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Ministerial statement on UK’s Online Safety Bill seen as steering out of encryption clash



The U.K. government appears to have steered out of a direct collision with the tech industry over a controversial, encryption-risking provision in the Online Safety Bill.

Mainstream tech giants and smaller encrypted messaging services have been united in warning for many months that the bill poses a direct threaten to the security and privacy of millions of web users by placing a legal obligation on encrypted messaging apps to bake-in content scanning capabilities on receipt of an order by the Internet regulator, Ofcom.

Security and privacy researchers, and legal experts, have also chipped in with a regular cadence of warnings that the bill’s broad surveillance powers risk — paradoxically — wreaking major harm on web safety. Yet the government has appeared deaf to concerns about the impact on encryption.

The bill targets a range of online harms and safety issues, including by putting obligations on platforms to tackle child sexual abuse material (CSAM). But here the government has explicitly sought to foster development of CSAM-scanning tools which could be applied to end-to-end encrypted (E2EE) messaging platforms without affecting user privacy — ignoring warnings from experts that there’s no way to circumvent E2EE without trashing people’s privacy and security.

Strongly encrypted messaging apps like Signal accused ministers of magic thinking. Even Apple waded into the public fray over the summer — warning the Bill poses a risk to web users’ security. WhatsApp and others have also warned they could shut services in the U.K. if the bill isn’t revised to remove the threat to encryption.

In recent months the government has sought to dampen concerns by suggesting Ofcom would not use these powers against strongly encrypted platforms which apply the gold standard (zero knowledge) E2EE, such as Signal, WhatsApp and iMessage. But the tech industry hit back — with the Signal Foundation’s president Meredith Whittaker among those asking why ministers wouldn’t clearly write the claimed limit into the text of the law to ensure strong legal protection for E2EE?

The compromise the government has apparently landed on now looks, at best, like a fudge — as there is still no clear statement putting E2EE beyond the reach of the bill’s scanning powers.

In a ministerial statement today in the House of Lords, where the bill was getting its third reading, Lord Parkinson of Whitley Bay said Ofcom could not be required to order scanning unless “appropriate technology” exists.

“When deciding whether to issue a notice [to scan for CSAM] Ofcom will work with the service to identify reasonable, technically feasible solutions to address the child sexual exploitation and abuse risk including drawing on evidence from a skilled person’s report. If appropriate technology does not exist which meets these requirements Ofcom cannot require its use,” he said. “That is why the powers include the ability for Ofcom to require companies to make best endeavours to develop or source a new solution.”

“It is right that Ofcom should be able to require technology companies to be able to use their considerable resources and their expertise to develop the best possible protections for children in encrypted environments. That has been our long standing policy position. Our stance on tackling child sexual abuse online remains firm and we’ve always been clear that the bill takes a measured, evidence-based approach to doing so,” he added.

The government’s line was highlighted earlier today, in a report by the FT ahead of the bill’s third reading — which wrote that the minister would state: “A notice can only be issued where technically feasible and where technology has been accredited as meeting minimum standards of accuracy in detecting only child sexual abuse and exploitation content.”

The newspaper also reported that “officials have now privately acknowledged to tech companies that there is no current technology able to scan end-to-end encrypted messages that would not also undermine users’ privacy”, citing “several people briefed on the government’s thinking”.

It’s the quietest of climb-downs, if indeed the FT’s sources have got an accurate snapshot of ministers’ views. But it’s probably as far as the government is going to go, given how deeply it’s dug this hole.

As we’ve reported before, even the the director of the research group it selected to carry out a technical evaluation of the “safety tech” projects that were given public funding back in 2021, as part of a Home Office competition to develop tech capable of detecting CSAM on E2EE services without comprising privacy, has warned of the folly of the effort.

“The issue is that the technology being discussed is not fit as a solution,” Awais Rashid, professor of cyber security at the University of Bristol and director of the Rephrain Centre, warned in a university press release in July. “Our evaluation shows that the solutions under consideration will compromise privacy at large and have no built-in safeguards to stop repurposing of such technologies for monitoring any personal communications.

