Month: February 2014

authenticID Enhances ID Proofing Technology to Help Combat Cloned Credit Card Fraud

By David Penn Posted on
Categories: authenticID

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authenticID has announced new enhancements to its CatfishID identity proofing solution that make it even harder for fraudsters to use cloned credit cards.

CatfishID combines authenticID’s sizable library of government-issued identification cards with techniques to verify micro prints, read bar code and magnetic stripe data, and make front-to-back card data comparisons. This provides an additional layer of verification that makes once major source of credit card fraud – cloned cards – that much more difficult to pull off.

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This technology – automated forensic document authentication (AFDA) – is not new, according to the company. But what is innovative is the way authenticID is deploying the technology to the specific task of detecting fraudulent or counterfeit identification.
Blair Cohen, CEO of authenticID said, “We are the only technology company specializing in identity authentication offering a solution that eliminates the use of a cloned credit card.”
Learn more about CatfishID here.
Based in Atlanta, Georgia, authenticID was founded in 2012. The company demoed its PictureID technology as part of the FinovateFall 2013 show in New York.

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SecondMarket Considering U.S.-Based Bitcoin Exchange

By Julie Muhn (@julieschicktanz) Posted on
Categories: SecondMarket

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There has been a flood of negativity shed on bitcoin thanks to the recent Mt. Gox drama. Despite that, SecondMarket, which originally launched as a trading platform for pre-IPO companies, plans to launch the first New York-based Bitcoin exchange.

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This announcement comes after SecondMarket dipped its toes into bitcoin waters last fall with the launch of the Bitcoin Investment Trust (BIT), a private, open-ended trust that is invested exclusively in bitcoin.

To support the new, yet-to-be-named exchange, SecondMarket will contribute approximately $20 million in cash and bitcoin. SecondMarket CEO Barry Silbert will likely serve as CEO for the new exchange, which will be self-regulated.

According to Fortune contributor Dan Primack, who first covered this story picked up by CNN Money,

“The goal would be to reduce Bitcoin price volatility, by using spot pricing once or twice per day (like gold spot pricing) and serving as a clearing company in which member firms would clear all transactions by day’s end. Members also would keep enough cash in Bitcoin to keep the exchange liquid.”

The new exchange is pending approval by SecondMarket’s board, which meets next week.

SecondMarket demonstrated at FinovateStartup 2009. Check out the demo video here.

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Finovate Alumni News– February 25, 2014

By Julie Muhn (@julieschicktanz) Posted on
Categories: ACI Worldwide, Allied Payment Network, Aptys Solutions, Authentify, BBVA, Kapitall, Lendio, MasterCard, PayPal, ShopKeep POS, Simple, ThreatMetrix, Tyfone, Wallaby Financial

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  • Netbanker considers why the BBVA Simple Bank deal is extraordinary.
  • American Association of Motor Vehicle Administrators selects Authentify for NSTIC Trusted Online Identities Pilot.
  • ThreatMetrix wins Most Innovative Anti-Malware Solution and Best Product Network Access Control Solution at 2014 Cyber Defense Mag Awards.
  • Tyfone unveils Fluide mobile banking platform.
  • PayPal to be the first payment provider on the latest Samsung Gear 2 smartwatches.
  • Lendio marks a year of record growth.
  • Kapitall announces $13 million in funding in round led by Linden Venture.
  • Wallaby launches Google Glass payment app.
  • ShopKeep POS wins global Gold Stevie Award for Sales & Customer Service for 2nd year in a row.
  • MasterCard partners with Syniverse to pilot location-based, anti-fraud service.
  • MoadBus to offer Allied Payment Network’s PicturePay.
  • ACI Worldwide to power online banking for Trustco Bank.
  • Bankers’ Bank to deploy Aptys Solutions‘ PayLOGICS originating and processing wire service.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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Why the BBVA Simple Bank Deal is Extraordinary

By Jim Bruene Posted on
Categories: Mergers & Acquisitions, Simple

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I was on vacation when the Simple deal went down last week. So, today I read the 25 or so unique articles published Thursday and Friday on BBVA’s $117 million acquisition of Simple. Of the bunch, only Ron Shevlin dove under the covers as to why a global financial powerhouse plunked down nine figures for a relatively small prepaid debit card portfolio. His take: the brand.

