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Fabric Ventures raises $130m to invest in ‘open economy’ start-ups

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The European Investment Fund has contributed to the new fund in a bid to ‘unlock financing opportunities’ for blockchain entrepreneurs.

Fabric Ventures, a Luxembourg-based VC firm, has announced a $130m fund for founders of blockchain and digital asset companies.

The new fund includes $30m from the European Investment Fund (EIF) as well as investment from VC firm Atomico, Mike Novogratz’s Galaxy Digital and Barry Silbert’s DCG.

Other backers include partners, executives, contributors and founders from Ethereum, Wise, PayU, Polkadot, PayPal and Google.

Fabric Ventures bills itself as a VC that backs the ‘open economy’, which includes companies that utilise technologies of the open web, such as digital assets and blockchain, that support the free flow of users, data and value.

“Fabric’s new fund will be put to work partnering with the most daring and relentless entrepreneurs of the open economy on their journey to architect lasting protocols and platforms, not simply companies,” said Richard Muirhead, co-founder and managing partner at Fabric Ventures.

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“It is now well acknowledged that there is a need for a web that is user owned and, consequently, more human-centric. There are astonishing people crafting this digital fabric for the benefit of all. We are excited to support those people with our latest fund.”

From a 2017 fund, the company has a portfolio of open web, finance and media companies that have a combined valuation of $42bn.

Axie Infinity is an NFT-based game in Fabric’s portfolio that has recently been growing in popularity. It is a Pokémon-inspired universe where anyone can earn tokens through skilled gameplay and contributions to the ecosystem, allowing players to battle, collect, raise and build a kingdom for their pets.

Alain Godard, chief executive of the EIF, said that despite rich engineering talent, deep-tech entrepreneurs in the blockchain sector in Europe often struggle to find financial support and investors that have a deep understanding of their space.

“This partnership seeks to address that need and unlock financing opportunities for entrepreneurs active in the field of blockchain technologies – a field of particular strategic importance for the EU and our competitiveness on the global stage.”

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London is the best European city for founders, Startup Genome report

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The UK capital was the only European city to make the top ten in Startup Genome’s ranking, tying with New York in second place for the second year in a row.

London is Europe’s number one start-up city, according to a recent report by Startup Genome. The research and advisory body which specialises in start-ups released its ‘Global Startup Ecosystem Report 2021’ report today (22 September).

The report identified London and New York as joint second-best cities in the world for start-ups. London was the only European location to make it into the top ten. The city is attractive to founders thanks to its educated workforce and tax incentives, the report found.

Silicon Valley in California took the top spot, unsurprisingly. This year’s global rankings were dominated by the US, with half of the top 30 ecosystems coming from this region, followed by Asia with 27pc and Europe with 17pc of the top performing ecosystems globally.

Silicon Valley, New York City, Boston, and Los Angeles alone contributed more than 70pc to the US’s total ecosystem value.

Paris made the top 20, coming in at number 12. The Amsterdam-Delta region followed in thirteenth place. Dublin improved its rank from the previous year’s report, coming in at number 36 this time.

Beijing, Boston, Los Angeles, Tel Aviv, Shanghai, Seattle and Stockholm also made the top ten best start-up cities.

The global start-up economy is currently worth more than $3.8trn in ecosystem value. There are 79 ecosystems generating over $4bn in value, which is more than double the number identified in 2017. This time last year, 91 ecosystems had achieved unicorn status.

Also in 2020, Startup Genome published a report indicating its concerns over the future of the start-ups ecosystem during Covid-19. The report suggested that 42pc of start-ups were in what it called ‘the red zone,’ meaning they had three months or fewer runway ahead of them.

Several countries  including the UK, France and Germany introduced special support packages for start-ups. Irish non-profit Scale Ireland also introduced a similar start-up scheme for Irish companies.

