Daily Tech Snippet: Wednesday, February 24

• European Tech Scene Begins to Feel Silicon Valley’s Woes: At the offices of Deliveroo, a food delivery start-up with headquarters in an upmarket neighborhood here, signs of activity are everywhere. The communal kitchen hums with 20-something developers. A gold-painted scooter, which the co-founder William Shu once used to make deliveries, stands in the center of the office as people bustle about. The frenetic pace belies a more cautious approach that Mr. Shu, 36, a former Morgan Stanley investment banker, has recently started taking at the start-up.Over the last year, Mr. Shu has urged colleagues to be more circumspect with growth plans, forgoing rapid expansion in competitive markets like the United States to focus on places where Deliveroo already has a loyal following. And while the start-up has raised almost $200 million, employs roughly 400 people worldwide and operates in 12 countries, Mr. Shu says profitability — and not just aggressive growth to beat rivals to new markets — is increasingly important as the company moves beyond its British roots. The focus at Deliveroo is symptomatic of a change across many European start-ups. Just as in Silicon Valley, where a number of privately held tech companies have been stung by lower valuations and investor questions about their sustainability, that same unease has now reached Europe’s tech community, in a sign that a move away from soaring boom times in start-ups is going global. Driving the pullback are some of the same forces that have caused a change in Silicon Valley’s start-up scene. Tech stocks are gyrating because of fears of a global economic slowdown — exacerbated in Europe by the region’s migrant crisis and persistent financial problems. Valuations of some start-ups worldwide got ahead of themselves. As a result, venture capitalists in Europe and farther afield are becoming more cautious about funding local start-ups that do not have proven business ideas. “When Silicon Valley sneezes, the rest of the world catches a cold,” said Fred Destin, a partner at the London office of Accel Partners, a venture capital firm. “It’s only a matter of time before Europe faces the same issues that we’re seeing on the West Coast.” In Europe, that is leading to situations like that of Powa Technologies. Last week , Powa, an e-commerce company based in London, entered into administration, a form of bankruptcy. The start-up had raised $175 million since 2013 but had failed to win enough customers for its mobile shopping technology. Deloitte, which is overseeing the sale of the company’s assets, says it is now working to find buyers for the business. Truecaller, a Swedish start-up that had raised around $80 million for its caller ID smartphone application, recently laid off about 20 percent of its staff. A company spokesman declined to comment on the layoffs and said Truecaller remained committed to its business. And SwiftKey, a popular predictive typing smartphone application used by more than 300 million people worldwide, was bought by Microsoft this month for a reported $250 million, which was significantly less than what many of SwiftKey’s investors had expected. “You can already see more hesitance and lower valuations,” Christian Reber, founder of 6Wunderkinder, a German start-up bought by Microsoft last year, said in an email. “The market correction will continue, and that’s not necessarily a bad thing.”

• MasterCard will let you to take a selfie to complete purchases: MasterCard wants to use your face to help fend off fraudsters. Using a new system called MasterCard Identity Check -- or, colloquially, "selfie pay" -- the credit card company will use biometric methods like face recognition and fingerprint scans to better secure online shopping. Right now, Mastercard offers a feature that financial institutions can enable that lets customers set up a password for online payments to help prevent fraud. The new system will use the same principle, but instead of relying on a password that could be forgotten or stolen, it uses your face or fingerprint. Consumers will go through all the normal steps of filling out credit card information when making an online purchase, but this feature adds another step: The website will send a notification through an app on customers' smartphones that asks them to verify their identity. This can be done either through a fingerprint scan or by using the phone's camera to take a brief, selfie-like, video. When taking the "selfie," the user will have to blink to prove that it's a live person and not just an old photo being used to spoof the system.

• Lenovo aims at mature markets with new 'augmented reality' phone: China's Lenovo Group is ready to break into mature markets this summer with the launch of its new smartphone which sports 'augmented reality' features developed under Google's Tango project, its chief executive said on Tuesday. The device, which was announced at the 2016 CES consumer electronics show in Las Vegas in January, will launch in July, Chief Executive Yang Yuanqing said in an interview at Mobile World Congress in Barcelona. Declining to give additional information he said that the phone will include Google's Project Tango technology and more. Project Tango combines 3D motion tracking with depth sensors to give a mobile device the ability to know where it is and how it moves through an area, creating the potential to use augmented reality features on the phone. Augmented reality software then overlays text or graphics on the real-life image. It differs from virtual reality, which seeks to simulate real-world views.

