The Morning Download: Uber and Snapchat Aside, Venture Capital Market Doesn’t Look So Hot

Good morning. The most heartening piece of data that one can draw from the latest Dow Jones VentureSource report is that funding in the second quarter rose from the first, to $15.78 billion, from $13.18 billion. The latest numbers reflect a total of nearly $5 billion invested in Uber Technologies Inc. and messaging service Snapchat Inc.

"Not counting those two deals, venture financing was well below the first quarter's $13.18 billion. But even if they are included, total investment has fallen by 20% from a year earlier, when U.S. venture-backed companies raised a nearly record-high $19.61 billion," the WSJ's Russ Garland reports.

That's no surprise, given that IT spending forecasts for this year were weak to start with, and the U.K.'s vote in favor of leaving the EU has put a bit more downward pressure on expectations. John-David Lovelock, a Gartner Inc. research vice president, said last month that given the relative rise in the value of U.S. IT services and products, "Some new larger, long-term strategic projects will now be put on pause and likely not restarted until 2017." How are your IT spending plans holding up, and where do startups fit in your vendor ecosystem? Let us know.

IBM moves blockchain to the supply chain realm. International Business Machines Corp. rolled out a blockchain cloud platform targeting companies that handle high-value goods that are often highly regulated. Startup Everledger, which helps companies track the provenance of diamonds worldwide, is testing the cloud-based IBM Blockchain service for a global rollout possibly by the end of the year, CEO Leanne Kemp tells CIO Journal.

TECHNOLOGY NEWS

Microsoft wins appeal ruling on data searches. The Second U.S. Circuit Court of Appeals in Manhattan ruled Thursday that federal law doesn't give investigators the ability to force Microsoft Corp. to produce data stored on a server overseas, the WSJ's Devlin Barrett reports. The case, closely followed by Silicon Valley, arose from a 2013 warrant issued by a federal judge in New York for the email contents of a suspect in a drug trafficking probe. Some of that data was housed reside in Microsoft computers in Ireland.

U.S. regulators pave way for 5G networks. The Federal Communications Commission voted to open nearly 11 gigahertz of high-frequency spectrum for wireless broadband, Reuters reports. Verizon Communications Inc. and AT&T Inc., already working to adopting new wireless technology, said they plan on rolling out 5G trials in 2017.

Tech leaders pen political open letter. Technology firms have been at the forefront in pushing for immigration reform to keep talent pools filled and in an open letter dozens of tech CEOs and engineers expressed their fear of a Donald Trump presidency. "We also believe that progressive immigration policies help us attract and retain some of the brightest minds on earth," the letter reads. Mr. Trump, it continues, "has promised a wall, mass deportations, and profiling."

Meanwhile one tech giant reports big diversity challenge. At California-based Facebook Inc., 4% of U.S. workforce is Latino; 2% black according to new data released by the social network. Women account for a third of its workforce, Reuters reports. Facebook blamed its problem on the "pipeline," meaning the number of women and minorities entering the tech industry. But some observers, citing the number of black and Latino computer-science graduates, tell the WSJ's Georgia Wells that the problem lies elsewhere.

Facebook board member to speak at GOP convention. Billionaire tech investor Peter Thiel joined the list of people scheduled to speak in support of Donald J. Trump at next week's Republican National Committee convention, the WSJ's Douglas MacMillan reports.

Smartphones to replace bank cards at ATMs. JPMorgan Chase & Co. and Bank of America Corp. plan to introduce tech that lets customers use their smartphones to withdraw cash from ATMs, Bloomberg reports. The process, which banks hope will increase convenience and cut down on skimming, requires that customers first authenticate the transaction by scanning a QR code with their phone and then enter a security code or tap their device on the machine.

Nintendo partner links up with AI firm. Japanese smartphone-game provider DeNA Co. said Thursday it has set up a company with AI company Preferred Networks Inc., the WSJ's Takashi Mochizuki reports. The new company, PFDeNA Inc., would benefit DeNA's  portfolio spanning games, health care and the automotive business, the companies said. DeNA partner Nintendo Co. possibly could benefit as well, Mr. Mochizuki suggests, with future smartphone games powered by the technology.

