This regularly-updated collection from Atomico discusses interesting things in tech and VC that may not receive widespread attention. It includes questions about Macron's ability to implement his pro-business agenda in France and boost the country's tech sector. Other items discuss the rise of new internet giants in China called TMD, emerging trends in Europe's investing landscape including more sector-focused funds, and legal and policy issues around law enforcement access to consumer data from IoT devices and tech companies. Recent M&A deals are also summarized, such as Gett acquiring Juno and Cisco purchasing Viptela.

1. 12 May 2017
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Atomico Need-to-Know

2. This is a regularly-updated collection of things we
(@atomico) found interesting and important in tech and VC
land, but that didn’t necessarily get the attention they
deserve. We think of them as our hidden little gems. We’ll
add to the collection over time, so bookmark the page and
keep coming back for updates or to dig into the archive.
Lovingly put together by @twehmeier & @stephen2206
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3. ● How successful will Macron be in implementing his policy agenda,
specifically those centred around improving the competitiveness of
the French economy?
● What impact will Macron’s election have on the remarkable rise of Le
French Tech?
● Macron’s campaign was a strong supporter of the importance of
technology, and Macron had aligned himself closely to the local tech
ecosystem
● Despite the incredible rise in France’s tech ecosystem, barriers to
starting and scaling companies still remain, in particular in terms of
the French labour market. Macron’s policy agenda has promised to
tackle these issues head on - a proposal that was warmly welcomed
by France’s tech base
● Outside of employment law, other key policies he has proposed
include tax liberalisation and promoting angel investment
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What do you need to know?
Why does it matter?
Key questions
● Emmanuel Macro won a landslide victory against Marine Le Pen,
winning the vote in the second presidential run-off by 66%-34%
● Following a rejection of populist politics in Austria, the Netherlands
and now France, these parallel movements have now been beaten
into partial retreat in mainland Europe
● Macron enjoyed huge support in the French tech community thanks
in part to the entrepreneurial spirit that he embodied as a relative
newcomer who has now successfully “disrupted the French political
landscape”
Landslide
Source: https://www.ft.com/content/d7621362-2f38-11e7-9555-23ef563ecf9a
“Macron is recognised as a member
of the entrepreneurial community
so even if they don’t agree with him
they feel he is one of them.”
“With entrepreneurs there’s
something of the alter-ego in
Macron. We think of Macron as the
guy who disrupted politics. And we
like that.”
Macron widely admired by French Tech - can he now deliver?
“Macron has been a
strong advocate for the
French tech scene,”
“Macron has a deep
understanding of how
digital transformation
is profoundly changing
the economy and
society”

4. ● Will we see a more active market for trading data emerge in areas beyond adtech,
which has a been a forerunner, as more sophistication emerges in valuing, pricing
and enabling the trading of data?
● Will far will regulators be prepared to tread in creating a ‘functioning market’?
● Finding new ways to respond to the dominance of the data economy by a few is
becoming a major focus. In Germany, for example, legislation is under discussion
to allow the Federal Cartel Office to intervene in cases in which network effects
and data assets play a role. Size, as measured by traditional means (revenue) is
no longer a good enough determinant of dominance
● The role of the Government in promoting open alternatives to centralised piles of
data is also gaining further support. Not just in sharing open data, but also in
enabling access to more sensitive data that can be “open sourced”, but that be
accessible to companies that are able to meet criteria around use of the data
● The idea of mandatory sharing of data is also gaining steam thanks in part to Ben
Thompson, who has written eloquently and persuasively on the subject. This is an
established practice in some industries (insurance), while new regulation (e.g.
GDPR and upcoming automotive regulation) looks set to push this idea further
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What do you need to know?
Why does it matter?
Key questions
Confrontation in the new data economy
● The Economist published a strong leader and thoughtful analysis essentially
calling for intervention by governments to “reboot antitrust” for the information age
● Back in 2011, the WEF described the potential for the emergence of “data as a
new asset class”, i.e. a new market to allow for data to be traded. But such an
open market has not developed, with reasons cited such as the value of keeping
data in-house, lack of fungibility, a lack of sophistication in pricing methodology,
privacy concerns and corporate concerns over ability to control use of data
● But “infonomics” (i.e. the market for trading data) is starting to emerge. When
Caesars Entertainment filed for bankruptcy, its biggest asset was a customer
dataset of 45M people valued at $1B. Similarly, data-driven M&A is also emerging
in greater frequency, such as IBM’s purchase of The Weather Company. Bartering
is also emerging (e.g. DeepMind/NHS)
Source: http://www.economist.com/news/briefing/21721634-how-it-shaping-up-data-giving-rise-new-economy
“Conflicts over control of oil
have scarred the world for
decades. No one yet worries that
wars will be fought over data.
But the data economy has the
same potential for
confrontation.”
“Rebooting antitrust for the
information age will not be
easy. It will entail new risks:
more data sharing, for
instance, could threaten
privacy. But if governments
don’t want a data economy
dominated by a few giants,
they will need to act soon.”