• Tech IPO Freeze Is Sign of Investor Reality Check: The tech IPO market is frozen. Storage vendor Nutanix is further proof. It's been over three months since Square and Match Group debuted, and not a single software or Internet company has followed. Seven of the past 10 technology companies to go public are trading below their offer price, and four are down by at least 20 percent, according to FactSet. Nutanix, which filed its IPO prospectus in December, is holding off on selling shares until the stock market volatility wanes, said sources familiar with the matter. The developer of data center technology that wraps together storage, servers and virtualization was set to go public in late January, but has been advised by its bankers to wait for the market to calm, said the sources, who asked not to be named because the discussions are private. No other high-profile tech companies are publicly on file. Last month, online lender Elevate Credit delayed its IPO due to market conditions, as January marked the worst month for the Nasdaq since 2010. The index is still down 8.5 percent to start the year even after rallying over the past week. For Silicon Valley's financiers, this is all troubling. Big IPOs are their lifeblood. That's how venture investors make outsized profits and justify the billions of dollars they pour annually into start-ups that ultimately go bust or fail to generate returns. Last year should have been a banner year for IPOs. The Nasdaq topped 5,000 for the first time since 2000, and rose for the fourth consecutive year. Investors expressed appetite for risk, bidding up Amazon.comand Netflix, the year's two best large-cap performers. Yet, tech companies went public at the slowest pace since 2009. Instead of IPOs, the highest growth companies were raising mega-rounds of cash in the private market at valuations and revenue multiples that exceeded what public investors were paying. Hedge funds and private equity firms distorted the IPO cycle, putting piles of cash into companies but without rewarding early investors and employees the way public offerings do. Late-stage private financing almost doubled from $8.9 billion in 2013 to $16 billion last year, according to the National Venture Capital Association, with companies including Uber, Airbnb, SpaceX and SoFi each reeling in at least $1 billion. That could mean a painfully dilutive private investment round, selling the business at a loss to some investors or going public at a price below what earlier investors paid. "People just have to get real," said Golden, a managing partner at Revolution Ventures in San Francisco and former director of JPMorgan's technology investment banking practice. "When markets are speaking, we may not like what they're saying but we have to listen."

• Etsy Shares Spike 13% As It Reports Strong Revenue In Fourth Quarter: Etsy didn’t have a good 2015, but it was still able to finish on the stronger side. Today the company reported its fourth-quarter results, coming in at $87.9 million in revenue and a loss of 4 cents per share. Analysts were expecting a loss of 1 cent per share on revenue of $86.5 million. Another important number to track here was the company’s gross merchandise sales (GMS), which rose 21.3% to $741.5 million from $611.5 million in the fourth quarter last year. Shares of Etsy were up as much as 13% in extended trading following the report. Still, it’s partially a recovery from the day where shares ended down around 7% before the company reported earnings. t’s also a strong finish amid the fresh 2015 IPOs, which was one of the weakest years for the IPO market since 2009. Even with the strong showing, Etsy is still trading well below its IPO price — but it is certainly not alone. The fourth quarter was an important one for Etsy — it had to show investors that it could post a strong holiday quarter and bring in new people who would buy gifts and other products on Etsy. It looks like investors were pleased by its ability to beat on revenue and bring in some new buyers and sellers. It also had to show that it could continue to bring those buyers and sellers in through despite its brand as an artisanal marketplace that is quite different from others like eBay. Etsy is also continuing to navigate a shift to more mobile sales, with mobile visits accounting for 61% of the company’s overall visits, and 44% of gross merchandise sales coming from mobile devices. This is all pretty good news for the company. In general, Etsy has not had a good year. Shortly after its IPO the stock hit around $30, but has since cratered to under $8. Today, obviously, didn’t help. To be sure, a lot of companies haven’t been having a good year due to a few things outside their control — like global economic issues and foreign exchange problems — but Etsy in particular is getting hit hard by investors.