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Cyber threat startup Cygilant hit by ransomware
Cygilant, a threat detection cybersecurity company, has confirmed a ransomware attack.
Christina Lattuca, Cygilant’s chief financial officer, said in a statement that the company was “aware of a ransomware attack impacting a portion of Cygilant’s technology environment.”
“Our Cyber Defense and Response Center team took immediate and decisive action to stop the progression of the attack. We are working closely with third-party forensic investigators and law enforcement to understand the full nature and impact of the attack. Cygilant is committed to the ongoing security of our network and to continuously strengthening all aspects of our security program,” the statement said.
Cygilant is believed to be the latest victim of NetWalker, a ransomware-as-a-service group, which lets threat groups rent access to its infrastructure to launch their own attacks, according to Brett Callow, a ransomware expert and threat analyst at security firm Emsisoft .
The file-encrypting malware itself not only scrambles a victim’s files but also exfiltrates the data to the hacker’s servers. The hackers typically threaten to publish the victim’s files if the ransom isn’t paid.
A site on the dark web associated with the NetWalker ransomware group posted screenshots of internal network files and directories believed to be associated with Cygilant.
Cygilant did not say if it paid the ransom. But at the time of writing, the dark web listing with Cygilant’s data had disappeared.
“Groups permanently delist companies when they’ve paid or, in some cases, temporarily delist them once they’ve agreed to come to the negotiating table,” said Callow. “NetWalker has temporarily delisted pending negotiations in at least one other case.”
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Boston’s Q2 shows that the startup rebound isn’t ahead of us, it’s upon us
The coronavirus caused some disagreement amongst Boston’s venture capital community. Looking back at our mid-2020 survey of its VCs, some saw the city’s strength in biotech and healthcare as a competitive advantage, while others saw Boston’s diverse startup ecosystem as key to its survival.
And some were worried that activity was about to clamp down. Jeff Bussgang, Flybridge Ventures, put it most frankly: “Q2 financing for Boston is going to fall off a cliff. The biotech industry may see some bright spots […] but the financing market has frozen up as solid as the Charles River in February.”
With fresh data in hand, it appears that the more bullish were more right than the bears and that, in a good turn of affairs for Boston startups, Bussgang was wrong.
The city, much like the country, did not see the sharply negative quarter that many anticipated. Boston posted record venture capital investment in the period, its highest total since at least Q3 2018 according to CB Insights data.
The same dataset also says that Boston-area companies raised $3.7 billion across 126 deals. Indeed, the good news from Boston’s Q1 bested better-than-anticipated-results from both the global venture capital community, and the domestic VC world in Q2.
Bussgang sent an updated metaphor to the TechCrunch team in response to this data: “It was a tundra in March and April but, as happens in Boston, April showers and May flowers kicked in and the financing markets started to gush again in the late spring/early summer, just in time to save Q2 .”
While the data isn’t historically definitive due to reporting lags, it can be used as a directional sign that Boston’s rebound isn’t ahead of us, it’s upon us.
The solid numbers are a sign that COVID-19 and economic turmoil have put many startups in greater demand than before, which means that they need to amass money to meet growth needs.
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Activ Surgical raises $15 million to advance autonomous and collaborative robotic surgery
Boston-based startup Activ Surgical has raised a $15 million round of venture funding led by ARTIS Ventures, and including participation from LRVHealth, DNS Capital, GreatPoint Ventures, Tao Capital Partners and Rising Tide VC. The round will help Activ continue to develop and expand availability of its software platform, which it launched to market in May.
Activ Surgical’s ActivEdge platform uses data collected from surgical implements outfitted with sensors created by the company to collect real-time data during the actual surgical process. That data is then used to inform the development of machine learning and AI-based visualizations that can provide guidance to surgeons and surgical systems to help them reduce the occurrence of potential errors, and ultimately improve outcomes for patients.
The company’s primary aim is to bring technological innovation to the sphere of surgical vision, which still relies primarily on methods like using fluorescent dyes that date back more than 70 years. Activ wants to use computer vision to provide real-time visual insight into things that surgeons wouldn’t be able to see on their own — and ultimately to use those insights to power the next generation of both collaborative surgical robots and eventually even fully autonomous robotic surgical procedures.
