both tech giants have been accused of acting too late to prevent foreign interests from using their platforms to exploit a loophole in Irish law to get around a ban on foreign donations to political campaigns by pouring money into unregulated digital advertising instead.

Speaking to the Guardian, a technology spokesperson for Ireland’s opposition party Fianna Fáil, described Google’s decision to ban the adverts as “too late in the day”.

“Fake news has already had a corrosive impact on the referendum debate on social media,” James Lawless TD told it, adding that the referendum campaign had made it clear Ireland needs legislation to restrict the activities of Internet companies’ ad products “in the same way that steps were taken in the past to regulate political advertising on traditional forms of print and broadcast media”.

We’ve asked Google why it’s only taken the decision to suspend referendum ad buys now, and why it did not act months earlier — given the Irish government announced its intention to hold a 2018 referendum on repealing the Eighth Amendment in mid 2017 — and will update this post with any response.

In a public policy blog post earlier this month, the company’s policy SVP Kent Walker talked up the steps the company is taking to (as he put it) “support… election integrity through greater advertising transparency”, saying it’s rolling out new policies for U.S. election ads across its platforms, including requiring additional verification for election ad buyers, such as confirmation that an advertiser is a U.S. citizen or lawful permanent resident.

However this U.S.-first focus leaves other regions vulnerable to election fiddlers — hence Google deciding to suspend ad buys around the Irish vote, albeit tardily.

The company has also previously said it will implement a system of disclosures for ad buyers to make it clear to users who paid for the ad, and that it will be publishing a Transparency Report this summer breaking out election ad purchases. It also says it’s building a searchable library for election ads.

Although it’s not clear when any of these features will be rolled out across all regions where Google ads are served.

Facebook has also announced a raft of similar transparency steps related to political ads in recent years — responding to political pressure and scrutiny following revelations about the extent of Kremlin-backed online disinformation campaigns that had targeted the 2016 US presidential election.

Brexit data transfer gaps a risk for UK startups, MPs told

The uncertainty facing digital businesses as a result of Brexit was front and center during a committee session in the UK parliament today, with experts including the UK’s information commissioner responding to MPs’ questions about how and even whether data will continue to flow between the UK and the European Union once the country has departed the bloc — in just under a year’s time, per the current schedule.

The risks for UK startups vs tech giants were also flagged, with concerns voiced that larger businesses are better placed to weather Brexit-based uncertainty thanks to greater resources at their disposal to plug data transfer gaps resulting from the political upheaval.

Information commissioner Elizabeth Denham emphasized the overriding importance of the UK data protection bill being passed. Though that’s really just the baby step where the Brexit negotiations are concerned.

Parliamentarians have another vote on the bill this afternoon, during its third reading, and the legislative timetable is tight, given that the pan-EU General Data Protection Act (GDPR) takes direct effect on May 25 — and many provisions in the UK bill are intended to bring domestic law into line with that regulation, and complete implementation ahead of the EU deadline.

Despite the UK referendum vote to pull the country out of the EU, the government has committed to complying with GDPR — which ministers hope will lay a strong foundation for it to secure a future agreement with the EU that allows data to continue flowing, as is critical for business. Although what exactly that future data regime might be remains to be seen — and various scenarios were discussed during today’s hearing — hence there’s further operational uncertainty for businesses in the years ahead.

“Getting the data policy right is of critical importance both on the commercial side but also on the security and law enforcement side,” said Denham. “We need data to continue to flow and if we’re not part of the unified framework in the EU then we have to make sure that we’re focused and we’re robust about putting in place measures to ensure that data continues to flow appropriately, that it’s safeguarded and also that there is business certainty in advance of our exit from the EU.

“Data underpins everything that we do and it’s critically important.”

Another witness to the committee, James Mullock, a partner at law firm Bird & Bird, warned that the Brexit-shaped threat to UK-EU data flows could result in a situation akin to what happened after the long-standing Safe Harbor arrangement between the EU and the US was struck down in 2015 — leaving thousands of companies scrambling to put in place alternative data transfer mechanisms.

“If we have anything like that it would be extremely disruptive,” warned Mullock. “And it will, I think, be extremely off-putting in terms of businesses looking at where they will headquarter themselves in Europe. And therefore the long term prospects of attracting businesses from many of the sectors that this country supports so well.”

“Essentially what you’re doing is you’re putting the burden on business to find a legal agreement or a legal mechanism to agree data protection standards on an overseas recipient so all UK businesses that receive data from Europe will be having to sign these agreements or put in place these mechanisms to receive data from the European Union which is obviously one of our very major senders of data to this country,” he added of the alternative legal mechanisms fall-back scenario.

