Prominent tech companies that have raised millions in venture capital funding were among the recipients of some of the largest loans distributed by the federal government to small businesses during the coronavirus pandemic.
The car rental service Getaround, the dog product business BarkBox, the insurance business MetroMile and cybersecurity company IronNet are among the companies that confirmed to The Technology 202 they received loans under the Paycheck Protection Program. These companies all received loans between $5 million and $10 million, according to data released yesterday by the Small Business Administration about the $660 billion relief program.
The recruiting start-up Hired and supply chain payments company TradeShift also took loans between $5 million and $10 million, according to SBA records. These companies declined to comment.
Several companies defended taking PPP loans as a necessary lifeline as the pandemic dramatically disrupted their businesses.
“On a global basis, our business was drastically impacted by the lockdowns and restrictions stemming from the coronavirus pandemic,” Getaround spokeswoman Courtney Richard said in a statement. “The PPP program helped reduce the otherwise severe impact on the health of our organization. In turn, this enabled us to continue providing an essential service to the communities we serve.”
However there were signs some of these companies were struggling prior to the pandemic. Getaround for instance announced significant layoffs in early January, as the company sought to cut costs.
The new records have reignited a debate in Silicon Valley about whether venture-backed companies should have applied for the relief.
The tech sector has not been as dramatically impacted by the pandemic as some other small businesses seeking the loans, including restaurants, hair and nail salons and small retailers. Some critics have previously said these businesses should have taken priority over tech companies that have existing investors with deep reserves of funding on hand.
As my colleagues wrote yesterday, the new data “paints a picture of a haphazard first-come, first-served program that was not designed to evaluate the relative need of the recipients.”
There was also widespread confusion when the program launched over whether start-ups that raised venture funding were even eligible for the government-backed loans. That sparked an intense industry lobbying effort to force the government to clarify the rules, a move backed by several prominent congressional Democrats. Venture capitalists argued the industry needed the loans to help build technologies that could aid with pandemic response. The new filings show many tech companies ultimately moved forward with applying for the program.
Now, the companies that took these loans say it helped them avoid layoffs, at least until the end of the year.
“The funding offered through the Program played a significant role in helping us avoid headcount reductions and positioned us to maintain our full staffing levels for the rest of 2020,” said BarkBox chief of staff Christina Donnelly in a statement.
Other major tech players, however, disputed the SBA records.
The list included several major venture capital firms, including Foundation Capital and Index Ventures. But both firms told The Technology 202 that they had never applied for such a loan, and the addresses included in the SBA’s filings were inaccurate. They said they were working with the agency to correct the record.
“The entry listed is in error, as although it lists us as a business name, it is not our address or correct information about our fund,” Index spokeswoman Ana Andreescu said in an email. “Our legal team is looking into why our name is listed and look to correct it ASAP.”
Bird, a purveyor of on-demand scooters, was also listed as a loan recipient. But the company says it never formally applied for such a loan, even though it did at one point discuss the possibility of taking one with its banker Citi, Bird chief executive Travis VanderZanden said on Twitter:
It looks like Citi started an application while they waited for our decision on whether to formally apply. We discussed internally and told Citi we didn’t want to apply via email on April 23rd. They confirmed that the temp app. was cancelled that evening and never submitted.
— Travis VanderZanden (@travisv) July 6, 2020
Citi also disputed the records. ““Citi has not funded a PPP loan for Bird,” spokeswoman Danielle Romero-Apsilos said in a statement. “Citi will seek the assistance of the SBA to ensure that the agency’s data accurately reflects actual PPP lending.”
The SBA did not immediately respond to a request for comment about the venture firms’ denial they should be included in the records. A senior administration official did say some firms might mistakenly appear in its database if the loans were later returned.
Other companies that appeared on the list said they already returned the money.
ZocDoc, an online medical appointment booking service, said it paid it back more than a month ago.
“As a business that saw our revenue based on in-person doctor appointment bookings dramatically decline at the onset of COVID-19, we met the criteria and applied for the SBA loan,” ZocDoc spokeswoman Jessica Aptman said in a statement. “Subsequently, as our business began to recover — due to our quick expansion into telehealth and the return of in-person bookings — we were able to obtain additional capital. As a result, we fully returned all PPP funds over a month ago so they could be redistributed to other small businesses in need.”
Our top tabs
Secretary of State Mike Pompeo says the United States is “looking at” banning TikTok and other Chinese social apps.
His remarks on Fox News follow mounting tensions between the U.S. government and China, where TikTok’s parent company ByteDance is based. He said the United States was taking the issue “very seriously.”
