Decrypted Telegram bot chatter revealed as new Windows malware

Sometimes it take a small bug in one thing to find something massive elsewhere.

During an investigation recent, security firm Forcepoint Labs said it found a new kind of malware that was found taking instructions from a hacker sending commands over the encrypted messaging app Telegram .

The researchers described their newly discovered malware, dubbed GoodSender, as a “fairly simple” Windows-based malware that’s about a year old, which uses Telegram as the method to listen and wait for commands. Once the malware infects its target, it creates a new administrator account and enables remote desktop — and waits. As soon as the malware infects, it sends back the username and randomly generated password to the hacker through Telgram.

It’s not the first time malware has used a commercial product to communicate with malware. If it’s over the internet, hackers are hiding commands in pictures posted to Twitter or in comments left on celebrity Instagram posts.

But using an encrypted messenger makes it far harder to detect. At least, that’s the theory.

Forcepoint said in its research out Thursday that it only stumbled on the malware after it found a vulnerability in Telegram’s notoriously bad encryption.

End-to-end messages are encrypted using the app’s proprietary MTProto protocol, long slammed by cryptographers for leaking metadata and having flaws, and likened to “being stabbed in the eye with a fork.” Its bots, however, only use traditional TLS — or HTTPS — to communicate. The leaking metadata makes it easy to man-in-the-middle the connection and abuse the bots’ API to read bot sent-and-received messages, but also recover the full messaging history of the target bot, the researchers say.

When the researchers found the hacker using a Telegram bot to communicate with the malware, they dug in to learn more.

Fortunately, they were able to trace back the bot’s entire message history to the malware because each message had a unique message ID that increased incrementally, allowing the researchers to run a simple script to replay and scrape the bot’s conversation history.

The GoodSender malware is active and sends its first victim information. (Image: Forcepoint)

“This meant that we could track [the hacker’s] first steps towards creating and deploying the malware all the way through to current campaigns in the form of communications to and from both victims and test machines,” the researchers said.

Your bot uncovered, your malware discovered — what can make it worse for the hacker? The researchers know who they are.

Because the hacker didn’t have a clear separation between their development and production workspaces, the researchers say they could track the malware author because they used their own computer and didn’t mask their IP address.

The researchers could also see exactly what commands the malware would listen to: take screenshots, remove or download files, get IP address data, copy whatever’s in the clipboard, and even restart the PC.

But the researchers don’t have all the answers. How did the malware get onto victim computers in the first place? They suspect they used the so-called EternalBlue exploit, a hacking tool designed to target Windows computers, developed by and stolen from the National Security Agency, to gain access to unpatched computers. And they don’t know how many victims there are, except that there is likely more than 120 victims in the U.S., followed by Vietnam, India, and Australia.

Forcepoint informed Telegram of the vulnerability. TechCrunch also reached out to Telegram’s founder and chief executive Pavel Durov for comment, but didn’t hear back.

If there’s a lesson to learn? Be careful using bots on Telegram — and certainly don’t use Telegram for your malware.

President Bolsonaro should boost Brazil’s entrepreneurial ecosystem

In late October following a significant victory for Jair Bolsonaro in Brazil’s presidential elections, the stock market for Latin America’s largest country shot up. Financial markets reacted favorably to the news because Bolsonaro, a free-market proponent, promises to deliver broad economic reforms, fight corruption and work to reshape Brazil through a pro-business agenda. While some have dubbed him as a far-right “Trump of the Tropics” against a backdrop of many Brazilians feeling that government has failed them, the business outlook is extremely positive.

When President-elect Bolsonaro appointed Santander executive Roberto Campos as new head of Brazil’s central bank in mid-November, Brazil’s stock market cheered again with Sao Paulo’s Bovespa stocks surging as much as 2.65 percent on the day news was announced. According to Reuters, “analysts said Bolsonaro, a former army captain and lawmaker who has admitted to having scant knowledge of economics, was assembling an experienced economic team to implement his plans to slash government spending, simplify Brazil’s complex tax system and sell off state-run companies.”

Admittedly, there are some challenges as well. Most notably, pension-system reform tops the list of priorities to get on the right track quickly. A costly pension system is increasing the country’s debt and contributed to Brazil losing its investment-grade credit rating in 2015. According to the new administration, Brazil’s domestic product could grow by 3.5 percent during 2019 if Congress approves pension reform soon. The other issue that’s cropped up to tarnish the glow of Bolsonaro coming into power are suspect payments made to his son that are being examined by COAF, the financial crimes unit.