I’ve been a huge Simple junkie, publishing 22 posts on the startup in the past four years. And I was delighted it chose to make its first industry appearance at Finovate in Fall 2011 (video here). But I’m even more excited about this deal, which was remarkable for several reasons:
  • Other than ING’s regulator-mandated divestiture of its U.S. unit to Capital One, this is the first major retail digital bank acquisition in the United States EVER. Yes, EVER.  Since the dawn of what we called “Internet-only” banks in Oct 1995 (note 1), not a single one has been acquired at other than a fire sale (e.g., ING Direct purchase of Netbank after it was closed by the FDIC), (see note 2). 
  • The revenue multiple was off the charts. Simple says it processed $1.7 billion last year. Assuming this was all debit card volume and they split the revenues relatively equally with their processor, The Bancorp Bank (which is Durbin-exempt, note 3), the startup generated somewhat less than $10 million in revenues last year. That’s not at all bad for a bank in its first full year of business. Founder Josh Reich says they were on a path to profitability, not a small feat for a tech company with nearly 100 employees.
  • Banks are usually acquired for some premium of their assets and deposits. Simple had zero financial assets since it only collected deposits. We don’t know their deposit totals, but with an average of 65,000 customers (note 4) making $1.7 billion in purchases, that means each spent about $2,000 per month. Let’s say that each of its 100,000 accounts held double that on average ($4,000), the bank had around $400 mil in deposits at year-end 2013. I’m not sure what banks are paying for demand deposits these days, but it’s not 25%.
  • Simple raised $18 mil since inception, but we don’t know at what valuation. But with the $117 million cash deal, it appears that investors were rewarded adequately. It was no 10x exit, but it could have been 2x to 3x, or more.
  • BBVA paid almost $1,200 per customer. Given that Simple’s entire funding amount of $18 mil had already generated 100,000 customers ($180 per customer), clearly acquiring this customer base was not the main driver of the valuation.
_________________________________________________
What it means:
  • Moven, Holvi, Tink, Numbrs, and other digital-only banks will see a bump in their valuations. 
  • Y-Combinator and other accelerators will see a surge in retail banking startups (which leads to more great Finovate presenters)
  • Simple under BBVA will be a fantastic case study with plenty of material for fintech bloggers and analysts (and especially blogging analysts)
  • There will be more legacy financial institutions following this strategy (clearly, there were other bidders to push the valuation above $100 million); however, don’t expect a stampede. Two or three acquisitions in 18 years is hardly a trend.
  • BBVA could very well make Simple its ING Direct-like brand (“BBVA Simple”?) across multiple new international markets (hat-tip to Venture Beat for being the only tech blog to focus on the international opportunity).
  • At least for a few years, before the founding team scatters to new ventures, it will be useful to have a semi-autonomous unit in Portland building out the services.
Finally, I’ll need a new VC-backed retail banking startup to obsess over. Time to get my Moven card activated.
——————
Notes:
1. The first pure digital bank was Security First Network Bank (SFNB) which was dumped for $13 mil in 1998 after attracting $50 mil in deposits and $14 million in credit card receivables).

2. One could argue that E*Trade’s ill-fated purchase of Telebanc for $1.8 bil in 1998 qualifies, but Telebanc was primarily a direct bank built through the phone channel.
3. Interestingly, as part of BBVA, which is not exempt from Durbin price controls (as far as I can figure), Simple’s interchange rate will likely fall dramatically, making the revenue multiple much higher going forward.

4. The bank started the year with 30,000 accounts and now has 100,000. So, assuming growth was even over the year, the average annual number of accounts = 65,000.
5. For more on pure-play digital banks, see our full Online Banking Report here (published in late 2011, subscription).

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Lendio Marks a Year of Record Growth

By Julie Muhn (@julieschicktanz) Posted on
Categories: Lendio

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Alternative financing has become increasingly mainstream with small business borrowers, as well as traditional and non-traditional lenders.

Lendio, a startup that matches small businesses with interested investors, helped reinforce the popularity of non-traditional lending techniques today by releasing some notable growth figures. Here is an overview:

    • More than doubled its revenue growth from 2012 to 2013
    • Provided approximately $1.15 billion in business loan matches in 2013 to help SMBs finance their endeavors
    • The number of business owners who created a profile on Lendio’s platform grew by 350,000 in 2013
    • Doubled its staff
    • Received $4.5 million in Series B funding
    • Named one of Utah’s Best Places to Work in 2013 by Utah Business Magazine 
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Additionally, last year it released two SaaS products for lenders, Lendio for the Loan Specialist and Lendio for the Team Lead. Both products are aimed to help lenders more efficiently manage their leads.

Lendio demoed at FinovateSpring 2011. You can check out its demo here.

