Salty, subterranean water could relieve world’s lithium shortage

The next bottleneck in lithium-ion battery supplies isn’t cobalt, even though China has a stranglehold on the market, and it’s not nickel, either, despite nickel prices nearly doubling in the past five months. Cobalt can be partially replaced with nickel, nickel can be partially replaced with manganese, and both can be completely replaced with iron phosphate, which is cheap and plentiful. 

But there’s no substitute for one crucial component of these batteries: Lithium.

Today’s lithium mines can’t hope to meet the skyrocketing demand for the next decade and beyond. Spotting an opportunity, startups like Lilac Solutions and Vulcan Energy Resources have leaped into action with new lithium extraction processes that are more efficient and potentially better for the planet.

The crunch

As automakers have fleshed out their electrification plans, they’ve caused an unprecedented rush for lithium. Over the last six months, lithium prices have gone on an epic bull run.

It started in January, when prices jumped to $37,000 per metric ton from $10,000 a month earlier, according to Benchmark Mineral Intelligence. Then it got worse in February, with spot prices rising to $52,000 per metric ton before rising again to $62,000 in March. Things have stabilized since then, but prices are still five times above the average price from 2016 to 2020.

Large companies of all stripes have been racing to secure supplies. Automakers like Ford and Tesla have signed huge contracts, and battery manufacturers and miners are rushing to secure supplies. Last year, for example, a three-way bidding war broke out for Canadian miner Millennial Lithium, which has large reserves in Argentina, and the winning bid ended up more than 40% higher than the initial offer.

Yet, those deals probably won’t be enough to fulfill the predicted demand for lithium, based on automakers’ current plans. Benchmark Mineral Intelligence is expecting demand to grow to 2.4 million metric tons in 2030 from less than 700,000 metric tons today.

Supply won’t be able to keep up given the current pace of new lithium projects.

“By the end of the decade, where we’re at now with the pipeline, we’re going to see significant deficits starting to grow,” said Daisy Jennings-Gray, a senior price analyst at Benchmark.

Last year, lithium supply fell short of demand by more than 60,000 metric tons. Jennings-Gray’s firm predicts that the deficit will be over 150,000 metric tons by 2030. To meet demand, Benchmark says that $42 billion will need to be invested in the space by the end of this decade.

Without new lithium projects coming online, it’ll likely get worse throughout the 2030s. By 2040, the International Energy Agency expects lithium demand to be 42 times higher than it is today.

“It’s an insane number,” said Jordy M. Lee, a program manager at the Payne Institute for Public Policy at the Colorado School of Mines. What’s more, it might even be too low.

“We’ve consistently underestimated how much demand for lithium-ion batteries we’re going to have in the coming years,” he said.

As the rise in demand shows no signs of abating, startups have surged into the space, pitching novel techniques to coax the volatile metal out of the earth.

CyberConnect raises $15M Series A to put data back in the hands of users

One of the promises made by web3 entrepreneurs is putting data back in the hands of owners through decentralization. Singapore-based CyberConnect is among a handful of blockchain startups working to fulfill this vision, and it has recently closed a Series A financing round totaling $15 million.

The lead co-investor of the round is Animoca Brands, the Hong Kong-based company that has in recent years risen from an underdog in game development to an investment juggernaut in the web3 world. The other co-investor is Sky9 Capital, a Shanghai-based venture capital firm founded by Ron Cao, who is known for helping Lightspeed Venture Partners set up shop in China back in the day.

“In web2, companies with the largest social network own users’ social graphs and build walls around them to stem competition and advance corporate interests,” says CyberConnect CEO and cofounder Wilson Wei.

As such, Wei and his team are building a social graph “protocol”, the underlying rules that allow data to be shared between computers, for applications, and in web3’s case, without a centralized agent like Facebook. The end goal is that users can travel across web3 platforms with their followings and followers.

An app experience powered by CyberConnect will look like this: Users connect their crypto wallet — which has become a universal gateway to any web3 app — to a social platform, upon which they will be shown all their existing connections. They will get recommended user addresses to follow, which is based on CyberConnect’s indexing. Once they follow someone, that piece of information will be added to CyberConnect’s network and become “portable and self-sovereign.”

To date, CyberConnect has supported 23 projects including Project Galaxy and Mask Network, reaching a total of 710,000 users.

Other companies are building similar infrastructure to allow follower interropability, such as Lens, which is operated by Aave, a decentralized lending protocol backed by Blockchain Capital.

