A VC Predicts Tech’s Top 10 Policy Fights of 2020
Good morning, Term Sheet readers. Polina here, back from vacation.
In today’s guest column, Tusk Ventures founder Bradley Tusk predicts how the tech community will grapple with the policy fights that await in 2020. (Disclosure: Tusk Ventures is invested in or works with several companies that operate in the categories mentioned in this column, including Handy, Eaze, FanDuel, Lyric, and Kodiak.)
The only thing we know for certain about 2020 is that it will be complete and utter chaos. Washington will dominate the conversation, but as usual, most of tech regulation will still take place at the state and municipal level. A host of challenges and opportunities lurk right around the corner as state legislative sessions resume next month.
Here are 10 regulatory issues to have on your radar:
This issue will feel like it’s everywhere all at once — and it will be. Breaking up giants like Amazon, Facebook and Google will be a major topic on the campaign trail, a constant focus for the Federal Trade Commission and the Department of Justice, a big press opportunity for dozens of state attorney generals around the country, and yet another issue for Congress to talk about (but not actually act upon). And even if Washington is in gridlock, the European Union and the UK’s Competition and Markets Authority have become more and more aggressive on competition.
Congress will eventually enact a standard for federal privacy. But until then, states are figuring it out for themselves (California, Maine and Nevada already have). Every tech company wishing to protect its ability to monetize user data is going to have to get down in the muck in virtually every jurisdiction. Given the politics and polling on this issue, the odds of their succeeding are low.
New York, New Jersey and Illinois are already taking up their own versions of California’s Assembly Bill 5, which aims to turn contractors and freelancers into permanent employees. This has recently gained traction within tech, with Handy CEO Oisin Hanrahan calling for full-time employee status for people working more than 25 hours per week for a single platform. Uber, Lyft and Door Dash will have their hands full, with labor, progressives and a bevy of smaller platforms all lined up against them in fights across the country. And they’ll need to win their statewide referendum in California to overturn AB5.
Last year, attempts at legalizing recreational cannabis succeeded in relatively conservative states like Illinois and Michigan, but failed in traditionally liberal states like New York and New Jersey. Both states will try again, possibly in tandem with Connecticut and Pennsylvania. The issue will continue to pop up in state legislatures and through ballot initiatives around the nation (Arizona, Florida, Missouri, South Dakota). I predict that Congress will debate — but fail to do anything — over providing a safe harbor to those using or handling cannabis in states where it already is legal.
New Jersey’s tremendous success with sports betting will lead even more states to follow suit in 2020. Last year, six more states legalized sports betting: Illinois, Tennessee, New Hampshire, Montana, Maine and North Carolina. E-sports legalization will become a real political issue in a handful of progressive jurisdictions too.
Three cities – Oakland, San Francisco and Somerville – have already banned government use of facial recognition, and it won’t stop there. Look for legislation in big states such as Michigan, Massachusetts, California, New York and New Jersey. This will be a very popular issue both on the far left and the far right. Facial recognition bans can have broad ramifications beyond the privacy risk from law enforcement.
SHORT-TERM RENTAL REGULATION:
Airbnb’s defeat in Jersey City last month will spur a new round of proposed restrictions on short-term rentals around the nation. This issue tends to move in either direction in terms of political momentum, and right now, that momentum has shifted away from Airbnb. As Airbnb goes public next spring, it will especially want to avoid all distractions. (Disclosure: Lyric is a portfolio company of ours and Airbnb is the company’s largest investor.)
Government will look to partner with the tech sector to figure out how to combat the crisis, since little else seems to be working. A host of new startups are using telemedicine to help opioid addicts prevent relapsing. Any sign of success will lead tech to opportunities to partner with state and local governments, Medicare and Medicaid, health insurers and others.
Autonomous cars are a political hot button. Trucks are not. Given the national shortage of truckers, and the lengths some truckers have to go to just to stay awake on the road, the need for a safer alternative is clear and generally accepted. That’s why states will follow the lead of Texas and Florida and allow autonomous truck testing on major highways as well as create dedicated lanes for autonomous truck delivery.
