Why EV startups should’ve hit the brakes before merging with a SPAC

The blank-check boom that made real many electric vehicle manufacturers’ dreams of going public may be nearing a close.

One such company, Faraday Future, is even in danger of being delisted, according to a filing with the U.S. Securities and Exchange Commission last week.

Faraday Future, Lordstown Motors, Lucid Motors, Nikola, and Canoo — nearly all the EV manufacturers that took a shortcut to an IPO by merging with a publicly traded shell company — have faced SEC scrutiny, sending their once sky-high valuations tumbling.

Faraday makes for a cautionary tale. The beleaguered seven-year-old EV company, which has yet to launch a vehicle, went public by merging with a special purpose acquisition company (SPAC) in July last year.

However, just months later, a report from activist short-seller Hindenburg Research led to an internal investigation that resulted in pay cuts for its top two executives and the dismissal of others. Hindenburg, a New York-based investment firm, has sounded alarm bells for several EV makers that took the SPAC route.

Chief among the investigation’s findings was Faraday had misled investors when said it had received more than 14,000 deposits for its long-awaited FF 91 vehicle. In fact, many of those reservations were actually unpaid, passive indicators of interest.

Last week, after the SEC subpoenaed several executives suspected of making other false claims, Faraday said the investigation could delay the filing of its 2021 annual report. Nasdaq said failure to comply with those guidelines puts the company in danger of being delisted from the stock exchange.

When boom goes bust

Over the past couple of years, a bevy of new EV companies – including startups yet to generate revenue or launch a commercial product – merged with SPACs to raise money to reimagine transportation and fulfill their visions of an electrified future. But analysts say that these once-promising businesses could soon be sold for parts — or fold altogether.

“Automotive manufacturing is not a business that’s friendly to new entrants,” said John Loehr, a managing director in the automotive and industrial practice at consulting firm AlixPartners. “You need significant production volumes to make money.”

Wagestream, a financial super app for waged workers, raises $175M, passes 1M users and doubles down on the U.S.

Front-line workers and those paid in hourly wages rather than salaries have become a prime target in the world of business IT, with a wave of apps helping them find jobs, do their jobs, communicate with each other better. In the latest development, a UK startup building what it describes as a financial “super app” specifically for waged workers and their financial well-being is announcing a round of funding to double down on its strategy. Wagestream, known best for working with employers to enable salary advances for employees by way of an app, has raised $175 million, money that it will use to continue adding in more features to the app, and to fuel a big push into the U.S. market.

“We are trying to solve workers’ financial pains,” said Peter Briffett, the CEO who co-founded the company with Portman Wills (CTO). “We’re building a positive route for frontline workers, who can now have $60,000 to $70,000 in savings for the first time.”

This is a Series C and it’s coming in the form of $60 million in equity and $115 million in debt.

The equity portion is being led by Smash Capital, funds and accounts managed by BlackRock; and the debt financing is coming from Silicon Valley Bank. Wagestream has raised about $257 million in debt and equity, and it is not disclosing its valuation with this round. Notable to the company’s structure and cap table — and one key way that it has differentiated itself from the cloud hanging over the concept of “payday lenders” in the UK and the U.S. — is that it is built on a social charter and is part-owned by UK-based financial charities and impact funds — specifically, the Joseph Rowntree Foundation, Barrow Cadbury Trust, Social Tech Trust, Big Society Capital, and the Fair by Design fund. Other backers in previous rounds have included Village Global, the social impact VC backed by the likes of Jeff Bezos and Bill Gates.

As a measure of how Wagestream is doing, the company has been on a roll in its growth. Currently more than 1 million workers across 300 employers have access to the app globally. It’s been seeing the strongest growth most recently in the U.S., where 250,000 retail, hospitality and healthcare workers have access to Wagestream through their employers (the deal is done with the latter but it’s up to the workers themselves whether they want to use it or not). Customers include big names like Burger King, Popeyes, Crate & Barrel and University of Chicago.

Other markets in addition the U.S. and U.K. where Wagestream is currently active include Spain and Australia.

The pain point that it’s addressing is a simple one: waged workers, partly because of how they are paid and how much they are paid, often find it very challenging to save money against spending it paycheck to paycheck.

Part of that is because of the sheer amount of money that they have, but part is also the cadence of how they get paid (weekly or bi-weekly versus monthly) and simply the tools that are incorporated into their pay to make it easier to save and use the funds for more than regular day-to-day living. The idea with Wagestream is not just to give those workers faster liquidity when they need it, but to give them the ability to use that money in different ways — for example with features to invest small amounts into stocks, and to bring in controls to save money incrementally in a way that makes the most practical sense for those users. There are also options to consult with a financial coach, and similar to other neobanks’ superapps, Wagestream “learns” about users to personalise further suggestions regarding a users’ finances.

