Chime Announces $18 Million Series B to Accelerate Growth; Surpasses 500,000 Bank Accounts

Chime, the leader in mobile banking that helps members avoid fees and automate their finances, today announces $18 million in Series B financing, led by global venture fund Cathay Innovation. With over 500,000 bank accounts opened since the company's 2014 launch, this latest round of financing will be used to accelerate growth and to develop new products to improve financial lives.

(Read on Business Insider)

"At Cathay, we look at fintech investment opportunities across the globe and we've never seen so much customer love for a banking service," said Denis Barrier, Co-Founder and CEO of Cathay Innovation. "Chime members engage with the app every day and trust Chime as the deposit account for their paycheck. It's much more than just a mobile app. With triple digit growth in new bank account openings in the last year, Chime has emerged as the clear leader in the US challenger banking segment."

Cathay Innovation led the round from its $320 million venture fund and offers a global investment network bridging North America, Europe and China. Other new investors in the round include Northwestern Mutual Future Ventures and Omidyar Network which invested through their Financial Inclusion initiative. Existing investors Crosslink Capital, Aspect Ventures, Forerunner Ventures and Homebrew also participated in the round bringing Chime's total funding to $36MM.

"Look at any of the headlines these days and it's clear that traditional US banks continue to fail millions of Americans with adversarial practices and opaque fee structures," said Chris Britt, CEO and Founder of Chime. "This financing allows us to rapidly scale a new approach to mobile banking that actually improves financial lives."

Chime's Bank Fee Finder exposed the impact of traditional banks' predatory practices and found that on average bank customers pay $329 in fees annually. By eliminating overdrafts, Chime has saved its members an estimated $100MM in potential overdraft fees to date. Chime has also helped members increase their savings. While the majority of Americans have less than $500 in savings according to Bankrate, members who enrolled in Chime's automatic savings program have tripled their average monthly savings.

In addition to investing in growth, the company will use this latest round of funding to launch new features to help members automate more aspects of their financial lives. Chime will also introduce new services through its open APIs and partnerships with leading financial companies, so that members can use their Chime account as a connected hub to manage all of their financial accounts.


How 'the invisible network' poses a major security threat

Imagine a hacker remotely turning off a life support machine in a hospital, or shutting down a power station. These are the nightmare scenarios we face because many organisations haven't a clue how many unsecured devices are connected to their networks, cyber-security experts warn.

(Read post on BBC News)

It was an ordinary day at a busy hospital - doctors, nurses and surgeons rushed about attending to the health of their patients.

For Hussein Syed, chief information security officer for the largest health provider in New Jersey, it was the health of his IT network that was keeping him busy.

And today, he was in for a surprise.

He knew he presided over a complex web of connected medical devices, computers, and software applications spread across RWJBarnabas Health's 13 hospitals.

This included about 30,000 computers, 300 apps, a data centre, as well as all the mobile phones hooking up to the hospitals' wi-fi networks.

Company mergers had only added to the complexity of these sprawling IT systems.

But when he used a specialist IoT cyber-security program to carry out a full audit, he discovered that there were in fact 70,000 internet-enabled devices accessing the health firm's network - far more than he'd expected.

"We found a lot of things we were not aware of," Mr Syed tells the BBC, "systems that weren't registered with IT and which didn't meet our security standards."

These included security cameras and seemingly innocuous gadgets such as uninterruptible power supplies (UPSs) - units that provide back-up battery power in the event of a power cut.

"These unidentified devices could definitely have been access points for hackers who could have then found high-value assets on our network," says Mr Syed.

Hack in to a UPS and you could potentially switch off life-critical machines, he explains. Or hackers could steal patient data, encrypt it, then demand a ransom for its safe return.

On the black market "health data is worth 50 times more than credit card data", says Mr Syed.

The audit "helped us protect our network," he adds, preferring not to dwell on what might have been.

Mike DeCesare, chief executive of ForeScout, the software provider Mr Syed brought in, says: "Businesses typically underestimate by 30% to 40% how many devices are linked to their network. It's often a shock when they find out.

