Some more comments from readers on the changing culture around startups filing their Form Ds with the SEC, and then a short update on SoftBank and a bunch more article reviews.
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Lawyers are pretty uniform that disclosure is no longer ideal
If you haven’t been following our obsession with Form Ds, be sure to read up on our original piece and follow up. The gist is that startups are increasingly foregoing filing a Form D with the SEC that provides details of their venture rounds like investment size and main investors in order to stay stealth longer. That has implications for journalists and the public, since we rely on these filings in many cases to know who is funding what in the Valley.
Morrison Foerster put together a good presentation two years ago that provides an overview of the different routes that startups can take in disclosing their rounds properly.
Traditionally, the vast majority of startups used Rule 506 for their securities, which mandates that a Form D be filed within 15 days of the first money of the round closing. These days though, more and more startups are opting to use Section 4(a)(2), which doesn’t require a Form D, but also doesn’t provide a “blue sky” exception to start securities laws, which means that startups have to file in relevant state jurisdictions and no longer have preemption from the SEC.
David Willbrand, who chairs the Early Stage & Emerging Company Practice at Thompson Hine LLP, read our original articles on Form Ds and explained by email that the practices around securities disclosures have indeed been changing at his firm and others:
We started pushing 4(a)(2) very hard when our clients kept getting “outed” thru the Form D and upset about it. In my experience, for 99% is the desire to remain in stealth mode, period.
When I started in 1996, Form Ds were paper, there was no internet, and no one looked. Now they are electronic and the media and blogs scrape daily and publish the information. It actually really is true disclosure! And it’s kind of ironic, right, which goes to your point – now that it’s working, these issuers don’t want it.
What I find is that the proverbial Series A is the brass ring, and issuers wants to call everything seed rounds (saving the title) until something chunky shows up, and stay below the radar too. So they pop out of the cake publicly for the first time with a big “Series A” that they build press around – and their first Form D.
Another piece of feedback we received was from Augie Rakow, the co-founder and managing partner of Atrium, which bills itself as a “better law firm for startups” that TechCrunch has covered a few times before. He wrote to us that in addition to the media concerns, startups also have to be aware of the broad cross-section of interested parties to Form Ds that hasn’t existed in the past:
Today, there is a bigger audience in terms of who cares about venture backed companies. Whether this spun off from the launch of the Facebook movie or the fact that over two billion people across the global have the internet at their fingertips via smartphones, people are connected and curious. The audience is not only larger but also encompasses more national and international interests. This means there are simply more eyes on trends, announcements, and intel on privately held companies whether they are media, investors, or your competitors. Companies that have a good reason to stay stealth may want to avoid attracting this attention by not making a public Form D filing.
For startups, the obvious advice is to just consult your attorney and consider the tradeoffs of having a very clean safe harbor versus more work around regulatory filings to stay stealthy.
But the real message here is for journalists. Form Ds are no longer common among seed-stage startups, and indeed, startup founders and venture investors have a lot of latitude in choosing how and when they file. You can no longer just watch the SEC’s EDGAR search platform and break stories anymore. Building up a human sourcing capability is the only way to get into those early investment rounds today.
Finally — and this is something that is hard to prove one way or the other — the lack of disclosure may also mean that the fears around seed financing dropping off a cliff may be at least a little bit unfounded. Eliot Brown at the Wall Street Journal reported just yesterday that the number of seed financings is down 40% according to PitchBook data. How much of that drop is because of changing macroeconomic conditions, versus changes in filing disclosures?
Quick follow up on SoftBank
Last week, I also got obsessed with SoftBank. The company confirmed today that it intends to move forward with the IPO of its Japanese mobile telecom unit, according to WSJ and many other sources. The company is targeting more than $20 billion in proceeds, and its overallotment could drive that above $25 billion, or roughly the level of Alibaba’s record IPO haul.
One interesting note from Taiga Uranaka at Reuters on the public issue is that everyday investors will likely play an outsized role in the IPO process:
Yet SoftBank’s brand name is still likely to draw retail investors long accustomed to using SoftBank’s phone and internet services. Many still see CEO Son as a tech visionary who challenged entrenched rivals NTT DoCoMo Inc ( 9437.T ) and KDDI, and brought Apple Inc’s ( AAPL.O ) iPhone to Japan.
Japanese households are commonly seen as an attractive target in IPOs with their 1,829 trillion yen in financial assets, even if they are traditionally risk-averse with over 50 percent of assets in cash and deposits.
More than 80 percent of the shares will be offered to domestic retail investors, a person with knowledge of the matter told Reuters.
Pavel Alpeyev at Bloomberg noted that “SoftBank is looking to tempt investors with a dividend payout ratio of about 85 percent of net income, according to the filing. Based on net income in the last fiscal year, that would work out to an almost 5 percent yield at the indicated IPO price.” A higher dividend ratio is particularly attractive to retired individual investors.
