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Quid raises $320M to loan money to startup employees using their equity as collateral

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Startups that take time to scale before going public or getting acquired can represent big, if long-term, returns for employees that hold equity in them. Big, because tech companies have proven to be some of the most valuable in the world when it comes to exits; long-term, because it might take years for a startup to have a liquidity event to give those equity-holding employees some money off the table.

Today, a company called Quid, which has built a business out of giving those employees another option — taking out loans and using their equity as collateral — is announcing a new fund to target that growing opportunity.

After providing loans to employees at some 24 companies, including Unity, Palantir, Crowdstrike, Uber, and Lyft, Quid now has raised a new $320 million fund that it plans to deploy both by collaborating directly with more startups to run programs for their employees, as well directly with employees themselves.

The aim is to select 30 more high-growth startups on track to IPO, and to allocate up to $30 million per company in the form of loans to employees, based on loaning up to 35% of the stock’s current value.

Quid was founded within Troy Capital — an investor that made its name previously with growth-stage investments in Uber, Bird, SpaceX and others — and Troy’s two managing partners, Josh Berman and Anthony Tucker (pictured below), run Quid as well. Berman has a pretty long history in startups and tech, including being one of the founders of MySpace; Tucker is younger and brings a stronger connection with how tech is moving and shaking today.

Quid raised its first fund of $200 million to deploy loans to those whole money was locked up in equity back in 2018, and it was spun out of Troy more formally earlier this year (pre-Covid).

Quid says that this latest fund is backed by Harvard Management Company, Oaktree Capital, Davidson Kempner, and unnamed strategic investors that include board members at leading late stage technology companies — perhaps the very companies that Quid in turn will work with to help give employees more liquidity.

The problem that Quid is tackling — or, in another view, profiting from — is that equity in a potentially hot startup has been a big driver for attracting talent to join what might otherwise turn out to be risky bets. But unlocking the cash connected to that equity typically only comes with a liquidity event. (Indeed, “quid” is double-word play: a reference to liquidity, as well as to slang that means money. In British English, quid is slang for the UK pound currency, which in turn is thought to be a reference to the Latin quid pro quo, which means “something for something.”)

Those liquidity events are not coming as fast these days as in the past, in part because there is so much money swimming around in the venture world that companies can stay private for longer, using venture and private equity funding to fuel their growth without needing to open themselves up to raising capital in a more public way.

While some companies will have secondary rounds — where another investor buys up existing shares — to give employees some liquidity, this isn’t always the case, and those processes can take longer. Those employees may need the cash for buying property, or for some large outlay around education or something else that requires a large payment, or to buy up more options in their company. So Berman and Tucker spotted an opportunity to address that with their own money.

Quid works in a pretty straightforward way: Quid takes a flat 7% annual fee on the amount that a person borrows, and that value is based on how much equity she or he has in a company, and calculations that Quid itself works out that value that equity.

That valuation may be in part based on previous rounds of fundraising, but also if shares are trading on the secondary market as well as other factors, Berman said. The loan against the equity amount is positioned as an alternative to selling shares on the secondary market, with the carrot being that if you’re at a high-growth company, holding on to those shares will give you a bigger return in the longer run.

A person is only expected to pay back the agreed-on sum, based on the value of the equity at the time of the loan, after equity shares can start to be converted into cash. Quid also pays tax bills and basically guarantees the loan itself, in that it assumes a company’s value is going to stay steady or go up.

“If a company turns out to be a Theranos or a WeWork, we take the risk,” said Berman. People are not expected to pay back the full sum in those cases.

The catch is that not everyone is eligible to take out a Quid loan. Berman said that to date it has worked with only 24 companies. It vets companies based on their growth rates, valuation and other factors, and then only chooses a subsection of those.

That list is likely to grow a little larger now, however, not least because Quid has more money to deploy, and because the pool of companies that have hit “unicorn” status of being worth more than $1 billion has also become a lot bigger.

As with so much in the world of investing, it seems like a simple enough idea, so much so that it would be a surprise if it didn’t get copied.

And, when you consider the giant investment vehicles that have landed in the last several years, and the challenges they have had in simply finding enough opportunities for investing their funds, and how that might have possibly led to some particularly bad and indiscrete bets, you can also imagine how such a service might end up being yet another bad bet if not handled well.

“There are a lot of funds that have large amounts of capital,” said Tucker. “But for us, a lot of this is about a customer relationship. It’s about marrying the ability to underwrite a loan with that.”

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Qualcomm’s Snapdragon 888 will land on phones in Q1 2021

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As promised, more info following yesterday’s Snapdragon 888 announcement. First off, as expected, the company’s next flagship SoC will arrive in the first quarter of next year. We’re still waiting on specific models, but as noted yesterday, the San Diego-based chip giant already has a lineup of smartphone makers planning to employ the 765 follow-up, including ASUS, Black Shark, LG, MEIZU, Motorola, Nubia, realme, OnePlus, OPPO, Sharp, vivo, Xiaomi and ZTE.

The focuses are also what you’d expect: 5G, AI, speed, security, imaging and gaming. As Qualcomm announced earlier, the new system sports the third-gen X60 5G modem, which supports both sub-6 and mmWave variations of the wireless technology with speeds up to 7.5 Gbps. Also on board is support for Wi-Fi 6 and Bluetooth 5.2.

The sixth-gen version of the company’s AI Engine brings faster processing speeds at lower power consumption — specifically up to 3x performance per watt, per Qualcomm’s numbers. That’s capable of up to 26 tera operations per second (TOPS). Compare that to the “incredible” 5.5 TOPS the company was talking up on the Snapdragon 765 roughly this time last year. The AI stuff is primarily used to boost camera, gaming, connectivity and voice assistants like Google’s.

On the camera side, the new chip features the improved Spectra 580, sporting the line’s first triple ISP (image signal processor). That’s going to go a ways toward fostering multi-camera setup, with the ability to simultaneously have three cameras at up to 2.7 gigapixels a second. The system also supports capture of three 4K HDR videos at once — overkill, perhaps, but neat. There’s improved low-light support as well, to brighten up dark shots — always a nice thing.

The on-board Adreno 660 GPU can do up to 35% faster graphics. The Kryo 680 — based on the new Arm Cortex-X1 architecture — brings up to a 25% uplift in CPU performance. Game rendering has been improved by up to 30%, and titles will get access to Variable Rate Shading — a first for a Qualcomm chip. As for security, the new chip offers a number of new features aimed at protecting on-device data, including the Qualcomm Secure Processing Unit.

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Self-driving trucks startup TuSimple raises $350M from U.S. rail, retail and freight giants

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Self-driving trucks startup TuSimple has closed a $350 million funding round from a diverse consortium of strategic investors that include major U.S. corporations in rail, retail and freight, according to sources familiar with the deal. 

The round, which was oversubscribed, was led by VectoIQ LLC, confirming a report by TechCrunch in September. VectoIQ is the consulting and investment company founded by Steve Girsky, the former GM vice chairman, consultant and investor whose special purpose acquisition company merged with hydrogen electric startup Nikola Corp. this summer. 

The injection of capital stands out not only because of its size, but the array of companies involved. Goodyear, Union Pacific, CN Rail, freight company U.S. Xpress and retailer Kroger all participated in the round, sources familiar with the deal told TechCrunch. Existing investors Volkswagen AG’s heavy-truck business The Traton Group and Navistar also participated. (Last month, Traton, which already held a 16.6% stake in Navistar agreed to acquire its remaining shares.)

TuSimple has raised $648 million since its founding in 2015.

The company declined to comment. 

TuSimple was one of the first autonomous trucking startups to emerge in what has become a small, yet bustling industry that now includes Aurora, Embark, Ike, Kodiak and Waymo. While TuSimple’s founding team and its earliest backers Sina and Composite Capital are from China, a chunk of its operations are in the United States, including its global headquarters in San Diego. TuSimple also operates an engineering center and truck depot in Tucson and more recently set up a facility in Texas to support its autonomous trips —always with a human safety operator behind the wheel. TuSimple also has operations in Beijing and Shanghai. 

As TuSimple has scaled with workforce and testing in the U.S., it has diversified its customer and investor base. The company has attracted a number of investors and partners in recent years, including UPS, Korean Tier 1 supplier Mando Corporation, Traton Group and now U.S. Xpress. 

TuSimple raised $55 million in 2017 with plans to use those funds to scale up testing to two full truck fleets in China and the United States. By 2018, TuSimple began to test on public roads, beginning with a 120-mile highway stretch between Tucson and Phoenix in Arizona and another segment in Shanghai. TuSimple has since expanded operations into Texas. 

Last year, the company’s valuation eked over the $1 billion-mark after raising $95 million in a Series D funding round. It’s unclear what TuSimple’s new post-money valuation is.

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Jitsu nabs $2M Seed to build open source data integration platform

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Jitsu, a graduate of the Y Combinator Summer 2020 cohort, is developing an open source data integration platform that helps developers send data to a data warehouse. Today, the startup announced a $2 million seed investment.

Costanoa Ventures led the round with participation from YCombintaor, The House Fund and SignalFire.

In addition to the open source version of the software, the company has developed a hosted version that companies can pay to use, which shares the same name as the company. Peter Wysinski, Jitsu’s co-founder and CEO, says a good way to think about his company is an open source Segment, the customer data integration company that was recently sold to Twilio for $3.2 billion.

But he says, it goes beyond what Segment by allowing you to move all kinds of data whether customer data, connected device data or other types. “If you look at the space in general, companies want more granularity. So let’s say for example, a couple years ago you wanted to sync just your transactions from QuickBooks to your data warehouse, now you want to capture every single sale at the point of sale. What Jitsu lets you do is capture essentially all of those events, all of those streams, and send them to your data warehouse,” Wysinski explained.

Among the data warehouses it currently supports include Amazon Redshift, Google BigQuery, PostGres and Snowflake.

The founders built the open source project called EventNative to help solve problems they themselves were having moving data around at their previous jobs. After putting the open source version on GitHub a few months ago, they quickly attained 1000 stars, proving that they had delivered something that solved a common problem for data teams. They then built the hosted version, Jitsu, which went live a couple of weeks ago.

For now, the company is just the two co-founders, Wysinski and CTO Vladimir Klimontovich, but they intend to do some preliminary hiring over the next year to grow the company, most likely adding engineers. As they begin to build out the startup, Wysinski says that being open source will help drive diversity and inclusion in their hiring.

“The goal is essentially to go after that open source community and hire people from anywhere because engineers aren’t just […] one color or one race, they’re everywhere, and being open source, and especially being in a remote world, makes it so so much simpler [to build a diverse workforce], and a lot of companies I feel are going down that road,” he said.

He says along that line, the plan is to be a fully remote company, even after the pandemic ends, as they hire from anywhere. The goal is to have quarterly offsite meetings to check in with employees, but do the majority of the work remotely.

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