Vape lung ‘breakthrough’ suggests lethal culprit in THC products could be vitamin E acetate

Official word has come down from federal authorities on one potential cause of the mystery illness affecting vape users: Vitamin E acetate, a chemical found in some vaping products that has been demonstrated to linger in the lungs long afterwards. The finding has been called a “breakthrough” but is far from the last word on the situation.

Sadly, the condition has already claimed the lives of at least 39 people, and more than 2,000 cases have been reported collectively from every state but Alaska. At present the only advice offered has been to stop vaping altogether.

In a media teleconference, the heads of the investigation from the Centers for Disease Control and Prevention explained the basis for pointing the finger at Vitamin E acetate. The substance was cited as a possible problem early on but only recent testing has established it as a bona fide suspect, the team explained.

Samples taken from the lungs of 29 victims of the condition were sent in from 10 different states, and vitamin E acetate was found in all of them. “These findings provide direct evidence of vitamin E acetate as the primary site of injury within the lungs,” said Anne Schuchat, principal deputy director of the CDC .

Although she agreed that this evidence is a “breakthrough,” she noted that it is at present merely a correlative finding — more research is required to establish causation, namely the mechanism of harm, though other work has been done in that area.

“Previous non-CDC research suggests that when vitamin E acetate is inhaled, it may interfere with normal lung function,” she said.

“It’s important to note that these findings do not rule out other possible compounds or ingredients that may be causing these lung injuries,” she continued. “There may be more than one cause of the outbreak.”

Equally important are the statistics involved with the sources of the substances in question. As mentioned earlier in the investigation, a huge proportion of those suffering from this condition were using THC products, and specifically ones acquired through unregulated channels like street dealers.

The vitamin E acetate may have been added for the purpose of essentially cutting the product, Schuchat mentioned in response to a question on the call.

“That may be done for the illicit purpose, or the profit purpose, of diluting the materials, making it look nice and perhaps not having to use as much THC or other active ingredients,” she said.

Other potentially dangerous chemicals have been identified in vape products when heated and aerosolized, including many that even the creators might not have predicted.

Knowing a potential culprit doesn’t get at the heart of the problem, which would be that this chemical (perhaps among others) has already built up over months or years in the lungs of frequent vape users. Treatment is a parallel line of research, but knowing at least one substance responsible should be helpful.

The CDC’s previous advice still stands, the officials noted: They advise avoiding vaping altogether, as there are very few controls at present over which ingredients are allowed in vape products, and what must be declared on the packaging, or indeed whether those declarations are in any way accurate.

Alpaca nabs $6M for stocks API so anyone can build a Robinhood

Stock trading app Robinhood is valued at $7.6 billion, but it only operates in the U.S. Freshly funded fintech startup Alpaca does the dirty work so developers worldwide can launch their own competitors to that investing unicorn. Like the Stripe of stocks, Alpaca’s API handles the banking, security and regulatory complexity, allowing other startups to quickly build brokerage apps on top for free. It has already crossed $1 billion in transactions within a year of launch.

The potential to power the backend of a new generation of fintech apps has attracted a $6 million Series A round for Alpaca led by Spark Capital . Instead of charging developers, Alpaca earns its money through payment for order flow, interest on cash deposits and margin lending, much like Robinhood.

“I want to make sure that people even outside the U.S. have access” to a way of building wealth that’s historically only “available to rich people” Alpaca co-founder and CEO Yoshi Yokokawa tells me.

Alpaca co-founder and CEO Yoshi Yokokawa

Hailing from Japan, Yokokawa followed his friends into the investment banking industry, where he worked at Lehman Brothers until its collapse. After his grandmother got sick, he moved into day-trading for three years and realized “all the broker dealer business tools were pretty bad.” But when he heard of Robinhood in 2013 and saw it actually catering to users’ needs, he thought, “I need to be involved in this new transformation” of fintech.

Yokokawa ended up first building a business selling deep learning AI to banks and trading firms in the foreign exchange market. Watching clients struggle to quickly integrate new technology revealed the lack of available developer tools. By 2017, he was pivoting the business and applying for FINRA approval. Alpaca launched in late 2018, letting developers paste in code to let their users buy and sell securities.

Now international developers and small hedge funds are building atop the Alpaca API so they don’t have to reinvent the underlying infrastructure themselves right away. Alpaca works with clearing broker NTC, and then marks up margin trading while earning interest and payment for order flow. It also offers products like AlpacaForecast, with short-term predictions of stock prices, AlpacaRadar for detecting price swings and its MarketStore financial database server.

AlpacaForecast

The $6 million from Spark Capital, Social Leverage, Portag3, Fathom Capital and Zillionize adds to $5.8 million in previous funding from investors, including Y Combinator. The startup plans to spend the cash on hiring to handle partnerships with bigger businesses, supporting its developer community and ensuring compliance.