“Entrepreneurs, policymakers, and community leaders in Europe have been working hard to build inclusive innovation ecosystems that are engines of economic growth and job creation for all,” commented JF Gauthier, founder and CEO of Startup Genome on the report’s release.

“The Global Startup Ecosystem Report is the foundation of knowledge where we, as a global network, come together to identify what policies actually produce economic impact and in what context,” Gauthier added.

Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.

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Facebook oversight board to review system that exempts elite users | Facebook

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Facebook’s semi-independent oversight board says it will review the company’s “XCheck” system, an internal program that has exempted high-profile users from some or all of its rules.

The decision follows an investigation by the Wall Street Journal that revealed that reviews of posts by well-known users such as celebrities, politicians and journalists are steered into the separate system.

Under the program, some users are “whitelisted”, or not subject to enforcement action, while others are allowed to post material that violates Facebook rules pending content reviews that often do not take place. The Xcheck system, for example, allowed Brazilian footballer Neymar to post nude pictures of a woman who had accused him of rape, according to the report.

Users were identified for additional scrutiny based on criteria such as being “newsworthy”, “influential or popular” or “PR risky”, the Wall Street Journal found. By 2020 there were 5.8 million users on the XCheck list, according to the newspaper.

The oversight board said Tuesday that it expects to have a briefing with Facebook on the system and “will be reporting what we hear from this” as part of a report it will publish in October.

The board may also make other recommendations, although Facebook is not bound to follow these.

The Journal’s report, the board said, has drawn “renewed attention to the seemingly inconsistent way that the company makes decisions, and why greater transparency and independent oversight of Facebook matters so much for users”.

Facebook told the Journal in response to its investigation that the system “was designed for an important reason: to create an additional step so we can accurately enforce policies on content that could require more understanding”. The company added that criticism of it was “fair” and that it was working to fix it.

A representative for Facebook declined to comment to the Associated Press on the oversight board’s decision.

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Philippines imposes 12 per cent digital services tax • The Register

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The Philippines has become the latest nation to impose a digital services tax.

Such taxes require the likes of Netflix and Spotify to pay local sales taxes even though their services are delivered – legally, notionally, and physically – from beyond local jurisdiction.

The Philippines has chosen a rate of 12 per cent, mirroring local value added taxes.

“We have now clarified that digital services and the goods and services traded through digital service providers should generally be subject to VAT. This is just a matter of common tax sense,” said Joey Salceda, a member of the Philippines’ House of Representatives and a backer of the change to the nation’s tax code.

Salceda tied the change to post-pandemic economic recovery.

“If brick and mortar establishments, which are the hardest-hit by the pandemic, have to pay VAT, the giants of e-commerce shouldn’t be exempt,” he said.

However, local companies that are already exempt from VAT by virtue of low turnover won’t be caught by the extension of the tax into the virtual realm.

Salceda’s amendments are designed to catch content streamers, but also online software sales – including mobile apps – plus SaaS and hosted software. The Philippines’ News Agency’s report on the amendment’s passage into law even mentions firewalls as subject to VAT.

The Philippines is not alone in introducing a digital services tax to raise more revenue after the COVID-19 pandemic hurt government revenue – Indonesia used the same logic in 2020 .

But the taxes are controversial because they are seen as a unilateral response to the wider issue of multinational companies picking the jurisdictions in which they’ll pay tax – a practice that erodes national tax bases. The G7 group of nations, and the OECD, think that collaborations that shift tax liabilities to nations where goods and services are acquired and consumed are the most appropriate response, and that harmonising global tax laws to make big tech pay up wherever they do business is a better plan than digital services taxes.

The USA has backed that view of digital services taxes, by announcing it will impose tariffson nations that introduce them – but is yet to enact that plan.

Meanwhile, the process of creating a global approach to multinational tax shenanigans is taking years to agree and implement.

But The Philippines wants more cash in its coffers – and to demonstrate that local businesses aren’t being disadvantaged – ASAP. ®

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