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Kapitall Announces $13 Million in Funding in Round Led by Linden Venture

By David Penn Posted on
Categories: Kapitall

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In a new round led by Linden Venture Fund LLC and joined by Bendigo Partners, Kapitall has added $13 million to its corporate coffers. Kapitall’s total funding now stands at more than $20 million.

“We are impressed by Kapitall’s track record to date,” said Linden Venture Fund managing partner Oksana Malysheva. “(We) know the leadership team has a winning combination of expertise in investing, gaming and interactive design to spark a true revolution among emerging investors.”

Kapitall relies on its graphical user interface and ramification to make it easier and more engaging for investors to research and analyze investments in stocks, mutual funds, and exchange-traded funds (ETFs). The company plans to use the additional funding to help develop new products and boost the growth of its community of users.

Company CEO Jarrett Lilien said, “We acquire, engage, and profitably interact with emerging investors – individuals that the traditional firms don’t handle well. We want these investors and we have an experience tailor made for them.”
A few interesting metrics for Kapitall:
  • More than 170,000 community members
  • More than 15,000 real and virtual trades executed monthly
  • More than 115,000 portfolios built, tracking real and virtual assets of more than $10 billion
Click here to watch a YouTube introduction to Kapitall.
Kapitall was founded in March 2008 by Gaspard de Dreuzy and Serge Kreiker, and is headquartered in SoHo, New York. Kapitall was recognized as a Webby Honoree in Financial Services in 2013.
See Kapitall’s FinovateFall 2010 demo here.

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Wallaby Launches Google Glass Payment App

By David Penn Posted on
Categories: Wallaby Financial

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While the Finovate research team was busy helping put on the company’s biggest FinovateEurope to date, alums like Wallaby Financial were no less busy taking advantage of the convergence between wearable technology and mobile payments.

The result is Pay With Wallaby for Google Glass, a new app – currently in beta – from Wallaby Financial that is the first app native to Google Glass that provides payment type decision-aing in real time for consumers.

The idea behind leveraging geolocation to make mobile commerce more efficient is a notion that has gained traction among offers and rewards innovators as mobile device use has grown. Wallaby’s focus is different, specializing in helping consumers choose and use the best payment card option for a given transaction at the point of sale. 

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But the strategy of combining Google Glass’s location data and the company’s own database of card offers and rewards could help lead the way for more financial app development that is optimized for wearables – from smart eyeglasses to smart watches and beyond. Recent fintech journalism on wearable technology has focused such innovations, introducing us to pilot programs and initiatives by banks like Westpac in New Zealand and Banco Sabadell in Spain.
Matthew Goldman, CEO and founder of Wallaby Financial said:
“We think that Google Glass will grow substantially in the near future and we want to be among the first to write helpful, user-friendly, native applications that deliver real value via this breakthrough technology.”
Watch a brief video of Pay With Wallaby for Google Glass here. 
Wallaby Financial was founded in August 2011, and is headquartered in Pasadena, California. Named one of CNN Money’s top 15 financial apps last month, Walllaby demoed its Wallaby Wallet Boost technology as part of FinovateSpring 2013. See the company in action here.
And to learn more about the companies that will be on stage for FinovateSpring this year, check out our FinovateSpring 2014 presenter post.

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Finovate Alumni News– February 24, 2014

By David Penn Posted on
Categories: Arxan Technologies, BBVA, HelloWallet, Kasasa, Kashoo, MasterCard, NICE Systems, Realty Mogul, Simple, TransferWise
  • Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Finovate-F-Logo.jpgNICE Systems named to Fast Company’s 50 most innovative companies list.
  • American Banker takes a look at BBVA’s acquisition of Simple.
  • MasterCard brings in-app payments to MasterPass; acquires m-wallet startup, C-Sam.
  • CNBC Finance hosts Kasasa CEO Gabe Krajicek to discuss the drive to local banks and credit unions.
  • Arxan Technologies partners with IBM to protect mobile apps against attacks.
  • HelloWallet launches Insights app to help HelloWallet users better understand their financial habits.
  • InterAksyon features TransferWise in column about transferring money overseas.
  • Realty Mogul’s real estate portfolio surpasses $85 million mark.
  • ExactCPA Tax Solutions introduces its app of the week: Kashoo Accounting.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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ZenPayroll Brings in $20 Million in Series A Funding from General Catalyst and Kleiner Perkins

By Julie Muhn (@julieschicktanz) Posted on
Categories: Funding, ZenPayroll

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ZenPayroll, a company that makes it easier for small businesses to pay their employees, announced yesterday it has been granted funding.

The San Francisco-based startup brought in $20 million in Series A funding from investors General Catalyst and Kleiner Perkins. The new installment, combined with the more than $6 million it received in December of 2012, brings the company’s total funding to just over $26 million.