Flagging up technical feasibility as a hard stop for Ofcom’s powers in a ministerial reading at this late stage of the bill’s passage looks to be the escape hatch the government has settled (and briefed on) to get out of a mess very much of its own making — a mess that’s generated increasingly attention-grabbing headlines about mainstream messaging apps preparing to exit the U.K. — without it being too explicit in carving out E2EE from the bill’s reach and risking a backlash from child safety campaigners who have been expending their own efforts on pushing for the bill’s powers to go even further.

Given this is a fudge, and given the continued existence in the bill of powers for Ofcom to order scanning on E2EE platforms the moment some developer claims to have come up with a feasible techie workaround — not to mention who knows what else might be lurking in the final text as a raft of amendments were also discussed today by Lord Parkinson — privacy campaigners are right to remain concerned.

In an early response to the FT’s report, posted to X (Twitter), Signal’s Whittaker called the government’s statement an “important moment” — and “a victory, not defeat” — while caveating her remarks by saying it is “not the final win”.

The Open Rights Group, a digital rights advocacy group which has also campaigned against the bill’s threat to encryption, described the government’s concessions as “welcome news” while arguing it would be “better if these powers had been completely removed from the bill”. “We continue to fight for the removal of the spy clause,” it added in remarks posted on X.

WhatsApp’s Will Cathcart also chipped in with a response, repeating his vow the platform would “never break our encryption”. “The fact remains that scanning everyone’s messages would destroy privacy as we know it,” he said. “That was as true last year as it is today. WhatsApp will never break our encryption and remains vigilant against threats to do so.”

The government, meanwhile, has rebutted any suggestion the minister’s remarks signal a change of tack.

In a statement emailed to TechCrunch a spokesperson for the Department for Science, Innovation and Technology said:

Our position on this matter has not changed and it is wrong to suggest otherwise. Our stance on tackling child sexual abuse online remains firm, and we have always been clear that the Bill takes a measured, evidence-based approach to doing so.

As has always been the case, as a last resort, on a case by case basis and only when stringent privacy safeguards have been met, it will enable Ofcom to direct companies to either use, or make best efforts to develop or source, technology to identify and remove illegal child sexual abuse content — which we know can be developed.

Monday saw technology companies including TikTok, Meta, Microsoft and more come together to discuss the threats posed by sexual offenders exploiting our children. We all agreed to continue to work together to tackle these heinous crimes wherever they take place.

Lord Parkinson also expressed gratitude for what he described as “constructive engagement” from technology companies over the summer as the government worked on various amendments to a bill that had already seen scores of changes, big and small, over years plural — and under several secretaries of state — since the first draft of the bill was published back in May 2021.

This report was updated to include WhatsApp’s public remarks

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.


Procurement is painful, so Pivot wants to simplify it



Earlier this year, a big French tech company started requiring an email to the CEO for every purchase above €1,000. That’s because they didn’t have the right tool to manage procurement.

Meet Pivot, a new French startup that wants to overhaul spend management solutions. Pivot wants to work with young companies that are growing fast and feel like they need a procurement solution. Instead of picking a legacy business spend management system from an ERP vendor, Pivot wants to be the first (and last) procurement system for these companies.

At the helm of the startup, you will find three experienced co-founders. Romain Libeau was one of the first employees at Swile and more recently acted as the Chief Product Officer for the French unicorn. Marc-Antoine Lacroix has spent several years working for Qonto as the Chief Technology Officer and then Chief Product Officer. Estelle Giuly has been a workflow engineers for several enterprise companies and for

“I worked a lot on operations at Swile, and especially on all the internal tools. I actually saw a sequencing where first we tried to get as many customers as possible, so first we focused on all the tools for our go-to-market strategy and sales — basically Salesforce. Then, you have a lot of customers, and you want to keep them happy. So we structured our customer service, our customer success team,” Romain Libeau told me.

“And then you get to the last brick, which is how well you manage all your financial flows,” he added. And that’s where Pivot comes in.

When companies hire a head of procurement, that person usually starts by listing all the requirements and issues a call for tenders. Usually, they get to choose between Oracle NetSuite’s procurement component or maybe Coupa. It then takes several months to integrate the product in the company and procurement teams feel like they are only using 10% of the feature set.

Pivot isn’t the only startup trying to improve procurement. In the U.S., Zip and Levelpath have both raised tens of millions of dollars. “There are some regional features, European features when it comes to compliance and the payment ecosystem,” Libeau said.