CyberConnect’s solution, Wei tells TechCrunch, consists of two components. Similar to Lens, it offers a software development kit (SDK), a piece of software for developers to create custom apps that let end-users manage their social graphs and a “social data network” that aggregates users’ behavior in web3, such as what tokens and NFTs they bought.

Rather than using smart contracts like Lens, CyberConnect’s SDK is built on top of InterPlanetary File System (IPFS), a peer to peer data storing and sharing network, and Ceramic, a network that manages mutable data without centralized servers, which Wei claims is a more “economic and gas-efficient solution.” Smart contracts are computer programs that execute automatically according to the terms of contracts and incur “gas fees”, the payments made by users to compensate for the computing power required to process transactions.

“Smart contract-based protocols are creating value from scarce items while any data stored on-chain costs a nontrivial amount of gas fee. There are only 10,000 NFTs in one collection and a limited amount of bitcoins,” Wei explains.

“In contrast, social context welcomes data abundance. There’s only an ever-increasing number of new users, new connections, and new content and that data will be by nature dynamic and need constant updates.”

CyberConnect plans to generate revenues through the social data network, which include different participatns like data contributors, indexers and recommenders, curators, and users. The network will be permissionless, meaning anyone can join, and include incentive mechanisms revolving around query fees, according to Wei.

The startup, headquartered in Palo Alto, operates with a team of 27 across the US, China, Canada and Europe.

Several venture investment firms, including Dragonfly, have recently warned web3 startups to brace for a cooling industry in the wake of the recent crypto market crash and wider macroeconomic compliactions. Wei is undeterred, saying “bear markets are a great time for us to focus on building.”

“As a serial entrepreneurial team, with more than seven years in social, Web3, and blockchain, previous experiences taught us that it is crucial to keep building during the downturns,” he says. “It will also be easier for truly visionary and value-creating projects to be properly recognized as the noise will die down together with the market hype.”

ZMO.ai secures $8M led by Hillhouse to create AI generated fashion models

With breakthroughs in machine learning, it’s no longer uncommon to see algorithmically generated bodies that can move and talk authentically like real humans. The question is now down to whether startups offering such products can achieve a sustainable business model. Some of them have demonstrated that potential and attracted investors.

ZMO.ai, founded by a team of Chinese entrepreneurs who have spent years studying and working abroad, just closed an $8 million Series A financing round led by Hillhouse Capital. GGV Capital and GSR Ventures also participated in the round.

The startup has found a healthy demand from fashion e-commerce companies that are struggling to hire and afford models due to their growing number of stock-keeping units (SKUs), or styles, as consumer tastes become more changeable. Using the generative adversarial network (GAN), ZMO has created a piece of software to help them create virtual full bodies of models by defining simple parameters like face, height, skin color, body shape, and pose.

“Traditionally, the entire cycle of garment manufacturing may take two to three months, from design, fabric selection, pattern making, modeling, to actually hitting the shelves,” says Ella Zhang, ZMO’s CEO and co-founder, a former engineer at Google and Apple.

“We are flipping and shortening that process. [Customers] can now test a piece of clothing by putting it on a virtual model, which can go on the website. Once orders come in, the e-commerce customer can start manufacturing,” she tells TechCrunch. “They can also test what type of people would suit a certain product by trying it out on different virtual models.”

It’s unsurprising that fashion e-commerce operators would find ZMO and its likes a cost-saving tool. Zhang says her company is in early discussion with fast fashion giant Shein, which rolls out 2,000-3,000 new products per day, about potential collaborations.

Screen capture of ZMO’s AI-generated video

We previously covered Surreal, a Sequoia-backed, Shenzhen-based startup also working on synthetic media to replace humans in lifestyle photos and other commercial scenarios. The business attracted a surge in interest as the COVID-19 pandemic hit China’s e-commerce exporters, who were having a hard time finding foreign models as the country went into strict border controls.

Going forward, ZMO is also planning to apply GPT-3, which uses big data and deep learning to imitate the natural language patterns of humans, to create speeches for models. As spooky as it may sound, the feature would make it breezy for e-commerce companies to churn out TikTok videos quickly and cheaply for product promotion.

On average, e-commerce companies spend around 3-5% of their annual gross merchandise value (a rough metric measuring sales, usually excluding returns and refunds) on photoshoots, according to Roger Yin, who worked at Evernote and ran his own cross-border e-commerce business before co-founding ZMO with Zhang.

“Images play a big role in driving e-commerce sales. The problem is that the [sales] cycle is short but the cost of images is high,” Yin observes, adding that costs can be even higher for fashion companies with a quick turnover of styles. The goal of ZMO is to reduce the costs of photoshoots to 1% of GMV.