Another witness, Giles Derrington, head of Brexit policy for UK technology advocacy organization, TechUK, explained how the collapse of Safe Harbor had saddled businesses with major amounts of bureaucracy — and went on to suggest that a similar scenario befalling the UK as a result of Brexit could put domestic startups at a big disadvantage vs tech giants.

“We had a member company who had to put in place two million Standard Contractual Clauses over the space of a month or so [after Safe Harbor was struck down],” he told the committee. “The amount of cost, time, effort that took was very, very significant. That’s for a very large company.

“The other side of this is the alternatives are highly exclusionary — or could be highly exclusionary to smaller businesses. If you look at India for example, who have been trying to get an adequacy agreement with the EU for about ten years, what you’ve actually found now is a gap between those large multinationals, who can put in place binding corporate rules, standard contractual clauses, have the kind of capital to be able to do that — and it gives them an access to the European market which frankly most smaller businesses don’t have from India.

“We obviously wouldn’t want to see that in a UK tech sector which is an awful lot of startups, scale-ups, and is a key part of the ecosystem which makes the UK a tech hub within Europe.”

Denham made a similar point. “Binding corporate rules… might work for multinational companies [as an alternative data transfer mechanism] that have the ability to invest in that process,” she noted. “Codes of conduct and certification are other transfer mechanisms that could be used but there are very few codes of practice and certification mechanisms in place at this time. So, although that could be a future transfer mechanism… we don’t have codes and certifications that have been approved by authorities at this time.”

“I think it would be easier for multinational companies and large companies, rather than small businesses and certainly microbusinesses, that make up the lion’s share of business in the UK, especially in tech,” she added of the fall-back scenarios.

Giving another example of the scale of the potential bureaucracy nightmare, Stephen Hurley, head of Brexit planning and policy for UK ISP British Telecom, told the committee it has more than 18,000 suppliers. “If we were to put in place Standard Contractual Clauses it would be a subset of those suppliers but we’d have to identify where the flows of data would be coming from — in particular from the EU to the UK — and put in place those contractual clauses,” he said.

“The other problem with the contractual clauses is they’re a set form, they’re a precedent form that the Commission issues. And again that isn’t necessarily designed to deal with the modern ways of doing business — the way flows of data occurs in practice. So it’s quite a cumbersome process. And… [there’s] uncertainty as well, given they are currently under challenge before the European courts, a lot of companies now are already doing a sort of ‘belt and braces’ where even if you rely on Privacy Shield you’ll also put in place an alternative transfer mechanism to allow you to have a fall back in case one gets temporarily removed.”

A better post-Brexit scenario than every UK business having to do the bureaucratic and legal leg-work themselves would be the UK government securing a new data flow arrangement with the EU. Not least because, as Hurley mentioned, Standard Contractual Clauses are subject to a legal challenge, with legal question marks now extended to Privacy Shield too.

But what shape any such future UK-EU data transfer arrangement could take remains tbc.

The panel of witnesses agreed that personal data flows would be very unlikely to be housed within any future trade treaty between the UK and the EU. Rather data would need to live within a separate treaty or bespoke agreement, if indeed such a deal can be achieved.

Another possibility is for the UK to receive an adequacy decision from the EC — such as the Commission has granted to other third countries (like the US). But there was consensus on the panel that some form of bespoke data arrangement would be a superior outcome — for legal reasons but also for reciprocity and more.

Mullock’s view is a treaty would be preferable as it would be at lesser risk of a legal challenge. “I’m saying a treaty is preferable to a decision but we should take what we can get,” he said. “But a treaty is the ultimate standard to aim for.”

Denham agreed, underlining how an adequacy decision would be much more limiting. “I would say that a bespoke agreement or a treaty is preferable because that implies mutual recognition of each of our data protection frameworks,” she said. “It contains obligations on both sides, it would contain dispute mechanisms. If we look at an adequacy decision by the Commission that is a one-way decision judging the standard of UK law and the framework of UK law to be adequate according to the Commission and according to the Council. So an agreement would be preferable but it would have to be a standalone treaty or a standalone agreement that’s about data — and not integrate it into a trade agreement because of the fundamental rights element of data protection.”

Such a bespoke arrangement could also offer a route for the UK to negotiate and retain some role for her office within EU data protection regulation after Brexit.

