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TechCrunch+ roundup: 2021 edtech report, UBS-Wealthfront deal, falling startup revenue

I could spend hours discussing early-stage startup operations and community-based marketing, but deal flow is my blind spot.

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I could spend hours discussing early-stage startup operations and community-based marketing, but deal flow is my blind spot.

But when investment banking firm UBS picked up financial robot-advisor Wealthfront for $1.4 billion in an all-cash deal this week, I noticed.

“At those prices, the company’s exit price is a win in that it represents a 2x or greater multiple on its final private valuations,” wrote Alex Wilhelm in The Exchange. “But its exit value is also parsable from a number of alternative perspectives: AUM, customers and revenue,” he added.

Examining each of those factors in turn, Alex found that the deal is more than just a “next-gen push” intended “to reach rich young Americans,” as some headlines suggested.

This exit will help other fintechs set expectations, but it should give a mental boost to anyone who thinks they’re too late to start up in this space.


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Just over 56% of Americans own stock, but that figure is still several points lower than it was before the Great Recession more than a decade ago. With more consumers buying crypto and fractional shares today, I’d say the robo-advisor race is still doing a parade lap.

Alex, who swims through deal flow like a carefree dolphin, agrees with me — to a point:

The recent declines in active users on platforms like Robinhood, and the success of fintechs like M1 in the last few years could point to a market more open to robo-advising, but the question is whether their lower-cost model can prove sufficiently interesting to investors.

Wealthfront, for example, takes a 0.25% cut of consumer funds. Robinhood I think was doing a bit better when we considered its PFOF incomes against lower-value customer accounts that were actively trading.

Can the robos present a financial picture that is similarly strong? If they can, they will likely prove less volatile than Robinhood has to date.

We’re essentially in agreement: it’s never too late for a good idea.

Thanks very much for reading TechCrunch+ this week!

Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist

European and North American edtech startups see funding triple in 2021

Image Credits: Bet_Noire (opens in a new window) / Getty Images

Pre-pandemic, VCs were notoriously reluctant to invest in education-related companies. Today, edtech startups are seeing higher average deal sizes, more seed and pre-seed funding from non-VC investors, and an influx of generalists.

According to Rhys Spence, head of research at Brighteye Ventures, funding for edtech startups based in Europe and North America trebled over the last year.

“Exciting companies are spawning across geographies and verticals, and even generalist investors are building conviction that the sector is capable of producing the same kind of outsized returns generated in fintech, healthtech and other sectors,” writes Spence.

Here’s how far VCs have lowered revenue expectations for seed through Series B

A front view on multiple spreadsheets containing binary computer data, financial figures and graph lines.

Image Credits: Matejmo (opens in a new window) / Getty Images

Valuations are soaring, but revenue averages for SaaS startups “have seen a recent and rapid decline,” according to a Kruze Consulting report Alex Wilhelm studied yesterday.

The revenue growth goalposts for early-stage startups wanting to fundraise have moved closer in the past couple of years, which means investors are now willing to pour money into companies with slower growth than they were earlier, Alex wrote.

“In all, startups are getting paid better, faster for less work than before. It’s a great time to raise, but a pretty awful time for venture capitalists trained in an era when they got more equity for their dollar.”

Dear Sophie: 3 questions about immigration and naturalization

lone figure at entrance to maze hedge that has an American flag at the center

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My F-1 OPT will run out this June. My employer has agreed to register me in the H-1B lottery in March.

What are my options if I’m not selected in the lottery?

—Gritty Grad

I’m in the U.S. with an L-1A visa that will max out later this year. My wife has been with me during the whole period on an L-2. Can my wife apply for H-1B this year?

Would she need to leave the country to activate it?

—Helpful Hubby

I have a 10-year green card that will expire later this year. I’ve been married to a U.S. citizen for 11 years, but we are in the process of divorcing.

Can I apply for U.S. citizenship even after my divorce?