"With the proliferation of IoT [internet of things] devices the attack surface for hackers has increased massively.

"Traditional antivirus software was designed on the assumption that there were just a few operating systems. Now, because of IoT, there are thousands."

ForeScout's software monitors a company's network and indentifies every device trying to access it, "not just from its IP [internet protocol] address, but from 50 other attributes and fingerprints", says Mr DeCesare.

The reason for these other layers of security is that it is "relatively easy" for hackers to mask the identity of a particular device - known as MAC [media access control] spoofing.

So ForeScout's software takes a behavioural approach to monitoring.

"We look at the traffic from all those different devices and analyse whether they are behaving like they should," he says.

"Is that printer behaving like a printer? So why is it trying to access other devices on the network and break in to the system?

"If we spot aberrant behaviour we can disconnect the device from the network automatically."

Services from network monitoring firms - ForeScout, Solar Winds, IBM, SecureWorks, Gigamon and others - are becoming increasingly necessary in a world where everything - from lamp-posts to lawn sensors - is becoming internet-enabled.

According to Verizon's latest State of the Market: Internet of Things report there are now 8.4 billion connected devices - a 31% increase on 2016 - and $2tn (£1.5tn) will have been spent on the technologies by the end of 2017.

But as Verizon points out, lack of industry-wide standards for IoT devices is giving businesses major security concerns.

Stories of cyber-attacks mounted on the back of insecure devices such as video cameras have highlighted the issue.

"IoT security is one of the biggest challenges we're facing right now," says Darren Thomson, chief technology officer and vice president, technology services at cyber-security firm Symantec.

The difficulty is that IoT devices are generally simple, cheap and low-powered, without the capability of running the antivirus programs operated by traditional computers.

"The challenge with critical infrastructure is that it wasn't built with security in mind," says Tom Reilly, chief executive of Cloudera, the IoT and data analytics platform.

"Smart cities are a great playing field for hackers - changing traffic lights, turning elevators on and off - there are many security exposures.

"We need to get ahead of them."

This necessitates a different approach to security, a growing number of experts believe.

In April, telecoms giant Verizon launched what it calls its IoT "security credentialing" service, whereby only trusted, verified devices are allowed to access a company's network.

Meanwhile, Cloudera has formed a strategic partnership with chip maker Intel.


Melinda Gates on VC industry & investing with Aspect Ventures

Melinda Gates: The VC industry 'needs to clean up its act'

Melinda Gates first heard about the controversial memo written by an engineer at Google from her husband, Bill -- the billionaire founder of Microsoft.

"He basically said, 'You're not going to believe this,'" Gates told Poppy Harlow at CNNMoney's American Opportunity breakfast in New York on Tuesday.

(Read post on CNN Money)

In August, Google found itself at the epicenter of the debate over sexism in Silicon Valley when engineer James Damore claimed in a viral 3,300-word essay that women aren't as well represented in the tech industry because they are biologically different than men.

That perspective didn't sit well with Gates.

"When I read that Google memo, I didn't know whether to be sad or whether to be outraged. And I think the sadness came first. The sadness to see that kind of point of view," she said in her first public remarks on the issue.

Gates, who studied computer science and worked as a developer at Microsoft (MSFT, Tech30) until 1996, said she decided not to speak out at the time because she thought "enough people were."

She pointed to an op-ed by YouTube CEO Susan Wojcicki as an exemplary response.

In her column, Wojcicki relays a conversation with her daughter about the memo. She goes on to talk about how she continues to experience sexism within the tech industry, and how she empathizes with the women at Google who now face "a very public discussion about their abilities."

"To me, that was the most poignant piece and nothing else needed to be said for me," said Gates, who is co-chair of the Bill & Melinda Gates Foundation.

Gates said the industry's gender problem is clear just by looking at the numbers.

When she was in college, 37% of computer science graduates were female. Now it's 18%, she said.

Things got worse when games started to become more "genderized," with a focus on sports and killing, she said.