Because as it stands, with the UK set to exit the EU next year — and even if an adequacy decision was secured — the ICO will lose its seat at the table at a time when EU privacy laws are setting the new global standard, thanks to GDPR.

“Unless a role for the ICO was negotiated through a bespoke agreement or a treaty there’s no way in law at present that we could participate in the one-stop shop [element of GDPR, which allows for EU DPAs to co-ordinate regulatory actions] — which would bring huge advantages to both sides and also to British businesses,” said Denham.

“At this time when the GDPR is in its infancy, participating in shaping and interpreting the law I think is really important. And the group of regulators that sit around the table at the EU are the most influential blocs of regulators — and if we’re outside of that group and we’re an observer we’re not going to have the kind of effect that we need to have with big tech companies. Because that’s all going to be decided by that group of regulators.”

“The European Data Protection Board will set the weather when it comes to standards for artificial intelligence, for technologies, for regulating big tech. So we will be a less influential regulator, we will continue to regulate the law and protect UK citizens as we do now, but we won’t be at the leading edge of interpreting the GDPR — and we won’t be bringing British values to that table if we’re not at the table,” she added.

Hurley also made the point that if the ICO is not inside the GDPR one-stop shop mechanism then UK companies will have to choose another data protection agency within the EU to act as their lead regulator — describing this as “again another burden which we want to avoid”.

The panel was asked about opportunities for domestic divergence on elements of GDPR once the UK is outside the EU. But no one saw much advantage to be eked out outside a regulatory regime that is now responsible for the de facto global standard for data protection.

“GDPR is by no means perfect and there are a number of issues that we have with it. Having said that because GDPR has global reach it is now effectively being seen as we have to comply with this at an international level by a number of our largest members, who are rolling it out worldwide — not just Europe-wide — so the opportunities for divergence are quite limited,” said Derrington. “Particularly actually in areas like AI. AI requires massive amounts of data sets. So you can’t do that just from a UK only data-set of 60 million people if you took everyone. You need more data than that.

“If you were to use European data, which most of them would, then that will require you to comply with GDPR. So actually even if you could do things which would make it easier for some of the AI processes to happen by doing so you’d be closing off your access to the data-sets — and so most of the companies I’ve spoken to… see GDPR as that’s what we’re going to have to comply with. We’d much rather it be one rule… and to be able to maintain access to [EU] data-sets rather than just applying dual standards when they’re going to have to meet GDPR anyway.”

He also noted that about two-thirds of TechUK members are small and medium sized businesses, adding: “A small business working in AI still needs massive amounts of data.

“From a tech sector perspective, considering whether data protection sits in the public consciousness now, actually don’t see there being much opportunity to change GDPR. I don’t think that’s necessarily where the centre of gravity amongst the public is — if you look at the data protection bill, as it went through both houses, most of the amendments to the bill were to go further, to strengthen data protection. So actually we don’t necessarily see this is idea that we will significantly walk back GDPR. And bear in mind that any company which are doing any work with the EU would have to comply with GDPR anyway.”

The possibility for legal challenges to any future UK-EU data arrangement were also discussed during the hearing, with Denham saying that scrutiny of the UK’s surveillance regime once it is outside the EU is inevitable — though she suggested the government will be able to win over critics if it can fully articulate its oversight regime.

“Whether the UK proceeds with an adequacy assessment or whether we go down the road of looking at a bespoke agreement or a treaty we know, as we’ve seen with the Privacy Shield, that there will be scrutiny of our intelligence services and the collection, use and retention of data. So we can expect that,” she said, before arguing the UK has a “good story” to tell on that front — having recently reworked its domestic surveillance framework and included accepting the need to make amendments to the law following legal challenges.

“Accountability, transparency and oversight of our intelligence service needs to be explained and discussed to our [EU] colleagues but there is no doubt that it will come under scrutiny — and my office was part of the most recent assessment of the Privacy Shield. And looking at the US regime. So we’re well aware of the kind of questions that are going to be asked — including our arrangement with the Five Eyes, so we have to be ready for that,” she added.

Online mortgage broker Trussle raises £13.6M Series B

Trussle, the U.K. online mortgage broker that competes most directly with Atomico-backed Habito, has closed £13.6 million in Series B funding.

Notably, the round is led by Goldman Sachs Principal Strategic Investments — a division of Goldman Sachs — and Propel Venture Partners, a fund backed by European banking giant BBVA.

In addition, a number of other investors also participated including Finch Capital, which led Trussle’s Series A fund raise, and Seedcamp, which has backed the fintech startup from the get-go.