—New Year, New Life

IBM shrugs off investor EPS concerns, sells growth story

Madrid headquarters of IBM International Business Machine, the American multinational of informatics and technology consulting services in Madrid, Spain

Madrid headquarters of IBM International Business Machine, the American multinational of informatics and technology consulting services, Spain, November 2012. Image Credits: Cristina Arias/Cover/Getty Images

IBM’s earnings report was received positively, but when CFO Jim Kavanaugh declined to share the company’s earnings per share expectations on a post-earnings conference call, the stock quickly tanked.

The stock recovered the following day, but the blip was newsworthy, since a narrow focus on offloading some assets, expanding growth and free cash flow puts IBM on track for further growth, analysts told Alex Wilhelm and Ron Miller.

“Good to see IBM finding back the growth that has eluded the vendor for longer than any investor would have liked,” said Holger Mueller, an analyst at Constellation Research.

“But a small ship can sail faster, and with Kyndryl and Watson Health assets being offloaded, it will help make IBM sail faster.”

In blow to unicorns, the global IPO market continues to soften

It’s still a great time to be a startup founder. Specifically — an early-stage startup founder.

WeTransfer’s parent, WeRock, delayed its IPO earlier this week, becoming the latest major software firm to shelve its plans to go public after JustWorks.

Before that, a bevy of SPAC IPOs that many hoped would shoot to the moon instead drifted off course after launching.

These signals, taken with several others, suggest that this might not be the best time to go public, wrote Alex Wilhelm and Anna Heim in The Exchange.

“Are the good times ending?”

Edtech startups flock to the promise and potential of personalized learning

Image Credits: Getty Images/smartboy10/DigitalVision

Everyone learns differently, but parents, teachers and schools tend to forget that vital fact in the classroom.

The enforced changes brought by the pandemic, however, have led some teachers and parents to realize that personalized learning is key to education, especially in the case of neurodiverse students.

As a result, a new wave of startups have appeared that promise to deliver curricula that adapts to a student’s emotional or educational state, reports Natasha Mascarenhas.

“The pandemic’s extended stay has caused edtech entrepreneurs – and society – to view learning outcomes as broader than job placement and exam scores,” she wrote.

3 views: How should startups prepare for a post-pandemic dip?

An illustration of a descending jet airplane with a unicorn logo on its tail

Image Credits: Bryce Durbin/TechCrunch

If the public markets were a swimming pool, it would still be open for business, but there’d be signs warning newcomers that the water has gotten a bit chilly.

Natasha Mascarenhas, Mary Ann Azevedo and Alex Wilhelm, the trio behind the Equity podcast, shared their predictions about what’s in store for startup funding and due diligence in 2022:

  • Natasha Mascarenhas: ‘The Lean Startup’ has aged with an asterisk
  • Alex Wilhelm: Money over bulls**t
  • Mary Ann Azevedo: Don’t try to be all the things

Crypto pioneer David Chaum says web3 is ‘computing with a conscience’

In 1982, computer scientist David Chaum wrote a dissertation that described a blockchain protocol, along with the code for implementing it.

Since then, his cryptologic research has led to developments like digital cash and anonymous communication networks. This week, he launched xxmessenger, which the company describes as the first “quantum-resistant” messaging app.

When we asked him what has changed in the past few years, Chaum said, “Seems to me that Bitcoin and the like have created something that could no longer be ignored. Now the question is: How can it be brought to the general public in a way that they can readily adopt this next generation of information technology?”

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Government

Family Of College Student Who Died From COVID-19 Vaccine Sues Biden Administration

Family Of College Student Who Died From COVID-19 Vaccine Sues Biden Administration

Authored by Zachary Stieber via The Epoch Times (emphasis…

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Family Of College Student Who Died From COVID-19 Vaccine Sues Biden Administration

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The family of a college student who died from heart inflammation caused by Pfizer’s COVID-19 vaccine has sued President Joe Biden’s administration, alleging officials engaged in “willful misconduct.”