“We have worked on this very issue for a long time,” he said, according to a CNBC News report.
“Whether it was the problems of having Huawei technology in your infrastructure we’ve gone all over the world and we’re making real progress getting that out. We declared ZTE a danger to American national security,” Pompeo added.
“With respect to Chinese apps on peoples’ cellphones, the United States will get this one right too.”
TikTok meanwhile is seeking to distance itself from China.
The company announced that it would pull its social network out of the Google and Apple app stores in Hong Kong amid a new national security law that went into effect last week, Ina Fried reports at Axios.
“In light of recent events, we’ve decided to stop operations of the TikTok app in Hong Kong,” the company said in a statement to Axios.
Other tech companies are grappling with how to handle the situation in Hong Kong. Facebook, Google and Twitter said they will stop reviewing requests from Hong Kong for user data while they evaluate the new national security law, my colleague Rachel Lerman writes.
The blockbuster tech antitrust hearing will take place on July 27 at noon.
Apple chief executive Tim Cook, Amazon chief executive Jeff Bezos, Alphabet chief executive Sundar Pichai and Facebook chief executive Mark Zuckerberg will all appear this month before a House antitrust subcommittee. It will mark a pivotal event in the investigation the subcommittee has been leading into the competitive behavior of tech giants over the past year. Bezos owns The Washington Post.
It’s not yet clear what the hearing’s format will be, given constraints related to the pandemic. It will take place in the Rayburn Building, but the executives and lawmakers will have the option of attending virtually.
“As we have said from the start, their testimony is essential for us to complete this investigation,” Jerrold Nadler, the House judiciary panel chairman, and David Cicilline, the House antitrust subcommittee chairman, said in a joint statement.
The Department of Justice and the Federal Trade Commission are also probing competition issues in the tech industry.
The data start-up Palantir Technologies has filed to go public.
The filing sets up the largest tech public debut since Uber’s IPO last year, writes Erin Griffith in the New York Times. The company has deep business ties in government, law enforcement and the defense industry, but it has also expanded into other areas.
Palantir is one of the most valuable private companies in the world, with a valuation greater than $20 billion. Founded by Peter Thiel and other prominent technologists, the company has attracted more than $3 billion in venture capital funding from investors including In-Q-Tel, the investment arm of the Central Intelligence Agency; Founders Fund, Thiel’s investment firm; Fidelity; and Tiger Global Management.
The company is very secretive and has long avoided going public. A market listing would force Palantir to reveal more about its business and sensitive relationships with government clients.
“The minute companies go public, they are less competitive,” Mr. Karp said in 2014.
Palantir has been beefing up its board ahead of its debut. In June, Palantir added Alexandra Wolfe Schiff, a former Wall Street Journal reporter, Spencer Rascoff, a tech executive, and Alexander Moore, an early Palantir employee, to its board.
Rant and rave
Vulture’s latest profile on the billion-dollar video company Quibi had Twitter buzzing.
From journalist Tom Gara:
A lot of great stuff in this QUIBI piece but the highlight for me is “In market research following its Oscars and Super Bowl ads, 70 percent of respondents said they thought Quibi was a food-delivery service” https://t.co/RBFjPeIYdP
— Tom Gara (@tomgara) July 6, 2020
And Laurie Voss:
I swear to god it’s eventually going to come to light that the whole motivating force behind Quibi is that nobody had the nerve to tell Meg Whitman that if you turn your phone sideways normal video content works just fine. https://t.co/G9Y6tP2fzM
— Laurie Voss (@seldo) July 6, 2020
Inside the industry
A new poll shows that 56 percent of people think that technology has helped the Black Lives Matter movement.
Americans for Prosperity, the pro-business political arm of the Koch network, and YouGov conducted a poll on Americans’ attitudes about the role of technology during the widespread protests against racial injustice in the United States. They found:
- Twenty-five percent of people said the protests wouldn’t even be happening without social media. Nineteen percent said protests would be happening to the same extent, and 39 percent said they would be happening in smaller ways.
- Sixty-eight percent of respondents said that police using tech, such as dash cams or a body camera, increases safety for those in their community.
- Over two-thirds of respondents thought the ability to record and then share pictures and video quickly on social media increases police accountability.
“The positive takeaway here is not only that technology facilitates positive action around important issues, but people recognize just how significant of a role it plays in the recent movements we’ve seen,” Americans for Prosperity senior policy analyst Billy Easley said in a statement.
- Michelle Peacock has joined Waymo as head of global public policy. Peacock joins from Turo where she led government relations, focusing on global market expansion.
Before you log off
Enjoy Haim’s Tiny Desk (Home) performance during this concert-less summer: