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TikTok’s CEO Alex Zhu is tired of the media’s portrayal of his viral video app as a backdoor for the Chinese government. So he’s on a mission to prove that you shouldn’t worry so much.
People have a lot of worries. They fear that TikTok is collecting and sharing user data. It’s threatening national security. It could challenge democratic values. Worst of all — it’s promoting “scantily clad adults and suggestive dancing” to children.
In an interview with The New York Times, Zhu denies it all. No, he says, the company doesn’t censor videos to appease the Chinese government. It doesn’t share user data with China or even its parent company ByteDance. Users’ data is stored in Virginia, with a backup server in Singapore. And what happens if China’s top leader, Xi Jinping, personally asked Zhu to remove a video or hand over user data?
“I would turn him down,” Zhu said.
I’m not sure his assurances will make the politicians in Washington feel much better. In October, Sen. Marco Rubio asked the U.S. government to open an investigation into TikTok out of concern that the company is “censoring content” around the world to satisfy Beijing’s leaders. “China is using these apps to advance their foreign policy and globally suppress freedom of speech, expression and other freedoms that we as Americans so deeply cherish,” he wrote in a letter. In a separate letter, Sen. Tom Cotton and Senate Minority Leader Chuck Schumer wrote, “TikTok is a potential counterintelligence threat we cannot ignore.”
As I’ve previously noted, there’s no question that TikTok looms a shadow over the United States during a time of fraught relations with China. Politicians fear it could threaten American innovation — the company is growing at a faster rate than American social media networks including Facebook, Instagram, YouTube and Snapchat.
It’s going to be a messy fight over things much larger than a 15-second lip-syncing video — as I’ve said before, we’re talking a threat to good ole’ American innovation, expression, and values.
THE HUBRIS OF WEWORK: In the midst of all the WeWork drama, we were all focusing on the 800-pound gorilla that is SoftBank. But what about WeWork’s minority stakeholders — the employees who have seen the value of their stock options decimated, and the venture capital investors who lost millions on their investment?
My colleague Rey Mashayekhi dug into WeWork employee Natalie Sojka’s lawsuit in San Francisco County Superior Court against Neumann, SoftBank, and members of WeWork’s board of directors, accusing them of “using their control of The We Company to benefit themselves to the detriment of the company’s minority shareholders.”
In it, she claims that WeWork’s minority investors were unaware of the extent of the financial situation of the company, having been granted neither financial materials nor disclosures prior to the release of its S-1. From his story:
“What went wrong here was the market belatedly learning that [WeWork’s] governance was terrible,” according to Mark Lebovitch, a partner at law firm Bernstein Litowitz Berger & Grosssman. “People lost faith not because the business model was flawed, but because the people running the business were flawed.”
Lebovitch thinks that the WeWork debacle “shows that governance matters” in an era when myriad startups have parlayed a frothy market into runaway, multibillion-dollar private valuations.
KYLIE TURNS COSMETICS INTO CASH: Say what you will about Kylie Jenner (and the whole Kardashian clan) but the girl knows how to turn makeup into cold, hard cash. Coty, the fragrance and cosmetics company, will acquire a 51% stake in Kylie Cosmetics, Jenner’s cosmetics startup, for $600 million. The deal values Kylie Cosmetics at $1.2 billion. Kylie Cosmetics is reportedly on track to bring in $200 million in sales this year while Coty has been floundering.
Silicon Valley likes to talk a lot about “disruption,” but while no one was looking, several female-led companies have actually upended the traditional beauty market. Beauty brand Glossier is a billion-dollar startup. Shiseido bought skincare brand Drunk Elephant for $845 million. On Monday, Estée Lauder agreed to buy the Korean skincare company behind the Dr. Jart+ brand in a deal that values the company at approximately $1.7 billion. Just more proof that there’s money to be made outside of ride-hailing and co-working. I’ve been a customer of all of these brands.
BUSINESS PERSON OF THE YEAR: Fortune released its annual Business Person of the Year list today. In a year of political instability and chaos, it was steady leadership that won the day in the business world. See who took the top spot here.
By the way, we’re building a new version of Fortune. While you’re here, we’d appreciate your confidential feedback on our products and platforms. You’re invited to join our Global Advisory Panel.
- OPay, a Nigeria-based mobile payments startup, raised $120 million in Series B funding. Investors include Meituan-Dianping, DragonBall Capital, GaoRong Capital, Source Code Capital, SoftBank Ventures Asia, Bertelsmann Asia Investments (BAI), Redpoint China, IDG Capital, Sequoia Capital China and GSR Ventures.
- BlueVine, a Redwood City, Calif.-based provider of small business banking, raised $102.5 million in Series F funding. ION Crossover Partners led the round, and was joined by investors including Lightspeed Venture Partners, Menlo Ventures, 83North, SVB Capital, Nationwide, Citi Ventures, M12, MUFG Innovation Partners Co, O.G. Tech - Eyal Ofer’s VC, Vintage Investment Partners, ION Group, and Maor Investments.