One major question is whether fintech businesses that start to grow atop Alpaca and drive its revenues will try to declare independence and later invest in their own technology stack. There’s the additional risk of a security breach that might scare away clients.

Alpaca’s top competitor, Interactive Brokers, offers trading APIs, but other services as well that distract it from fostering a robust developer community, Yokokawa tells me. Alpaca focuses on providing great documentation, open-source contribution and SDKs in different languages that make it more developer-friendly. It will also have to watch out for other fintech services startups like DriveWealth and well-funded Galileo.

There’s a big opportunity to capitalize on the race to integrate stock trading into other finance apps to drive stickiness because it’s a consistent, voluntary behavior rather than a chore or something only done a few times a year. Lender SoFi and point-of-sale system Square both recently became broker dealers as well, and Yokokawa predicts more and more apps will push into the space.

Why would we need so many stock trading apps? “Every single person is involved with money, so the market is huge. Instead of one-player takes all, there will be different players that can all do well,” Yokokawa tells me. “Like banks and investment banks co-exist, it will never be that Bank of America takes 80% of the pie. I think differentiation will be on customer acquisition, and operations management efficiency.”

The co-founder’s biggest concern is keeping up with all the new opportunities in financial services, from cash management and cryptocurrency that Robinhood already deals in, to security token offerings and fractional investing. Yokokawa says, “I need to make sure I’m on top of everything and that we’re executing with the right timing so we don’t lose.”

The CEO hopes that Alpaca will one day power broader access to the U.S. stock market back in Japan, noting that if a modern nation still lags behind in fintech, the rest of the world surely fares even worse. “I want to connect this asset class to as many people as possible on the earth.”

African logistics startup Lori Systems raises Series A led by Chinese investors

African on-demand trucking logistics company Lori Systems has raised a Series A round led by Chinese investors Hillhouse Capital and Crystal Stream Capital.

Other participating investors included Nigeria and U.S.-based EchoVC, Flexport CEO Ryan Petersen and Nigerian founder Iyinoluwa Aboyeji.

Lori Systems is not disclosing the amount of the Series A. DealStreet Asia reported the round amount at $30 million earlier Friday, but Lori Systems’ CEO Josh Sandler would not confirm that. That figure was “something lost in translation” and “a mischaracterization of the raise,” he told TecCrunch on a call.

The company issued a clarification to initial reporting in a Medium post. On the reason for the non-disclosure, “Lori has never released fundraising details as we feel it is a vanity metric that distracts from what matters most: our mission of lowering the cost of goods in frontier markets,” Lori Systems co-founder Jean-Claude Homawoo told TechCrunch.

A recent Financial Times piece pegged Lori’s total funding raise at $20 million. In an SEC Form D filing in June Lori Systems issued $29 million in equity, though details weren’t given to which parties.

disruptsf18_battlefield_lori-1284

Founded in Kenya in 2016, the company provides mobile-based on-demand trucking logistics services through an Uber -like network of drivers and merchant partners. Lori Systems has operations in East Africa in Kenya and Uganda.

The company expanded to Nigeria in September 2019, where it faces a competitor in trucking logistics company Kobo360.

“We are using the round to ramp up operations, build up our technology, and hire a best in class team…that can drive a global revolutions in logistics,” Lori Systems CEO Josh Sandler said.

The company recently hired Nigerian Uche Ogboi from EchoVC to become its CFO and former Quona Capital associate Efayomi Carr.

Lori Systems won Startup Battlefield Africa in 2017.

Badoo’s Andrey Andreev sells his stake in Bumble owner MagicLab to Blackstone, valuing the dating apps at $3B

Bumble, the popular and profitable dating and networking app built around the ethos of women calling the shots on how connections get made and developed, has made a deal for some independence of its own.

Andrey Andreev, the founder of Badoo, the controversial London-based company that owns a series of dating apps and was the main backer and builder of Bumble, is selling to Blackstone his entire stake in MagicLab, the company that owned both Bumble and Badoo (and other dating apps), and will step away from the business. Whitney Wolfe Herd, Bumble’s founder, becomes the CEO of the whole company, retaining much of her stake in the business in the process. We understand that stake is at about 19%.

The deal values Bumble and the wider business — which is profitable — at $3 billion.

Blackstone also will be making an investment in the company as part of the deal.

“This transaction is an incredibly important and exciting moment for Bumble and the MagicLab group of brands and team members. Blackstone is world-class at maximizing the success of entrepreneur-led companies, which presents a tremendous opportunity. We are very excited to build the next chapter with them,” said Wolfe Herd in a statement. “I am honored to take on the role of CEO of the group. I will strive to lead the group with a continued values-based and mission-first focus, the same one that has been core to Bumble since I founded the company five years ago. We will keep working towards our goal of recalibrating gender norms and empowering people to connect globally, and now at a much faster pace with our new partner.”