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It plans to use the funds to build new features and create add-ons to existing features, such as:

    • Increase payroll automation
    • Help employers build stronger bonds with employees
    • Help employees better understand their finances

This news comes on the heels of yesterday’s announcement of ZenPayroll’s participation in FinovateSpring in April. To see its newest development in action, get your ticket here.

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Loop Launches Secure Mobile Wallet for Point of Sale Transactions

By David Penn Posted on
Categories: Loop

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Ladies and gentlemen, the LoopWallet has landed.

Now available in the Apple App Store, the LoopWallet app allows consumers to make their mobile device their primary, point-of-sale payment method instead of cash or cards. 

The Android edition of the app is expected to be available in April.

Will Graylin, Loop CEO states, 
“Just download the free LoopWallet app, order a Loop AppCessory, swipe your cards into your smartphone, and pay at almost everywhere in the world.”
Loop AppCessory’s are tools – fobs, charge case, primarily, with more to come – that allow users to swipe their cards and store information alongside their mobile device. Credit, debit, gift, ID, membership, rewards … most of the kinds of plastic currently stuffing the average wallet can be stored in the LoopWallet app.

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When shopping, consumers place their smart device near the swipe slot on the POS terminal, and press the transmit button to make the transaction.
Loop is Level One PCI-compliant, and data is encrypted and stored in secure memory in the LoopAppCessory. That said, the company’s relationship with card issuers is such that Loop can provide per transaction, dynamic card data, making it impossible for fraudsters to clone your card.
Watch Loop’s intro video here.
Loop was founded in 2013 by Will Grayin and George Wallner, and is headquartered in Woburn, Massachusetts. The company has raised more than $10 million, and is among the innovators scheduled to demo at FinovateSpring 2014 in San Jose in April. To learn more about the event, visit our FinovateSpring page here.

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Finovate Alumni News– February 21, 2014

By Julie Muhn (@julieschicktanz) Posted on
Categories: AdviceGames, CRIF, Fiserv, Nous.net, SocietyOne, ThreatMetrix, TSYS, Yseop, ZenPayroll
  • Finovate-F-Logo.jpgBanking Day reports: SocietyOne to take next step in development next month, when it announces the involvement of a strategic investor.
  • ThreatMetrix announces frictionless, context-based authentication to prevent unauthorized access to enterprise applications.
  • TSYS announces increased investment in Central Payment Joint Venture.
  • Fiserv Premier platform picked by New Jersey-based Sussex Bank.
  • CRIF acquires OFWI, aka, Teledata, from Axon Active Holding AG.
  • ZenPayroll brings in $20 million in Series A funding from General Catalyst and Kleiner Perkins.
This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

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FinovateSpring 2014 Presenting Companies Revealed!

By Julie Muhn (@julieschicktanz) Posted on
Categories: FinovateSpring 2014

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Even though we just returned from a sold-out FinovateEurope, we’ve been busy for weeks preparing for our FinovateSpring conference in San Jose.

We’re finally ready to reveal the companies that will take the stage on April 29 and 30. After weeks of sifting through large stacks of qualified applicants, we’ve managed to refine the selection to the very best in fintech.

Here’s lineup, along with a short description of each company. We’ll reveal more about the specific innovations that each company will debut in our Sneak Peek series in a few weeks:

