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3 questions for the startup market as we enter Q3 – TechCrunch

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Somehow June is over in just a few hours, meaning that we are trotting toward the third quarter’s starting line.

Leaving aside the uncomfortably rapid pace at which time is flying past us, entering a new financial reporting period is an excellent moment to pause, reflect and work out the key questions for the upcoming quarter. After all, we’ve seen so very much change on a quarterly basis lately that each quarter feels like a year.


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Recall Q3 2021, for example. After a lighter second quarter, the IPO market regained its footing last July, forcing this column to group public offerings into batches to just stay on top of them. And then Q3 set a huge record in terms of total venture capital investment to boot. Robinhood went public. It was busy.

The final quarter of 2021 was different. Seeing both the peak of many technology company valuations and their initial descent, Q4 of last year was a liminal state between the tail end of a long-running bull market and a rearing correction. Q1 2022 continued that trend, but with more bear than bull, and the second quarter — though we have yet to collect all the data — featured a moribund IPO market, rising startup layoffs, a crypto winter and more.

So what will Q3 2022 bring for global startups? Let’s talk through what we’re tracking, expecting and perhaps even dreading.

As we are on the cusp of a Friday before a long weekend, I know that you mentally have one foot on the beach. I promise that we’ll be brief today. Let’s talk through the three questions we have for Q3:

Will valuations recover?

For a brief period in the final weeks of Q2, it appeared that software stocks were mounting what could have been called a modest recovery. The Bessemer Cloud Index’s ETF closed at 25.93 on June 16, before ticking up to close at 31.21 on June 24. That bump did not last.

Since the little boomlet in software stocks, the same basket of companies is now down to 27.99 points, giving back the bulk of its gains. As the ETF traded as high as 65.51 in the last year, the recovery was modest at best. That it was also transient feels nearly rude.

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Big funds ‘screwing with Series A market but not seed market’ says veteran VC Mike Hirshland – TechCrunch

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Mike Hirshland is enjoying 2022. Despite the market’s zigs and zags, he has spent much of his time this past summer in Rhode Island, where relatives from afar have gathered on and off for an extended family reunion. He and partner Raanan Bar-Cohen were also able to close their fifth fund with $150 million in capital commitments at winter’s end —  ahead of the stock market collapse that would follow. Indeed, the two now have around $375 million in assets under management at their 11-year-old venture firm, Resolute Ventures.

Yet another reason to feel cheery is what’s happening at their stage of the market, where after a rapid run-up, valuations are slowly but surely coming back down to earth, suggests Hirshland. He says that while Resolute’s pace has been “remarkably consistent,” leading to roughly 10 investments each year that draw initial checks from the firm in the $1 million to $1.5 million range, the “biggest departure” in its history was last year. It was then that both round sizes and valuations ballooned, prompting the firm to write bigger checks while also forcing it to walk away from “really big, really pricey seed rounds” with valuations so lofty that Hirshland feared their next round would be problematic.

That’s not to say it’s all been a walk in the park. Some of Resolute’s best-performing portfolio companies, including Opendoor and Bark & Co., have had their struggles since going public through tie-ups with special purpose acquisition companies.

Another of Resolute’s bets, Clutter — which is also backed by Sequoia Capital and SoftBank — has also found it harder to grow its business than it might have imagined earlier. The outfit merged with a rival in February to bolster its odds of succeeding, but Hirshland, who remains “quite bullish” on Clutter, admits that it isn’t always easy to profitably “move atoms.”

What is not a concern for Hirshland, he insists, is competition. He says Resolute backs founders based largely on their vision and the firm’s belief that the team can build something compelling. (“I’m essentially indifferent if it’s day 1 or day 365, when they can show me some code,” he says.) He argues that other firms, no matter their public messaging, aren’t quite as open-minded, especially not right now.

In fact, asked about later-stage firms like Tiger Global and Insight Partners that have been shifting more of their attention to younger startups, Hirshland, talking with TechCrunch over Zoom, shrugs his shoulders. “Big funds are really screwing with the Series A market,” he says, “but in the seed market, we’re not seeing these guys come that far down.”