Bumble is consistently in the top 10 of lifestyle apps in the U.S., according to App Annie data. The WSJ reports that Bumble now has some 75 million users, although Apptopia’s figures are a little more conservative: it notes that aggregated, lifetime downloads of Bumble are about 52 million, while lifetime in-app purchase revenue is about $335 million. March 2019 was its best month ever for IAP revenue with $14.1 million, and over the past six months, Bumble has averaged 1.5 million downloads per month, Apptopia’s Adam Blacker told TechCrunch. (The download figure doesn’t include web-based signups.)

But while Bumble has been growing at a healthy clip — in addition to being profitable, MagicLab had revenue growth of 40% annually — the transaction caps off a tumultuous time at the corporate level for the company.

Almost exactly a year ago, Andrey Andreev had been talking about a future IPO for Badoo in the U.S., listing on Nasdaq. The bigger company at the time also included the eponymous Badoo app, which itself now has 450 million users, as well as a number of others targeting more specific communities (for example, older people), and it was altogether expecting to make some $400 million in revenues in 2018.

Within that bigger picture, Bumble was easily the high-profile jewel in the crown, especially in the high-visibility market of the U.S., where Badoo had hoped to list.

Badoo prior to that had reportedly turned down a $450 million offer for Bumble from Match (some have reported that Match might have offered as much as $1 billion or more for it) — a strange twist in a long saga between the two. (In brief: Match is the company that owns Tinder and had been locked a series of different lawsuits with Bumble: Wolfe Herd had previously been a Tinder co-founder and left under acrimonious circumstances. Andreev had previously met Wolfe Herd and then approached her to start Bumble under his wing in the wake of that departure.)

While a bold IPO was an interesting prospect, things took a turn for the worse this summer, when an expose in Forbes painted a bleak picture of misogyny and sleaze at the parent company, headed by an eccentric and oblique leader — not the image that Bumble wanted to project, and definitely not the image that would have read well on Wall Street.

“We’re excited to invest in MagicLab, which is a pioneer in the fast-growing online dating industry. They have a highly talented team and strong set of platforms, including Bumble, which was built on a commitment to inclusion and female empowerment,” said Jon Korngold, head of Blackstone Growth (BXG), in a statement. “This partnership is a perfect example of Blackstone’s ability to use its scale, long-term investment horizon, and deep bench of operational resources to help entrepreneurs take advantage of transformational growth opportunities in order to create global industry leaders over time.”

As with Wolfe Herd and Blackstone, Andreev does not address this aspect of the story in his statement on the sale, focusing instead on making a good return on his investment to fuel building more apps ahead.

“Blackstone presented MagicLab with a great opportunity to further develop the brands and platform, and I am confident Blackstone will take MagicLab to the next level in terms of growth and expansion. I am incredibly proud of the company, and of how we have connected millions of people around the world,” he said. “At MagicLab, I have had the pleasure of working with some of the best and most talented entrepreneurs. My aim now is to ensure a smooth and successful transition before I embark on a new business venture in search of innovative leaders with new and exciting ideas. I am grateful for all the support of my partners and employees over the years as we couldn’t have gotten to this point without them. I wish MagicLab and Blackstone every success.”

Wolfe Herd defended Badoo and Andreev through the bad press, but now with the divestment, it seems that there was more at play with a bid to extricate Bumble out of that relationship.

Andreessen Horowitz launches free crypto startup school

Last month, Andreessen Horowitz (a16z) general partner Chris Dixon announced at TechCrunch Disrupt that the VC firm would run a free crypto startup school. And the company is officially launching its school today. Applications are now open and you have four weeks to apply.

With this initiative, a16z wants to democratize cryptocurrencies. Dixon and the a16z team has been involved in the cryptocurrency/blockchain space for seven years, and the firm now wants to share some of its learnings with entrepreneurs.

This way, it could give a boost to the crypto community, which could create investment opportunities for a16z down the road — a16z says clearly that participating in the crypto startup school doesn’t mean you’ll receive an investment from a16z. It also positions a16z as a thoughtful investor when it comes to crypto startup investments — not just for participants of the crypto startup school but for the crypto community at large.

The a16z Crypto Startup School will be a seven-week program that starts February 21, 2020. The program is free and a16z doesn’t take any equity.

Lectures will take place in Menlo Park, so you have to be based in Silicon Valley or willing to spend a couple of months there. And because a16z knows that it can be challenging to move to another country just to attend this program, the firm will also be recording all lectures. Anyone will be able to watch videos and download curriculum materials later.

