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Updated: 8 hours 15 min ago

Uber spins out delivery robot startup as Serve Robotics

2021, March 3 - 1:39am

Postmates X, the robotics division of the on-demand delivery startup that Uber acquired last year for $2.65 billion, has officially spun out as an independent company called Serve Robotics.

TechCrunch reported in January that a deal was being shopped to investors.

Serve Robotics, a name taken from the autonomous sidewalk delivery bot that was developed and piloted by Postmates X, has raised seed funding in a round led by venture capital firm Neo. Other investors included Uber as well as Lee Jacobs and Cyan Banister’s Long Journey Ventures, Western Technology Investment, Scott Banister, Farhad Mohit and Postmates co-founders Bastian Lehmann and Sean Plaice.

Serve Robotics didn’t share specifics of the funding except to confirm that the round, which will be a Series A, has not been completed yet. Funding a spin out can occur in phases, with the first tranche used for the initial launch and the rest of the round closing once IP has been transferred.

Uber planning to spin out Postmates’ delivery robot arm

The new company will be run by Ali Kashani, who headed up Postmates X. Other co-founders include Dmitry Demeshchuk, the first engineer who joined the Serve team at Postmates and MJ Chun, who previously led product at Anki and has been heading up product strategy at Serve. The company is launching with 60 employees with headquarters in San Francisco and offices in Los Angeles and Vancouver, Canada.

Image Credits: Serve Robotics

“While self-driving cars remove the driver, robotic delivery eliminates the car itself and makes deliveries sustainable and accessible to all,” said Kashani, co-founder and CEO of Serve Robotics. “Over the next two decades, new mobility robots will enter every aspect of our lives — first moving food, then everything else.”

Postmates’ exploration into sidewalk delivery bots began in earnest in 2017 after the company quietly acquired Kashani’s startup Lox Inc. As head of Postmates X, Kashani set out to answer the question: why move two-pound burritos with two-ton cars? Postmates revealed its first Serve autonomous delivery bot in December 2018. A second generation — with an identical design but different lidar sensors and few other upgrades — emerged in summer 2019 ahead of its planned commercial launch in Los Angeles.

The company’s mission to design, develop and operate delivery robots specialized in navigating sidewalks will continue, albeit with an eye toward expansion. Serve will continue its delivery operations in Los Angeles. It plans to ramp up research and development in the San Francisco Bay Area and expand its market reach through new partnerships.

The spinout is consistent with Uber’s aim to narrow the focus of its business on ride-hailing and delivery in a push toward profitability. This strategy began to take shape after Uber’s public market debut in May 2019 and accelerated last year as the COVID-19 pandemic put pressure on the ride-hailing company. Two years ago, Uber had enterprises across the transportation landscape, from ride-hailing and micromobility to logistics, public transit, food delivery and futuristic bets like autonomous vehicles and air taxis. CEO Dara Khosrowshahi has dismantled the everything-but-the-kitchen-sink approach as he pushes the company toward profitability.

In 2020, Uber offloaded shared scooter and bike unit Jump in a complex deal with Lime, sold a stake worth $500 million in its logistics spinoff Uber Freight and rid itself of its autonomous vehicle unit Uber ATG and its air taxi play Uber Elevate. Aurora acquired Uber ATG in a deal that had a similar structure to the Jump-Lime transaction. Aurora didn’t pay cash for Uber ATG. Instead, Uber handed over its equity in ATG and invested $400 million into Aurora, which gave it a 26% stake in the combined company. In a similarly crafted deal, Uber Elevate was sold to Joby Aviation in December.

Uber sells self-driving unit Uber ATG in deal that will push Aurora’s valuation to $10B

Categories: Business News

Vestiaire Collective raises $216 million for its second-hand fashion platform

2021, March 3 - 12:47am

Vestiaire Collective announced a new funding round. The company has raised $216 million, or €178 million — it has reached a valuation above $1 billion, making it a unicorn. French fashion and luxury group Kering is leading the round with Tiger Global Management. Kering now owns 5% of Vestiaire Collective.

The startup operates an online marketplace where you can find pre-owned luxury and fashion items. And it’s a complicated industry as you don’t want to buy a damaged item or a cheap knockoff. The company controls and authenticate some items before they reach the buyer. If you opt for direct shipping, you can get reimbursed if there’s something wrong with what you ordered.

In addition to the two lead investors, many of the company’s existing shareholders are investing once again, such as Vestiaire Collective’s own CEO Max Bittner, Bpifrance’s Large Venture fund, Condé Nast, Eurazeo through Eurazeo Growth and Idinvest Venture, Fidelity International, Korelya Capital, Luxury Tech Fund and Vitruvian Partner.

As you may have noticed, it’s been a bit harder to travel and buy fashion items in store. Many fashion e-commerce companies have been thriving during the coronavirus outbreak, and Vestiaire Collective is one of them. Transaction volume doubled in 2020 compared to 2019. There are 140,000 new listings every week.

In addition to the current pandemic, many consumers are concerned about the impact of fashion on the environment. At the lower end of the spectrum, retailers and fast fashion brands encourage you to buy more and more stuff as trends change with each season. At the higher end of the spectrum, luxury brands don’t want to undermine the value of their goods by putting items on sale to clear room for a new collection.

That’s why Vestiaire Collective is particularly well positioned to find new customers who are looking for quality goods that are going to last for a while and that haven’t been specifically produced for them. Similarly, people can sell their stuff instead of throwing them away.

While Vestiaire Collective originally started in Europe, the company is now growing rapidly in the U.S. and Asia. “As of January 2021, local sellers in those regions had increased their items sold by more than 250% year-over-year,” Tiger Global partner Griffin Schroeder said in the release.

With today’s funding round, the company plans to further develop partnerships with brands through buy-back circular solutions. The company also wants to encourage more people to sell something every time they buy something. Vestiaire Collective aims to be carbon neutral by 2026 and get the B Corp certification. The startup will also hire 155 people in the technology team.

Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Oscar Health raises IPO price as Coupang releases bullish debut valuation

2021, March 3 - 12:46am

Investors appear excited to buy shares in impending public companies Oscar Health and Coupang. TechCrunch covered both extensively during their ramp toward the public markets, and more recently regarding their IPO march. And now, with a combined valuation well above $50 billion, both public offerings should make a splash.

And in good news for their respective investors, recent pricing points to an IPO market that remains enthusiastic about new listings, despite some recent chop among public technology equities.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

The valuation news from Coupang and Oscar Health bodes well for other impending offerings, including a host of SPAC-led flotations and the coming direct-listing of cryptocurrency giant Coinbase.

This morning, let’s collect pricing news on both Coupang and Oscar Health, eat some modest crow in the case of the latter and prep ourselves for the next two unicorn public offerings.

These companies will soon convert tens of billions of dollars of illiquid private shares into public currency. As such, their offerings may reveal investors’ sentiments regarding e-commerce and insurance companies backed by venture capital.

Oscar Health and Coupang’s IPO pricing

As TechCrunch reported this morning, South Korean e-commerce player Coupang could be worth as much as $51 billion in its IPO if its first debut price range of $27 to $30 per share holds up; the price range matches earlier expectations for the company, which recorded revenues of $11.97 billion in 2020, up more than 90% from its year-ago results.

Oscar Health’s new IPO price range is even more interesting than Coupang’s first. The insurance startup’s first IPO pricing interval of $32 to $34 per share valued the company at a midpoint, full-diluted price of around $7.7 billion. Its range is now $36 to $38 per share, more than modestly higher than its prior target price range.

Categories: Business News

Offering a service that prioritizes the highest-paying gigs in the gig economy, Stoovo raises funding

2021, March 3 - 12:35am

Semih Korkmaz and Hantz Févry launched Stoovo in 2019 as a way to help gig workers make the best use of their time.