But the fact that some American startups are thriving also proves that there is a real market opportunity. That’s why Pivot has already raised a $5.3 million pre-seed round (€5 million) from several VC firms (Visionaries, Emblem, Cocoa, Anamcara and Financière Saint James) as well as entrepreneurs and investors such as Loïc Soubeyrand (founder of Swile), Steve Anavi (co-founder of Qonto), Hanno Renner (co-founder of Personio), Oliver Samwer (co-founder of Rocket Internet), Pierre Laprée, Alexis Hartmann and Alexandre Berriche.

And things have been advancing at a very rapid pace. After this funding round in April, the company started developing the product over the summer and launched it in September with a first client — Voodoo.

“We’re rolling out gradually, because, as I always tell our team, more haste, less speed. But we’re going to end the year with around ten customers. So we’ve got the deals, but we don’t want to rush into anything,” Libeau said.

A PO workflow for humans

If you work for a big company and you often fill out purchase orders, you know that it’s a painful process. There are too many fields, you’re not sure what you’re supposed to write in each field and you would rather find a workaround to avoid purchase orders.

Pivot is well aware of that and has designed a tool that makes the PO workflow less painful. Admins can set up workflows from Pivot’s interface directly — no coding skills required. For instance, a very large purchase with a software vendor might trigger a security review, an IT review, a legal review, etc. That’s why Pivot is betting on third-party integrations and an interface that works for everyone.

Pivot integrates directly with your existing tech stack. It fetches the company’s org chart for the approval workflow from the HR system, it retrieves budgets from Pigment, Anaplan, etc. It then communicates with your communication tools, such as Slack, Microsoft Teams and Jira.

And, of course, Pivot integrates with ERP software (NetSuite, SAP…) so that vendors, cost centers, compliance rules and more are instantly propagated once a purchase order is validated.

Too many companies waste time in approvals and endless workflows. Pivot wants to add a layer of spend management without slowing down business teams. And the timing seems right as many companies are reviewing how they spend money.

Image Credits: Pivot

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.

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Why we’re seeing so many seed-stage deals in fintech



Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous week. If you want to receive The Interchange directly in your inbox every Sunday, head here to sign up! It was a relatively quiet week in fintech startup land, so we took the time to scrutinize where we’re seeing the most funding deals.

Seed deals everywhere

Across the board in all industries, except perhaps AI, we’ve seen a big drop in later-stage funding deals and no shortage of seed-stage rounds.

When it comes to fintech, I can tell you at least anecdotally that the vast majority of pitches that hit my inbox are for seed rounds. It is very rare these days to get pitched for Series B or later, or even for Series A rounds.

Venture banker Samir Kaji, co-founder and CEO of Allocate, points out that the private markets often take their cues from the public markets and as such, it’s no surprise that we’re seeing far fewer later-stage deals and a plethora of seed rounds. The Fintech Index — which tracks the performance of emerging, publicly traded financial technology companies — was down a staggering 72% in 2022, according to F-Prime Capital’s State of Fintech 2022 report.

“Seed is typically the least affected because those companies are just too early to really feel like you have to worry about where the public markets are,” he told me in a phone interview last week. “We’re so far divorced from the time period where these companies are going to be large enough where the public market sentiment is going to really matter.”

Allocate, which recently just closed on $10 million in capital, is currently an investor in about 60 funds. But Kaji is seeing the tide beginning to turn.

“The investment pace in 2022 was just so slow, and the beginning of 2023 was incredibly slow as well, but we’re starting to see things pick up as people are now starting to see that the bid ask on deals at the Series A and later are starting to narrow,” Kaji added. “And I think entrepreneurs have started to capitulate to this new environment. This always is the case — it’s like an 18- to 24-month lag in the public markets. So I would expect much more later-stage activity again in the next 18 to 24 months.”

I asked our friends at PitchBook what they’re seeing, and unsurprisingly, in the second quarter, there were more seed deals forged in the retail fintech space (135) compared to any other stage. When it came to the enterprise fintech space, early-stage deals accounted for most of the deal activity (239) with seed-stage coming in a close second (221), according to PitchBook.