- SmartNews, Inc, a Japan-based news discovery app, raised $92 million in Series E funding at a $1.2 billion valuation. Japan Post Capital Co. Ltd. and ACA Investments Pte Ltd co-led the round, and was joined by investors including Globis Capital Partners Co., Ltd., Dentsu, Inc, and D.A.Consortium Inc. (Hakuhodo DY Group).
- Nuvia, a Santa Clara, Calif.-based silicon design company, raised $53 million in Series A funding. Capricorn Investment Group, Dell Technologies Capital, Mayfield and WRVI Capital led the round, and were joined by investors including Nepenthe LLC.
- Bungalow, a San Francisco-based co-living company, raised $32 million in Series B funding. Founders Fund and Coatue co-led the round, and were joined by investors including Khosla Ventures, A-Rod Corp, Atomic VC, CAA Ventures, Cherubic Ventures, Maverick Capital, Nine Four Ventures, and Wing Ventures.
- Aerospike Inc., the global leader in next-generation, real-time NoSQL data solutions, raised $32 million in Series D funding. Triangle Peak Partners led the round, and was joined by investors including NewView Capital Partners, Alsop Louie Partners and Eastward Capital Partners.
- Bison Trails, a Brooklyn-based provider of secure infrastructure for multiple blockchain networks, raised $25.5 million in Series A funding. Blockchain Capital led the round, and was joined by investors including Kleiner Perkins, Coinbase, Collaborative Fund, A Capital, Consensys, Sound Ventures, Initialized, Accomplice, Galaxy Digital, and Notation.
- Eden, a San Francisco-based workplace management platform raised $25 million in Series B funding. Reshape led the round.
- Abnormal Security, a San Francisco-based cloud email security platform, raised $24 million in Series A funding. Greylock Partners led the round.
- Luko, a Paris-based home insurance company, raised a €20 million ($22 million) in Series A funding. Accel led the round, and was joined by investors including Founders Fund and Speedinvest.
- Wayve, a U.K.-based developer of artificial intelligence that teaches cars to drive autonomously using reinforcement learning, raised $20 million in Series A funding. Eclipse Ventures led the round, and was joined by investors including Balderton Capital.
- Freedom Leaf, a Las Vegas-based hemp consumer packaged goods company, raised $5 million in funding. Merida Capital led the round.
- TRM Labs, a San Francisco-based cryptocurrency risk management platform, raised $4.2 million in funding, Investors include Initialized Capital, Blockchain Capital, PayPal Ventures, and Y Combinator.
- LIV, a San Francisco-based mixed reality game streaming platform, raised $2.6 million in Series A funding. Hiro Capital led the round.
- Bolt, a San Francisco-based electric bike delivery company, raised $2.5 million in seed funding. Maniv Mobility led the round, and was joined by investors including Contrarian Ventures.
- CharliAI, a Canada-based AI-powered workflow automation engine company, raised $1.6 million in seed funding. Investors include BDC Capital and Yaletown Venture Partners.
PRIVATE EQUITY DEALS
- Luminate Capital Partners made an investment in Quantivate, a Woodinville, Wash.-based SaaS governance, risk and compliance solution provider. Financial terms weren't disclosed.
- Woodstream Corporation, a portfolio company of Vestar Capital Partners, acquired Dynamic Solutions Worldwide LLC, a Milwaukee, Wisc.-based maker of DynaTrap insect traps. Financial terms weren't disclosed.
- CIC Capital invested C$30 million ($22.7 million) in equity and debt into Care Group of Pharmacies, a Canada-based chain of independent pharmacies. Financial terms weren't disclosed.
- Driven Brands, which is backed by Roark Capital, acquired Clairus Group, a Canada-based provider of automotive glass distribution, replacement, and claims management solutions. Financial terms weren't disclosed.
- Episerver, which is backed by Insight Partners, agreed to acquire Idio, a content personalization and analytics platform. Financial terms weren't disclosed.
- Providence Equity Partners made a majority investment in n2y LLC, a Huron, Ohio-based provider of software, curriculum and tools to the K-12 special education market. Financial terms weren't disclosed.
- Marlin Equity Partners acquired ProScheduler, a Sweden-based provider of contact center workforce management solutions. Financial terms weren't disclosed.
- Gemini acquired Nifty Gateway, a New York-based platform for non-fungible tokens that power digital collectibles and virtual goods. Financial terms weren't disclosed. Nifty Gateway had raised approximately
- Arlington Capital Partners agreed to sell Quantum Spatial, a Sheboygan, Wisc.-based provider of spatial analytics intelligence and enablement solutions, to NV5, for $303 million.
FIRMS + FUNDS
- Unusual Ventures, a Menlo Park, Calif.-based venture capital firm, raised $400 million for its second fund.
- Wellington Management, a Boston-based investment management firms, raised $393 - million for Wellington Biomedical Innovation Fund I.
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