Févry, who immigrated to the U.S. from Haiti, knew firsthand the struggles that come with part-time work from his days as a student at Stonybrook University. While there bouncing from job to job, Févry would feel the sting associated with hidden fees, unkept promises and variability of part-time labor.

The time at Stonybrook was also when Févry got his first taste of entrepreneurship. In 2010 and 2011, Févry said the dean of the University’s business school let the budding business owner cut back on his hours so he could start iTrade International, an import-export business selling earthquake detection equipment in Haiti.

That first taste of tech and business development eventually landed Févry a job at Google in Hong Kong and offered him the chance to travel around the world. After a stint in Europe, Févry moved back to the U.S. where he set to work building Stoovo.

The question on his mind was this: How can we leverage technology to help gig workers or people taking short-term assignments?

Févry and his co-founder Korkmaz envisioned Stoovo as a way to level the playing field by providing gig workers with information about the highest paying jobs available on the gig platforms at any one time. “What the platforms are doing is they are optimizing to make sure that they’re responding to demand,” Févry said. “What we do is use the same approach to predict what will be the demand, where will be the demand, what will be the competition and what’s the payout.”

The company’s software advises gig workers on the optimum time for using each service based on their earning criteria and hours, Févry said.

“We tell you when to start working, where you need to start working and when you need to go when you need to take your break,” he said. 

But the company’s service isn’t only about optimization. There’s also a banking component and a suite of products to ensure that gig workers are also getting the most out of their gigs financially. The company offers a checking account, a tax management service and lending services as well, through services like BellBizzer, a Seattle-based company that offers a short-term rental service for consumer goods.

Both Korkmaz and Févry spent time working as delivery drivers or freelancing to get a feel for the challenges gig workers faced, Févry said. During lunch breaks at Google, Févry would do food deliveries to see what he could do so that he could understand how to make the gig economy work better.

Ultimately, the best solution would be to pay gig workers a fair wage for the time they spend doing their work, but barring that, technologically developed band-aids to help heal technologically enabled wounds seem like the only option.

Gig companies like Uber have a history of using their algorithms to wring more money from drivers — sometimes unbeknownst to the workers.

Back in August, a developer named Armin Samii created an app called UberCheats that monitored the UberEats application for a software bug to inform drivers if they were underpaid by the company for the distance they’d traveled to make a delivery. Last week, the app was taken down, but only because of a copyright infringement claim from Uber.

UberCheats is now live! Download the Chrome extension to detect if UberEats has underpaid you.

Uber could block this at any time, so if you're an UberEats driver/biker, please download it before it's blocked by Uber and let me know if Uber cheated you!https://t.co/NsIuTbsSU1

— Armin Samii (@ArminSamii) August 18, 2020

Stoovo and UberCheats seem to come from the same place. The idea is to equip workers with tools that can work for workers instead of for big platforms.

It’s this vision that attracted investors like Derek Norton from Watertower Ventures to invest in the company. To date, Stoovo has raised $2.4 million from investors, including Watertower, 500 Startups, Plug and Play Ventures and TSEF, Févry said.

With the money, the company hopes to build out more products that can enable things like low-cost money transfers. Ultimately, the company just wants to give these gig workers a chance, Févry said.

“The gig economy is rife with frustrations,” Févry said, and Stoovo is making a pitch to smooth over the obstacles. “We really understand your life. We are also immigrants,” he said. “We know that of that $200… we know you have to send $40 overseas… We are building a product with [gig workers], we are not building for them.”

As it adds Jeremy Milken to the partnership, Watertower Ventures nears $50 million close for its new fund

Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Instacart raises $265M at a $39B valuation

2021, March 3 - 12:35am

On-demand grocery delivery platform Instacart has raises a $265 million funding ground from existing investors, including Andreessen Horowitz, Sequoia Capital, D1 Capital Partners and others. The new funding, which, like its past few rounds, isn’t assigned a Series alphabetical designation, pushes the company’s valuation to $39 billion – more than double its $17.7 billion valuation when it raised is last financing, a $200 million venture round in October 2020.

What’s behind the massive increase in the value investors are willing to ascribe to the business? Put simply, the pandemic. Last year, Instacart announced three separate raises, including a $225 round in June, followed by a $100 million round in July. The rapid sequence of venture capital injections were likely designed to fuel growth as demand for grocery delivery services surged while people attempted to quarantine or generally spend less time frequenting high-traffic social environments like grocery stores.

Instacart raises $200M more at a $17.7B valuation

In a blog post announcing the news, Instacart doesn’t put specifics on the growth rates of usage over the course of 2020, but it does express its intent to grow headcount by 50% in 2021, and continue to scale and invest in its advertising, marketing and enterprise efforts specifically in a quote.

On the product side, Instacart broadened its offerings from groceries to also include same-day delivery of a wide range of products, including prescription medicine, electronics, home decor, sport and exercise equipment and more. It’s capitalizing on the phenomenon of increased consumer spending during the pandemic, which is a reverse from what many anticipated given the impact the ongoing crisis has had on employment.

Instacart Chief Financial Officer Nick Giovanni said in a quote that the company expects this to be “a new normal” for shopping habits, and the size and pace of the company’s recent funding, as well as its ballooning valuation, seem to suggest its investors also don’t think this is a trend that will revert post-pandemic.

Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Indonesian payments infra startup Xendit raises $64.6M in Accel-led Series B

2021, March 3 - 12:00am

Fueled by the COVID-19 pandemic, digital transformation is happening all over the world. And Southeast Asia is no exception.

Indonesia’s Xendit, a startup focused on building digital payments infrastructure for the region, has just raised $64.6 million in a Series B led by Silicon Valley heavyweight Accel. The funding brings the total amount raised by the Jakarta-based company to $88 million since its 2015.

Notably, Y Combinator also participated in the financing. In fact, Xendit is the first Indonesian company to go through Y Combinator’s accelerator program. It also was ranked No. 64 on Y Combinator’s top 100 companies (by valuation and top exits) list in January 2021

Xendit works with businesses of all sizes, processing more than 65 million transactions with $6.5 billion in payment value annually. Its website promises businesses that “with a single integration,” they can accept payments in Indonesia and the Philippines. The company describes itself as building out financial services and digital payments infrastructure “in which the next generation of Southeast Asian SaaS companies can be built on top of,” or put more simply, it aspires to be the Stripe of Southeast Asia.

Xendit has been growing exponentially since its launch — with its CAGR (compound annual growth rate) increasing annually by 700%, according to COO and co-founder Tessa Wijaya. In 2020, the company saw its customer count increase by 540%. Customers include Traveloka, TransferWise, Wish and Grab, among others. Xendit declined to reveal hard revenue figures.

It also declined to reveal its current valuation but we do know that as of October 2019, it was valued at at least $150 million – a pre-requisite for appearing on this Y Combinator list, on which it ranked No. 53. 

The idea for Xendit was formed when CEO Moses Lo met his co-founders while studying at University of California, Berkeley. Shortly after, they went through Y Combinator, and launched Xendit in 2015. 

One of the company’s main benefactors was Twitch co-founder Justin Kan. According to Lo, “he happened to have some family in Indonesia, and it was also about the time when Asia was becoming more interesting for YC.”

Xendit was originally launched as a P2P payments platform before evolving into its current model.

Today, the startup aims to help businesses of all sizes seamlessly process online payments, run marketplaces, distribute payroll manage finances and detect fraud via machine learning. It aims for fast and easy integrations so that businesses can more easily accept payments digitally.