Despite SoftBank’s horrifying levels of debt, Japanese consumers may well save the company from itself and allow it to effectively jump start its balance sheet yet again. Complemented with a potential Vision Fund II, Masayoshi Son’s vision for a completely transformed SoftBank seems waiting for him in the cards.
Notes on Articles
Tech C.E.O.s Are in Love With Their Principal Doomsayer – Nellie Bowles writes a feature on Yuval Noah Harari, the noted philosopher and popular author of Sapiens. Bowles investigates the paradoxical popularity of Harari, who sees technology as creating a permanent “useless class” and criticizes Silicon Valley with his now enduring popularity in the region. Interesting personal details on the somewhat reclusive Israeli, but ultimately the question of the paradox remains sadly mostly unanswered. (2,800 words)
Why Doctors Hate Their Computers – Atul Gawande discusses learning and using Epic, the dominant electronic medical records software platform, and discovers the challenges of building static software for the complex adaptive system that is health care. His observations of the challenges of software engineering will be well-known to anyone who has read Fred Brooks, but the piece does an excellent job of exploring the balancing act between the needs of technocratic systems and the human design needed to make messy and complicated professions work. Worth a read. (8,900 words)
Picking flowers, making honey: The Chinese military’s collaboration with foreign universities – An excellent study by Alex Joske at the Australia Strategic Policy Institute on the hundreds of military scientists from China who use foreign academic exchanges as a means of information acquisition for critical scientific and engineering knowledge, including in the United States. China’s government under Xi Jinping has made indigenous technology development a chief domestic priority, and the U.S. innovation economy is encouraged to increasingly guard its intellectual property. (6,500 words)
The Digital Deciders – New America report by Robert Morgus who investigates the fracturing of the internet, which I have written about at some length. Morgus finds that a small group of countries (the “digital deciders”) will determine whether the internet continues to be open or whether nationalist interests will close it off. Let’s all hope that Iraq believes in freedom of expression and not Chinese-style surveillance. Worth a skim. (45 page report, but with prodigious tables)
Bluetti AC200P Power Station Review
When it comes to batteries, you almost always have to make a compromise between power and size. That’s more true with portable batteries where mobility plays a more critical role. There are times, however, when the reverse is true and charging power becomes the deciding factor. The latter is true for Maxoak’s newest portable power station, the 2000Wh Bluetti AC200P, which uses the term “portable” very loosely, at least in comparison to other portable power stations. In exchange, however, you won’t have to make that many compromises in what or how many you can juice up with it.
This thing is huge, no doubt about that. Of course, that may be expected if you noticed the “2000W” or “2000Wh” label that the Bluetti AC200P comes with. This is twice the capacity of the Jackery Explorer 1000, for example, but also has more than twice the features and output options.
At 16.5 x 11 x 15.2 inches and weighing 60.6 lbs, almost 27.5kg, the Bluetti AC200P is barely portable. Sure, you can still carry it with some effort, but it’s meant more to be carried to its final location rather than carried around everywhere. As if to emphasize that nature, There are no carrying handles on top, just handlebars at the sides.
The power station’s design is clean and utilitarian, with all the action happening only on the front side. That includes the LCD touch screen that not only shows battery stats but also lets you control some settings. Unfortunately, that screen is easily defeated by bright outdoor light, like the sun, for example. The top, as mentioned, is bereft of any carrying handles or any structure for that matter, leaving the surface clear and flat for the wireless charging areas.
Power is the defining trait of the Bluetti AC200P and that comes via the 2000Wh battery inside as well as the High 2000W AC inverter. With the plethora of output options available, the power station makes short work of mobile devices, easily charging them hundreds of times if really needed.
It can also handle small appliances, including mini-fridges, something more portable power stations can only dream of.
The Bluetti AC200P also offers a variety of charging options for the battery itself, with solar charging advertised as the best method in both efficiency and economy. That said, that requires a separate purchase and a 400W wall charger will have to do.
You can also charge via a car charging cable and the Maxoak packages all needed cables, amusingly even the Solar Charging Cable.
It also bears noting that the Bluetti AC200P uses Lithium Iron Phosphate, a.k.a. LifePO4. This is the very same kind of battery used in electric vehicles for its reliability, safety, and long lifetimes even under higher temperatures.
Of course, the power station does have fans to keep things cool but they are pretty silent so you won’t have to worry about disturbing neighbors.
All that power would go to waste, however, if the portable power station didn’t allow users to take advantage of it. Fortunately, the Bluetti AC200P is all about that but, unfortunately, this is also where it makes a few compromises, too.
The highlight, of course, are the six AC outlets available for anything, from that mini-fridge to that laptop that still doesn’t support USB-C charging, as long as they are OK sharing that 2000W output. There are two 12V/3.0A DC ports to complement it, a lone 12V/25A DC port, and a 12V/10A DC car charger port.
For mobile devices, you have four 5V/3A full-sized USB-A ports, none of which support any fast charging technology, like Qualcomm’s Quick Charge.