ActivSight is the company’s first product in its ActivEdge platform offering, and is a small, connected imaging coddle that can be attached to existing laparoscopic and arthroscopic surgical instruments. The company is currently tracking toward getting their hardware cleared by the FDA for use by Q4 this year, and are working with eight hospital partners for pilot projects in the U.S.
The company has raised a total of $32 million in funding to date.
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Who’s writing first checks into startups?
Over the past two decades, the venture capital industry has exploded beyond anyone’s wildest imaginations.
What began as a sleepy industry in Boston and Menlo Park has now expanded to dozens of cities the world over. The National Venture Capital Association estimates that VCs deployed more than $130 billion in 2018 and 2019, and thousands of new investors have joined the ranks in recent years to find the next great startups.
All that activity, though, poses a dilemma for founders: Who actively writes checks? Who is a leader in a specific market or vertical? Who has the conviction to underwrite pathbreaking investments? Who, ultimately, do you want to have by your side for the next decade as your startup grows?
There are lists that rank VCs by their exit returns. There are lists that rank young VCs by their potential. There are lists of VCs who claim investment interest in various sectors. There are lists that try to ferret out deal volume, impact and other quantitative metrics. There are internal lists at accelerators that share collective wisdom between founders.
Who actively writes checks? Who is a leader in a specific market or vertical? Who has the conviction to underwrite pathbreaking investments? Who, ultimately, do you want to have by your side for the next decade as your startup grows?
All those lists and rankings have an important function to serve, but for all the compilations of investors out there, we couldn’t find a single one that publicly answered a simple yet vital question: Who are the VC investors who are leaders in specific verticals who should be a founder’s first stop during a fundraise?
Today’s venture industry is made up of thousands of investors with varying specialties, and far too many passive investors that are willing to participate in rounds but don’t actively participate in deals unless other investors have committed. Many don’t actively push to get deals done or don’t actively lead the charge to build a syndicate of investors.
With all that in mind, we’re excited to launch a new initiative that we hope will help answer those questions and help founders find that first check — The TechCrunch List.
Over the next few weeks, we’re going to be collecting data around which individual investors are actually willing to write the proverbial “first check” into a startup’s fundraising round and help catalyze deals for founders — whether it be seed, Series A or otherwise (i.e. out of your Series A investors, the first person who was willing to write the check and get the ball rolling with other investors). Once we’ve collected, cleaned and analyzed the data, we’ll publish lists of the most recommended “first check” investors across different verticals, investment stages and geographies, so founders can see which investors are potentially the best fit for their company.
Founders are used to being specialized; after all, they have to live and breathe their startups every single day. So it can be jarring to start talking to generalist investors who know little about a category and ask shallow questions only to render a judgment with irrelevant advice. One of the greatest impetuses for us to put together The TechCrunch List is that like founders, we also struggle to cut through the noise around the interests of individual VCs.
We’d argue that’s close to impossible. There is more spend on technology than ever before in history. Verticals are getting more competitive — market maps that used to have 10 to 50 companies have expanded to hundreds. The only way to compete today is to specialize, and that has never been more true for VCs.
In all, The TechCrunch List will publish the most recommended “first check” writers across 22 different categories, ranging from D2C & e-commerce brands to space, and everything in between. Through some data analysis around total investments in each space, we believe our 22 categories should cover the entirety or majority of the venture activity today.
To make this project a success and create a useful resource for founders, we need your help. We want to hear from company builders and we want to hear from them directly.
To make this project a success and create a useful resource for founders, we need your help. We want to hear from company builders and we want to hear from them directly. We will be collecting endorsements submitted by founders through the form linked here.
Through the form, founders will be asked to submit their name, their startup, the stage of company, the name of the one “first check” investor they want to endorse and a couple of minor logistical items. We are asking founders here for their on-the-record endorsement. We ask that you limit your recommendations to one (1) person per fundraise round.
While many investors may have helped you in your journey, we are specifically interested in the person who most helped you get a round underway and closed. The one who catalyzed your round. The one who guided you through the fundraise process. The one investor you would ultimately recommend to other founders who are trying to find their VC champion.
Our main goal is to help founders, dreamers and company builders find investors who will invest in them today, and with your help, we think we can. The TechCrunch List is not meant to identify every possible investor under the sun who might make an investment within a space, nor just the big household-name VCs whose reputations can sometimes seem more linked to their follower counts on Twitter as opposed to their bold term sheets.