The market opportunity is there. One of the world’s most populous countries that is home to more than 270 million people — an estimated 175 million of which are internet users — Indonesia’s digital economy is expected to reach $300 billion by 2025.

Add to that a complex region that is home to 17,000 different islands and a number of regulatory and technological challenges.

“Trying to build the businesses of tomorrow on yesterday’s infrastructure is holding Southeast Asia’s businesses back,” Lo said.

The global shift toward more digital transactions over the past year led to increased demand for Xendit’s infrastructure and services, according to Wijaya. To meet that demand, the company doubled its employee headcount to over 350 currently.

The pandemic also led to Xendit branching out. Prior to 2020, many of the company’s customers were large travel companies. So the first few months of the year, the startup’s business was hit hard. But increased demand paved the way for Xendit to expand into new sectors, such as retail, gaming and other digital products.

Looking ahead, the startup plans to use its new capital to scale its digital payments infrastructure “quickly” with the goal of providing millions of small and medium-sized businesses across Southeast Asia with “an on-ramp to the digital economy.” It is also eyeing other markets. Xendit recently expanded into the Philippines and also is considering other countries in Southeast Asia, such as Thailand, Vietnam, Malaysia and Singapore, according to Wijaya.

Xendit is also similar in scope to San Francisco-based Finix, which aims to make every software company a payments company. Xendit acknowledges the similarities, but notes it is also “looking to tackle broader challenges related to accessibility, security and reliability that are unique to Southeast Asia,” with a deep understanding of the region’s unique geographical and cultural nuances.

To Accel partner Ryan Sweeney, Xendit has “quietly” built a modern digital payments infrastructure that’s transformed how Southeast Asian businesses transact.

“Their team’s combination of deep local expertise and global ambitions means they’re uniquely positioned to do what no other company could do in the region,” he said. “The vision of Xendit is a bold one: they are building the digital payments infrastructure for Southeast Asia, and fits squarely into Accel’s global fintech thesis.”

Other fintechs that Accel has backed include Braintree/Venmo, WorldRemit,GoFundMe and Monzo, and more recently Galileo, TradeRepublic, Lydia, Public.com and Flink.

Fintech startup Finix closes on $3M in Black and Latinx investor-led SPV

Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Flipboard expands its local coverage to more than 1,000 cities and towns

2021, March 2 - 11:22pm

News aggregator Flipboard‘s local coverage is making what product lead Brian Gottesman described as a “quantum leap,” expanding from 60 topics (a.k.a. cities, towns and communities that you can follow) to more than 1,000.

While Flipboard has allowed users to follow stories focused on major cities like New York for years, it launched a broader initiative around local news at the beginning of last year. The company says it’s now bringing together news coverage in locations across the United States and Canada, including all 210 Designated Market Areas tracked by Nielsen.

This comes as local newspapers continue to struggle and shut down, creating what are known as news deserts. But Flipboard’s data quality analyst Marty Rose said that its local news sections don’t just rely on traditional newspapers — they can aggregate stories from travel blogs, publications aimed at diverse audiences, TV stations, regional/national publications that do stories of local interest and more.

“Our aggregation could create a local paper where in communities they don’t exist,” Gottesman added.

Flipboard is now tying these local topics to GPS locations, as well. Users will be asked to share their location with the app (Gottesman noted that to protect user privacy, Flipboard is only using “coarse precision” and doesn’t retain user location data), then presented with a list of nearby cities and local topics of interest that they can follow. This will allow them to keep up on everything from local political news to COVID-19 updates, weather forecasts and dining recommendations.

Flipboard expands local news coverage to reach 50 cities across US and Canada

“This is such a key part of informing our users,” Gottesman said. “They need to know if there’s a natural disaster in their area … they need to know if there’s a new place to go and get vaccines. Their community is more important than ever.”

Conversely, Rose said that by building relationships with local news organizations, Flipboard could also “elevate” their coverage to non-local sections when it might be relevant to a broader audience.

Asked how publishers’ subscription strategies and paywalls might affect the stories that appear in these local topics, Rose acknowledged, “Some local publications do have paywalls. It’s entirely up to them, we have no problem with that whatsoever … We provide the headlines and if the user clicks through and they’re presented with some kind of paywall, it’s unfortunate for them, but it’s not really our call.”

At the same time, he said that local TV coverage isn’t paywalled, and that a growing number of local blogs and digital publications are relying on more of a donation or membership model: “I really hope that they stick around and we can push those a bit more.”

Project Oasis is a Google-backed research initiative to support local news startups

Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Beam raises $80M as the dental insurer looks to keep up rapid historical growth

2021, March 2 - 10:55pm

This morning Beam, an insurtech startup that provides dental coverage to corporate employees, announced that it has closed an $80 million Series E. Mercato-affiliated Traverse led the investment, with Nationwide insurance joining the deal. Both are new investors in Beam. Prior investors Drive Capital and Georgian Partners also put capital into the funding event.

The investment comes after rapid growth at the company, a common theme amongst neo-insurance providers. The startup cohort often leans on digital information collection to better information on consumer behavior. The information allows companies like Beam, and auto-insurers incent behaviors that lower costs like brushing, or safe driving, while having more information to inform their risk underwriting activities.

Once the neo-insurers have enough data to prove their underwriting models, they can rapidly scale their businesses, something investors covet.

Beam CEO Alex Frommeyer said in an interview that the dental insurance business, which lacks the occasional catastrophic impact of a home insurer having to cover the cost of a house, for example, is an attractive slice of the coverage market. Per Frommeyer, his company has “sub-70s” loss ratios, meaning that it spends less than $0.70 per dollar of premium it receives on paying claims.

We lack specifics on its combined loss ratio and loss adjustment expenses, but the loss ratio itself points to enough margin in Beam’s core insurance product to possible create an attractive business; some neo-insurnace providers that have been well received by investors are struggling to get their numbers to even similar levels of performance. Add in Beam’s self declared revenue growth of 600% in the last three years, and “net revenue retention rate of 100%,” and it’s not hard to see why investors wanted to put more capital to work in the company.

Beam’s business is interesting for more reasons than merely its economics. It is also a consumer hardware player, manufacturing its own toothbrush to track, and encourage via promotions, its covered members to brush as frequently correctly. And the company’s software for enrollment, claims, and the like has become popular enough that Beam offers other insurance products via its platform to some customers, in addition to its own dental coverage.

Regarding its new investment, Frommeyer said that thanks to dental insurance’s lack of mega-claims, it doesn’t require as large a capital reserve as some insurance types. That means its new funding is largely earmarked for growth. The cash is likely welcome. After doubling its member base in both 2019 and 2020, the company has an upward climb ahead of if it wants to match the result again in 2021.

While the insurtech market has proven attractive for public investors in some cases — Lemonade’s post-IPO performance, and Root’s IPO pricing, say — there have been bumps. Root’s share price has taken a beating in recent months, and MetroMile, which went public via a SPAC, has lost ground in recent trading sessions.

Still, the market for insurance is huge, and with startups trying to apply tech solutions and modern digital software to the market, there’s plenty for investors to favor. Let’s see how far Beam can get with another huge check.

Categories: Business News

Flink, the Berlin-based grocery delivery startup that operates its own ‘dark stores’, raises $52M

2021, March 2 - 10:04pm

The on-demand grocery delivery industry in Europe (and beyond) continues to heat up amidst the pandemic, including a plethora of startups taking a vertical approach by operating their own delivery only — or “dark” — stores. The latest to show its hand is Berlin-based Flink, which today is announcing that it has raised a hefty $52 million in seed financing.

The round is led by Target Global and existing investors Northzone, Cherry Ventures and Silicon Valley-based debt provider TriplePoint Capital. Cristina Stenbeck from Kinnevik also joins the round in a personal capacity.