Here’s a sneak peek of the course outline:

  • What are Crypto Networks, and Why Do They Matter?
  • Blockchain Computing Primitives: Cryptography and Consensus
  • Overview of Application Development Tools
  • Applications: Today and 2025
  • Crypto Business Models
  • Cryptoeconomics
  • UX, Product Development and Security
  • Go-to-Market Strategy and Developer Relations
  • Community Participation and Governance
  • Regulatory Landscape and Considerations
  • Guide to Fundraising

As you can, it’s a mix of lectures purely focused on cryptocurrencies as well as broader startup 101 lessons (fundraising, go-to-market strategy, etc.).

The program is looking for 20 to 25 teams, which should represent approximately 40 participants. You should have prior experience when it comes to building software products, but you don’t need to be a crytpo expert. Participants can expect 12 to 15 hours of lectures, workshops, mentorship and networking opportunities per week.

At the end of the course, participants will showcase a project idea or a prototype during a demo day.

Every startup is a bank — or wants to be

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week we did something just a little bit new. Kate was in studio at TechCrunch’s SF HQ. Alex was in his dork cave in Providence. And we had a guest in the studio as well. We’ve done similar setups before, but never with video all around. So, welcome to a slightly new chapter in Equity’s production history (all praise to Chris for making it work, video will be out today on TechCrunch’s YouTube page).

Our guest this week was the excellent Sarah Smith from Bain Capital Ventures. Before she turned to writing checks, Smith worked for both Quora and Facebook. Her fun fact? She’s an avid and competitive player of board games.

First up we dug into one of Kate’s latest, a piece looking at the influencer space, venture investments into it and what’s next for the power of the Instagram-famous. She highlights startups like Influence, Cameo, Karat and more.

Next up, Deserve raised $50 million from Goldman Sachs, making the round something that was worth touching on. Later, Alex spoke with the company’s CEO and picked up more context, but what matters for today is that Deserve is doubling-down on its credit card fintech service, not doing what other companies that handle money are up to — namely, trying to become neobanks at high speed.

Speaking of which, why is every fintech or finservices startup becoming a bank? Partially because they can, partially because it can be lucrative and partially because, we found out, it’s a way to juice customers that they’ve already paid to acquire. Want to make your CAC expenses look more efficient? Stretch out that LTV!

And then we spent a minute on Uber’s results, which proved better than expected but wound up being poorly received.

Glad you guys came back for another episode, we’ll see you soon.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Prices increase tonight: Buy Disrupt Berlin 2019 early-bird passes now

We get it. You’re deep in the weeds starting your startup, building your business, expanding your empire. Startuppers are frequently overworked, prone to procrastination and last-minute decision making.

We’re here to tell you today’s the last day you can score early-bird savings to Disrupt Berlin 2019. The earlybird deadline ends tonight at 11:59 p.m. (CEST). Don’t pay more than necessary. Beat the deadline, and buy your early-bird pass to Disrupt Berlin right now.

As usual, we have a great lineup of speakers, and you’ll learn from the best at Disrupt. Here are just a few examples of what’s on tap. For more details, go study the Disrupt Berlin 2019 agenda.

Growing from a humble garage project into a global competitor may be possible… but easy? Not so much. Learn the fine art of scaling your startup from a panel of experts who’ve been to the mountaintop. You’ll hear from Holger Seim, founder and CEO of Blinkist; Karoli Hindriks, founder and CEO of Jobbatical; and Sophie Alcorn, founding partner of Alcorn Immigration Law.

Brexit — the mere word strikes uncertainty in the hearts of U.K. and European startups. Talk about jangled nerves. We’ll hear three experts discuss decision-making in the face of Brexit’s chaotic landscape. Investor Bindi Karia, founder Glenn Shoosmith and VC Volker Hirsch offer their unique perspectives on how to make the right decisions in the face of these obstacles.

If you’re into rapidly changing landscapes, don’t miss eToro’s Yoni Assia and Charlie Delingpole of ComplyAdvantage as they talk fintech. You’ll hear lessons they learned along the way and how today’s startups can change the future of finance.

Hiroki Takeuchi, GoCardless co-founder, CEO and fintech expert, has led the eight-year-old company to the point where it has a shot at becoming a global leader in direct debit payments. He’ll join us to talk about resilience and why he sees a big opportunity for B2B use cases.

There’s so much more to take in at Disrupt Berlin. What happens when you mix creativity and raw talent and then subject it to intense pressure? Head on over to the Extra Crunch Stage to watch the Hackathon finalists pitch products they designed, coded and created in 24 hours. Who will win the individual sponsored challenges and who will win $5,000 from TechCrunch editors for best overall hack?

Disrupt Berlin 2019 takes place on 11-12 December, and you have just a few hours left to take advantage of early-bird pricing. Buy your early-bird pass before 11:59 p.m. (CEST) tonight and save up to €500.

Is your company interested in sponsoring or exhibiting at Disrupt Berlin 2019? Contact our sponsorship sales team by filling out this form.