What has been interesting, Wills said, was that employers themselves are “leaning in” to working with Wagestream more because they’ve started to see it as a sweetener when they are recruiting staff, and also to help with reducing employee churn, which is a persistent problem in the waged-working world.

He noted that there are currently some 12,000 jobs listed on Indeed.com (a commonly used recruiting platform in this sector) that advertise Wagestream as a benefit for those interested in applying.

“It’s hard to recruit people and we become a retention and recruitment benefit,” he said. “And we found that people actually do more hours of work if they have earlier access to the money they will be paid. It helps them budget their financial lives better.”

The move into the U.S. will bring a new set of challenges to Wagestream, but also potentially new opportunities. The U.K., where it has most of its customers today, has 11 major banks, and most people have bank accounts, not least because it’s completely free for them — no fees and so on — and so many people have their paychecks directly funneled there. This has meant that Wagestream hasn’t focused on building a “banking app” for U.K. users.

The U.S. on the other hand has no less than 4,300 banks, and yet it still has a massive population of “unbanked” and “underbanked” among waged workers because in fact a lot of banks charge a various set of fees, making it a cost many do not want to bear.

“Around 28% are using check cashing services” — rather than getting funds paid into accounts, Wills said. “This means a paper paycheck and paying someone 10-12% of net wages to cash a check. So a prepaid card product is very high on the roadmap in the U.S. for us.” This would give users the option of foregoing a check cashing service and the associated fees, and potentially using that cut for something else, like investments.

Covid-19 put a spotlight on frontline workers — the essential people who had to continue doing their jobs in tough circumstances while so many others were ensconced in home offices — and their ranks are definitely not going away, with an estimated 2 billion of them globally. It’s frankly great to see more being built to address their needs.

“The combination of financial exclusion and a rising cost of living have created severe financial stress for hard-working Americans,” said Brad Twohig, Managing Partner at Smash Capital, in a statement. “We’ve invested in Wagestream because its team has reimagined the world of work making it more accessible and rewarding for millions of people.”

Front-line workers and those paid in hourly wages rather than salaries have become a prime target in the world of business IT, with a wave of apps helping them find jobs, do their jobs, communicate with each other better. In the latest development, a UK startup building what it describes as a financial “super app”

Union.ai raises $10M to simplify AI and ML workflow orchestration

Union.ai, a startup emerging from stealth with a commercial version of the open source AI orchestration platform Flyte, today announced that it raised $10 million in a round contributed by NEA and “select” angel investors. CEO Ketan Umare says that the proceeds will be put toward supporting the Flyte community by “improving the accessibility, performance and reliability of Flyte” and broadening the array of systems that Flyte integrates with.

While companies find AI’s predictive power alluring, particularly on the data analytics side of the organization, achieving meaningful results with AI often proves to be a challenge. It’s true that AI can help to project revenue, for example, by identifying trends in buying and selling. But implementing and maintaining the data pipelines necessary to keep AI systems from drifting to inaccuracy can require substantial technical resources.

That’s where Flyte comes in — a platform for programming and processing concurrent AI and data analytics workflows. Union’s team, including Umare, helped to build Flyte while at Lyft, where it was used to help create a system to calculate the estimated time of arrival (ETA) for drivers to get from point A to point B.

“[Union’s] founders first met at Lyft, where we joined the team responsible for calculating the ETA for a Lyft driver to get from point A to point B,” Umare told TechCrunch via email. “Searching for the right solution led the team deep into machine learning techniques, which came with requirements to use large amounts of data and deliver robust models to production consistently … The techniques used were platformized, and the solution was used widely at Lyft.”

Lyft contributed Flyte to open source in 2020, granting the trademark to the Linux Foundation a year later. That’s when Union’s team saw an opportunity to layer paid services on top of the project in the cloud.

“A managed version of Flyte, called Union Cloud, will allow smaller teams and organizations to use the power of Flyte without the need to staff up on infrastructure teams,” Umare continued. “We [founded Union] because we believe that machine learning and data workflows are fundamentally different from software deployments. This is because software is more precise with a slower lifecycle while machine learning and data workflows start off being experimental and may need to be quickly productionized.”