"[A]ll the sudden, when games started to become very genderized, you started to see the downtick. This huge falling off of women wanted to go into computer science," she said.

Making matters worse are hidden biases throughout the male-dominated tech industry, she said. The venture capital community, in particular, "needs to clean up its act."

"I think they also fund what they know," Gates said. "Today, they know male, white, Caucasian, in a hoodie, looks like a geek, comes from an Ivy League or equivalent school. That's their funding criteria."

Only 6% of VC partners today are women, Gates added, and a mere 3% of companies led by women get VC funding.

Gates is tackling the problem with her own money. Over the next 18 months, she plans to finance groups with funding models that show a commitment to gender equity. She's already partnered with Aspect Ventures, a San Francisco-based VC firm founded by two women.

"Moving money is what will move the industry for women," she said.

Gender discrimination is something Gates says she personally experienced "all the way through" her studies and career.

Sexism was less of an issue inside Microsoft, Gates said, but it would occur when she'd attend industry events like conferences.

Even in her philanthropic work, it's a recurring issue.

"I still walk in places with Bill, and people... they assume he's the smartest person in the room, almost no matter if it's a man or a woman who walks in," Gates said. "But as soon as I open my mouth, you can sometimes look at the person's face and they're kind of like, 'Wow, she knows something, too.'"

Gates says such hidden biases influence both men and women and are made worse by the fact that they're so rarely addressed.

"We don't talk about what's going on," she said. But now she believes things are finally starting to change.

"Tech is invasive," Gates said. "It's in all of our lives. Don't you want the people who are sitting behind that, programming it, to be people who have diverse points of view?"


New Aspect Ventures COO talks VC operations, diversity

Aspect Ventures, a female-founded VC firm, has appointed Kendra Ragatz as COO and general partner. Ragatz is stepping into a two-fold role: In addition to making investments, she's in charge of growth and development for the firm itself.

(Read post on PitchBook)

Theresia Guow and Jennifer Fonstad founded Aspect in 2014 and closed its debut vehicle on $150 million the next year. The firm, which is currently raising a second fund with a $175 million target, is focused on early-stage investments in several industries, including security, digital health, AI and autonomous vehicle software. It writes seed and Series A checks.

As of now, Aspect has backed more than 30 startups, including travel booking platform HotelTonight and Chime, the provider of a savings app.

A unique role: venture capital COO

The COO position is relatively unique among investment firms. Because of the nature of the business, private equity and venture capital investors tend to devote their time, energy and finances to helping other companies grow.

"Today, more and more VC firms are focusing on running their own businesses to the same degree they focus on helping their portfolio companies," said Ragatz (pictured) in an interview with PitchBook.

In her new role, Ragatz will do just that: She'll help develop Aspect Ventures by focusing on recruiting, finance and operations, in addition to mentoring the firm's investors. Before joining the Bay Area-based VC firm as an operating partner at the end of 2016, Ragatz held more traditional roles at investment firms including DAG Ventures and Steamboat Ventures, Disney's venture capital arm.

In addition to her COO duties, Ragatz will have a more traditional partner role. She'll seek out new investment opportunities for Aspect, some of which will likely be in the health and wellness sector.

Women in VC: 'Diversity generates better outcomes'

A VC firm founded and run by two women is something of a rarity in Silicon Valley. Ragatz said the firm's co-founders, Guow and Fonstad, are some of the only female investment professionals she's ever worked with. While the firm doesn't necessarily make a point of investing in female-founded startups, its portfolio does include a fair number of them.

The percentage of global VC deals for companies with at least one female founder sits at about 17%, per PitchBook data. Here's a closer look at VC investment in female-founded companies over the last decade, as of March 2017:

*The chart above is from a datagraphic PitchBook produced in March. 

Ragatz said Aspect's portfolio tends to be more diverse than average.

"It's not our strategy to invest solely in female founders, but I do think Aspect being founded by two female general partners and having further diversity amongst our investing team creates a strategic advantage for our firm in attracting top-notch entrepreneurs," she told PitchBook. "At the end of the day, and there is a lot of data to support this, we do believe that diversity generates better outcomes."