In 2019, Utah, Colorado, Washington and Oregon joined West Virginia to allow some constituents to vote on their phones over the blockchain. Given the polarization and dysfunction plaguing every level of government, the need to dramatically increase turnout and change the incentives given to politicians is greater than ever. I believe more jurisdictions will offer mobile voting in 2020, more voters will be allowed to participate, and more startups will work on mobile voting technology. (Disclosure: Tusk funds and runs the Mobile Voting Project out of Tusk Philanthropies.)
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- Vroom, a New York-based used car marketplace, raised $254 million in Series H funding. Durable Capital Partners led the round, and was joined by investors including T. Rowe Price Associates, and L Catterton.
- WalkMe, a San Francisco-based digital adoption platform that helps companies automate , raised $90 million in Series G funding. Vitruvian Partners led the round, and was joined by investors including Insight Partners.
- Neuron Mobility, a Singapore-based e-scooter startup, raised $18.5 million in Series A funding. Investors include GSR Ventures.
- Jow, a Paris-based grocery shopping app, raised $7 million in funding. Stride.VC led the round, and was joined by investors including Yes VC, and Shan-Lyn Ma, the co-founder and CEO of Zola. Existing investors DST Global and eVentures also participated.
- RaySecur, a Boston-based mailroom security startup, raised $3 million in seed funding. One Way Ventures led the round, and was joined by investors including Junson Capital, Launchpad Venture Group, and Dreamit Ventures.
PRIVATE EQUITY DEALS
- Protective Industrial Products, which is backed by Audax Private Equity, acquired Boss Manufacturing, a Kewanee, Ill.-based supplier of gloves, boots, rain-wear, and other personal protective equipment. Financial terms weren't disclosed.
- Grammer Industries, Inc., a portfolio company of Stellex Capital Management, acquired LiMarCo Logistics, LLC, a Houston-based regional hauler of Liquefied Petroleum Gas. Financial terms weren't disclosed.
- ClearCourse Partnership LLP, a group of companies backed by Aquiline Capital Partners, acquired Giftpro, a U.K.-based software platform that allows hotels, restaurants, spas and other venues to sell and manage gift vouchers and event tickets. Financial terms weren't disclosed.
- WHP Telecoms, a portfolio company of Equistone Partners Europe, acquired Sitec Infrastructure Services Ltd, a U.K.-based project management company focused on servicing the UK telecommunication sectors.
- Molecular Data, a Shanghai-based developer of e-commerce and software solutions, filed to raise up to $70 million in an IPO. The firm posted net revenue of $1.3 billion in 2018 and loss of $35.6 million. It plans to list on the Nasdaq “MKD.” Read more.
- Brentwood Associates acquired Chicken Salad Chick, an Auburn, Ala.-based fast-casual restaurant chain, from Eagle Merchant Partners. Financial terms weren't disclosed.
- NorthEdge Capital sold Direct Healthcare Group, a U.K.-based developer of medical devices, in a secondary buyout to ArchiMed. The deal marks a 3x return on its initial investment for NorthEdge.
FIRMS + FUNDS
- Leonard Green & Partners, a Los Angeles-based private equity firm, raised $14.75 billion across two funds. Green Equity Investors raised $12 billion, while Jade Equity Investors, the firm’s debut mid-market fund, raised $2.75 billion.
- Centana Growth Partners, a New York and Palo Alto-based growth equity firm, raised $375 million for its second fund, Centana Growth Partners II, L.P.
- Peregrine Ventures, an Israel-based med-tech venture capital fund, raised $115 million for its fourth fund.
- OMERS Ventures hired Jambu Palaniappan as a managing partner.
- Polaris Partners named Isaac Ciechanover as a partner.
- BlackArch Partners named Ian Mackay as managing director.
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