Will we start seeing more later-stage deals in 2024? I sure hope so. Will we see any fintechs actually go public? That’s probably less likely. But you can be sure we’ll be on the lookout.

Slope continues its climb

It’s always great to see startups rise through the ranks, especially at a time when fintech hasn’t been doing so well. One of the companies I have had the pleasure of following is Slope. The company, founded by Lawrence Murata and Alice Deng, developed a business-to-business payments platform for enterprise companies.

When covering the company’s initial $8 million seed round in 2021, I learned that Slope’s origins came from Murata watching his wholesaler family struggle with an easier way to manage payments. He and Deng built the company so that moving to a digital order-to-cash workflow was seamless.

Last year, Slope raised another $24 million in Series A funding, and this week banked $30 million in a venture round led by Union Square Ventures, which co-led the Series A. It also included participation from OpenAI’s Sam Altman and a list of other heavy VC hitters. Read more. — Christine

co-founders Lawrence Lin Murata and Alice Deng, B2B payments

Slope co-founders Lawrence Lin Murata and Alice Deng. Image Credits: Slope

Weekly News

TechCrunch Opinion: Fintech actually has a value system: Here’s how we can reclaim it

Introducing the a16z Global Payments Hub

Other items we are reading:

Apple is ordered to face Apple Pay antitrust lawsuit

Greenlight celebrates launch of web-based financial literacy library

Funding and M&A

As seen on TechCrunch

Pan-African contrarian investor P1 Ventures reaches $25M first close for its second fund

QED and Partech back South African payment orchestration platform Revio in $5.2M seed

Crediverso takes on legal after $3.5M capital infusion

Series, which aims to replace ERP systems, lands $25M

Seen elsewhere

Luge Capital: $71M first close of second fund completed

Colektia completes purchase of non-performing loans for $72M

Mexico’s albo receives $40m in Series C funds, striving for neobank profitability

Grow Credit Inc., a top 30 fintech app, secures $10m funding with USAA as lead investor in Series A round

StretchDollar raises $1.6M in pre-seed funding

WealthTech Vega exits stealth with over $8M funding

Farther closes Series B funding round to gain $131M valuation — This new round comes a little over a year after the wealth tech firm raised a Series A on a $50 million valuation. Check out TechCrunch’s earlier coverage of Farther.

Image Credits: Bryce Durbin

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.

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How to raise a Series A in today’s market



If you’re an early-stage founder, the crazy days of 2021 are a distant memory. Money is tight, and the process of getting more is as unsettled as ever.

The past few tumultuous years have tossed out the milestones that defined previous Series A benchmarks. But that doesn’t mean the game is lost. At this year’s TechCrunch Disrupt, three investors shared their perspectives on what’s changed, what’s working today, and what advice they’re giving founders who are looking to raise a Series A.

“As companies mature to seed and Series A, a year and a half ago, if you were at a million or even approaching a million in revenue, a Series A would come together in a snap. That has changed really quickly,” Maren Bannon, co-founder and managing partner at January Ventures, told the audience. “Now it’s probably more like 2 [million] to 3 million in revenue where those rounds come together in a snap.”

For founders, the moving goalposts can be incredibly frustrating — especially since the reasons for it are beyond their control. After a remarkable 13-year bull run, uncertainty crept into the market last year, dampening investor appetite for risk. Rising interest rates compounded the problem.

As a result, Series A investors have pulled back dramatically. “What we’ve noticed in the statistics is that the Series A deployment is down 60% over the last year and a half. The amount deployed per Series A is down 25% from $10 million to $7.5 million. And the number of deals getting done is much fewer,” said James Currier, general partner at NFX.

“The bulk of seed stage companies were [successfully] raising off of story, not traction,” Loren Straub, general partner at Bowery Capital, said of market conditions two years ago. “I think there’s been a real shift in focus towards traction, momentum, legitimate product-market fit.”

“A lot of the Series A investors are understandably looking for a higher bar,” she added.

A market crowded with venture capitalists hasn’t helped, either, Currier said. Back in the ’90s, there were about 150 general partners in the U.S., he said. Today, there are more than 31,000 listed on Signal, a network of investors his firm runs.

Disclaimer – This is just shared content from above mentioned source for knowledge sharing.

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