TriplePoint’s inclusion is notable, since debt financing makes sense for these types of capital intensive businesses, including those that need to build out actual stores, albeit dark ones, and other deep logistics infrastructure.

To that end, the injection of capital — which brings total funding to date to $64 million — coincides with Flink’s expansion into the Netherlands and France, and follows the opening of 10 dark stores in a number of German cities. They include Berlin, Hamburg, Munich, Nuremberg, Dusseldorf and Cologne, with more planned.

Officially launched just six weeks ago, Flink, which means “quick” in German, claims to deliver groceries from its own network of fulfilment centres in less than 10 minutes. That puts it up against dark-store competitors including Berlin’s much-hyped Gorillas and London’s Dija and Weezy, and France’s Cajoo, all of which also claim to focus on fresh food and groceries.

There’s also the likes of Zapp, which is still in stealth and more focused on a potentially higher-margin convenience store offering similar to U.S. unicorn goPuff. (Related: goPuff itself is also looking to expand into Europe and is currently in talks to acquire or invest in the U.K.’s Fancy, which some have dubbed a mini goPuff).

Delivery company goPuff is in talks to acquire the UK’s Fancy

However, based on today’s funding round and an extremely experienced founding team, Flink is certainly one to watch. The rather stealthy company was founded in late 2020 by Oliver Merkel (former Bain & Company partner who led the firm’s retail practice in Germany), Christoph Cordes (former co-CEO of home24, which IPO’d in 2018) and Julian Dames (former co-founder of Foodora, CMO at foodpanda and VP at Delivery Hero, and most recently at SoftBank). Founder-market-fit? Check.

As noted, Flink is pitching itself very much as a grocery solution, similar to Dija and Gorillas, for example, meaning that the real competition — in the short to mid-term, at least — is traditional supermarkets that do scheduled delivery but aren’t typically on-demand. However, delivering just-in-time fresh food poses many logistical challenges, such as the supply chain and ensuring you actually stock the products customers want when they want them. That’s a slightly different challenge to focusing on convenience store items such as beer, chocolate and snacks, or cigarettes etc., which is closer to the original goPuff model.

In a brief call last night with Christian Meermann, founding partner at Cherry Ventures, he told me that he believes truly on-demand groceries can be made to work, including the unit economics, but concedes it is a huge challenge logistically. But he also pointed out that the prize is potentially much bigger for whichever team can figure it out, since grocery shopping can easily happen multiple times per week and basket sizes can soon add up. Meermann isn’t convinced the same can be said of a pure convenience store offering, but of course there is overlap between the two.

Jessica Schultz, general partner at Northzone and previously a co-founder of HelloFresh, agrees. She says that instant shopping delivery will become “the new standard” in shopping more generally, and that groceries is the perfect category to start in, due to the nature of the products and frequency of consumption (e.g. perishables, waste, snacking, three meals per day, etc.).

“Getting all your groceries, and not only convenience items but also your fresh herbs, your fruits, your bread… in less than 10 minutes is truly a wow experience,” she tells me. “I’m incredibly impressed with what the Flink team has achieved to date in this very fast-moving industry. I’m not sure I’ve seen such a rapid growth, or clean and strategic approach before. Their deep understanding of the core market dynamics is what will make them succeed”.

Schultz also argues that existing supermarket infrastructure can’t deliver on express grocery shopping and that large incumbents don’t have the skillset or agility to build on-demand grocery. “Instant delivery requires the build out of new infrastructure (micro-warehouses, hub & spoke) as well as a fully vertically integrated approach,” she adds.

Meanwhile, the new financing will be used to expand further within Germany and into additional European markets this year. “In Q2 2021, Flink will roll out its first stores in the Netherlands and France, beginning in cities like Amsterdam and Paris,” says the 120-person company.

“Consumers absolutely love to get their grocery shopping done in 10 minutes,” says founder Oliver Merkel. “We’ve received fantastic NPS feedback and see people using Flink multiple times a week. With the additional funding, we can roll out Flink even faster in Europe.”

Gorillas, the on-demand grocery delivery startup taking Berlin by storm, has raised $44M Series A

Early Stage is the premiere “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Nigerian founders-turned-investors are now running syndicate funds

2021, March 2 - 9:37pm

The Future Africa Fund kicked off in 2015 when Iyinoluwa Aboyeji and Nadayar Enegesi, co-founders of U.S.-based and African-focused talent company Andela, wrote checks to African startups as angel investors. This continued even as Aboyeji joined and left Flutterwave, the fintech company he co-founded.

In January 2020, the pair made the fund official, with Aboyeji as general partner and Enegesi as limited partner. Simultaneously, they announced that the fund had invested $1.5 million across 19 African companies.

The idea for a syndicate fund would come in the following months as the pandemic disrupted investment activities worldwide.

In the past year, syndicates have been emerging as a key force for investing — and for startups seeking capital to get going — on the continent. This is because most of the capital in Africa for promising startups is typically distributed among many investors. Syndicates are now emerging as one way of bringing the long tail together for more equity firepower.

During the onset of the pandemic, Aboyeji, via his blog post, said Future Africa Fund was looking to raise institutional investment. However, the whole process proved difficult and the fund wasn’t able to raise because he was stuck in Nigeria and could not visit London, New York and Washington, DC, “where institutional and development finance capital sits.”

But in April, the fund decided to improvise by launching a syndicate arm called the Future Africa Collective.

“There’s a massive early-stage funding gap for African startups. All the data we were looking at pointed to the fact that work needed to be done to bridge that gap,” Aboyeji told TechCrunch. “We simply couldn’t go on the journey alone to fix the gap and decided to build Future Africa Collective to democratize access to African startups. We think of ourselves as pioneers in this field.”

Here, Future Africa acts as the syndicate lead sourcing investments, conducting due diligence and securing allocations for investors called backers.

It’s a similar model employed by AngelList, the company founded by Indian-American entrepreneur Naval Ravikant and Babak Nivi as a fundraising platform for startups to raise money from angel investors. Over the years, the angel network has based its infrastructure on syndicates — investment vehicles that allow investors, referred to as backers, to co-invest with prominent investors — known as leaders.

Syndicate leads are often experienced angel investors or successful startup founders. They have a wealth of knowledge from playing different roles in the building of a startup ecosystem. On the other hand, backers don’t have much experience investing in startups most times, and for some that do, they will rather allow syndicate leads to choose startups to invest in and manage their investments.

On AngelList, there are more than 200 active syndicate leads listed with a typical check size ranging from $200,000 to $350,000. Collectively, they have invested more than $2 billion in startups globally.

Adopting syndicate funds for African startups

Like Aboyeji, two other Nigerian tech entrepreneurs — Bosun Tijani and Jason Njoku — have also launched syndicate funds within the past year.

Tijani is the co-founder and CEO of Co-Creation Hub (CcHub), a pan-African innovation hub with offices in Lagos and Nairobi. He is also an angel investor, and via CcHub’s accelerator programme and a partner fund called Growth Capital Fund, Tijani has invested in more than 40 startups.

So why launch a syndicate given the success of the other funds? According to Tijani, the syndicate hopes to solve the challenges that exist with traditionally structured investment vehicles. Here’s what he means.

In 2019, Nigeria accounted for more than 53% of the diaspora remittances to the African continent. Primarily, these remittances are channelled for domestic consumption. Tijani wants the CcHub Syndicate to be an avenue where a percentage of these remittances can come in to deepen the quality of capital available to local entrepreneurs. He believes the syndicate will help Africans in the diaspora who are passionate about nation-building but do not have the capacity to be limited partners in a typical fund structure, to co-invest alongside CcHUB in high-growth tech companies across Africa.