George Watts Jr. in a file image. (Courtesy of the Watts family)

U.S. Department of Defense (DOD) officials wrongly promoted COVID-19 vaccination by repeatedly claiming the available vaccines were “safe and effective,” relatives of George Watts Jr., the college student, said in the new lawsuit.

That promotion “duped millions of Americans, including Mr. Watts, into being DOD’s human subjects in its medical experiment, the largest in modern history,” the suit states.

The Public Readiness and Emergency Preparedness Act allows lawsuits against certain people if they have engaged in “willful misconduct” and if that misconduct caused death or serious injury.

COVID-19 vaccines are covered by the act due to a declaration entered during the Trump administration in 2020 after COVID-19 began circulating.

DOD’s conduct and the harm caused as alleged within the four corners of the lawsuit speaks for itself,” Ray Flores, a lawyer representing the Watts family, told The Epoch Times via email. “I have no further comment other than to say: My only duty is to advocate for my client. If the DOD conveys a settlement offer, I will see that it’s considered.”

The suit was filed in U.S. court in Washington.

The Pentagon and the Department of Justice did not respond to requests for comment.

Watts Suddenly Died

Watts was a student at Corning Community College when the school mandated COVID-19 vaccination for in-person classes in 2021. He received one Pfizer dose on Aug. 27, 2021, and a second dose approximately three weeks later.

Watts soon began experiencing a range of symptoms, including tingling in the feet, pain in the heels, numbness in the hands and fingers, blood in his sperm and urine, and sinus pressure, according to family members and health records.

Watts went to the Robert Packer Hospital emergency room on Oct. 12, 2021, due to the symptoms. X-rays showed clear lungs and a normal heart outline.

Watts was sent home with suggestions to follow up with specialists but returned to the emergency room on Oct. 19, 2021, with worsening symptoms despite a week of the antibiotic Augmentin. He was diagnosed with sinusitis and bronchitis.

While speaking to his mother at home on Oct. 27, 2021, Watts suddenly collapsed. Emergency medical personnel rushed to the home but found him unresponsive. He was rushed to the same hospital in an ambulance. He was pronounced deceased at age 24.

According to a doctor at the hospital, citing hospital records and family members, Watts had no past medical history on file that would explain his sudden death, with no known history of substance abuse or obvious signs of substance abuse. His mother described her son as a “healthy young male.”

Dr. Robert Stoppacher, a pathologist who performed an autopsy on the body, said that the death was due to “COVID-19 vaccine-related myocarditis.” The death certificate listed no other causes. A COVID-19 test returned negative. Dr. Sanjay Verma, based in California, reviewed the documents in the Watts case and said that he believed the death was caused by the COVID-19 vaccination.

Pfizer did not respond to a request for comment.

Watts Took Vaccine Under Pressure

The community college mandate included a 35-day grace period following approval by the U.S. Food and Drug Administration (FDA) of a COVID-19 vaccine.

The Moderna, Pfizer, and Johnson & Johnson vaccines were given emergency use authorization early in the pandemic. The FDA approved the Pfizer shot on Aug. 23, 2021. It was the first COVID-19 vaccine approval. But doses of the approved version of the shot, branded Comirnaty, were not available for months after the approval.

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Tyler Durden Fri, 06/02/2023 - 23:00

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International

US Sent Billions in Funding to China, Russia For Cat Experiments, Wuhan Lab Research: Ernst

US Sent Billions in Funding to China, Russia For Cat Experiments, Wuhan Lab Research: Ernst

Authored by Mark Tapscott via The Epoch Times…

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US Sent Billions in Funding to China, Russia For Cat Experiments, Wuhan Lab Research: Ernst

Authored by Mark Tapscott via The Epoch Times (emphasis ours),

Hundreds of millions of U.S. tax dollars went to recipients in China and Russia in recent years without being properly tracked by the federal government, including a grant that enabled a state-run Russian lab to test cats on treadmills, according to Sen. Joni Ernst (R-Iowa).