While the jury is still out on Bolsonaro’s impact on Brazilian society at large after being portrayed as the Brazilian Trump by the opposition party, he’s come across as less authoritarian during his first days in office. Since the election, his tone is calmer and he’s repeatedly said that he plans to govern for all Brazilians, not just those who voted for him. In his first speech as president, he invited his wife to speak first which has never happened before.

Still, according to The New York Times, “some Brazilians remain deeply divided on the new president, a former army captain who has hailed the country’s military dictators and made disparaging remarks about women and minority groups.”

Others have expressed concern about his environment impact with the “an assault on environmental and Amazon protections” through an executive order within hours of taking office earlier this week. However, some major press outlets have been more upbeat: “With his mix of market-friendly economic policies and social conservativism at home, Mr. Bolsonaro plans to align Brazil more closely with developed nations and particularly the U.S.,” according to the Wall Street Journal this week.

Based on his publicly stated plans, here’s why President Bolsonaro will be good for business and how his administration will help build an even stronger entrepreneurial ecosystem in Brazil:

Bolsonaro’s Ministerial Reform

President Temer leaves office with 29 government ministries. President Bolsonaro plans to reduce the number of ministries to 22, which will reduce spending and make the government smaller and run more efficiently. We expect to see more modern technology implemented to eliminate bureaucratic red tape and government inefficiencies.

Importantly, this will open up more partnerships and contracting of tech startups’ solutions. Government contacts for new technology will be used across nearly all the ministries including mobility, transportation, health, finance, management and legal administration – which will have a positive financial impact especially for the rich and booming SaaS market players in Brazil.

Government Company Privatization

Of Brazil’s 418 government-controlled companies, there are 138 of them on the federal level that could be privatized. In comparison to Brazil’s 418, Chile has 25 government-controlled companies, the U.S. has 12, Australia and Japan each have eight, and Switzerland has four. Together, Brazil-owned companies employ more than 800,000 people today, including about 500,000 federal employees. Some of the largest ones include petroleum company Petrobras, electric utilities company EletrobrasBanco do Brasil, Latin America’s largest bank in terms of its assets, and Caixa Economica Federal, the largest 100 percent government-owned financial institution in Latin America.

The process of privatizing companies is known to be cumbersome and inefficient, and the transformation from political appointments to professional management will surge the need for better management tools, especially for enterprise SaaS solutions.

STEAM Education to Boost Brazil’s Tech Talent

Based on Bolsonaro’s original plan to move the oversight of university and post-graduate education from the Education Ministry to the Science and Technology Ministry, it’s clear the new presidential administration is favoring more STEAM courses that are focused on Science, Technology, Engineering, the Arts and Mathematics.

Previous administrations threw further support behind humanities-focused education programs. Similar STEAM-focused higher education systems from countries such as Singapore and South Korea have helped to generate a bigger pipeline of qualified engineers and technical talent badly needed by Brazilian startups and larger companies doing business in the country. The additional tech talent boost in the country will help Brazil better compete on the global stage.

The Chicago Boys’ “Super” Ministry

The merger of the Ministry of Economy with the Treasury, Planning and Industry and Foreign Trade and Services ministries will create a super ministry to be run by Dr. Paulo Guedes and his team of Chicago Boys. Trained at the Department of Economics in the University of Chicago under Milton Friedman and Arnold Harberger, the Chicago Boys are a group of prominent Chilean economists who are credited with transforming Chile into Latin America’s best performing economies and one of the world’s most business-friendly jurisdictions. Joaquim Levi, the recently appointed chief of BNDES (Brazilian Development Bank), is also a Chicago Boy and a strong believer in venture capital and startups.

Previously, Guedes was a general partner in Bozano Investimentos, a pioneering private equity firm, before accepting the invitation to take the helm of the world’s eighth-largest economy in Brazil. To have a team of economists who deeply understand the importance of rapid-growth companies is good news for Brazil’s entrepreneurial ecosystem. This group of 30,000 startup companies are responsible for 50 percent of the job openings in Brazil and they’re growing far faster than the country’s GDP.