Our hope is that this can be a go-to resource for founders looking to fundraise going forward, and with that in mind, we are very determined to improve the glaring representation gaps in the venture industry. It’s no secret that the world of VC still looks like a country-club membership roster, dominated by white men with strong opinions and loud voices. Looking at the data, it’s clear that there are groups that are particularly underrepresented, with only a small portion of the industry made up of Black, Latinx and female investors, for example.
We want to amplify these voices and we want to hear particularly from founders of color, female founders and other underrepresented groups. We also want to make sure our recommended investor lists are sufficiently representative and highlight underrepresented investors who might not have had equal opportunities in the past.
We want to help builders wade through the BS politics and fundraising annoyances that founders complain to us about on a daily basis, and help them identify qualified leads that are actually active, engaged and specialized and are the best fit to help founders raise money and grow now.
Thank you for your support. We’re excited to build The TechCrunch List with you — and for you.
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Rewarding civic pride and boosting the local economy? Akron, Ohio is trying out a startup for that
Akron, Ohio, the hometown of LeBron James; the seat of the U.S. tire industry; the 127 largest city in the U.S.; and the home of America’s first toy company, is now the latest site of a global experiment in whether cities can use behavioral economics to help foster good citizenship.
Thanks to the work of the city’s deputy mayor for integrated development, James Hardy, Akron is the first city to roll out services from an Israeli-based company called Colu. A startup backed by just over $20 million in financing from American and Israeli investors, the company has developed an app-based rewards service that cities can roll out to provide perks to users.
In Akron’s case, the initiative rewards points for shopping at local businesses that can be redeemed for discounts at those stores. The initial effort, which includes a platform for businesses to market directly to the app’s users, focuses on businesses owned by women and minorities (a response to the movement for racial justice that has sprung up in the wake of the murder of George Floyd in Minneapolis).
Akron is the first city of what Colu founder Amos Meiri expects to be a nationwide rollout throughout the U.S. The company already has managed to ink another agreement with the city of Chula Vista, Calif.
Colu, which has raised its capital from investors associated with blockchain technologies like Barry Silbert’s Digital Currency Group; the Boston-based venture capital firm, Spark Capital; New York’s Box Group and the Israeli corporate conglomerate, IDB Group, has deep ties to the cryptocurrency world of alternative financial instruments through Meiri.
One of the original architects of the Color coin blockchain experiment, Meiri’s work with Colu is in some ways an extension of that effort to create new kinds of economies powered by alternative financial mechanisms.
Meiri said cities typically pay for Colu out of their marketing budgets as a new way to communicate and attempt to influence civic behavior.
For Akron’s government officials, the company’s services are a way to boost locally owned businesses that have been hit hard by the state’s attempts to contain the COVID-19 outbreak.
“Our locally owned small businesses are facing enormous challenges and we need out-of-the-box ideas that safely connect them to consumers and turn local spending into a source of pride for residents,” said Akron Mayor Dan Horrigan, in a statement. “Our partnership with Colu will enable the city to reward customers for shopping local, improving revenues for our small businesses while helping folks stretch their dollars.”
Earlier work with the municipal government in Tel Aviv promoted sustainable business practice and encouraged businesses to do more to manage their waste and carbon footprint by introducing a “green label.” Businesses that followed the city’s guidelines were given the label and shoppers were encouraged to frequent those merchants.
Colu envisions itself as more than just a marketing and rewards platform for businesses. The company hopes it can draw users into a kind of social networking platform for civic engagement where users can share their own stories about city-life and their interactions with local business owners and the community.
In some ways, it’s a kinder, gentler version of China’s social credit scoring system, which is also designed to influence civic behavior. In this formulation, there’s a rewards system, but no mechanisms to punish citizens for bad behavior.
“Akron has a long history of innovation within our economy — this initiative draws on that legacy,” said Deputy Mayor Hardy, in a statement. “By putting the future of Akron’s locally owned small businesses in the palm of our citizens’ hands, we hope to make it easy for consumers to keep their money local and continue to strengthen our incredible community.”
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As funding slows in Boston, its early-stage market could shine
Chris Lynch, a founder and former general partner at Boston-based seed-stage fund Accomplice, remembers “VC Mountain in Waltham.”