Even if they did, adds Hirshland, it wouldn’t last long. “You always see firms announce these big seed initiatives because when things get competitive, people move earlier. But when the shit hits the fan, they go back to focusing on their bread and butter and the cycle just continues.”

Resolute has so far invested roughly $10 million in initial checks from its newest fund. Some of its more recent investments include Signl, a startup that sells business intelligence tools to investors and whose founders sold an earlier company, Bitium, to Google in 2017.

Resolute also recently invested in Nobl9, a so-called service level objective platform whose founders also sold a previous company (Orbitera) to Google.

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Hold-outs targeted in fresh batch of noyb GDPR cookie consent complaints – TechCrunch

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Just over a year after launching a major project targeting thousands of sites blatantly flouting cookie tracking rules in Europe, local privacy campaign group noyb has fired off another batch of complaints targeting a hardcore of website operators that it says have ignored or not fully acted upon earlier warnings to bring their cookie consent banners into compliance with the EU’s legal standard for consent, such as the General Data Protection Regulation (GDPR).

Noyb says the latest batch of 226 complaints have been lodged with 18 data protection authorities (DPAs) around the bloc.

As with earlier actions by noyb, all the complaints relate to the most widely used cookie banner software, made by OneTrust. But it’s not the software itself that’s the issue — rather the complaints target deceptive settings it found being applied. Or even no choice at all being offered to site users to deny tracking in a clear breach of the law around consent.

Deceptive cookie pop-ups have had a corrosive impact not only on the privacy rights of web users in the region, systemically stripping people of their right to protect their information, but they have also been very damaging for the reputation of EU data protection rules like the GDPR — enabling critics to blame the regulation for spawning a tsunami of annoying cookie banners despite the fact the law clearly outlaws consent theft via cynical tactics like injecting one-way friction or offering users zero opt-out ‘choice’.

The vast scale of cookie consent violations has, nonetheless, posed a major enforcement challenge for the bloc’s network of under-resourced data protection authorities — hence noyb stepping in with a smart and strategic approach to help clean up the “cookie banner terror” scourge, as its campaign couches it.

Given noyb’s focus on impact, and the extremely widespread nature of cookie consent problems, the campaign group has sought to minimize how many formal complaints it’s filing with regulators — so its partially automated compliance campaign entails sending initial complaints to the offending sites in question, offering help to rectify whatever dark patterns (or other bogus consent issues) noyb has identified.

It’s only sites that have repeatedly ignored these nudges and step-by-step compliance guidance that are being targeted for formal complaints with the relevant oversight body now.

“We want to ensure compliance, ideally without filing cases. If a company however continues to violate the law, we are ready to enforce users’ rights,” said Max Schrems, chairman at noyb, in a statement.

“After one year, we got to the hopeless cases that hardly react to any invitation or guidance. These cases will now have to go to the relevant authorities,” he added.

Thus far, noyb credits its cookie consent campaign with generating what it couches as a “large spill-over effect” — with, not only directly targeted violating consent banners being amended but some non-targeted sites also adapting their settings after they heard about the complaints. “This shows that enforcement ensures compliance beyond the individual case,” argues Schrems. “I guess many users have realized that for example more and more ‘reject’ buttons gradually appeared on many websites in the last year.”

Discussing progress to date, a spokeswoman for noyb also told us: “We have seen an increasing compliance rate in our regular scans (where we scan several thousands websites in Europe using the CMP OneTrust) after our first round of warnings last May. This is probably due to an increased awareness due to our complaints, the ‘fear’ that this law might actually be enforced and because Onetrust proactively informed their customers about our complaints and adjusted their standard settings to be ‘noyb compliant’.

“Therefore we consider those websites that still violate the GDPR despite all warnings as ‘hopeless’ cases. All of them are new cases, so none of the companies targeted already last year are in that batch.”

The so-called “hopeless” cases include a mix of (smaller) media sites, popular retailers and local pages, per noyb’s spokeswoman.