Bolsonaro’s Pro-Business Cabinet Appointments

President Bolsonaro has appointed a majority of technical experts to be part of his new cabinet. Eight of them have strong technology backgrounds, and this deeper knowledge of the tech sector will better inform decisions and open the way to more funding for innovation.

One of those appointments, Sergio Moro, is the federal judge for the anti-corruption initiative knows as “Operation Car Wash.” With Moro’s nomination to Chief of the Justice Department and his anticipated fight against corruption could generate economic growth and help reduce unemployment in the country. Bolsonaro’s cabinet is also expected to simplify the crazy and overwhelming tax system. More than 40 different taxes could be whittled down to a dozen, making it easier for entrepreneurs to launch new companies.

In general terms, Brazil and Latin America have long suffered from deep inefficiencies. With Bolsonaro’s administration, there’s new promise that there will be an increase in long-term infrastructure investments, reforms to reduce corruption and bureaucratic red tape, and enthusiasm and support for startup investments in entrepreneurs who will lead the country’s fastest-growing companies and make significant technology advancements to “lift all boats.”

Huawei reportedly punishes staff for New Year’s Eve tweet sent from an iPhone

As predicted, Twitter’s subtle new feature showing which clients tweets are sent from is already embarrassing brands.

Following on from a Korean boyband sponsored by LG and Apple’s own Music staff, Huawei is the latest to be embarrassed after it sent a New Year’s Eve message using an iPhone.

A since-deleted message included the embarrassing tell-tale detail: “Twitter for iPhone” indicating that the Huawei account had tweeted from an iPhone. The tweet was replaced by another sent from Twitter Media Studio client, which is developed for brands and advertisers and isn’t a fierce rival’s smartphone, but the damage was done.

The internet being the internet, the gaffe was noticed and preserved by many keen people who were to point out the contradiction. The mistake also gained lots of attention on Chinese social network Weibo.

Embarrassed by the episode, the Chinese smartphone firm has slapped those responsible with a fine.

That’s according to Reuters, which got its hands on an internal memo which reveals that two employees responsible have had their salaries reduced by 5,000 yuan, that’s around $730. In addition, one of the pair — reportedly Huawei’s digital marketing director — will have their income “frozen” for a year. While we don’t know their full salary packages and a $730 drop may be less than the cost of an iPhone, it is still bound to sting.

Worst of all, perhaps, it seems that they were not directly at fault for the mistake, which Huawei senior VP Chen Lifang said had “caused damage to the Huawei brand.”

The incident, Reuters reports, was due an error by an agency hired by Huawei:

The mistake occurred when outsourced social media handler Sapient experienced “VPN problems” with a desktop computer so used an iPhone with a roaming SIM card in order to send the message on time at midnight, Huawei said in the memo.

The irony here is that Apple’s near-blanket ban on VPN apps means it would probably have been easier to get access to Twitter using an Android phone. Instead, the agency apparently went to the trouble of acquiring a Hong Kong-based SIM card in order to hop over the Great Firewall and send this ultimately ill-fated missive.

It’s fun to joke about consumer companies relying on their archrivals, but the incident comes at a particularly challenging time for Huawei.

The company’s CFO is currently on bail in Canada where she awaits extradition to the U.S. on charges of fraud that could see her jailed for up to 30 years. But its core business is also under pressure.

Huawei may be best-known for its smartphone business, which ranked second in Q3 2018 with 14.6 market share according to IDC, but its telecom equipment unit has always been its biggest seller and now its future is uncertain. Intelligence leaders from Australia, Canada, New Zealand, the U.K. and the U.S — the so-called ‘Five Eyes’ — are reported to have agreed to a ban on all equipment from Huawei and fellow Chinese firm ZTE, and that’s something that allies such as Japan appear to be joining in on.

TNB Aura closes $22.7M fund to bring PE-style investing to Southeast Asia’s startups

TNB Aura, a recent arrival to Southeast Asia’s VC scene, announced today that it has closed a maiden fund at SG$31.1million, or around US$22.65 million, to bring a more private equity-like approach to investing in startups in the region.

The fund was launched in 2016 and it is a joint effort between Australia-based venture fund Aura and Singapore’s TNB Ventures, which has a history of corporate innovation work. It reached a final close today, having hit an early close in January. It is a part of the Enterprise Singapore ‘Advanced Manufacturing and Engineering’ scheme which, as you’d expect, means there is a focus on hardware, IO, AI and other future-looking tech like ‘industry 4.0.’