  • Artivest provides insight and access to exceptional investing.
  • Avoka helps organizations rapidly create, deploy, and manage omni-channel applications to improve customer experience.
  • BodeTree helps banks connect with small businesses to provide the funding, insight, and know-how they need to succeed.
  • ChiaraMail’s innovative email technology, Envelope-Content Splitting, helps eliminate fraud and ensure privacy.
  • Crealogix is a Swiss provider of digital banking services.
  • CUneXus Solutions empowers consumers with perpetual insight into their personal buying power and on-demand access to pre-approved loans.
  • D3 Banking provides data driven, omni-channel banking services across any digital channel, anytime, anywhere on any device.
  • Dealstruck combines crowdlending with traditional finance to provide innovative funding solutions that are fair, transparent, and affordable.
  • defi SOLUTIONS’ online Loan Origination System (LOS), built by auto finance experts, can be quickly deployed and customized online today.
  • Digital Insight’s proven innovations give financial institutions the flexibility to engage more and cross-sell effectively.
  • Digital Retail Apps provides a mobile app shopping platform that allows shoppers to skip the checkout line.
  • Encap Security’s in-app authentication makes everyone smile, improving security, customer experience, revenue, and satisfying regulations. 
  • Endeavour is an exclusive and specialist enterprise-mobility integrator, providing niche mobile consulting, UI/UX, and development services.
  • EyeVerify’s Eyeprint Verification provides a password-free mobile experience.
  • Fiserv is a global provider of information management and electronic commerce systems for financial services.
  • FlexScore built the first ever personal finance score.
  • ID.me offers individuals one secure login for all of their digital ID cards.
  • Insuritas is bringing revolutionary new technology to financial institutions that transforms their revenue models.
  • IntelliResponse is a digital self-service and customer-engagement software company.
  • Interactions provides natural language Virtual Assistant application services for their automated customer-care processes.
  • Jumio is a next generation credentials-management company, offering payments and ID scanning and validation products for mobile and web transactions.
  • Kofax improves the customer experience with dynamic, real-time mobile engagement with its Mobile Capture Platform.
  • Kreditech uses Big Data and complex machine-learning algorithms to enable faster, better and more sustainable credit decisions.
  • LendingRobot helps automate your peer-lending investments.
  • LendingTree, the leading online loan marketplace, provides consumers with competitive home loan, auto loan and credit card offers.
  • LendUp is a next generation lending-technology platform, whose first product is redefining payday as an opportunity to build credit.
  • Loop delivers a simple, organized and effective consumer experience to create a superior commerce experience.
  • Market Prophit quantitatively ranks financial bloggers in social media to identify the mavens in the crowd.
  • Motif Investing’s innovative social platform is revolutionizing thematic investing for both individuals and advisors.
  • MShift is helping financial institutions and merchants save money on mobile payments to better serve their community.
  • NICE Systems provides software solutions that deliver strategic insights from structured and unstructured data in real time.
  • OnBudget combines mobile app, PFM tool, and prepaid MasterCard enabling unprecedented simplicity in managing household spending.
  • Pellucid Analytics fixes pitchbook creation.
  • Personal Capital is an award-winning free software to manage your wealth and people to help grow it.
  • Pixeliris develops high-tech technologies, including contactless communication between smart devices.
  • PrivatBank has created an Android-based contactless ATM.
  • Quisk is the next step in the evolution of money.
  • Radius helps you find your best customers and provides modern marketing solutions for companies targeting local businesses.
  • Realty Mogul is an online marketplace for real estate investments: crowdfunding for real estate.
  • Rippleshot reduces 25+% of fraud losses by uncovering merchant data breaches and stopping card fraud.
  • Roostify is a web and mobile service that accelerates and simplifies the mortgage experience.
  • SaveUp is the gummy vitamin of personal finance that uses rewards and behavioral economics to motivate savers.
  • SmartAsset provides the web’s best answers to your important personal finance questions.
  • Spreedly is a credit-card vault in the cloud that provides all the benefits of tokenization without ever having cards locked into any payment gateway.
  • StrategyCorps provides mobile and online banking solutions so appealing, they generate $75 in annual friendly-fee income per customer.
  • Sureify is life insurance made easy. It helps you learn, compare and evaluate your life insurance needs.
  • Tactile Finance makes mortgage transactions easy to understand, transparent and speedy for both buyers and sellers.
  • TD Ameritrade & LikeFolio create targeted programs and innovations to directly reach next generation investors.
  • TextPower’s TextKey provides ironclad protection on a budget by sending a simple text message.
  • Travelex helps customers to send and spend money around the world.
  • True Link protects seniors against unwanted financial transactions, like donations to sham charities or deceptive telemarketing sales.
  • Venovate is an institutional crowdfunding platform for alternative asset-investing.
  • Verde International’s next generation automated loan-underwriting optimization engine satisfies customers, shareholders, regulators, dealers, and other stakeholders, instantly.
  • Visible Equ
    ity’s     software allows institutions to analyze the risk and opportunities in their lending data.
  • Vorstack provides early warning and remediation against cyber-threats through its contextual threat sharing, analysis and collaboration platform.
  • WePay is a payment company that completely protects platform businesses from fraud risk/ compliance burdens.
  • Wipit provides integrated mobile payments, financial services and prepaid card convenience to underbanked consumers.
  • Yseop’s artificial intelligence software replicates and scales financial expertise through real-time natural language generation.
  • ZenPayroll provides a modern, cloud-based payroll service that is simple and delightful to use.
  • Zumigo secures transactions, devices and people by leveraging mobile network data.

In addition to the above companies, we’ll reveal the stealth companies closer to the event.

Interested in being a part of the audience? Get your ticket here before February 28 to lock in the very early bird price. See you in San Jose!

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