Raging debate in Bitcoin-land: Should a thief get to keep the money? After an unknown hacker raided an experimental online venture-capital fund called DAO in June and spirited away $60 million worth of a virtual currency called ether, the fund's creators came up with a way to recover the money. The WSJ's Paul Vigna reports that a lot of their investors are against the move, since undoing the theft requires altering the computer code underlying the digital currency and its platform.

Presidential candidates weigh-in on pressing tech issue. Both had something to say Thursday about Pokemon Go, Gizmodo reports.

WHAT YOUR CEO IS READING

Every week, CIO Journal offers a glimpse into the mind of the CEO, whose view of technology is shaped by stories in management journals, general interest magazines and, of course, in-flight publications.

The day of the grilled swordfish died. As industry titans find themselves today fretting over Twitter followers, it's fitting that Saturday marks the last day of service at The Four Seasons. Back in 1959, when the restaurant opened in New York City's Seagram Building, the only social network that mattered fit in the Grill Room–or the Pool Room during dinner. "Thankfully, the tables were far enough apart to facilitate dealmaking yet still allow for just a soupçon of eavesdropping," Wallpaper's Aaron Peasley reports. Bankers and fashionistas, Kissinger and Kennedy, sheikhs and princelings–all staked their claims. "The restaurant's heyday was the 1970s," the Guardian's Jason Farago recalls. "Outside, the city came within days of bankruptcy, and the streets were choked with crime. Inside, tycoons and socialites conducted a choreographed spectacle of dining and table-hopping wo rthy of France's ancien régime." 

A former State Department employee once stationed in Myanmar is behind the world's hottest tech movement. After government work and grad school John Hanke went on to start two videogaming companies, one of which became Keyhole, which formed the basis for Google East and Maps, the FT's Tim Bradshaw reports. At Google, Mr. Hanke started Niantic Labs to explore the intersection between geolocation and entertainment. Among the fans: the CEO of the the Pokémon Company. Mr. Hanke guided Niantic into standalone status to make it easier to deal with partners- "just because Google is Google," he tells the FT. And the rest is history. "I don't think we were built to sit in a dark room with a piece of electronics strapped on our head," he says about Niantic's latest creation, Pokemon Go. "I'm more enamoured of going outside and building real social connections."

Hacking the brain for profits. Biohacking, a William Gibson-esque word–if there ever was one–for the act of gobbling up Russian pharmaceuticals, nutritional supplements and even a bit o' LSD in an effort to maintain a mental edge, is gaining followers in Silicon Valley. "Entrepreneurs and executives and investors are not normal people," as one San Francisco-based doctor tells Marisa Kendall at the San Jose Mercury News. "They are like high-performance race cars that are nonstop moving, and they need pit stops more often than normal people." Coming down from making the world a better place has its drawbacks. The specialist says that some techies are taking the "date-rape drug" to help them sleep.

EVERYTHING ELSE YOU NEED TO KNOW

Samsung's construction arm lost at least $700 million in two years constructing one of the world's biggest iron-ore mines. (WSJ)

China's economic roller coaster is taking a bite out of American exporters, adding to criticism that China is getting more than it gives in trade. (WSJ)

Global stocks were mainly flat as a deadly terror attack in France hit investor sentiment that had been buoyed by a record close on Wall Street and better-than-expected Chinese economic data. (WSJ)

BP PLC said its costs from the 2010 Gulf of Mexico oil spill would rise by an additional $5.2 billion and ultimately cost $61.6 billion. (WSJ)

Tom Loftus contributed to this article. The Morning Download comes from the editors of CIO Journal and cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints. You can get The Morning Download emailed to you each weekday morning by clicking http://on.wsj.com/TheMorningDownloadSignup.


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