The fund is targeting Series A and B deals and it has the firepower to do 15-20 deals over likely the next two to three years, co-founder and managing partner Vicknesh R Pillay told TechCrunch in an interview. There’s around $500,000-$4 million per company, with the ideal scenario being an initial $1 million check with more saved for follow-on rounds. Already it has backed four companies including TradeGecko, which raised $10 million in a round that saw TNB Aura invest alongside Aura, and AI marketing platform Ematic.

The fund has a team of 10, including six partners and an operating staff of four. It pitches itself a little differently to most other VCs in the region given that manufacturing and engineering bent. That, Pillay said, means it is focused on “hardware plus software” startups.

“We are very strong fundamentals guys,” Pillay added. We ask what is the valuation and decide what we can get from a deal. It’s almost like PE-style investing in the VC world.”

A selection of the TNB Aura team [left to right]: Samuel Chong (investment manager), Calvin Ng, Vicknesh R Pillay, Charles Wong (partners), Liu Zhihao (investment manager)

Another differentiator, Pillay believes, is the firm’s history in the corporate innovation space. That leads it to be pretty well suited to working in the B2B and enterprise spaces thanks to its existing networks, he said.

“We particularly like B2B saas companies and we believe we can assist them through of our innovation platforms,” Pillay explained.

Outside of Singapore — which is a heavy focus thanks to the relationship with Enterprise Singapore — TNB Aura is focused on Indonesia, the Philippines, Thailand and Vietnam, four of the largest markets that form a large chunk of Southeast Asia’s cumulative 650 million population. With an internet population of over 330 million — higher than the entire U.S. population — the region is set to grow strongly as internet access increases. A recent report from Google and Temasek tipped the region’s digital economy will triple to reach $240 billion by 20205.

The report also found that VC funding in Southeast Asia is developing at a fast clip. Excluding unicorns, which distort the data somewhat, startups raised $2.6 billion in the first half of this year, beating the $2.4 billion tally for the whole of 2017.

There are plenty of other Series A-B funds in the region, including Jungle Ventures, Golden Gate Ventures, Openspace Ventures, Monks Hill Ventures, Qualgro and more.

Australia rushes its ‘dangerous’ anti-encryption bill into parliament, despite massive opposition

Australia’s controversial anti-encryption bill is one step closer to becoming law, after the two leading but sparring party political giants struck a deal to pass the legislation.

The bill, in short, grants Australian police greater powers to issue “technical notices” — a nice way of forcing companies — even websites — operating in Australia to help the government hack, implant malware, undermine encryption or insert backdoors at the behest of the government.

If companies refuse, they could face financial penalties.

Lawmakers say that the law is only meant to target serious criminals — sex offenders, terrorists, homicide and drug offenses. Critics have pointed out that the law could allow mission creep into less serious offenses, such as copyright infringement, despite promises that compelled assistance requests are signed off by two senior government officials.

In all, the proposed provisions have been widely panned by experts, who argue that the bill is vague and contradictory, but powerful, and still contains “dangerous loopholes.” And, critics warn (as they have for years) that any technical backdoors that allow the government to access end-to-end encrypted messages could be exploited by hackers.

But that’s unlikely to get in the way of the bill’s near-inevitable passing.

Australia’s ruling coalition government and its opposition Labor party agreed to have the bill put before parliament this week before its summer break.

Several lawmakers look set to reject the bill, criticizing the government’s efforts to rush through the bill before the holiday.

“Far from being a ‘national security measure’ this bill will have the unintended consequence of diminishing the online safety, security and privacy of every single Australian,” said Jordon Steele-John, a Greens’ senator, in a tweet.

Tim Watts, a Labor member of Parliament for Gellibrand, tweeted a long thread slamming the government’s push to get the legislation passed before Christmas, despite more than 15,000 submissions to a public consultation, largely decrying the bill’s content.

The tech community — arguably the most affected by the bill’s passing — has also slammed the bill. Apple called it “dangerously ambiguous”, while Cisco and Mozilla joined a chorus of other tech firms calling for the government to dial back the provisions.

But the rhetoric isn’t likely to dampen the rush by the global surveillance pact — the U.S., U.K., Canada, Australia and New Zealand, known as the so-called “Five Eyes” group of nations — to push for greater access to encrypted data. Only earlier this year, the governmental coalition said in no uncertain terms that it would force backdoors if companies weren’t willing to help their governments spy.