5. ● The use of data without clear communication can lead to public push back. As an
example, the way the NHS has enabled access to patient data has been
challenged due to a perceived lack of consent granted by individuals for certain
use cases
● Machine learning PhDs are the top hires for big tech giants and any perceived
monopoly should be understood
● Impact on jobs: risk that a lot of employees may be left behind, risking to generate
asymmetric wealth and employment outcomes and increase inequalities (war for
talent)
● Policymakers and regulators need to step up to be able to control machine
learning technologists’ ambitions towards data
● Who stands to benefit economically from the liberalisation of, and free access to,
public data?
● Is Machine Learning concentrating the power and wealth into the hands of a few
powerful companies and individuals at the expenses of society?
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What do you need to know?
Why does it matter?
Key questions
● The Royal Society (UK’s national academy of science) published a detailed report
on AI, focusing specifically on how the UK Government can play a role in ensuring
the most positive integration of machine learning into the UK economy and society
● Selected key points highlighted included a need for free and liberal access to
publicly funded data, investing in new skills will be needed to be able to use
machine learning in your everyday life but also at work (PhD, masters), as well as
managing public opinion to address concerns for privacy and consent,
depersonalisation and job losses. The teaching of AI ethics is seen as important
Source: https://techcrunch.com/2017/04/24/ai-report-fed-by-deepmind-amazon-uber-urges-greater-access-to-public-sector-datasets/
https://royalsociety.org/~/media/policy/projects/machine-learning/publications/machine-learning-report-summary.pdf
https://royalsociety.org/~/media/policy/projects/machine-learning/publications/machine-learning-report.pdf
A new wave of debates that are emerging around
machine learning...
Royal Society study outlines role for UK Govt in ML
Selected Royal Society recommendations:
● Increase accessibility to data for ML
● New open data standards to extend data lifecycle
● Ensure key concepts of ML are taught at all levels
● Teach ML in all related fields (e.g. health, law, etc)
● Ensure research funding is available for ML fields
● Ensure Industrial Strategy incorporates ML deeply
● Ensure the public is engaged in ML discussions
● Ensure societal implications are baked into ML work

6. ● What impact will the emergence of TMD have on the Chinese Internet landscape,
in terms of talent flows, M&A, partnerships & collaborations, etc?
● Given TMD are showing international ambitions - just like BAT - how will they
impact the global Internet landscape?
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What do you need to know?
● Who are Toutiao, Meituan-Dianping & Didi Chuxing (TMD)?
● Toutiao: Founded in 2012
○ News aggregation app with sophisticated ML tech
○ 700M users in China (68M DAU)
○ Acquired Flipagram (video app in the US.)
○ Valuation: $11B
○ Founder: Zhang Yiming
● Meituan–Dianping; Founded in 2010
○ Formed by merger in October 2015
○ US$ 25.84 billion in GMV, 150M MAU, 10M orders/day
○ Launch of their own online financial service
○ Jan 2016 closed $3.3 billion round at a valuation of $18 billion
○ Founder: Wang Xing
● Didi Chuxing: Founded in 2012
○ Mobile transportation platform, acquired Uber China
○ Valued at $55B following most recent $5B funding round
○ Founder: Cheng Wei
Why does it matter?
Key questions
In China, TMD emerging as challengers to BAT
Source: http://technode.com/2017/02/09/tmd-is-the-new-bat/
http://technode.com/2017/02/10/tmd-bat-founders/
https://techcrunch.com/2016/01/20/meituan-dianping-loads-of-yuan/
● China’s Internet landscape is evolving rapidly and as new consumer demands
emerge, a new wave of hugely valuable companies is beginning to emerge. These
companies have shown an ability to reach giant valuations in a very short space of
time, even making the pace of scaling in Silicon Valley look slow
● Expectations in China are that two of the three TMD companies may choose to
IPO in 2017. Irrespective of whether they do or not, the companies have large
warchests and will increasingly be active in China (and internationally) on the
investment & M&A front.
● China is challenging to be as important a player in the global tech world as the US
China has a new group of Internet tycoons
China’s new Internet tycoons hit ~$80B in aggregate value
Latest
Valuation
Toutiao $11B
Meituan-Dianping $18B
Didi Chuxing $50B
Total - TMD $79B
Baidu $58B
Alibaba $298B
Tencent $294B
Total - BAT $650B
The founders of TMD:
Toutiao: Zhang Yiming
Meituan: Wang Xing
Didi: Cheng Wei
Despite reaching an aggregate
valuation of ~$80B, the TMD still
have a long way to reach the
collective scale of China’s
original Internet giants. Baidu,
however, looks set to be caught
by Didi soon, if Didi’s dramatic
pace of scaling continues as it
has done in the past two years