Aspect backs TheRealReal, the online consignment company founded by Julie Wainwright that reached a $450 million valuation in June. Other notable female-founded startups in the firm's portfolio include subscription beauty company Birchbox and career guidance platform The Muse.

Firms like Aspect are at the forefront of building diversity in the tech community. "I'm hopeful that as the industry attracts and promotes more female VCs, and there are more female entrepreneurs starting businesses, it will create a cycle of opportunity for even more women to enter into tech and succeed."



A Pledge for Decency and Broader Opportunity for All

The technology ecosystem continues to be challenged for many women as a respectful, safe place to work and thrive.

(Read post on Medium)

Just last week alone the industry saw the resignation of Uber CEO Travis Kalanick on the heels of Eric Holder’s investigation into Uber’s culture and workplace practices. The week ended with sexual harassment allegations against venture capitalist Justin Caldbeck which has continued to spiral deeper into the industry this week around the permissive role others played in allowing the behavior over many years. The brave stand to go on the record by three female founders is forcing the venture capital & start up community to take a hard look at why unwanted sexual advances toward women in the workplace continue to be an issue.

We believe the issue is broader than just curbing sexual harassment. Data has shown repeatedly that diversity in a company’s leadership boosts the bottom line. It has the natural benefit that when you have broad diversity around the table, people are more thoughtful in how they treat each other and power dynamics change throughout the organization. What you say matters. What you permit matters. And what you do matters. Now more than ever.

The data continues to underscore this message. This week, The Harvard Business Review released data based on 140 VCs and 189 entrepreneurs that found male-led companies raised five times more funding than the female-led startups. The study found that female entrepreneurs are asked different questions and judged on a different set of standards compared to their male counterparts. It’s not the first time we’ve seen this issue. In 2016, women received just 2% of VC funding overall.

And, during a peer-reviewed study earlier this year in Sweden, researchers observed that venture capitalists described female and male entrepreneurs with drastically different words, from calling the male entrepreneurs “Young and Promising” while calling similar female entrepreneurs, “Young and Inexperienced.” Whether it’s unconscious bias or not, it must end if we want parity for women in venture capital, or women seeking funding as entrepreneurs.

It’s not about one bad apple but about a culture that permits or passively allows these power dynamics to remain. When tech, venture, and private equity firms share power broadly, such behavior would be unthinkable. When less than 1% of all venture investors share equal power and economics in a firm, it takes a lot of effort for it not to happen.

Thanks to LinkedIn founder and Greylock partner Reid Hoffman, VCs and founders across the tech industry are now signing up to #DecencyPledge, making it clear that we will not tolerate sexual harassment. Kudos to Reid as a successful entrepreneur and well respected male VC for kicking this off. If we are going to reshape the tech start up culture to be more inclusive for all, it will take men AND women working together.

It’s a great start, but our hope is that it is just that: a start. We hope it will spark a broader conversation, not just on zero-tolerence for harassment of women, but also on addressing gender (and other types) of discrimination in the tech ecosystem. We are urging leaders in the technology ecosystem to consciously work to bring a diverse leadership team directly into their companies and portfolios. Only through a conscious, purposeful effort will organizations change. Join us in actively driving this change in all that you touch and do throughout our ecosystem. Let not technology lag the world but demonstrate how diverse, open cultures lead to better workplaces and better outcomes for the business.

We are asking our community and fellow VCs to make the #BoostOpportunityPledge. Meaning, we won’t tolerate sexual harassment or gender discrimination and will work tirelessly to build a more fair and safe workplace. Women need to actively bring along diversity as well. It’s not just a men problem, it’s a people problem. Let’s get to work.



Wake-up Call in Silicon Valley

Theresia Gouw provides insight to top tech trends, including the departure of Uber CEO Travis Kalanick, "super voting rights," and change in corporate culture in the Valley. Also Gouw provides her play on Amazon and Wal-Mart.