Australia’s likely to pass the bill — but when exactly remains a mystery. The coalition government has to call an election in less than six months, putting the anti-encryption law on a timer.

China leaves Huawei founder off honor roll marking 40 years of economic success

In the lead up to China’s 40th anniversary of reforms and opening up, People’s Daily, the mouthpiece of the ruling Communist Party, published a list on Monday commending 100 extraordinary contributors to the country’s economic development.

Familiar names like Jack Ma of ecommerce operator Alibaba as well as Pony Ma of gaming and social networking firm Tencent made it to the short list, while one heavyweight was conspicuously missing: Ren Zhengfei, the 74-year-old founder and CEO of Chinese telecommunications behemoth Huawei.

While People’s Daily did not reveal the algorithms behind its nominating process, industry observers grappled with Ren’s absence and speculated why the father of the world’s largest telecom equipment manufacturer and second-largest smartphone maker was left off the rank.

One widely cited reason is the intentional coverup of Huawei’s alleged ties to the Chinese government in the backdrop of increasing US-China trade tensions. In August, US President Donal Trump signed a bill that would ban government agencies from using products and services from Huawei and its Chinese competitor ZTE over national security concerns.

Australia and New Zealand subsequently banned Huawei and ZTE as they joined a band of western countries that are increasingly wary of China’s influence around the world. In response, Huawei said it had never been asked to engage in intelligence work on behalf of any government.

As technology journalist Zheng Jun wrote on Weibo, Twitter’s Chinese equivalent, the attempt to “depoliticize” Huawei and “distance” it from the Chinese government may benefit the telecom giant.

Veteran media scholar Qian Gang echoed that view while suggesting an alternative explanation: perhaps the Chinese authority didn’t see Huawei’s achievement as being remarkable enough.

“Either [Ren] is in the unfortunate position of accepting his lot as one whose efforts do not constitute ‘outstanding achievement’ within the Party’s reform and opening pantheon (a political indignity), or he must eat the bitter fruit of concealment, tacitly accepting his compromisingly close links with the government,” Qian writes in an op-ed for the China Media Project.

Curiously, Ren was nominated by a similar list in October that commemorated China’s economic reforms, though the judges were different: the All-China Federation of Industry and Commerce, a non-governmental chamber of commerce; and the United Front Work Department, an organ tasked with spreading the Party’s influence at home and abroad.

That winning the Party paper’s honor list is on par with an affinity with the government is little more than speculative. But Chinese companies, private or state-owned, are linked to the government to various extents.

A raft of internet firms have instituted internal Party committees — up to 65 percent in Jack Ma’s native Zhejiang Province per a party paper — and the central authority is reportedly taking small stakes in industry leaders including Tencent and Alibaba, according to the Wall Street Journal.

Many have been taken aback by Jack Ma’s Communist Party affiliation, which the honor list mentioned. A Party school professor described the reaction as “a lack of knowledge” of the Party’s involvement in private businesses.

“Membership of the Party and corporate management are two unrelated things,” Su Wei, a professor at a Party School in the city of Chongqing, told Global Times, a paper under the People’s Daily. “The board of shareholders is in charge of decision-making and daily operations, while Party cells are set up to make sure the company’s operations are in line with the principles and policies of the CPC.”

For those who watch China closely, Ma’s political affiliation may come as no surprise as the fact came to light when Ma became the head of Zhejiang Merchants Association in 2015. It’s also worth noting that the bosses of Alibaba’s close competitors Pony Ma and Baidu’s Robin Li are non-Party members, the honor list shows.

Amazon reverses tax-triggered block on US shop in Australia

Amazon has reversed a decision it made six months ago to shut off its US ecommerce site to Australian shoppers. Reuters reports that the U-turn comes after a customer backlash.

Since July shoppers in Australia trying to browse stuff to buy on Amazon.com have been redirected to the local site, Amazon.com.au.

Shipping to Australia from Amazon.com was also shut off at the same time. So shoppers were limited to buying goods sold by local sellers.

But from today the block has gone.

The geoblock on Amazon.com followed a change in Australian tax regulation requiring businesses earning more than $75,000 AUD per year to charge its 10% Goods and Services Tax (GST) on low value items imported by consumers.

The so-called ‘Amazon Tax’ was drawn up in response to concerns about the impact of Amazon and other large overseas ecommerce businesses on local retailers which have to apply GST to all products they sell.