Back then, entrepreneurs on funding quests would visit a building overlooking the Waltham Reservoir near Boston where they pitched to a few investors: Matrix Partners, Charles River Ventures and Highland Capital Partners.
“And if they didn’t invest in you, you weren’t getting money to start your company,” Lynch said.
Since then, Lynch has watched the area’s startup ecosystem reach the point where seed-stage firms are ubiquitous, but in a city populated with firms waiting to make first bets, the scene is unsurprisingly undergoing a funding drought. Crunchbase data indicates that the city’s Q2 venture capital pace slowed dramatically, with April seeing far fewer rounds and dollars invested in 2020 than in 2019.
Boston saw just seven known equity funding rounds in April, investments worth a hair under $60 million. In the year-ago April, Boston recorded 24 equity funding rounds worth more than $500 million.
Yet, while the numbers are slow, some Boston tech leaders think seed startups will continue to thrive thanks to accelerators and a healthy base of local early-stage investors. And Lynch, who left Accomplice in 2017, says the venture slowdown might help firms recalibrate their appetite for new deals to a more healthy pace.
“The advantage of more access to capital without a proportional increase in great ideas really waters down the fort,” he said, referring to upmarkets. “A lot of money has been invested in companies before they even proved their ideas were right, and I think even I fell into a trap of competing so hard for deals that I lost sight of a good deal.” He estimates that in our COVID-19 world, investors will start to again take three months for due diligence on a deal, versus three weeks to a signed term sheet.
If Boston’s seed investors becomes more conservative, that means that accelerators — homes of the brightest founders, often before they even have their first customer — will be pressed to react.
Accelerators
Venture Lane, a co-working space and startup incubator for early-stage companies, was nearing its one-year anniversary in the heart of Boston when COVID-19 hit the city.
The incubator, which traditionally hosts 10 startups at a time, made its whole program virtual and reworked existing content to help navigate the climate. Plus, per founder Christian Magel, its tips and workshops were opened up to any early-stage founder, not just the ones enrolled with Venture Lane. Hundreds have signed up, he said.
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Top investors predict what’s ahead for Boston’s VC scene in Q1
Before the COVID-19 pandemic shook up the world and reshaped the economy, Boston was quietly setting records.
According to new venture data compiled by TechCrunch, the region set what was at least a local maximum in venture capital raised in the space of a single quarter in Q1 2020.
But while Boston’s startup market announced a number of huge rounds that bolstered its total venture dollars raised in the first quarter, there were signs of weakness: Deal volume was its best since Q2 2019, according to a set of data compiled and released by PwC and CB Insights, but was still a little under the pace set in 2018.
So Boston’s startups raised lots of money, but couldn’t match prior highs when it came to the number of checks written. And those results were largely recorded before COVID-19 shuttered the city. Since then, we’ve seen a number of area startups lay off staff, something we explored last week.
Now, with fresh data in hand, we can take a closer look at the city’s first quarter of 2020. To better understand what we’re unpacking, we asked a number of local venture capitalists to weigh in. Let’s look back at Boston’s Q1 as we stride into Q2 with the help of Venture Lane, .406 Ventures, Volition Capital and Flybridge Capital Partners.
The data
Starting with a programming note is counter-flow, but bear with us. TechCrunch is starting a regular, monthly series on Boston and its startup market. This is a second prelude of sorts. Normally we’d hold news and interviews for a later date so that we’d have plenty of material for a column. In the face of relentless change, however, we didn’t want to hold off on reporting and synthesizing new information. When things are more normal, our pace will follow.
Per PwC and CB Insights, here’s the last few quarters of data, along with a few yearly totals to draw you the picture we can now see:
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Amid unicorn layoffs, Boston startups reflect on the future
As domestic and global economies grapple with the COVID-19 era, its impact on startups is coming into focus: All will be impacted, many will suffer and some will close.
Boston, a city that TechCrunch keeps tabs on, has seen a number of well-known startups struggle in recent weeks. Their misfortunes come quickly after companies in the region recorded huge venture raises, generating notable momentum.
In December, TechCrunch wrote that “despite winter’s chill, the Northeast’s tech ecosystem is white-hot,” taking into account Boston’s historical gains in the venture world. And earlier in 2020 we covered a few huge rounds that the city’s own Toast and Flywire had put together; worth $520 million as a pair, the two venture deals stood out for how large they were and how close to one another they were announced.