“We see the syndicate as a complementary vehicle to our VC fund as it deploys bridge financing to companies with proven traction seeking to raise funds to meet critical milestones ahead of their next funding cycles,” he said.

Bosun Tijani talks strategy as CEO of Africa’s new largest tech hub

But before CcHub launched its $500,000 accelerator programme and Aboyeji founded Andela in 2014, Jason Njoku of iROKO had already begun to invest in startups.

Two years after launching the African entertainment company in 2011, Njoku and his co-founder Bastian Gotter launched SPARK, a self-described company builder and a $2 million fund. The fund, whose LPs were HNIs investing between $100,000 to $500,000, has gone through several iterations to stay alive.

The fund is currently in harvest mode, but that hasn’t stopped Njoku from investing personally. His personal portfolio and Spark’s successful exit in Paystack has earned him a reputation that allows him to run some online communities where he charges people for his insights as an angel investor. 

He tells me that Investzilla came into play when a couple of investors wanted to access his deal flow after Paystack’s acquisition.

“I have been advising and referring investors into companies informally for the last few years, so this just formalizes it,” he said. “Investzilla investors wouldn’t consider themselves HNIs but have the ambition to invest $3-10,000 in several early-stage companies annually. Investzilla is focused on unlocking that opportunity for them.”

In a nutshell, the Future Africa Collective, CcHub Syndicate and Investzilla want to improve access to financing for African founders. The plan is to reduce venture flight, which has become prevalent in the ecosystem in recent times. But how do they work, and what progress have they made so far?

The nitty-gritty details

Typically, leads allow backers to join the syndicate via an application. After vetting and then approving these backers, they gain access to the syndicate’s deal flow and can pick investments on a deal-by-deal basis. Also, they are mandated to pay a one-time fee to join.

For Investzilla, backers pay a membership fee of $500. Thereafter, investors can put between $5,000 to $15,000 checks in more than 10 early-stage companies annually. While there has been no public announcement yet on its launch, Njoku says the syndicate soft-launched with 20 investors in January, and deals are waiting to be completed in the pipeline.

CcHub Syndicate, on the other hand, launched in December 2020. Tijani doesn’t state how much the syndicate’s administration fee costs but says the minimum backers can invest is $5,000.

So far, the syndicate has signed up more than 400 individuals, investing groups and institutional investors. Out of that number, a little above 30 investors have undertaken the syndicate’s KYC (Know Your Customer) process. Last month, it announced that a total of $267,500 had been raised to support three Nigerian startups’ bridge financing rounds.

Meanwhile, the Future Africa Collective charges membership dues of $1,000 a year, and four times a year it selects some backers to the syndicate. Each quarter, backers are presented with five startups they can invest in with a minimum of $5,000. In less than a year, Future Africa Collective has grown to more than 160 members. Collectively, they have invested over $1 million in 14 startups across Africa.

L-R: Jason Njoku (Investzilla), Iyinoluwa Aboyeji (Future Africa Collective), and Bosun Tijani (CcHub Syndicate)

One important thing to note is that a transaction fee prorated by their check size is charged for every deal a backer makes across all three syndicates.

The three syndicates also charge carry, which is a cut of positive returns generated by the investment. For instance, Future Africa has a 20% carry. If a backer invests $5,000 in the syndicate and the investment returns $20,000, the syndicate would earn $3,000 in carry, leaving the backer with $12,000 profit. Like Future Africa, Investzilla charges a 20% carry, but CcHub Syndicate does 15%.

As to when the return on investments is scheduled to be made, Aboyeji says the Future Africa Collective is designed to return upon secondaries.

“We hold the right to decide when to exit, but if there are any opportunities, we discuss them with the syndicate. Returns are disbursed to the syndicate members who invested in specific startups should there be an exit,” he said.

And the timeline for this across the syndicates is designated around 5 to 10 years.

That said, with Africa’s seed-stage funding gap not closed enough yet, the founders believe that there will be increased participation from more players with varied syndication models. 

Njoku, who is enthused about more capital being pumped into Africa’s tech ecosystem, says if these syndicates can get more than 200 angels to commit between $3,000 to $10,000 in at least five startups in a year, the continent might start to see more high net worth individuals participate in tech investments. 

“If we can unlock that, then it would be $2 million to $10 million in early-stage funding annually, which may or may have been attracted in the first place. Like Iyin and Bosun, founders who have created a lot of wealth with African tech feel comfortable and breed confidence. That’s an attractive asset class for executives or HNIs.”

Categories: Business News

Humaans raises $5M seed to make it easier for companies to on-board and manage staff

2021, March 2 - 6:00pm

Humaans, a London-based HR startup, has raised $5 million in seed funding to accelerate the development of its employee on-boarding and management platform. Backing the round is Y Combinator, Mattias Ljungman’s Moonfire, Frontline Ventures and former head of Stripe Issuing, Lachy Groom.

A number of other investors, made up of seasoned entrepreneurs and startup operators, also participated. They include LinkedIn CEO Jeff Weiner (via Next Play Ventures), Stripe COO Claire Johnson, Figma CEO Dylan Field, Intercom co-founder Des Traynor, former Workday CTO David Clarke, former Benchmark GP Scott Belsky, Notion COO Akshay Kothari, Qubit co-founder Emre Baran, Evervault CEO Shane Curren and Stripe head of security Gerardo Di Giacomo.

Founded by former Qubit employees Giovanni Luperti and Karolis Narkevicius, Humaans came into existence formerly in April 2020 after the pair quit the product agency they had founded together. With a soft launch the previous year while bootstrapping, and with validation from early users, Luperti and Narkevicius decided they had found enough product-market fit to focus on the startup full-time.

“We bootstrapped Humaans by reinvesting capital from the previous businesses we co-founded,” explains CEO Luperti. “After gaining initial commercial traction, we decided to raise capital and brought a number of investors and operators onboard, and joined Y Combinator”.

Pitching itself as a central hub for employee on-boarding and management — or a single source of truth for staffing — Humaans aims to play nicely by integrating with other existing SaaS used across the “HR stack”. This is because scaling companies are increasingly rejecting all-encompassing HR software and using the best modern SaaS offerings for various different functions.

“Companies are frustrated with poorly integrated HR stacks, making processes slow while exposing them to compliance risks,” says Luperti. “This is why the adoption of point solutions is increasing dramatically. Companies are adopting what’s best based on their needs and stage of growth to address their people needs”.

For example, a company may choose an applicant tracking system, a performance management system, contract management software and an employee engagement platform, and so on. “This makes the ‘all-in-one’ model antiquated, creating the opportunity for a solution like Humaans to emerge. We’re building a layer of infrastructure for all employee data”.

This is seeing Humaans attempt to bring together the full HR stack and automate processes like on-boarding, off-boarding and compensation management with fast workflows that can be set up not dissimilar to an IFTTT or Zapier-style type of interaction model.

Image Credits: Humaans

“If you ask around, most employees dislike their HR software,” says Luperti. “HR tools have historically been clunky, slow and not good at providing a good user experience. Existing players focused more on sales and acquisition than retention through product. But HR buyers today are more sophisticated than ever and have an appetite for best in class. We’re building the Slack of HR… an employee management platform that’s both delightful and very powerful”.

To that end, Humaans says it grew 3x in the past few months and is popular amongst distributed companies, such as Pleo, ChartMogul, Bombinate, HeySummit and Pento.

Adds the Humaans CEO: “There are two segments of existing players: those targeting SMEs, and those working with corporations. Serving the companies in the middle is the opportunity we’re going after”.