Launched in 2016, Trussle moves the entire mortgage process online, bringing with it much-needed transparency. One aspect to this — powered by the data it amassing and machine learning — is making it infinitely easier to ‘switch’ mortgage when a better deal or lower interest rate becomes available. The same technology-driven approach is used for those looking to find and apply for a new or first time mortgage.

In a brief call this morning, Trussle co-founder and CEO Ishaan Malhi told me that the new capital will be used to further scale up the company, noting that the Trussle team has grown from 14 to 70 people since its Series A in February 2017. A significant portion of these are in product development as the fintech startup moves from what Malhi describes as a transactional proposition — where customers use Trussle at the point of taking out a mortgage — to a “lifetime proposition” that supports customers when they first start thinking about owning their own home and then throughout their financed home ownership.

As an example of this, he pointed me towards Trussle’s mortgage monitoring service, which launched last year. It constantly monitors the market and alerts you when money can be saved by switching to another deal.

However, the longer term vision — and presumably part of what attracted investors — is to return more value based on the data Trussle captures. This could include telling you when it may be advantageous to overpay and giving you an easy to understand dashboard that clearly shows where you are at in the repayment process.

More broadly, Trussle wants to play a major role and making home ownership a reality for many for whom is it increasingly prohibitive (think: Generation Rent). To do this, he doesn’t rule out partnerships with other fintech startups aligned to that same mission.

Adds Malhi in a statement: “The backing from two prolific and globally renowned fintech investors recognises the brilliant progress we’ve made, but also the scale of our ambition. The funding will enable us to invest significantly in building our brand and our product, but fundamentally will accelerate us towards our vision of digitising the end-to-end journey to make home ownership more affordable and accessible to all”.

Tame wants to bring order to conference and event planning chaos

Tame, a self-proclaimed “design-driven” tech startup from Copenhagen in Denmark, is on a mission to “solve the chaos of event planning”. The company’s founders, who claim to have previously organised more than thirty large conferences and events, think they have spotted a gap in the market for an all-in-one event planning tool designed specifically to be used by teams.

Like a Swiss Army Knife for event production, the SaaS spans an array of organisational features, such as event program building, an easy way to store the contact details and current status of speakers, and a place to manage suppliers, sponsors and exhibitors. In addition, Tame supports team collaboration in the form of shared file storage, notes, tasks, and messaging.

“Tame is built as a collaborative event planning tool, enabling your entire organisation to plan and streamline all your events from start to finish,” says Tame co-founder Jasenko Hadzic. “With Tame you can stay on top of every event with a complete 360 real-time overview and collaborate with your team and external partners.

Furthermore, Tame includes its own ticketing features that allows event managers to quickly publish programs, speakers, and sponsors “on a beautifully constructed ticketing page, that can be customised to fit every organisation”. The software plays nicely with the wider event ecosystem, too, with an API that enables Tame to integrate with other event technologies currently on the market, thus letting the startup focus solely on “solving the planning of the event,” says Hadzic.

“Tame’s solution replaces tasks currently done in spreadsheets and is the first of its kind customisable enough to consolidate all of your internal event planning in one place and empower your entire team with real-time collaboration,” he adds.

Last month saw the company launch more publicly, opening up the SaaS to self sign-up so that event teams can hit the road running. “As events are stressful, we’ve focused a lot of on building a simple UI that would allow event teams all over the world to get going easily and onboard themselves. Event teams have to get going smoothly and they can’t afford to make mistakes. We know that, so we’ve allowed them to get going very fast,” says Hadzic.

Tame is operating a freemium model: it costs nothing to use for free events but there’s a fixed fee of €1 per paid ticket, which the event organiser can either absorb or transfer to the attendee. “We are all in on transparency, so therefore we don’t offer a percentage fee of the ticket price like many other ticketing solutions out there. In the future, we will offer a premium version of our platform for a fixed monthly subscription fee and this will be our primary business model”.

Meanwhile, the company is also disclosing a seed round of $550,000 from a number of well-known Nordic angel investors with a proven track record in SaaS and product design. They include Tommy Andersen (co-founder and Managing Partner of ByFounders), Hampus Jakobsson (Venture Partner at BlueYard Capital and co-founder of TAT, which sold to Blackberry for $150m), Jacob Wandt (founder of e-conomic, which sold to HG Capital in 2013 for $100m+), Anders Pollas (co-founder and ex-CPO of Podio, the project management tool sold to Citrix for €50 million), and Gregers Kronborg (ex-General Partner of Northzone).