Indeed, looking at preliminary venture data from Crunchbase, Boston was on track to crush its 2019 tally of venture rounds of $50 million or more in 2020. That record-setting pace is now in doubt.
To get a feel for Boston’s new reality, we’ve collected the region’s recent news and spoke to area investors and founders, including David Cancel of Drift (the previous founder of Compete and other companies), Drew Volpe of First Star VC and a team of folks from Underscore VC.
TechCrunch had intended to start a monthly series on Boston and its venture capital and startup scenes later this month. We’re kicking it off early because the news is already here.
Slowdown
Earlier this week, restaurant management platform Toast cut 50% of its staff. The Boston-based company was valued at $5 billion in recent months, and — before the pandemic hit — was planning to spend the next few years gearing up to go public. Toast sits uniquely between fintech and restaurant tech, industries that have been arguably impacted the most by COVID-19’s spread and widespread restaurant closures.
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Flagship Pioneering raises $1.1 billion to spend on sustainability and health-focused biotech
Flagship Pioneering, the Boston-based biotech incubator and holding company, said it has raised $1.1 billion for its Flagship Labs unit.
Flagship, which raised $1 billion back in 2019 for growth-stage investment vehicles, develops and operates startups that leverage biotechnology innovation to provide goods and services that improve human health and promote sustainable industries.
“We’re honored to have the strong support of our existing Limited Partners, as well as the interest from a select group of new Limited Partners, to support Flagship’s unique form of company origination during this time of unprecedented economic uncertainty,” said Noubar Afeyan, the founder and chief executive of Flagship Pioneering, in a statement.
In addition to its previous focus on health and sustainability, Flagship will use the new funds to focus on new medicines, artificial intelligence and “health security,” which the company says is “designed to create a range of products and therapies to improve societal health defenses by treating pre-disease states before they escalate,” according to Afeyan.
Flagship companies are already on the forefront of the healthcare industry’s efforts to stop the COVID-19 pandemic. Portfolio company Moderna is one of the companies leading efforts to develop a vaccine for the novel coronavirus which causes COVID-19.
In the 20 years since its launch, Flagship has 15 wholly owned companies and another 26 growth-stage companies among its portfolio of investments.
New companies include: Senda Biosciences, Generate Biomedicines, Tessera Therapeutics, Cellarity, Cygnal Therapeutics, Ring Therapeutics and Integral Health. Growth companies developed or backed by Flagship include Ohana Biosciences, Kintai Therapeutics and Repertoire Immune Medicines.
Two of the companies in the Flagship Labs portfolio have already had initial public offerings in the past two years, the company said. Kaleido Biosciences and Axcella Health raised public capital in 2019, and Moderna Therapeutics conducted a $575 million secondary offering earlier this year.
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SpaceX alumni are helping build LA’s startup ecosystem
During the days when Snapchat’s popularity was booming, investors thought the company would become the anchor for a new Los Angeles technology scene.
Snapchat, they hoped, would spin-off entrepreneurs and angel investors who would reinvest in the local ecosystem and create new companies that would in turn foster more wealth, establishing LA as a hub for tech talent and venture dollars on par with New York and Boston.
In the ensuing years, Los Angeles and its entrepreneurial talent pool has captured more attention from local and national investors, but it’s not Snap that’s been the source for the next generation of local founders. Instead, several former SpaceX employees have launched a raft of new companies, capturing the imagination and dollars of some of the biggest names in venture capital.
“There was a buzz, but it doesn’t quite have the depth of bench of people that investors wanted it to become,” says one longtime VC based in the City of Angels. “It was a company in LA more than it was an LA company.”
Perhaps the most successful SpaceX offshoot is Relativity Space, founded by Jordan Noone and Tim Ellis. Since Noone, a former SpaceX engineer, and Ellis, a former Blue Origin engineer, founded their company, the business has been (forgive the expression) a rocket ship. Over the past four years, Relativity href=”https://techcrunch.com/2019/10/01/relativity-a-new-star-in-the-space-race-raises-160-million-for-its-3-d-printed-rockets/”> has raised $185.7 million, received special dispensations from NASA to test its rockets at a facility in Alabama, will launch vehicles from Cape Canaveral and has signed up an early customer in Momentus, which provides satellite tug services in orbit.
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