Right now, 80% of ZMO’s customers are based in China, but it’s working to attract more overseas users this year using its new financial infusion. Operating with a team of 30 staff, the startup boasts 30 “medium and large-sized” customers, including Tencent-backed Chicv, one of Shein’s numerous challengers, and over 100 “small and medium” customers, such as dropshipping sellers.

ZMO’s other co-founders include Ma Liqian, a Ph.D. in computer vision who graduated from Belgium’s KU Leuven, and Yang Han, who previously worked on AI-powered styling at Tencent and SenseTime.

Drip aims to provide thrill of live commerce to NFTs, physical collectibles

Javaughn Lawrence was wandering around Eniac Ventures’ entrepreneur-in-residence program in 2020 looking for a product, and found inspiration from some Pokémon cards.

He joined a Facebook group for Pokémon collectors and started watching people host what he called “ripping and shipping,” where they were ripping open packs of Pokémon cards and selling them.

“It was interesting, but the actual experience was very bad,” Lawrence recalls. “The video was slow, the chat was laggy and you also had to pay using five different payment methods. However, people were still coming on to buy, and they were super engaged, super kind and super involved with it.”

Lawrence came away with a pack of cards for himself, but also the idea of building something better. He and Sameep Sheth began hacking together what would become Drip in January 2021.

javaughn lawrence, drip

Javaughn Lawrence, co-founder and CEO of Drip. Image Credits: Drip

Lawrence considers Drip “the Shopify for livestream commerce,” providing tooling so users can run livestream auctions, drops or buy it now formats via Drip’s existing marketplace.

Live commerce is most popular in China where sales are expected to hit $423 billion in 2022. That compares to the U.S. live commerce market, which is poised to reach $35 billion in sales by 2024.

Drip is also competing in an increasingly crowded landscape dominated by Whatnot and Popshop. To leverage that future demand, the company is also developing some unique features to allow users to embed the livestream into their web properties so they can simultaneously capture the majority of their audience and for third-party developers to build experiences on top of our ecosystem.

In addition, sellers can collect cash or cryptocurrency for their physical products and soon Ethereum-based NFTs. Drip takes a 6% cut of the transactions for now, with Lawrence saying they may create a subscription product down the line.

The company initially brought in several hundred thousand dollars in seed funding, but began growing over 20 times in monthly volume and grew to a team of 19. That’s when Lawrence and Sheth decided to go after additional funding. They raised another $28.5 million in a combined seed and Series A round that included $23 million in Series A dollars at over a $100 million valuation.

The rounds were led by Base10, Kindred, Eniac Ventures and Harlem Capital with participation from a group of angel investors, including Axie Infinity founder Jeff Zirlin; Nick Tomaino, a general partner at 1confirmation and early Coinbase hire; Brian Long and Andrew Jones at Attentive; Ramnik Arora, head of product at FTX through his fund Toy Ventures; and Chris Bennett, CEO of WonderSchool.

With this new round of funding, Drip will scale its NFT selling efforts, including on-chain transactions on Ethereum and seller acquisitions, as well as decentralizing access to its live selling capabilities and growing the team, especially in engineering, product, partnerships and operations.

One of the emergent behaviors the Drip co-founders have seen is some users actually taking screen recordings of the NFT reveal or having a friend on a video chat with them. That is what the company is out to change.

“The NFT purchasing experience, on a whole, is a very social experience,” Lawrence added. “Right now, people are kind of hacking that together. Being a part of a community is the core interaction and video will solve that and help to engage the community afterwards as well.”

Daily Crunch: ‘The bitcoin network is not a payments network,’ says FTX CEO Sam Bankman-Fried

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PT, subscribe here.

It’s Monday the 16th of May, and I’m back once again, like a renegade master. I’m fantastically over-caffeinated and at a standing desk today, so for the occasion, it’s a dancing desk. Because, I mean, you try to sit still while listening to this thumpin’ beat.

This week, I’m psyched to head out to TechCrunch Sessions: Mobility in San Mateo to get the full story on which cars will be driving themselves and which companies are driving into our hearts – or off the nearest cliff. Get your tickets now — we still have a few available.

In other news(casts), we particularly enjoyed Lucas and Anita’s Chain Reaction podcast, where they’re taking a look at how crypto VCs can’t rely on spending their way into loyalty.

In other news, I just re-read my TechCrunch contract, which states no superfluous obscenities are allowed, so rest assured that this newsletter only contains strictly necessary swearwords. Much love and sunbeams and such! – Haje

The TechCrunch Top 3

  • Ack — moar layoffs: Natasha and Amanda break down the current constriction in startups with a roundup of layoffs over the past week, including an analysis of what happened at Section4, Carvana, Latch, DataRobot, and the hiring freezes at some of the tech stalwarts, including Meta, Twitter and Uber. They did a roundup last week, too, in case you missed that one. Meantime, Alex analyzes overall data from layoff tracker Layoffs.FYI.
  • Trouble in Unicorn Town: Over on TC+, Alex considers how SaaS valuation multiples have taken a further dive, now clocking in at single digits. As he summarizes: “A startup that sold stock last year at a 50x ARR multiple would need to double and then double again before it would have a multiple that is similar to the current public-market standard.“
  • Crypto? More like crypt-no: Anita reports how 30-year-old crypto billionaire Sam Bankman-Fried takes a swipe at Bitcoin, saying it has no future as a payments network.

Startups and VC

Every now and again, startups raise money for missions that make me worry about the current timeline we are on. Today’s installment of that theme comes from the desk of Mr. Butcher, MBE, covering WeAre8’s crowdfunding campaign for a social media app where users are paid to watch apps. Sure, it makes sense to get some cash for your time, but also … just, ugh.

I loved this interview Aria did with high-flying (geddit …) startup Astra. It became the fastest company in history to reach orbit in November, six years after its founding, and its CEO says it’s aiming for daily launches sooner rather than later.

Developers, developers, developers:

5 lessons from ‘Star Wars’ that can transform startup managers’ strategies and tactics

Image Credits: Natalia_80 / Getty Images

The “Star Wars” saga is based on a storytelling structure developed by Joseph Campbell, a writer and literary professor who conceived of “the hero’s journey.”

Consisting of 12 stages, his archetype calls for a protagonist who leaves ordinary life behind after hearing the call to adventure — you can imagine why it’s a popular metaphor among tech investors.

According to Touchdown Ventures President Scott Lenet, Jedi Knight Obi-Wan Kenobi offered five discrete lessons for founders and investors.

For example, “’I have a bad feeling about this’ is a recurring joke in the franchise — nearly every major character utters the line at one point or another,” writes Lenet.

“These are also words to live by for corporate and startup leaders, because they are an emblem of awareness and proactivity.”

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

You may not be thinking “games” when you hear Hulu, but its newest partnership with Xbox is changing that – Lauren reported it just inked a new deal that gives U.S. Hulu subscribers three months of a PC Game Pass as its Friends with Benefits initiative. Amazing name aside, perhaps it’s time to brush off my gaming rig (who am I kidding; I ain’t got time to play games. Too busy tweeting about coffee and my slowly-circling-the-drain mental health).

After EU pressure, it looks like Apple might be inching itself closer to introducing Apple iPhone models with a USB-C port. As someone who has USB-C cables strewn around every surface, room, nook, and cranny of my house, that would work beautifully for me – but Apple has long resisted the pressure, so we’ll see what actually happens on that front. I’m sure Darrell will continue to keep us abreast of the shape of iPhone’s crevices.

  • Excuse me, Robot, are you my Uber? Uber Eats is piloting autonomous deliveries with Serve and Motional. I just hope the robots also eat their vitamins, find love, and find some time for walks in the forest.
  • I wrote this, I like this: Twitter is testing a new “Liked by Author” label that appears when the creator of a tweet likes your reply, Aisha reports.
  • Da, da, da, say goodbye to your data: A new report from the Irish Council for Civil Liberties argues that a real-time bidding system is “the biggest data breach ever recorded.”
  • All the things, all the places, all the time, on a street near you: Uber revealed a host of new platforms and features during its global product event. The new products span Uber’s ride-hail and delivery services and aim to increase ridership, open new lines of business, incentivize drivers to go electric and more, Rebecca reports.

Nigeria’s Topship raises $2.5M from Flexport and YC to help merchants with international shipping

African merchants encounter many challenges when it comes to international shipping ranging from logistics and customs to hidden and excessive charges.

Digital freight forwarders on the continent have grown to tackle these supply chain issues. In some way, they are taking after the likeness of an $8 billion company and a market leader in the freight space, Flexport; some have dubbed themselves the “Flexport for Africa.” 

Recent YC graduate Topship is one such startup and it has raised a $2.5 million seed round months after concluding the recent YC winter batch. Flexport is its lead investor. Other backers include Y Combinator, Soma Capital, Starling Ventures, Olive Tree Capital, Capital X and True Capital. The individual investors in the round include Immad Akhund, Mercury CEO and Arash Ferdowsi, co-founder of Dropbox.