Asked for examples of pages which still violate “almost everything” (i.e. where cookie consent rules are concerned) more than a year after the group’s compliance campaign kicked off, she pointed to media sites including https://www.elle.com/ and https://www.menshealth.com/; recipe site www.delish.com; online travel agency booking.com; and fashion retailer aboutyou (in various EU countries).

Other high profile sites that are being targeted for formal complaints now — and which have remedied “at least some violations” (though not others), in noyb’s assessment — include football site fifa.com; cosmetics retailers rituals.com and clinique.at/de; and streaming giant hbo.com.

While noyb says “most” of the sites it’s formally complaining about now don’t provide users with an option to withdraw their consent to tracking, its spokeswoman noted: “Others have implemented a reject button (30% of all warned websites) but are still ignoring other aspects like deceptive designs.”

Noyb’s cookie complaints have already led to some regulatory action, with the European Data Protection Board (EDPB) establishing a special taskforce last year to coordinate responses to what the group suggests could end up as as many as 10,000 cookie consent complaints being filed — although the first DPA decisions related to complaints it lodged last year are still pending.

“We hope for the coordinated approach by the EDPB taskforce,” said its spokeswoman, adding: “The Austrian DPA so far has been the most active one in processing the complaints followed by some of the German DPAs. We hope to receive the first decisions by the end of this year.”

Now that this final round of OneTrust complaints has been filed, the not-for-profit group says it will move onto sites using other so called consent management platforms (CMPs) — expanding the scope of its automated complaint-cum-compliance platform to cover rival CMPs, such as TrustArc, Cookiebot, Usercentrics and Quantcast.

So scores more sites which haven’t been caught up in noyb’s sweeps yet, despite operating blatantly bogus consent banners, will be on the receiving end of a pointed letter vis-a-vis their cookie compliance in the near future.

In parallel with firing off lots of these letters over the past year+, noyb has also been gathering data on the impact of the cookie complaint project — and plans to issue a report on what it’s learned later this year.

Separately, France’s DPA, the CNIL, has been pretty active on cookie consent enforcement — taking some tough action against a number of tech giants (Amazon, Facebook and Google), under the ePrivacy Directive, that has enabled it to issue some major fines over abusive cookie tracking practices — and which appears to have forced (some) reform.

The ePrivacy legal route has allowed the CNIL to circumvent the GDPR’s one-stop-shop mechanism, which critics blame for undermining enforcement of the bloc’s flagship data protection regulation, especially against Big Tech, by funnelling (and bottlenecking) complaints through a handful of so-called lead DPAs (Ireland being the biggest) on account of a handful of markets having large numbers of tech giants regionally located on their soil.

noyb’s approach of filing large batches of thematic GDPR complaints is another strategy to push back against enforcement delays by simultaneously looping in DPAs across the bloc to tackle an issue, encouraging coordination, joint working and (it hopes) a pipeline of decisions that defend European citizens’ rights.

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Snapchat officially introduces parental controls through a new ‘Family Center’ feature – TechCrunch

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Snapchat today is rolling out its first set of parental controls, after announcing last October it was developing tools that would allow parents to gain better visibility into how their teens used the social networking app. The update follows the launches of similar parental control features across other apps favored by teens, including Instagram, TikTok and YouTube.

To use the new feature, known as Family Center, parents or guardians will need to install the Snapchat app on their own device in order to link their account to their teens through an opt-in invite process.

Once configured, parents will be able to see which accounts the teen is having conversations with on the app over the past seven days, without being able to view the content of those messages. They’ll also be able to view the teen’s friend list and report potential abuse to Snap’s Trust & Safety team for review. These are essentially the same features TechCrunch reported earlier this year were in development.

Parents can access the new controls either from the app’s Profile Settings or by searching for “family center” or related terms from the app’s Search feature.

Snap notes the feature is only available to parents and teens aged 13 through 18 as the app is not meant to be used by younger users. The launch comes on the heels of increased pressure on social networks to better protect their minor users from harm both in the U.S. and abroad. This has led big tech companies to introduce parental controls and other safety features to comply with E.U. laws and expected U.S. regulations.