Categories: Business News

Amsterdam’s Crisp, an online-only supermarket, raises €30M Series B led by Target Global

2021, March 2 - 5:24pm

Crisp, an Amsterdam-based, online-only supermarket focused on fresh produce, has raised €30 million in a Series B financing led by leading Target Global and joined by Keen Venture Partners and the co-founders of Adyen and Takeaway.com. Crisp has now raised a total of €42.5 million to date. It plans to use the money to expand in the Netherlands, and eventually across Europe.

Crisp says its USP is seasonal products sourced directly from 600+ small and high-quality producers at an affordable price in the Netherlands. Customers order through a smartphone app and deliveries are the next day within a one-hour time slot. It also uses a 100% electric fleet serving big cities and suburbs, and its model is to have zero food waste.

The European grocery market is currently worth €2 trillion, but access to customers for high-quality, smaller producers is still tricky and blocked by incumbents. Crisp is taking advantage of consumers moving online, and wanting fresher food.

Tom Peeters, CEO and co-founder of Crisp, told me via online interview that “the differentiation on our model is that we offer quality and convenience. So, fish is super fresh, fruits and produce is super fresh, etc. We basically stay away from the standard supermarket proposition that everything is always there, and you manage long shelf life. We’d rather build a very short chain sourcing directly at the source and bringing it in a very convenient way to you.”

He said it’s not a 15-minute delivery but the next day in order to ensure freshness. “The typical customer is a young family. An average order is 45 products and rather than offering all the brands, we on-boarded the long-tail of food producers in our digital marketplace, so we sourced from over 600 sources of food.”

Czech on-demand grocery delivery startup Rohlik bags $230M to expand across Europe

He said: “Food in Holland is €40 billion, in Germany it is 200 billion. I think Europe combined it’s over 2 or 3 trillion. So that means basically we don’t need to spread thin over many countries in order to build a healthy business, not just healthy products, so we make money on every customer order.”

Founded in 2018 by serial entrepreneurs Tom Peeters, Michiel Roodenburg and Eric Klaassen, Crisp claims to be now one of the fastest-growing supermarkets in the Netherlands, with a seven-fold in sales in 2020 and more than 85% of sales coming from repeat customers, it says.

Bao-Y van Cong, investment director at Target Global, headquartered in Berlin, said: “Crisp is building a world-class technology platform that is of value to both consumers and producers. The way we buy our food has not changed a lot since the 1950s, creating inefficiencies in quality, affordability and convenience. Crisp reflects the changing relationship that consumers today have with food: The European market for grocery shopping is starting to move online fast, super-accelerated by the pandemic. At the same time, we see a massive surge in demand for fresh and transparently sourced food.”

Early Stage is the premiere “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Czech on-demand grocery delivery startup Rohlik bags $230M to expand across Europe

2021, March 2 - 5:19pm

Food delivery — whether it’s ready-made orders from restaurants, meal kits or groceries — has been one of the most-used services in this last year of living under the cloud of a global health pandemic, and today one of the companies with ambitions to build a pan-European empire in the third of these categories is announcing a major round of funding to help it get there.

Rohlik, a Czech startup that has built an online grocery ordering and delivery business combining your usual grocery fare — which it procures itself wholesale, or offers in concert with established businesses like Marks & Spencer — with items sourced from local small businesses, has picked up €190 million ($230 million at today’s rates).

It plans to use the funding to expand its footprint across metropolitan areas in its existing three markets — the Czech Republic, Hungary and Austria — as well as to break into Germany, Poland, Romania and other countries in the near future.

The company — which has some 17 thousand items in its online store — saw revenues rise 101% in FY 2020 to €300 million on 750,000 customers, and it is profitable. This round will give it significantly more fuel to grow than its balance sheet would, Tomáš Čupr, Rohlik CEO and founder, told TechCrunch in an interview.

In a market now full of companies offering online grocery delivery, from online arms of established brick and mortar sellers through to “digital native” brands, one of Rohlik’s unique selling points has been to tap into the specific shopping habits of average European urban consumers, who regularly combine shopping at smaller businesses alongside supermarkets.

“We found the sweet spot of great service, which is two-hour delivery turnaround ordered in windows of 15 minutes, and an amazing assortment. Traditionally you find supermarket assortments in online grocers, but what is the point of waiting for that? We have a supermarket, too, but we married it with local butchers, fishmongers, bakers, fruit and veg sellers, things you can’t buy in mass retail,” said Čupr. “We are saving people five to seven shopping trips, not just the one to the supermarket, and that’s why we managed to scale.”

The round was led by Partech, with significant participation also from Index Ventures. The EBRD, Quadrille Capital, J&T Bank, R2G and Enern (a current investor) were also in the round.

Gorillas, the on-demand grocery delivery startup taking Berlin by storm, has raised $44M Series A

The valuation is not being disclosed, but Forbes’ Czech edition, when reporting on the round being in the works in January, said it was over €600 million ($723 million). We understand from sources it is around $600 million.

Founded in 2014, Rohlik’s funding comes at an interesting and key moment in the online grocery business, in Europe and beyond.

First, we as consumers have proven out the immediate and lasting demand for these services in the last year.

Shelter-in-place orders, and a general move from large parts of the consumer population to socially distance to help keep down community spread of the COVID-19 pandemic, have led to huge surges of consumers using online food ordering for their grocery needs.

That caused, in many cases, those systems to get overloaded. For example, Ocado here in the U.K., where I am a customer, saw its system fall over with the demand, leading it to implementing strict online queuing systems; many companies were unable to keep up with stock demands and requests for delivery slots, etc.)

Even with some (very much not all) countries in Europe relaxing parts of their orders, grocery has remained a very-much used online category in markets where it is available. That is to say, whatever growing trends there were before a year ago, that adoption has accelerated and stuck.

Second, online grocery delivery has become a key area of interest for investors, concentrating specifically on startups, which see an opportunity to innovate even as some of the very biggest players, such as Amazon, beat partial retreats.

Last year, we reported that Dija — a new startup from former Deliveroo employees in London — was raising a round; Gorillas in Berlin raised $44 million in December; Ocado in the U.K. (which is listed here but is run like a startup) raised more than $1 billion.

Wolt closes $530M round to continue expanding beyond restaurant delivery

Last month, Wolt in Finland — which started with restaurants but has since expanded into other areas, including grocery — raised $530 million; Glovo in Spain picked up $120 million; and Weezy in the U.K. raised $20 million.

And just today, yet another online-only grocery delivery startup, Crisp in the Netherlands, raised $36 million (€30 million), and Flink in Germany raised $52 million, with both of those deals led by Target Global.

(And this is not a comprehensive list.)

Amsterdam’s Crisp, an online-only supermarket, raises €30M Series B led by Target Global

Depending on the country, the target market (urban-only or everyone, families or single people), and the choice of food that’s getting delivered (e.g. those who want things that are slightly more prepared versus farm-fresh produce for bigger cooking efforts, etc.), and sourcing relationships (directly with brick-and-mortar retailers, small or big, direct from producers), different startups are taking their own approaches around what kind of models they are building to manage sourcing, logistics and fulfillment.

Some are taking on “dark” convenience stores in cities, as is the case with Gorillas; others are using large fulfillment centers well outside of urban centers, such as Ocado. Some are building their supply chains from the ground up, while others are working with existing retailers, big and small.

The attraction in part with Rohlik is how it has used logistics technology combined with a close understanding of the market (one of Čupr’s previous startups was a restaurant delivery business, acquired by Delivery Hero) to build its platform.

“We’re making a substantial bet and we’re not looking for any business that provides a substitute to existing services,” said Index partner Jan Hammer, in an interview. “We’ve invested in different models around the globe and we have good experiences with Good Eggs. As a tech investment firm, we look at commerce payments, warehouse software and related models that can be synergistic. The macro trend is universal offline to online migration through a better business model. That is the direction of travel. As a VC we would also say that it’s also down to the individuals involved.”