Topship was founded in 2020 during the pandemic when co-founder and CEO Moses Enenwali noticed a surge in merchants’ needs for shipping parcels and cargo outside Nigeria. He had built relationships with these merchants following his time with logistics company ACE Logistics and e-commerce fulfilment provider, Sendbox. Though demand was steady during his time with both companies from 2015 to 2020, this was different.

“The world was shutting down, but there was this high demand for stuff and demand for international shipping was going up simultaneously. So I was like, “this is interesting.” It wasn’t a business then as we just helped these people move stuff like a scrappy, little hustle,” Enenwali told TechCrunch over a call.

Globally, about 60% of air cargo is flown in the belly hold of passenger flights which is one reason why to an extent, shipping businesses done via air are more straightforward to start than those done via the sea. For Enenwali, it even made more sense to go through this route because passenger planes flew half empty for most of 2020. After months of iteration, Topship went live in March 2021 with Junaid Babatunde as CTO.

Topship says it wants to create the easiest way for African businesses to export and import parcels and cargo to their customers, suppliers, and distributors worldwide. The company and similar players such as Sote, SEND, and OnePort365 want to improve the overall shipping experience in Africa. However, Topship’s expectations are pretty lofty; it said in a statement that “its mission is to make the shipping experience in Africa as easy and stress-free as booking an Uber ride.” And one factor that might work in its favour is its focus on air cargo even as others explore a mix of air, sea and truck haulage pioneered by Flexport.

CEO Enenwali argues that while African startups, including his, take some cues from Flexport’s playbook, he doesn’t think Africa is ready for the unicorn’s model, which is super-heavy on sea cargo movement.

“The reason why the Flexport model wouldn’t work here is it’s heavily invested in ocean freight and we don’t have enough ports on the continent. For example, in Nigeria, we have one function port, and for ocean freight to work, we need ports, railways, and roads for trucking. But we don’t have the roads, and we don’t have the railways,” said the CEO, giving reasons why Topship doesn’t involve itself with sea cargo.

“It’s difficult to connect the continent with ocean freight. Flexport’s business model makes a lot of sense even with the way they attack problems aggressively, and I love that. But for Africa, we need to tweak it to fit the use case here. So what we’ve seen is the way to connect the continent is via air. Every country and major city on the continent has a functioning airport, and airlines are flying to all those airports daily.”

Topship caters to a wide range of users. From a merchant moving tons of heavy equipment and a solo entrepreneur sending parcels to a student mailing documents to a school abroad and a Gen Z shopping from a foreign store, Topship is a borderline local and international shipping solution between digital freight and e-commerce fulfilment. Flexport has backed several African companies from both categories, such as Trella, Flextock, ShipBlu, Sendbox, and Freeterium.

According to Enewali, Topship allows 1,500 merchants to move cargo and parcels from Nigeria to over 150 countries. Although it can help Nigerian merchants receive parcel deliveries from the other way round, they can only accept cargo deliveries from the U.S., the U.K and China

The company’s revenue comes from two ways: selling shipping insurance and taking a margin on transactions. Enewali said the company is exploring other revenue streams, including trade financing and customs clearance charges. The company has recorded ~50% month-on-month revenue growth since getting into YC this January.

I think what YC does more than anything is just push you to dive as deep as possible in understanding your users,” said the CEO about Topship’s revenue growth after YC. I mean, look into the future, a lot of it’s coming from that ethos of just the user is the most important piece of the puzzle, and we have to be obsessive about it. We’re taking all the learnings and insights that we’ve learned from our users over the past five months or six months and building it into the product in a way that is merchants-focus.”

Late last year, merchant groups from Ghana, Tanzania and Kenya invited Topship to gauge the possibility of launching in their respective markets. Enewali said this new funding provides Topship with the pockets to follow through and start operations there. A portion of the investment will be used to improve its asset-light technology and build out proprietary global shipping infrastructure to make imports/exports significantly faster and easier, the CEO said.

Topship has also set aside fashion design and retail grants worth $3,500 to award new and established fashion brands in Nigeria as a sign of “support for the future of the growing e-commerce sector” in the country.

Valued at $50M, Body404 wants to bring Chinese indie brands to the world

Over the past few years, Shein has taken over online fast fashion by exporting affordable wear from China to customers around the globe. Its success has attracted a wave of imitators, but a startup called Body404 believes China isn’t just about cheap runway knockoffs. The country is also seeing a budding generation of cosmopolitan designers crafting high-quality garments and accessories, and Body404 wants to help them reach Western consumers.