Other social networks have introduced more expansive parental controls compared with what’s available at launch from Snapchat’s Family Center. For example, TikTok allows parents to set screen time controls, enable a more “restricted mode” for younger users, turn off search, set accounts to private, restrict messaging as well as who can view the teen’s likes and who can comment on their posts, among other things. Instagram also includes support for time limits set by parents alongside its parental controls.

Snap, however, points out that it doesn’t require as many parental controls because of how its app was designed in the first place.

Image Credits: Snap

By default, teens have to be mutual friends to begin communicating — so there’s a reduced risk of them receiving unwanted messages from potential predators. Friend lists are private and teens aren’t allowed to have public profiles. In addition, teenage users only show up as “Suggested Friends” or in search results when they have mutual friends in common with the user on the app, which also limits their exposure.

That said, parents’ concern over Snapchat isn’t limited to fears of unwanted contact between teens and potentially dangerous adults.

At its core, Snapchat’s disappearing messages feature makes it easier for teens to engage in bullying, abuse and other inappropriate behavior, like sexting. As a result, Snap has been the subject of multiple lawsuits from grieving parents whose teens committed suicide. They claim that Snap’s platform helped facilitate online bullying, which has since led the company to revamp its policies and limit access to its developer tools. It also cut off friend-finding apps which had encouraged users to share their personal information with strangers — a common avenue for child predators to reach younger, vulnerable Snapchat users.

Sexting has also been an issue of multiple lawsuits. Most recently, a teenage girl initiated a class-action lawsuit against Snapchat which alleges its designers have done nothing to protect against the sexual exploitation of girls using its service.

Image Credits: Snap

With Snapchat’s new Family Center, the company is giving parents some insight into teens’ use of the app — but not enough to fully prevent abuse or exploitation, as it favors maintaining the teen’s privacy.

For parents, the ability to view a teen’s friends’ list doesn’t necessarily help them understand if those contacts are safe. And parents don’t always know the names of all their teens’ classmates and acquaintances, only those of their closer friends. Snap also doesn’t allow parents to block their teens from sending photos to friends privately, nor has it implemented a feature similar to Apple’s iMessage technology which automatically intervenes to warn parents when sexually explicit images are being sent in chats. (Though it does now tap into CSAI Matching technology to remove known abuse material.)

The Family Center also offers no controls over if and how their teen can engage with the app’s Spotlight feature, a TikTok clone of short videos. Nor can parents control whether or not their teen’s live location can be shared on the in-app Snap Map. And parents can’t control who their teens can add as friends.

The company’s Discover section is ignored by the parental controls, as well.

In a Congressional hearing last year, Snap had been asked to defend why some content in its Discover section was clearly aimed at adults — like invites to sexualized video games, articles about going to bars or those about porn, and other items that seemed out of sync with the app’s age rating of 13+. The new Family Center offers no control over this part of the app, which includes a sizable amount of clickbait content.

We’ve found this section consistently features intentionally shocking photos and medical images  — similar to the low-value clickbait articles and ads you’ll see smattered across the web.

At the time of writing, a quick scroll through Discover uncovered various articles designed to frighten or alarm — at least three articles featured photos of giant spiders. Another was about a parent who murdered her children. One story focused on Japan’s suicide forest and another was about people who died at theme parks. There was also a story of a teacher caught “cheating with” (its words) a 12-year-old student — a truly disgusting way to title a story about child sexual abuse. And there were multiple photos of rare medical conditions that should probably be left to a doctor’s viewing, not shown to younger teens.

Snap says a future update will introduce “content controls” for parents and the ability for teens to notify their parents when they report an account or a piece of content to Snap’s safety team.

“While we closely moderate and curate both our content and entertainment platforms, and don’t allow unvetted content to reach a large audience on Snapchat, we know each family has different views on what content is appropriate for their teens and want to give them the option to make those personal decisions,” a Snap spokesperson said of the upcoming parental control features.

The company added it would continue to add other controls after gaining more feedback from parents and teens.

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