Sen. Joni Ernst (R-Iowa) speaks at a Senate Republican news conference in the U.S. Capitol on March 9, 2022. (Anna Moneymaker/Getty Images)

Ernst and her staff investigators, working with auditors at the Government Accountability Office (GAO) and the Congressional Research Service, as well as two nonprofit Washington watchdogs—Open The Books (OTB) and the White Coat Waste Project (WCWP)—discovered dozens of other grants that weren’t counted on the federal government’s USASpending.gov internet database.

While the total value of the uncounted grants found by the Ernst team is $1.3 billion, that amount is just the tip of the iceberg, the GAO reported.

Among the newly discovered grants is $4.2 million to China’s infamous Wuhan Institute of Virology (WIV) “to conduct dangerous experiments on bat coronaviruses and transgenic mice,” according to a May 31 Ernst statement provided to The Epoch Times.

The $4.2 million exposed by Ernst is in addition to previously reported funding to the WIV for extensive gain-of-function research by Chinese scientists, much of it funded in whole or part prior to the COVID-19 pandemic by National Institutes for Health (NIH) grants channeled through the EcoHealth Alliance medical research nonprofit.

The NIH has awarded seven grants totaling more than $4.1 million to EcoHealth to study various aspects of SARS, MERS, and other coronavirus diseases.

Buying Chinese Puppy Parts

As part of another U.S.-funded grant, hearts and other organs from 425 dogs in China were purchased for medical research.

These countryside dogs in China are part of the farmer’s household; they were mainly used for guarding. Their diet includes boiled rice, discarded raw food animal tissues, and whatever dogs can forage. These dogs were sold for food,” an NIH study uncovered by the Ernst researchers reads.

Other previously unreported grants exposed by the Ernst team include $1.6 million to Chinese companies from the federal government’s National School Lunch Program and $4.7 million for health insurance from a Russian company that was sanctioned by the United States in 2022 as a result of the invasion of Ukraine.

“It’s gravely concerning that Washington’s reckless spending has reached the point where nobody really knows where all tax dollars are going,” Ernst separately told The Epoch Times. “But I have the receipts, and I’m shining a light on this, so bureaucrats can no longer cover up their tracks, and taxpayers can know exactly what their hard-earned dollars are funding.”

The problem is that federal officials don’t rigorously track sub-awards made by initial grant recipients, according to the Iowa Republican. Such sub-awards are covered by a multitude of federal regulations that stipulate many conditions to ensure that the tax dollars are appropriately spent.

The GAO said in an April report that “limitations in sub-award data is a government-wide issue and not unique to U.S. funding to entities in China.”

GAO is currently examining the state of federal government-wide sub-award data as part of a separate review,” the report reads.

Peter Daszak, right, the president of the EcoHealth Alliance, is seen in Wuhan, China, on Feb. 3, 2021. (Hector Retamal/AFP via Getty Images)

The Eco-Health sub-awards to WIV illustrate the problem.

“Despite being required by law to make these receipts available to the public on the USAspending.gov website, EcoHealth tried to cover its tracks by intentionally not disclosing the amounts of taxpayer money being paid to WIV, which went unnoticed for years,” Ernst said in the statement.

“I was able to determine that more than $490 million of taxpayer money was paid to organizations in China [in] the last five years. That’s ten times more than GAO’s estimate! Over $870 million was paid to entities in Russia during the same period!

Together that adds up to more than $1.3 billion paid to our adversaries. But again, these numbers still do not represent the total dollar amounts paid to institutions in China or Russia since those numbers are not tracked and the information that is being collected is incomplete.”

Adam Andrzejewski, founder and chairman of OTB, told The Epoch Times, “When following the money at the state and local level, the real corruption exists in the subcontractor payments. At the federal level, the existing system doesn’t even track many of those recipients.

“Without better reporting, agencies and appropriators don’t truly understand how tax dollars were used. We now know that taxpayer dollars are traded further downstream than originally realized with third- and fourth-tier recipients. These transactions need scrutiny. Requiring recipients to account for where and how they actually spend each dollar creates a record far better than agencies are capable of generating.”