7. ● Is there sufficient dealflow to support highly-specialised funds, especially those
focused on a narrow sector and a limited geography?
● Will collaboration between funds, especially across stages and geographies,
deepen or will a ramp in competition push in the other direction?
● More choice in terms of pockets of capital to tap is great news for European
entrepreneurs, particular is these new pools of money come with genuine
value-add beyond pure capital, including sector expertise, operating experience or
gateways to important customer groups
● Despite a growing diversity of funds at the earliest stages and a number of large
funds able to write bigger cheques, there is still some way to go until the European
VC landscape boasts as deep a bench of investors as Silicon Valley, where the
degree of competition at every stage significantly exceeds that seen in Europe
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What do you need to know?
Why does it matter?
Key questions
● Aside from the headline figures in terms of venture fundraising (€1.7B raised
across 17 tech-focused VC funds in 1Q17, source: Yann Roux), 2017 has seen
further evidence that Europe’s investor landscape is being built out in a number of
interesting and important ways that suggest a growing level of maturity and
sophistication
● A number of clear trends are emerging, including the arrival of sector specialist
funds with a narrow but deep focus on specific tech categories (e.g. AI, SaaS,
fintech), a growing number of founder-led funds started by former entrepreneurs,
evidence of an awakening of corporate Europe with CVCs arising from multiple
sectors, including finance, energy and automotive, as well as the arrival of
interesting and innovative new models at the earliest stages of company formation
Emerging trends in Europe’s investor landscape
Source:
Selected new funds &
trends represented
Regional
Specialism
Sector Specialism Founder-led Corporate
Europe
Vendep Finland SaaS
Asgard Germany AI
Samaipata Ventures S. Europe Marketplaces La Nevera Roja
Digital + Partners Germany Industial, fintech D Borse
VentureFriends Greece eFood/eShop
Centrica Innovations EnergyTech, IoT Centrica
Scania Growth AutoTech Scania
Seraphim Space Tech New Space
● Greater regional diversification: New VC funds continue to emerge
outside the historical strongholds of the UK & Germany, e.g. in Greece
● Deeper sector specialisation: In an increasingly competitive investor
landscape, sector specialisation is emerging as a key form of differentiation
● More Founder-led funds: The path from successful entrepreneur to
investor is now becoming increasingly well trodden
● An awakening of corporate Europe: the emergence of a new pool of
Europe-focused corporate VC funds
● Innovative new models at earliest stages: EF has become a global
innovator with its model. Wave Ventures is pioneering investing in students,
Station F building amazing infrastructure for early-stage companies
● Emergence of sophisticated angel networks: Angel investors grouping
together to form tight investment-focused networks, e.g. Nordic.Makers.
Demis Hassabis also reported to be building a network
Selected trends in European investor landscape
Source: Yannick Roux, https://medium.com/@yanroux/2016-the-year-european-venture-capital-changed-gear-b332de097bc8

8. ● Is the data collected from IoT devices actually more reliable than
human beings, given the potential ability of users to
modify/manipulate or erase their data?
● Should tech companies have to release the available data? What
would be a reasonably strong argument to do so?
● There is a big shift toward a data-driven regime of “truth”. While
these new sources of data can be hugely valuable to the authorities,
there is a increasing tension between customer rights- privacy and
law enforcement
● Each time a new source of potential data emerges, the continuing
debate about whether the US should have a law forcing tech
companies to build backdoors to their data (and if so, a danger to be
exploited by other actors) and whether or not tech companies should
be obliged to reveal customer data when asked by government
authorities grows in volume
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What do you need to know?
Why does it matter?
Key questions
● Fitbit, Amazon Echo, Jawbone devices have gained more and more
interest from lawyers, the police and legal experts as a source of
intelligence to be used to help solve crimes
● Data such as step count, sleep, location, heartbeat can be very
valuable when it comes to solving a case and more and more of
these datas are now bring actively used as evidence in courtrooms
Say hello to your new courtroom witness
Source: https://qz.com/620423/heres-how-often-apple-google-and-others-handed-over-data-when-the-us-government-asked-for-it/
http://www.fronteo.com/usa/the-internet-of-things-implications-for-ediscovery/
US law enforcement requests for user data

9. M&A wrap up
Acquiror Target Target desc. Amt Comments
Gett Juno On-demand taxi services $200M Gett has acquired Juno to build out its operations in NYC
IAC Angie’s List Consumer recommendation site $500M+
IAC has acquired public company Angie’s List with the intention of merging it with its own
HomeAdvisor unit to spin the new entity into a new public company
Cisco Viptela Software-defined networks $610M
Latest M&A deal for Cisco following AppDynamics purchase. Deal reportedly valued at
approx. 30% discount to its last round valuation of $900M from 2016
Spotify MediaChain Blockchain-based music data mgmt n/a
Spotify has now made at least 10 disclosed acquisitions, primarily in areas to build out its
capabilities in terms of use of data/tech to improve its core service offering
Whirlpool Yummly Recipe search engine n/a Had raised $23M & last valued at $100M. Whirlpol is largest home appliance manufacturer
Sirius XM
Automatic
Labs
Connected car company $100M
Satellite radio company Sirius expanding into broader range of connected car services via
the acquisition
Thales Guavus Big data analytics company $210M
Thales has acquired Guavus to build out its data analytics capabilities to serve its
customers in key verticals, such as aerospace, transport and defence. Guavus had raised
~$140M.
Ant Financial HelloPay Singapore-based mobile payments NA
Ant Financial contineus to acquire internationally as it seeks to build its presence in the
payments markets outside of China. HelloPay was the subsidiary of Lazada, which is
majority-owned by Alibaba after a $1B transaction in 2016
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