At first glance, Body404’s indie designer collections are reminiscent of retro-90s looks of acid-house colors and baggy denim (disclosure: fashion terminology is way out of my area of expertise). Or they are something that you’d imagine Billie Eilish and her Gen-Z followers would wear. Unlike throwaway fashion, the clothes seem to be designed to last — a pair of flared pants cost $135 and an occult printed long sleeve asks for $144.

Body404’s offering has won some investor support. Founded less than a year ago, its valuation jumped to $50 million after closing a Series pre-A round totaling $50 million in March, it told TechCrunch. The investment was led by BAI Capital (Bertelsmann Asia Investments) and will allow the startup to expand beyond its current team of 100 employees across China and the US. Existing investors Kuanzhai Venture Capital and One Capital also joined in the round.

The startup doesn’t hold inventory, which keeps its costs down, but it provides manufacturing resources and marketing help to designers who might lack the know-how of telling their stories to a global audience.

Most of Body404’s 100 designers are currently located in China, but it doesn’t want to stop short there. Its co-founder and CEO Jeff Zhang, a serial entrepreneur who ran an IDG-backed flash sales app, also wants to connect boutique designer brands from other countries to China’s well-oiled supply chains — which is often cited as a key ingredient to Shein’s success.

A major pain point in cross-border selling is high return rates. Zhang said return is relatively low at Body404 — around 2%, which is much healthier than the 10-15% seen on fashion marketplaces that emphasize affordability over quality. Body4040 boasts $1 million in monthly sales and aims to reach $20 million in annual total this year.

Most of the company’s customers come from the US and Europe, whose average basket size hovers around $50. Surprisingly, its customer profile isn’t that much different from Shein’s — 16-23 years old, 80% female. That’s because “there’s a growing segment of consumers who want high quality and something different to wear,” said Charles Wang, the company’s chief marketing officer.

Users are discovering Body404 on Facebook, Google, and in particular, TikTok. Click per mille (CPM), a way to measure return on online advertising spent, ranges from $3-5 on the short video app, while CPM on Facebook in comparison stands at $10-15, according to Zhang.

Unlike some companies with Chinese roots that try to obscure their origin, fearing an increasingly negative perception of “Chinese companies”, Body404 wants to “rebrand what it means to be made in China.”

“We don’t want the border between China and the world to close down. We want to show the world what Chinese designers look like,” said Zhang.

Synergies raises $12M to give factory managers an AI analytics assistant

There’s no lack of startups around the world trying to make industrial activities more efficient with artificial intelligence. Some invent robots to assist or replace manual labor, while others use machine learning to help businesses discover insights. Synergies Intelligent Systems falls into the second category.

Michael Chang founded Synergies in 2016 in Boston to provide easy-to-use AI-powered analytics tools to medium-sized manufacturers. Having worked at Foxconn in Shenzhen in the late 2000s helping the Apple supplier improve yield rate, or reduce the percentage of defective products, using data analysis, Chang realized that not every factory has the financial prowess to spend tens of thousands of dollars on digitization.

Synergies’ vision and recent growth have won investor support. The company was mostly bootstrapping during its early years, but it recently accepted venture funding to accelerate hiring, market expansion, and product development. It secured $12 million from a Series A funding round led by NGP Capital, which was formerly called Nokia Growth Partners and is backed by Nokia, as its name implies. Private equity firm New Future Capital also participated.

Synergies now operates a team of about 70 employees across Shanghai, Taipei, Guangzhou, Singapore and Boston.

The startup declined to disclose its valuation but said it’s serving nearly 100 customers, 80% of which are in Greater China, including mid-sized factories with thousands of workers run by Foxconn and Fuyao, one of the world’s largest auto glass producers. Chang told TechCrunch that Nokia and Synergies are working on some projects in the early stage, though the pair doesn’t have a large-scale partnership yet.

The Finnish telecoms titan, to Chang’s knowledge, has been promoting “industrial 5G” worldwide, which is to bring next-generation connectivity to manufacturing. So it won’t be surprising to see the two working more closely together in the future.

Synergies’ product could work well with 5G-powered factories that are constantly collecting and analyzing data in the cloud. It provides what’s called an “augmented analytics” platform to help manufacturers optimize efficiency on three fronts — supply chain, yield, and production capacity.

By analyzing operational data, Synergies’s software can make suggestions to managers, for example, recommending how much supply they should procure, or how to quickly change a product line to maximize capacity at the lowest cost. Once the advice is put into practice and new data is reaped, Synergies’ machine learning systems can analyze and keep refining its algorithms to help factories improve performance.

“Such machine learning isn’t rocket science for AI experts, but for an average small- and medium-sized factory in China, the overhead for creating a comprehensive ‘data middle platform’ is too high because it requires the coordination between the IT department, project managers, and AI experts,” suggested Chang, an MIT graduate with a Ph.D. in electrical engineering and computer science.

“Most small and medium factories only keep a small team of IT staff, not to mention a team of dedicated AI scientists.”

“Compared to advanced manufacturers in the West,” Chang continued. “Chinese factories, even the ones that are massive now, have only been around for four or five decades. They are a lot more price-sensitive, operate at lower margins, and want quicker returns on investment. So it’s hard to ask them to spend $10 million upfront on building a data platform.”

Using data analytics and AI to refine business decisions also addresses the problem of high turnover in the manufacturing industry, Chang explained. As population growth slows in China, factories are struggling to recruit and retain workers, meaning it’s hard to preserve workplace knowledge as well.

“It’s not a business that sees the kind of crazy growth as, say, crypto companies,” Chang maintained. “But I believe it’s a meaningful business because we are creating real changes on the ground.”

Daily Crunch: Peloton CEO to shareholders: ‘Turnarounds are hard work’

To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PT, subscribe here.

It is Tuesday the 10th of May, and the end of an era as Apple officially retires the iPod after a 20-year run of swinging our tushes, white earbuds dangling against brightly colored backgrounds. – Christine and Haje

The TechCrunch Top 3

  • Peloton’s rough ride: For a bicycle that goes nowhere, Peloton missing its revenue estimates for the first quarter is putting the company on a downhill trajectory. We are now watching how CEO Barry McCarthy will lead his team to turn the red knob to the right, rise out of the saddle, and pedal Peloton into a course correction.
  • IBM tips its hat: To Red Hat, of course. Ron gave us an inside look at how the company has been doing since joining IBM in 2018 — really good, as far as we can tell — with Red Hat giving IBM “some cloud credibility it had been missing” and one of the reasons IBM did so well in its first-quarter earnings.
  • Bitcoin go bye-bye: Jacquelyn spoke to some crypto experts trying to make sense of Bitcoin’s value decrease, which at the time was down more than 50% from its November 2021 peak. It seems like a complicated mess with a lot of acronyms flying around. So much so that even investors in China (remember it banned cryptocurrency) that found a way to still buy and sell tokens are keeping a watchful eye.

Startups and VC

It’s a hardware feast this news cycle on Ye Olde TechCrunch: DJI launched its entry-level quadcopter at under $700. Remarkable raised a round of funding for its e-paper notepad at a unicorn valuation, and the team behind the viral sensation IkeaBot raised $4 million to further develop its Eureka controller.

We loved this piece from Connie about Bonobos footwear company founder Andy Dunn and his work in destigmatizing mental health challenges, speaking out about his “secret battle” against bipolar disorder.

Moar newz:

BNPL in 2022: 4 fintech investors discuss regulation, trends and how to stand out

Hourglass projecting a dollar sign as shadow.

Image Credits: LdF (opens in a new window) / Getty Images

Globally, sluggish wage growth and rising inflation have encouraged shoppers to defer payments on everything from groceries to durable goods.

Affirm, Afterpay and Klarna own 75% of the sector in the U.S., which leaves little room for startups hoping to join the fray. Founders who target emerging markets like Latin America and India may have an easier time, but only if their products and services are clearly differentiated.

To learn more about the state of the industry, Karan Bhasin interviewed four fintech investors:

  • Frances Schwiep, partner, Two Sigma Ventures
  • Melissa Guzy, co-founder and managing partner, Arbor Ventures
  • Jonathan Whittle, co-founder and partner, Quona Capital
  • Jason Brown, partner, Victory Park Capital

In addition to sharing their direct advice for fintech founders, they talked about managing fraud and default risk, BNPL’s growing popularity as a point-of-sale option, and what kinds of investment opportunities they’re looking for.

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

It looks like EU internal market commissioner Thierry Breton had a good day yesterday, hopefully crossing a few things off of his bucket list, including meeting Elon Musk and essentially getting his OK on the EU’s Digital Services Act, which aims to provide more governance rules around “harmonizing content” and consumer protections while also fining those who breach them. Meanwhile, the U.K. is pushing forward with its data reform bill targeting Big Tech.