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Tyler Durden Fri, 06/02/2023 - 19:40

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Government

OraSure Technologies’ CFO Makes Bold Insider Purchase, Reigniting Investor Confidence

Executive Kenneth McGrath’s $500,000 buy read as promising signal about future for diagnostic test developer OraSure Technologies (NASDAQ:OSUR) saw…

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Executive Kenneth McGrath’s $500,000 buy read as promising signal about future for diagnostic test developer

OraSure Technologies (NASDAQ:OSUR) saw a stock price re-rate on Thursday, climbing 11% after investors became aware of its CFO Kenneth McGrath buying shares in the diagnostic test developer.  This latest rally in OSUR stock, gives traders and investors hope that the strong momentum from the beginning of 2023 might return.

OSUR shares had mounted an impressive 54% rally for 2023 through to May 10, when the first-quarter results update spooked investors. 

The CFO’s trade was initially spotted on Fintel’s Insider Trading Tracker following the filing with the Securities and Exchange Commission.

Big Holdings Boost

In the Form 4 filing, McGrath, who assumed CFO duties in August 2022, disclosed buying 100,000 shares on May 30 in the approved trading window that was open post results.

McGrath on average paid $4.93 per share, giving the total transaction a value just shy of $500,000 and boosted his total share count ownership to 285,512 shares.

The chart below from the insider trading and analysis report for OSUR shows the share price performance and profit made from company officers in previous transactions:

OraSure Technologies

Prior to joining OraSure, McGrath had an impressive eight-year tenure at Quest Diagnostics (NYSE:DGX), where he rose to the position of VP of Finance before departing. This is the first time that the CFO has bought stock in the company since August 2022. It is also worth noting that the purchase followed strong Q1 financial results, which exceeded Street forecasts.

Revenue Doubles

In its recently published Q1 update, OraSure Technologies told investors that it generated a whopping 129% increase in revenue to $155 million, surpassing analyst expectations of around $123 million. 

Notably, the revenue growth was driven primarily by the success of OraSure’s COVID-19 products, which accounted for $118.4 million in revenue for the quarter and grew 282% over the previous year.

The surge in revenue for this product was largely driven by the federal government’s school testing program, which led to record test volumes. However, it is important to note that demand for InteliSwab is expected to decline in Q2 2023, prompting OraSure to scale down its COVID-19 production operations. As part of its broader strategy to consolidate manufacturing, the company plans to close an overseas production facility.

While the COVID-19 products division has been instrumental in OraSure’s recent success, its core business delivered stable flat sales of $36.6 million during the quarter. 

In terms of net income, OraSure achieved an impressive result of $27.2 million, or $0.37 per share, in Q1, marking a significant improvement compared to the loss of $19.9 million, or a loss of $0.28 per share, in the same period last year. This result exceeded consensus forecasts of $0.16 per share. As of the end of the quarter, the company held $112.4 million in cash and cash equivalents.

Looking ahead to Q2, OraSure has provided revenue guidance in the range of $62 to $67 million, reflecting the lower order activity from the US government with $25 to $30 million expected sales for InteliSwab. The declining Covid related sales have been a core driver of the share price weakness in recent weeks.

While sales are likely to fall in the coming quarters, one positive for the company is its low debt balance during this period of rising cash rates. The chart below from Fintels financial metrics and ratios page for OSUR shows the cash flow performance of the business over the last five years.

OraSure Technologies

Analyst Opinions

Stephen’s analyst Jacob Johnson thinks that outside of Covid, OSUR continues to execute on several cost and partnership initiatives which he believes appears to be bearing fruit. Johnson pointed out that three partnerships were signed during the quarter.

The analyst thinks that the ex-Covid growth story will be the new focus for investors from now on. The brokerage maintained its ‘equal-weight’ recommendation and $6.50 target price on the stock, matching Fintel’s consensus target price, suggesting OSUR stock could rise a further 29% in the next 12 months. 

The post OraSure Technologies’ CFO Makes Bold Insider Purchase, Reigniting Investor Confidence appeared first on Fintel.

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