Rohlik, Čupr said, uses large fulfillment venues that are not as big as out-of-town centers but located much closer to where their customers are based. (This could also potentially give the company an opportunity for expansion into new cities: as large supermarkets become less profitable, they can present themselves as a real estate opportunity for online delivery companies like Rohlik.)

Flink, the Berlin-based grocery delivery startup that operates its own ‘dark stores’, raises $52M

Interestingly, a company probably most similar to Rohlik, and thus one of its potentially closest competitors, Picnic from The Netherlands, last raised money in 2019, $300 million, to build an automated distribution center to serve its home country and Germany. Perhaps it will be next in line for a big round of money. (I’ll also note that both Index and Accel were reportedly interested in Gorillas, but neither invested in the end. With Index now putting its bets on Rohlik, you have to wonder what Accel might do next, if anything.)

A lot of companies in this space up to now have been focused on national markets — Instacart has not expanded outside of North America, Ocado is only in the U.K., and so on. The opportunity for a company like Rohlik is to export its model to more countries that have similar market dynamics to those it already serves.

“Rohlik is the most exciting player in the European online grocery industry,” said Omri Benayoun, general partner at Partech, in a statement. “We are honored to partner with Rohlik’s founder Tomáš Čupr, whose passion for service, sustainability and vision for the grocery sector we share. Rohlik’s execution expertise has earned it the trust of both local merchants and global FMCG companies; allowing Rohlik to outperform on quality and price compared to the grocery giants.”

Updated with more updated numbers from Rohlik on its full-year figures, and some changes to investor names in this round: Kaiser Permanente Ventures is not involved.

Early Stage is the premiere “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.

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Categories: Business News

Coupang may raise up to $3.6 billion in its IPO, at a potential valuation of $51 billion

2021, March 2 - 2:19pm

According to an amended S-1 filing, South Korean e-commerce leader Coupang expects to price its initial public offering between $27 to $30 per share, potentially raising up to $3.6 billion. After the IPO, Coupang will have a total of 1.7 billion shares outstanding, including Class A and Class B. This means the means the pricing would give Coupang a potential market capitalization between $46 billion to $51 billion, a huge increase over the $9 billion valuation it reached after its last funding round in 2018, led by SoftBank Vision Fund.

Coupang and some of its existing shareholders will offer a total of 120 million shares during the IPO.

Korean e-commerce firm Coupang raises $2 billion from SoftBank’s Vision Fund

If Coupang’s IPO is successful, it would be a huge win for SoftBank Vision Fund, which will own 36.8% of its Class A shares after the listing.

Founded in 2010 by Bom Kim, Coupang is known for its ultra-speedy deliveries and is now the largest e-commerce company in South Korea, according to Euromonitor. According to the filing, Kim will hold 76.7% of voting power after the listing, while SoftBank Vision Fund will hold about 8.6%. Other investors that currently own 5% or more of Coupang’s shares include Greenoaks Capital Partners, Maverick Holdings, Rose Park Advisors, BlackRock and Ridd Investments.

Coupang filed to go public on the New York Stock Exchange last month, under the symbol CPNG. Based on Bloomberg data, Coupang’s listing will be the fourth-biggest by an Asian company on a U.S. exchange, and the largest since Alibaba’s $25 billion IPO in 2014.

Coupang files for mega US IPO

Categories: Business News

Compass files S-1, reveals $3.7B in revenue on net loss of $270M

2021, March 2 - 11:26am

Compass, the real-estate brokerage startup backed by roughly $1.6 billion in venture funding, filed its S-1 Monday.

The move comes just under one year after the New York-based company laid off 15% of its staff as a result of the shifting economic fortunes created by the global response to the novel coronavirus pandemic.

Prior to the IPO, SoftBank’s Vision Fund holds slightly more than a one-third stake in the company. Other investors include the Canadian Pension Plan Investment Board, Fidelity, Wellington Management, and the Qatar Investment Authority, according to Crunchbase.

The company’s last fundraise was in July 2019, when Compass — a company that has built a three-sided marketplace for the real estate industry, along with a wide set of algorithms to help make it work — raised a $370 million round of funding. That financing valued Compass at $6.4 billion.

One of the greatest things about companies going public is that we get insight into their financials. Compass is not profitable but it did see a massive surge in revenue over the past few years.

The company’s revenues have increased from $186.8 million in 2016 to a whopping $3.7 billion last year, with much of the top-line revenue growth coming in the last two years, according to its S-1. Given the startup’s agency model, most of that revenue is paid out directly to the firm’s agents, who netted about $3 billion in commissions in 2020. Compass posted a net loss of $270 million in 2020, a net loss roughly in line with what it has experienced in the past two years.

Total transactions on the platform grew from about 27,000 in 2018 to 145,000 in 2020, while total transaction volume (the value of the properties the company brokers) went up by about five-fold, from $34 billion to $152 billion last year. Since commissions on real estate are determined as fixed percentage of the value of the property, more transaction volume directly translates into more revenue for Compass. The company had 19,385 agents on its platform as of Dec. 31, 2020.

Compass had its share of trouble before the pandemic. In September 2019, the Wall Street Journal reported that the company had lost a number of senior level individuals over the previous eighteen months including its chief financial officer, chief marketing officer and chief technology officer.

The story was updated post-publication to more accurately reflect the number of agents Compass has on its platform

Categories: Business News

How China’s synthetic media startup Surreal nabs funding in 3 months

2021, March 2 - 10:31am

What if we no longer needed cameras to make videos and can instead generate them through a few lines of coding?

Advances in machine learning are turning the idea into a reality. We’ve seen how deepfakes swap faces in family photos and turn one’s selfies into famous video clips. Now entrepreneurs with AI research background are devising tools to let people generate highly realistic photos, voices and videos using algorithms.

One of the startups building this technology is China-based Surreal. The company is merely three months old but has already secured a seed round of $2-3 million from two prominent investors, Sequoia China and ZhenFund. Surreal received nearly 10 investment offers in this round, founder and CEO Xu Zhuo told TechCrunch, as investors jostled to bet on a future shaped by AI-generated content.

Prior to founding Surreal, Xu spent six years at Snap, building its ad recommendation system, machine learning platform and AI camera technology. The experience convinced Xu that synthetic media would become mainstream because the tool could significantly “lower the cost of content production,” Xu said in an interview from Surreal’s 12-person office in Shenzhen.

Reface grabs $5.5M seed led by A16z to stoke its viral face-swap video app

Surreal has no intention, however, to replace human creators or artists. In fact, Xu doesn’t think machines can surpass human creativity in the next few decades. This belief is embodied in the company’s Chinese name, Shi Yun, or The Poetry Cloud. It is taken from the title of a novel by science fiction writer Liu Cixin, who tells the story of how technology fails to outdo the ancient Chinese poet Li Bai.

“We have an internal formula: visual storytelling equals creativity plus making,” Xu said, his eyes lit up. “We focus on the making part.”

In a way, machine video generation is like a souped-up video tool, a step up from the video filters we see today and make Douyin (TikTok’s Chinese version) and Kuaishou popular. Short video apps significantly lower the barrier to making a professional-looking video, but they still require a camera.

“The heart of short videos is definitely not the short video form itself. It lies in having better camera technology, which lowers the cost of video creation,” said Xu, who founded Surreal with Wang Liang, a veteran of TikTok parent ByteDance.

Commercializing deepfakery

Some of the world’s biggest tech firms, such as Google, Facebook, Tencent and ByteDance, also have research teams working on GAN. Xu’s strategy is not to directly confront the heavyweights, which are drawn to big-sized contracts. Rather, Surreal is going after small and medium-sized customers.