Taking Flyte

Umare and Union’s other co-founders, Haytham Abuelfutuh and George Snelling, all have deep backgrounds in the tech industry. Prior to joining Lyft, Umare was a senior software engineer at Amazon and a principal engineer at Oracle, where he led development of a block storage product for an infrastructure-as-a-service and bare metal offering. Abuelfutuh spent seven years as an engineer at Microsoft and three as a developer at Google, where he helped to ship an internal software library for first-party apps including Google Photos. Snelling — also a Microsoft veteran — co-founded several startups (Westside, LabKey and Patchr) and spent time at Salesforce as a senior director of engineering.

With Union Cloud — the launch of which coincides with the release of Flyte version 1.0 — Umare says the goal is to reduce (and ideally eliminate) the unwieldy infrastructure that can crop up in data science projects and hamstring development. At their worst, messy abstractions can necessitate rebuilding infrastructure to deploy AI to production, Umare points out — negatively affecting the potential return on investment.

According to a 2021 Wakefield Research report, enterprise data engineers spend nearly half their time building and maintaining data pipelines. Sixty-nine percent of respondents to the survey — mainly data engineers — said that business outcomes would improve if their teams could contribute more to business decisions and spend less time on manual pipeline management.

“Production machine learning is still in its infancy at the moment, especially at companies outside big tech. Thus, most companies start off with DIY — that is our primary competition,” Umare said. “We took a radically different, first-principles approach to defining what a workflow means for machine learning and data scientists. We started with a goal to minimize human errors and try to help predict problems ahead of time [and worked] closely with extremely sophisticated and a diverse set of partners like Spotify, Gojek and Freenome [to help] refine the solution.”

Union Cloud inherits all of Flyte’s characteristics and capabilities, including connectors between computation back ends that record all changes to an AI pipeline. Union Cloud also stores a history of all a pipeline’s executions and provides a dashboard, command-line interface and API to interact with the computations.

Union Cloud — and Flyte — define workflows as multiple tasks. Workflows and tasks can be written in any programming language and stay on-premises, as does data moving through those components.

Cloud advantage

So what’s the value add with Union Cloud? Umare says that it adds “agility, reproducibility, and security” to Flyte by centralizing infrastructure management and maintaining “high” privacy and compliance standards. “Our products are built with zero-trust principles in mind and thus our users can use [it] to build a self-serve platform that still maintains high security standards,” he continued. “Data science is very academic, which directly affects machine learning. There is a lot of fantastic research and literature that is available in academia, which is hard to productionize. We need to bridge both these worlds in a structured and repeatable way.”

Umare also sees Union Cloud as a way to reduce the cost of developing new products and systems in a way that the open source Flyte project can’t accomplish. While he concedes that similar efforts from other vendors exist, like AWS Sagemaker, he believes that they fail to integrate well with the rest of the data science ecosystem.

“We have been at this problem for over five years, refining our solution and iterating based on real-world feedback and requirements,” Umare said. “The machine learning sector is already large and growing within traditional companies as well. We view growth potential to not be limited by the size of the current demand however, but rather by the experience we can deliver, which is why we’ve focused purely on customer success and open source adoption. This will lead to revenue growth in the near future.”

On the topic of growth, Union plans to double its 20-person headcount by the end of the year as it focuses on product buildout. Umare didn’t have statistics to share on Union Cloud interest or uptake, but reiterated that “thousands” of users across companies such as Lyft, Spotify, Toyota subsidiary Woven Planet, and biotech and finance brands have adopted Flyte.

Union.ai, a startup emerging from stealth with a commercial version of the open source AI orchestration platform Flyte, today announced that it raised $10 million in a round contributed by NEA and “select” angel investors. CEO Ketan Umare says that the proceeds will be put toward supporting the Flyte community by “improving the accessibility, performance

Register for free and explore data trends at Data & the Culture Transformation

Data — it’s the lifeblood of every company, and as our data culture transforms, so too must your business. An emerging, innovative data ecosystem promises to integrate disparate data sources, provide a more complete picture of business, both present and future, and improve enterprise collaboration at every level.

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Attending Data & the Culture Transformation is 100% free. Register today, join us online and gain a deeper understanding of the changes driving new, collaborative data ecosystems — and how they can benefit your business.

Data — it’s the lifeblood of every company, and as our data culture transforms, so too must your business. An emerging, innovative data ecosystem promises to integrate disparate data sources, provide a more complete picture of business, both present and future, and improve enterprise collaboration at every level. Understanding the rapidly changing trends in data

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The sparse and inconsistent availability of urban data is currently hampering efforts to manage our cities fairly and effectively—but this could be solved by exploiting the latest advances in artificial intelligence.The sparse and inconsistent availability of urban data is currently hampering efforts to manage our cities fairly and effectively—but this could be solved by exploiting the latest advances in artificial intelligence.Machine learning & AI