(Watch interview on CNBC)



How to Increase Diversity in Silicon Valley

Aspect's Theresia Gouw talks with Techonomics about investing in tech, taking risks and what she sees as the good news about diversity in Silicon Valley.

(Listen to two segments of interview on Techonomics)



Stem raises $8M to get music artists paid more seamlessly

While music streaming has become more and more commoditized, artists still have a wide array of places to distribute their songs like Spotify, YouTube and Apple Music — but getting paid properly can start to complicate things.

(Read on TechCrunch)

That problem gets even more difficult when there are multiple people collaborating on the same song and it’s not clear who is getting how much of a cut from the revenue share from those services. That, on top of that the general unpredictability of an artist’s revenue, has left a hole that Stem co-founder Milana Rabkin thinks her and her co-founders startup Stem can fill. To do that, the company has raised $8 million in financing led by Evolution Media and Aspect Ventures, along with several other strategic investors and continuing participation from Upfront Ventures.

Stem works to collect the revenue from those tracks in disparate platforms and sources it into a sort of escrow. It then pays out the artists based on a previously agreed level of involvement and revenue share. Rabkin said that each artist and collaborator has to sign off on the share. When a track is uploaded, the artist defines those share percentages, and then the revenue is distributed out more quickly than traditionally if it went through the typical channels. Rabkin said users should start getting data within the first 30 to 60 days of publishing.

“A lot of the new tools that have been created in the fintech space have really been focused on the services that have enabled independent small businesses to grow on their own,” Rabkin said. “Artists and creators are no different, the problem is no one’s created tools that cater to them. If you look at Intuit you have Mint, but for an artist with unpredictable income and difficult to track revenue streams [it’s different]. You can plug in your bank account, but Intuit and mint doesn’t plug into iTunes or YouTube or Spotify.”

Another problem Stem is trying to tackle is ensuring that collaborators that may not be able to monetize their content. Some artists — like first-timers — may be releasing content but have to treat it purely as promotional or marketing. Instead of just focusing on making money of touring, Rabkin said Stem will hopefully offer those artists some way of driving revenue right from the get-go.

The data that Stem brings in from all these disparate platforms may also, itself, be valuable. Artists can get information on their listeners and start to zero in on some of their preferences. That might help them tailor their tours or other parts of their marketing. But adding information around revenue streams on top of that adds another layer of data that can signal a much stronger level of engagement than some of the other signals they might have.

“The problem that exists is in the supply chain in the music business, that hasn’t been [solved],” Rabkin said. “There’s new exciting frameworks that have been developed, really great tools to normalize data in relational databases. Those types of tools, they make it really easy to start tackling these problems in a way that wasn’t possible years ago.”

Rabkin said she doesn’t view Stem as competitive with distribution services, as the company is trying to get everything funneled into one place just to sort out who gets paid what. Right now the company has to take over the process, but part of the reason Stem is raising money is to build the tools it has in a way that other distributors can use.

There will likely be plenty of competition in the space. Kobalt, for example, raised $75 million at a $775 million valuation last month. And each of these services — like iTunes or Spotify — may end up simplifying their artist tools down enough that it may not require such complicated background gymnastics to figure out how to get the right people paid. But Rabkin hopes that by building a seamless enough experience Stem will be able to attract a wide artist base that includes Frank Ocean, Childish Gambino, DJ Jazzy Jeff, Anna Wise, Chromatics, and Poolside.

What James Comey’s Firing Means For the Future of Cyber Attacks

Theresia Gouw and Jennifer Fonstad on the future of cyber-attacks.

Following Presidents Trump’s abrupt termination of FBI Director James Comey earlier this month, the US government is left in a vulnerable spot as officials struggle to create the right policies to avoid cyber-attacks. Comey was one of the few federal officials equipped to get the job done right; he handled the investigation into Hillary Clinton’s use of a private email server and led a criminal investigation into whether Trump advisers colluded with the Russian government to steer the 2016 presidential election.

