If there’s one thing you need to know about TikTok, it’s this:
“What was happening behind the scenes at TikTok was not always what the company was talking about in public forums,” Fortune tech reporter Alexandra Sternlicht told me.
Yesterday, Sternlicht published a story revealing that, according to 11 former employees, TikTok retained ties to its China-based parent ByteDance—even after publicly saying the operations of the two entities had been separated. The story drew social media responses from Washington, including from FCC Commissioner Brendan Carr. These ties have been especially clear in the company’s data-sharing practices, some ex-employees say:
Evan Turner, who worked at TikTok as a senior data scientist from April to September in 2022, said TikTok concealed the involvement of its Chinese owner during his employment. When hired, Turner initially reported to a ByteDance executive in Beijing.
These are high-stakes revelations, as TikTok continues to be both a political hot potato and an insurgent social media darling. Sternlicht writes:
The allegations of close ties, made in interviews between August and April, raise more questions about the relationship between TikTok and ByteDance. They also create more fodder for critics who fear the Chinese government could use TikTok as a sort of Trojan horse to spy on Americans by sifting through the huge amounts of digital data that it collects.
And though TikTok has become a lightning rod, it’s also important to remember how we got here in the first place. Put simply, creators and consumers love TikTok.
“TikTok occupies this really important place in the creator economy,” said Sternlicht. “The virality that you can get on TikTok doesn’t exist on Instagram or YouTube. On TikTok, you can go from someone who’s just a regular person to someone who’s truly famous on social media, and that’s an amazing thing.”
At the beginning of our interview, Sternlicht had highlighted the gap between TikTok’s words and its actions when it comes to China. So, at the end I followed up with a final question: Does she think that gap will ever close?
“I don’t know if it’s possible to say,” said Sternlicht. “But I really hope so, and I think from the employees that I’ve interviewed they definitely say that there’s been progress made in distancing itself from China…An employee who was there up until very recently said that Project Texas [TikTok’s initiative to protect Americans’ user data] is very effective, and they were familiar with the tech stack, so I think that’s a good sign.”
Elsewhere…Andreessen Horowitz closed on $7.2 billion for its newest group of funds, Axios reported yesterday.
See you tomorrow,
Allie Garfinkle
Twitter: @agarfinks
Email: alexandra.garfinkle@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Two Chairs, a San Francisco-based platform that matches patients with therapists and measures their therapeutic progress, raised $72 million in Series C funding. Amplo led the round and was joined by Fifth Down Capital and others.
- Quilt, a Redwood City, Calif.-based developer of all-electric home climate systems raised $33 million in Series A funding. Energy Impact Partners and Galvanize Climate Solutions led the round and were joined by Lowercarbon Capital, Gradient Ventures, MCJ Collective, Garage Capital, Incite Ventures, and Drew Scott.
- Ecotrak, an Irvine, Calif.-based facility management platform, raised $30 million in funding. Respida Capital led the round and was joined by Carver Road Capital and existing investor Gala Capital Partners.
- Bridgewise, a Tel Aviv, Israel-based AI-powered analysis platform for global securities, raised $21 million in funding. SIX Group led the round and was joined by Group11, L4 Venture Building, and others.
- Lawhive, a London-based AI-powered platform designed to automate aspects of legal work and connect lawyers with clients, raised £9.5 million ($11.8 million) in seed funding. GV led the round and was joined by Episode 1 Ventures.
- AVALON, an Orlando, Fla.-based independent game studio, raised $10 million in funding. BITKRAFT Ventures and HASHED led the round and were joined by Coinbase Ventures, Spartan Capital, Foresight Ventures, LiquidX, and Momentum6.
- Crypto Valley Exchange, a Zug, Switzerland-based platform for options & futures trading in DeFi, raised $7 million across pre-seed and seed fundraising rounds. Fabric Ventures and Kyber Capital Crypto Fund led the round and were joined by AMDAX, Wave Digital, Funfair Ventures, Seier Capital Family Office, Five T Group, and Saxon.
- LunaJoy Health, a St. Petersburg, Fla.-based women’s mental health company, raised $4.2 million in funding from Y Combinator, FoundersX Fund, Goodwater Capital, Magic Fund, VentureSouq, Nurture Ventures, NorthSouth Ventures, and others.
- Take2 AI, a New York City-based AI-powered job simulation platform for sales recruiting, raised $3 million in seed funding. Reach Capital and SemperVirens led the round and was joined by Techstars and others.
- Isospec Analytics, a Lausanne, Switzerland-based developer of biomolecular analysis technology designed to identify unknown molecules, raised $1.9 million in pre-seed funding. Founderful led the round and was joined by Tiny.vc, another.vc and Venture Kick.
OTHER
- Resideo Technologies (NYSE: REZI) agreed to acquire Snap One Holdings (NASDAQ: SNPO), a Charlotte, N.C. and Lehi, Utah-based provider of smart-living products, services, and software to professional integrators, for approximately $1.4 billion including debt.
- Stagwell (NASDAQ: STGW) agreed to acquire PROS, a São Paulo, Brazil-based marketing consultancy specializing in digital public relations. Financial terms were not disclosed.
IPOS
- Marex Group, a London, U.K.-based financial services provider, plans to raise up to $325.4 million in an offering of 15.4 million shares priced between $18 and $21 on the Nasdaq. The company posted $1.2 billion in revenue for the year ending December 31, 2023. JRJ Group, BXR Group Holdings, and Trilantic Capital Partners back the company.
- Gauzy, a Tel Aviv, Israel-based developer of smart glass, camera monitor, and advanced driver assistance technologies, filed to go public on the Nasdaq. The company posted $78 million in revenue for the year ending December 31, 2023. Ibex Partners, Olive Tree Ventures, Infinity Holding Ventures PTE, Avery Dennison Corp, South Lake One, and Blue-Red Partners back the company.
PEOPLE
- Mobilion Ventures, a Tel Aviv, Israel-based venture capital fund, hired Dr. David Abraham as a partner. Formerly, he was with Robert Bosch Technologies Israel.
- Underscore VC, a Boston, Mass.-based venture capital firm, promoted Brian Devaney to partner.
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