A loophole had meant GST was only applied to items purchased from overseas retailers worth $1,000 AUD or more — so local competitors argued it gave Amazon, eBay and other overseas competitors an unfair advantage.

Amazon’s response was to shutter its overseas shops. But by limiting shoppers to the inventory on its Australian site, which only launched in December 2017, the ecommerce giant seems to have shot its local business in the foot — encouraging locals to look elsewhere for their retail fix. Or just not buy as much stuff.

The Guardian notes there are only about 80 million products on the Australian store vs 500 million on the US site.

Six months later Amazon has backtracked. And seemingly decided to suck up the 10% tax after all.

We’ve reached out to the company for a comment.

An Amazon spokesman told Reuters it had changed its mind after listening to customer feedback, adding it had built the “complex infrastructure needed to enable exports of low-value goods to Australia and remain compliant with [local] laws”.

So far only products sold by Amazon itself on Amazon.com are being made available for purchase by Australians, with third-party sellers not yet covered.

Notably — on the U-turn timing front — Black Friday is tomorrow.

Aka the day when retailers attempt to kick start a holiday buying bonanza by slashing a bunch of prices and scattering digital tinsel all over their online channels. Clearly Amazon doesn’t want to miss out on more sales.

Tesla picks telco executive Robyn Denholm to replace Elon Musk as chairman

Elon Musk’s replacement as the chair of Tesla has been named and it is Robyn Denholm, an Australian executive who has been a director with the electric vehicle firm since 2014.

Denholm is currently CFO of Australia-based telco Telstra and she’ll step into the breach once a six-month notice period is served, Tesla said in an announcement released late Wednesday evening U.S. time.

There’s been plenty of speculation as to who will replace Musk — the figurehead of Tesla’s business — after he announced in September that he would step down as the firm’s chairman. Musk’s resignation was part of a settlement with the SEC, which found Tesla guilty of failing to require disclosure controls and procedures relating to a tweet from Musk about taking the company private. Tesla later confirmed it would remain a public entity despite Musk’s tweets.

The SEC deal included a $20 million fine for Musk who retained his position as CEO and the confidence of the board.

Denholm was extensive experience in the automotive industry beyond her time with Tesla. Her career includes a seven-year stint with Toyota Australia, and she has also worked for tech giants Juniper Networks and Sun Microsystems. She is a graduate of the University of Sydney, where she studied economics, and holds a Master’s degree in Commerce from the University of New South Wales.

Robyn Denholm has been a Tesla director since 2014

“I believe in this company, I believe in its mission and I look forward to helping Elon and the Tesla team achieve sustainable profitability and drive long-term shareholder value,” Denholm said in a statement.

“Robyn has extensive experience in both the tech and auto industries, and she has made significant contributions as a Tesla Board member over the past four years in helping us become a profitable company. I look forward to working even more closely with Robyn as we continue accelerating the advent of sustainable energy,” Musk added.

Peak Theory lines up media partners and funding as Cubcoats becomes a phenomenon

With a planned cartoon series coming up, partnerships in place with Major League Baseball, NBCUniversal, and other media companies of heroic proportions, the founders creating the kids clothing phenomenon, Cubcoats, are on a roll.

Peak Theory, launched by longtime friends Zac Park (who’s 29) and the 35 year-old Spencer Markel, is the company behind Cubcoats, a hoodie that transforms into a puppet (or a puppet that transforms into a hoodie?). With their first product, the two founders have achieved the kind of viral success in its first year that most companies only dream of.

Markel, a former mergers and acquisitions lawyer with DLA Piper, and Park, a product director at the design agency AKQA, first met in San Francisco through a mutual friend and almost immediately began planning their escape from the corporate world.

Peak Theory founders Zac Park and Spencer Markel

“We thought to ourselves, what can we create that would bring over a novel and sticky concept that could sell well to parents and create a lasting brand relationship with kids,” Park said, in a statement. “We wanted a product that a child would get attached too, grow up with, and want to gift to their future kids.”

The two self-described kids at heart hit upon the idea of Cubcoats through a mutual love of Transformers and Mighty Morphin Power Rangers as children (and maybe as adults as well).

“We don’t have any kids, we were just big kids,” said Markel. 