(Read on Fortune)

Although the Justice Department last week appointed ex-FBI director Robert S. Mueller III to head the investigation in Comey’s place, the developments nonetheless beg broader questions over what kinds of protections against cyber-attacks should Americans expect from the US government?

Without senior leadership in many of these government agencies, very few agencies are willing or even able to make large financial outlays or make decisions for new software, architecture, or counter-measures. Per reporting from Politico and USA Today, top-ranking positions across U.S. Defense, Treasury, and State departments, as well as key ambassador spots, are still awaiting appointments. In other words, rather than addressing the issue with press-laden, sweeping executive orders, perhaps the problem is simpler – putting talent into key open positions and enabling them to do their jobs. While Trump’s full cabinet has been confirmed, the Nonpartisan Partnership for Public Service has identified 557 ‘key’ government appointments that have yet to be confirmed by the Senate (not to mention the thousands of appointments that do not require Senate confirmation).

As time passes and without leadership in place, any decisions around major cybersecurity initiatives must be put on hold.

Former President Obama proposed a $19 billion cybersecurity plan in 2015 and 2016 (as part of the President’s Fiscal Year 2017 Budget) to improve IT infrastructure. But many deals are on hold while awaiting President Trump’s team that would help replace old government systems that are the most vulnerable to cyberattacks. While Trump did sign a separate cybersecurity order earlier this month, it’s improvements are incremental. Even as Trump also proposed increases in cybersecurity budgets for U.S. Homeland Security, he still flirts with the notion that a government shutdown would be “good for government,” as suggested ina recent tweet. As government employees worry about getting paid and are furloughed, America’s capacity to build and secure its digital boundaries flounders.

It is now time to start building a more comprehensive plan for protecting and prosecuting cyber-attacks against our citizens and organizations. As Fortune 500 companies make cybersecurity a responsibility that even corporate board members are held to, perhaps it’s time for the Administration to appoint a cybersecurity czar to direct and manage cybersecurity across agencies, reporting directly to the President. Similar to coordinating physical security, cybersecurity needs to be elevated in mindshare, management, and resources. A proactive approach must be the priority. Rather than acting in a reactionary way, this approach enables leadership to coordinate efforts across agencies and internationally, and may provide impetus for filling positions more rapidly and effectively across the organization in the same way the private sector protects itself from cyber hacks.

Unfortunately, it’s not enough to keep the police on the streets and the military bills paid anymore. When governments are compromised by a hack, their people and their organizations are held up for ransom and the leadership is bogged down in identifying where the blame lies. How can we expect to protect ourselves? Let’s not wait until there is another Federal breach that undermines the security of our nation (remember the Office of Personnel Management hack in 2015?) to put a spotlight on the problem. What we’ve seen so far is just the beginning.


The 50 Most Powerful Moms of 2017

Jennifer Fonstad joins Melinda Gates, Adele, Sheryl Sandberg and other fantastic women on Working Mother's list of The 50 Most Powerful Moms of 2017.

(Read on Working Mother)

Jennifer Fonstad, Partner, Aspect Ventures/Entrepreneur

Children: 18, 16, and 12-year old twins.
Venture capital was largely considered a man’s world—until this working mom came along! Along with partner, MPWM Theresia Gouw Ranzetta, her company, Aspect Ventures, is one of the few women-led venture capital firms in Silicon Valley. Last year, she was named “Venture Capitalist of the Year” at the Deloitte Technology 2016 Fast 500, marking the first time a woman won the award. Jennifer had the vision to invest in now popular brands, such as BirchBox, UrbanSitter and TheRealReal. Prior to Aspect, Jennifer was Managing Director with Draper Fisher Jurvetson, helping to take them from $150 million under management to more than $3.5 billion, before she left to form Aspect. She’s made the Forbes Midas List twice, and, according to the Silicon Valley Business Journal, has also “taught in Kenya, trekked after wild gorillas in Africa and now serves as chairperson of the Somaly Mam Foundation, which focuses on ending sex slavery of underage girls around the world.” Her myriad of accomplishments are major #workmomgoals, for sure.