Some other Tuesday tidbits:

  • Nintendo shared a new milestone today — over 100 million annual playing users. That’s a lot of Super Mario Bros. going at the same time. Oh wait, we are behind the times; perhaps it’s better to say Splatoon.
  • The U.S. and some of its allies have decided to formally blame Russia for the Viasat cyberattack that took place in February.
  • Salesforce acquired Troops.ai, which will become part of Slack and build a bunch of Slack bots for sales teams to more easily retrieve and update data.
  • The parent company of Tinder, Match and OkCupid sued Google, alleging the company was trying to maintain a monopoly in the way people pay via the Google Play app marketplace. We think language from the lawsuit says it all: “Ten years ago, Match Group was Google’s partner. We are now its hostage.”
  • While Google is dealing with that, it is also joining with Microsoft, Yahoo and others to provide support behind a proposed New York bill banning the use of controversial search warrants. If passed, New York would be the first state to ban what Zack reported was “so-called geofence warrants and keyword search warrants, which rely on demanding tech companies turn over data about users who were near the scene of a crime or searched for particular keywords at a specific point in time.”

Musk talks Tesla demand, EV startups, and scooters in expansive interview

Elon Musk weighed in on Tesla, SpaceX and his multitude of other companies — including that social media business he’s trying to purchase — during a wide-reaching 80-minute interview Tuesday that covered demand for EVs, the need for raw materials, the problem with hydrogen and the most promising EV startups.

While much of what Musk talked about at the Financial Times’ Future of the Car conference in London has been shared before, there were a few items that stood out, including that Tesla could stop taking customer orders for its vehicles.

Tesla may stop taking orders

For Tesla, the issue is not demand but supply. “Right now demand is exceeding production to a ridiculous degree,” Musk said. “We’re actually probably going to limit [or] stop taking orders for anything beyond a certain period of time.”

The automaker still aims to produce 20 million cars annually by 2030, a figure Musk said he chose because it represents 1% of the global fleet.

“But it’s not a promise,” he noted. “It’s an aspiration. I think we’ve got a good chance of getting there.”

That compares with the 930,000 vehicles Tesla produced last year, a figure that’s been “roughly equally difficult” to reach as getting to 20 million.

Musk admires Volkswagen

When asked to name the most impressive EV startup operating today, Musk named Volkswagen, just one day after Volkswagen CEO Herbert Diess said from the same conference stage that Tesla proved stronger than the German juggernaut expected.

“I think the company making the most progress besides Tesla is actually VW, which is not a startup but can be viewed in some ways as a startup from an electric vehicle standpoint,” Musk said.

He also said that there are several strong companies coming out of China, which accounts for more than a quarter of Tesla’s global sales and where Tesla plans to expand its Shanghai Gigafactory.

“There’s just a lot of super talented, hardworking people in China that strongly believe in manufacturing. They won’t just be burning the midnight oil, they’ll be burning the 3 a.m. oil. They won’t even leave the factory type of thing, whereas in America, people are trying to avoid going to work at all.”

Tesla will remain open source

Musk reiterated his standing invitation to automakers to make use of Tesla’s patents to build upon its Autopilot system.

“We only patent things in order to prevent others from creating this minefield of patents that inhibit progress with electric vehicles,” he said. “But we’re never going to really prosecute anyone for using our patents. So let’s just say you can use any Tesla patents for free, so I think hopefully that’s helpful to others.”

But Tesla needs a year to prove itself before automakers may consider it, Musk said.

“The traditional car makers will solve electrification. It’s not fundamentally difficult at this point to make electric cars. The thing that I think they may be interested in licensing is Tesla Autopilot full self-driving, and I think that would save a lot of lives.”

Buying a mining factory is not out of the question

As EV makers face a shortage of raw materials to make lithium-ion batteries, Tesla has been signing long-term deals with mining companies worldwide to secure its supply. But the automaker is not above becoming more involved with the earth-moving business.

“It’s not that we wish to buy mining companies, but if that’s the only way to accelerate the transition then we will do that,” Musk said. “There’s no arbitrary limitations on what’s needed to accelerate. We’ll just tackle whatever set of things are needed to accelerate sustainable energy, and doing mining and refining or buying a mining company provided we think we can do it.”

But scooters are out of the question

When asked if Tesla plans to make a car smaller and more affordable than the Model 3, such as a scooter, Musk spoke against the micromobility device.

“Scooters are very dangerous,” he said. “I don’t recommend anyone drive a scooter. If there’s ever an argument between a scooter and a car, it will lose.”