They started the process of creating hundreds of prototypes in September 2016 and by November of 2017 had hit upon the final designs for eight different puppets that turned into zippered hoodies for children. Each animal-inspired puppet had different characteristics and personalities and each came with a story tied to it.

The two-in-one clothes went viral. In its first full year Cubcoats expects to pull in somewhere between $2 million and $5 million in revenue, according to the two founders. By July, 2018 the company had sewn up $5 million in financing from a who’s who of entrepreneurs and celebrity investors.

Institutional investors including strategic partner, Major League Baseball, and celebrity investor Will Smith’s Dreamers Fund, came on board. So did individual angel investors like FabFitFun co-founders Daniel and Michael Broukhim, the actress Hilary Duff, Schwarzenegger scion, Patrick Schwarzenegger, and Jen Rubio, the co-founder of Away.

The Harmon Brothers video production company, which is behind a number of direct-to-consumer marketing hits like the mattress company Purple and others is collaborating on a series of videos with the Peak Theory team and investing in the company as well.

The idea of the company is to create a brand that’s not just the two-in-one cubcoat,” said Markel.  “We’re trailblazing a new area of consumer products that we think will be pretty hot. There’s a burgeoning space in two-in-one products. We’re uniquely situated to design these two-in-one products and build our own IP in terms of content.”

Big media and entertainment companies are already clamoring to work with Peak Theory, the company said. Professional sports teams and leagues like Major League Baseball are only the first companies to publicly disclose their interest in the company.

“We’re two big kids at heart with very whimsical dreams,” said Markel. “We’ve tried very hard to be two people who are not necessarily from the industry to come in and create a novel industry and rethink some of the way we do consumer products… .it’s been really fun.”

The company plans to expand the Cubcoats line to Canada, Australia and across Asia in 2019 — meaning popular favorites like Kali the kitty and Tim the puppy will be popping up in cities from Sydney to Seoul in addition to Seattle.

Peak Theory has partnered with Nordstrom for the holiday season to sell its Cubcoats in roughly 100 of its locations and will have pop up shops of its own at The Grove mall in Los Angeles and the Americana mall in Glendale, Calif.

Airobotics raises another $30 million for its automated drone technologies

Airobotics, the developer of automated drones that can fly without a pilot, has raised $30 million in a new round of financing.

The new funding will be used to boost the company’s manufacturing efforts to meet new demand and help with the development of the company’s global headquarters in Arizona as it looks to capitalize on interest from mining companies in North and South America.

“Streamlining manufacturing to achieve growth and scale is what this funding is to be used for,” according to the company’s chief executive officer and co-founder Ran Krauss.

As the company looks to increase manufacturing, it will likely confine its efforts to the U.S., given the constraints that the Airobotics has on its potential vendors and supply chain thanks to its involvement in the defense industry.

Krauss would not comment on whether the company is doing any work with the U.S. Department of Homeland Security or the much-maligned Immigrations and Customs Enforcement and U.S. Customs and Border Patrol, but ICE has expressed interest in acquiring drone technologies and the company has been pushing hard into the homeland security market (indeed it was a centerpiece of the company’s last $32.5 million round in 2017).

“We are deepening our work in the mining industry in Australia and in the U.S. [and] the next step is to be active in smart cities,” said Krauss.

The company’s mining operations span the globe with deployments through the mining giant BHP in Arizona, South 32 in Australia, Vale in Brazil and additional work in Chile.

“We are looking very seriously into the United States because of our scale. Mining is a significant market in the U.S. and also… flights in cities which is something we’re looking to in two years,” said Krauss.

Airobotics is also making money from contracts doing security and facilities management for companies like Intel, where it is already deployed in one of the company’s large semiconductor fabrication facilities.

The company was the first company in the world to be granted authorization to fly fully automated drones without a pilot, as licensed by the Civil Aviation Authority of Israel (CAAI).

“We have a strong business pipeline and to keep up with demand for our technology, we are continuing to expand operations across the countries in which we operate, specifically our new headquarters in the U.S,” said Krauss in a statement. “Additionally, the new funding will drive our continuous work with Aviation Authorities to obtain BVLOS (Beyond Visual Line of Sight) Certificate of Waiver in every geography we operate in, including in the U.S.”

The new financing was led by Pavilion Capital, a Sino-U.S. investment firm based in New York. Previous investors including Blue Run Ventures China, Charles River Ventures and OurCrowd, as well as additional private investors, also participated in the funding.