You’ll have to make do with the single USB-C charger that does output up to 60W of power, good enough for some lighter laptops. Other laptops, however, might trickle charge only at that rate and might be better off using the AC outlets instead.
Last but not the least, the Bluetti AC200P also offers two wireless charging pads capable of a shared 15W of power output. You’ll have to keep that in mind when using both at the same time. Unfortunately, placing devices can be a bit tricky as you have to really hit that small area where the charging coil is located underneath.
With a 2000Wh LifePO4 battery and a total of 17 charging output options, the Bluetti AC200P 2000Wh Portable Power Station definitely exudes power and does its name justice.
It’s not without costs, of course, primarily the size and weight of the box, but it makes up for that in versatility. Then there’s also the $1,999.99 price tag that some might balk at. It is clearly a tool designed to meet a specific need and, fortunately, it does impress when it comes to meeting that need.
GPD WIN 3 gaming handheld PC mixes old design with new hardware
The success of the Nintendo Switch revived interest in portable gaming consoles and gave birth to some devices and smartphone accessories that tried to capitalize on that. Even before the age of the Switch, however, GPD was already trying its luck with dedicated Android gaming handhelds before stumbling upon a niche yet profitable portable PC gaming market. Its latest attempt is perhaps its most ambitious yet, cramming almost unbelievable specs into a design that looks like a blast from the past.
Those who have been following the tech market long enough may experience a bit of deja vu looking at the GPD WIN 3, the latest crowdfunded portable gaming PC handheld from the company. There is no mistaking it takes inspiration from the 2006 Sony VAIO UX and the small number of “slider” ultra-mobile PCs or UMPCs that tried to carve a niche during those days. Of course, the GPD WIN 3 applies some modern touches, starting with what’s running inside.
The contraption is powered by a Core i7-1165G7 (or Core i5-1135G7) with 16GB of LPDDR4X 4266 MHz RAM and 1TB of M.2 SSD storage, quite the powerhouse considering the size of the GPD WIN 3. There’s also the Intel Iris Xe graphics, the chipmaker’s somewhat discrete GPU and its latest attempt at making it big in PC gaming. There are, of course, the usual gaming buttons and joysticks flanking the touch screen while its special trick is the touch keyboard hidden underneath that same sliding screen.
There are, of course, certain compromises that have to be made with a gaming PC of this size and power. For one, the 5.5-inch screen maxes out at 1280×720 pixel in order to maximize the graphics hardware, allowing it to run games at moderate frame rates and decent settings but at lower resolutions. The keyboard, which lacks the tactile feedback of physical keys, is also best for brief text input only, for in-game chats, logins, etc.
Given this is pretty much a laptop in a small form-factor, it shouldn’t be surprising that the price tag is anything but small, too. The lowest you can get it on Indiegogo right now is $799 for the Core i5 option but you might want to consider throwing in $50 more for a dock that converts the GPD WIN 3 into a desktop, as long as you have a bigger screen, a keyboard, and a mouse. The campaign, which is pretty much a pre-order system, still has over a month left. Judging by how many already grabbed the highest $949 tier, however, it’s clear that this might also be GPD’s most successful product yet.
Apple M1 Macs can no longer sideload iPhone, iPad apps
Apple’s M1 Silicon opened the doors for more iOS and iPadOS apps to run on macOS beyond the very few supported by Mac Catalyst on Intel-based Macs. Unsurprisingly, some consider the doors still not opened wide enough as some apps are still unavailable from the Mac App Store. That has pushed some to look for a workaround that allowed them to install almost any iPhone or iPad app on M1 Macs. Unfortunately for them, Apple has now closed that window, perhaps for good.
It might boggle the mind why some M1 Mac owners would want to sideload iOS apps when iOS apps are supported on the new ARM-based computers. The reason pretty much boils down to why Mac users also “sideload” apps outside of the Mac App Store, at least for apps that are not available from Apple’s sanctioned store in the first place. That is to say, not all iOS and iPadOS apps are available for installation on M1 Macs.
Although M1 Macs are technically capable of running them, Apple gave developers the option not to have their iPhone apps listed on the Mac App Store for one reason or another. Perhaps they have a dedicated Mac app already or simply don’t want to support that use case and the potential headaches it may bring. Unsurprisingly, a few enterprising power users have found ways to work around that, using unsanctioned tools to sideload those apps.
Apple was, of course, unamused and has now pushed a server-side update that effectively blocks that possibility. Users who try to sideload unsupported iOS apps on M1 Macs will be met with a failure message if they’re on macOS 11.1 Big Sur. Those running the beta version of macOS 11.2 will be shown a more descriptive explanation.
That said, if you were lucky enough to have installed such unsupported iPhone apps before this, those will still work as long as the app remains installed. Given how the change was implemented, 9to5Mac believes that there will be no way to work around this safeguard, at least not without some serious hacking.
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