Surreal’s face swapping software for e-commerce sellers

Surreal’s software is currently only for enterprise customers, who can use it to either change faces in uploaded content or generate an entirely new image or video. Xu calls Surreal a “Google Translate for videos,” for the software can not only swap people’s faces but also translate the languages they speak accordingly and match their lips with voices.

Users are charged per video or picture. In the future, Surreal aims to not just animate faces but also people’s clothes and motions. While Surreal declined to disclose its financial performance, Xu said the company has accumulated around 10 million photo and video orders.

MyHeritage now lets you animate old family photos using deepfakery

Much of the demand now is from Chinese e-commerce exporters who use Surreal to create Western models for their marketing material. Hiring real foreign models can be costly, and employing Asian models doesn’t prove as effective. By using Surreal “models”, some customers have been able to achieve 100% return on investment (ROI), Xu said. With the multimillion-dollar seed financing in its pocket, Surreal plans to find more use cases like online education so it can collect large volumes of data to improve its algorithm.

Uncharted territory

The technology powering Surreal, called generative adversarial networks, is relatively new. Introduced by machine learning researcher Ian Goodfellow in 2014, GANs consist of a “generator” that produces images and a “discriminator” that detects whether the image is fake or real. The pair enters a period of training with adversarial roles, hence the nomenclature, until the generator delivers a satisfactory result.

In the wrong hands, GANs can be exploited for fraud, pornography and other illegal purposes. That’s in part why Surreal starts with enterprise use rather than making it available to individual users.

Companies like Surreal are also posing new legal challenges. Who owns the machine-generated images and videos? To avoid violating copyright, Surreal requires that the client has the right to the content they upload for moderation. To track and prevent misuse, Surreal adds an encrypted and invisible watermark to each piece of the content it generates, to which it claims ownership. There’s an odd chance that the “person” Surreal produces would match someone in real life, so the company runs an algorithm that crosschecks all the faces it creates with photos it finds online.

“I don’t think ethics is something that Surreal itself can address, but we are willing to explore the issue,” said Xu. “Fundamentally, I think [synthetic media] provides a disruptive infrastructure. It increases productivity, and on a macro level, it’s inexorable, because productivity is the key determinant of issues like this.”

China’s cash-burning video sector: How Kuaishou lost $1B in 6 months

Categories: Business News

Square’s bank arm launches as fintech aims ‘to operate more nimbly’

2021, March 2 - 8:52am

Known for its innovations in the payments sector, Square is now officially a bank.

Nearly one year after receiving conditional approval, Square said Monday afternoon that its industrial bank, Square Financial Services, has begun operations. Square Financial Services completed the charter approval process with the FDIC and Utah Department of Financial Institutions, meaning it’s ready for business.

The bank, which is headquartered in Salt Lake City, Utah, will offer business loan and deposit products, starting with underwriting, and originating business loans for Square Capital’s existing lending product.

Historically, Square has been known for its card reader and point-of-sale payment system, used largely by small businesses — but it has also begun facilitating credit for the entrepreneurs and smalls businesses that have used its products in recent years.

Moving forward, Square said its bank will be the “primary provider of financing for Square sellers across the U.S.”

In a statement, Square CFO and executive chairman for Square Financial Services Amrita Ahuja said that bringing banking capability in house will allow the fintech to “operate more nimbly.”

Square Financial Services will continue to sell loans to third-party investors and limit balance sheet exposure. The company said it does not expect the bank to have a material impact on its consolidated balance sheet, total net revenue, gross profit or adjusted EBITDA in 2021.

Opening the bank “deepens Square’s unique ability to expand access to loans and banking tools to underserved populations,” the company said.

Lewis Goodwin had been tapped to serve as the bank’s CEO, and Brandon Soto its CFO. With today’s announcement, Square also announced the following new appointments:

  • Sharad Bhasker, Chief Risk Officer
  • Samantha Ku, Chief Operating Officer
  • Homam Maalouf, Chief Credit Officer
  • David Grodsky, Chief Compliance Officer
  • Jessica Jiang, Capital Markets and Investor Relations Lead

The trend of fintechs becoming banks continues. In February, TechCrunch reported that Brex had applied for a bank charter.

Brex applies for bank charter, taps former Silicon Valley Bank exec as CEO of Brex Bank

The fast-growing company, which sells a credit card tailored for startups, with Emigrant Bank currently acting as the issuer, said that it had submitted an application with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions (UDFI) to establish Brex Bank.

A number of fintech companies, or those with fintech services, have spun up products typically offered by banks, including deposit and checking accounts as well as credit offerings. Often, these are designed to provide capital to customers who might not be able to get funding on favorable terms from traditional banking institutions, but who might qualify for business-building loans from a provider who knows their company, like Square, inside and out.

Categories: Business News

Kaltura files to go public on the back of accelerating revenue growth, rising losses

2021, March 2 - 8:41am

Kaltura, a software company focused on providing video technology to other concerns, has filed to go public.

The Kaltura S-1 filing only partially surprised. TechCrunch previously covered the company as part of our ongoing $100 million ARR series focusing on private companies that have reached material scale. (TechCrunch has also covered its product life to a moderate degree.)

The company’s IPO documentation details a business that did more than merely accelerate its growth in 2020, and more specifically, during the COVID-19 era. Seeing a company that powers video tooling do well when much of the world has transitioned to remote work and education is not a bolt from the blue. What is notable, however, is that the company’s revenue growth has accelerated yearly since at least 2018 and its final quarter of 2020 placed the company at a new growth rate maximum.

Public investors, hungry for growth, may find such a progression compelling.

Kaltura also has an interesting profitability profile: As its GAAP net losses scaled in the last year, its adjusted profitability improved. Depending on your stance regarding adjusted metrics, Kaltura’s bottom line will either irk or delight you.

This afternoon, let’s rip into the company’s S-1 and yank out what we need to know. It is IPO season, with SPACs galore and other private companies taking more traditional routes to the public markets, including Coupang announcing a price range for its traditional debut today and Coinbase’s impending direct listing.

For now we’ll focus on Kaltura. Let’s get into it.

Inside Kaltura’s IPO filing

When TechCrunch last covered Kaltura’s financial results, we noted that the company founded in 2006 had raised just north of $166 million, crossed the $100 million ARR mark, and was, per its own reporting, “profitable on an EBITDA.” Kaltura also told TechCrunch that it had margins in the 60% range and was growing at around 25% year over year. That was just over a year ago.

Do those figures hold up? In the Q1 2020 period Kaltura recorded $25.9 million in revenue, software margins of around 78% and blended gross margins of 59.8%. And the company had grown 16.6% from the year-ago quarter. In Kaltura’s defense, the company’s growth accelerated to 24% in the year, so its self-reported numbers were mostly fair. Better than, I think, most numbers we get from private companies.

Categories: Business News

Apple alum’s jobs app for India’s workers raises $12.5 million

2021, March 2 - 8:33am

A startup by an Apple alum that has become home to millions of low-skilled workers in India said on Tuesday it has raised an additional $12.5 million, just five months after securing $8 million from high-profile investors.

One-year-old Apna said Sequoia Capital India and Greenoaks Capital led the $12.5 million investment in the startup. Existing investors Lightspeed India and Rocketship VC also participated in the round. The startup, whose name is Hindi for “ours,” has now raised more than $20 million.

More than 6 million low-skilled workers such as drivers, delivery personnel, electricians and beauticians have joined Apna to find jobs and upskill themselves. But there’s more to this.

An analysis of the platform showed how workers are helping one another solve problems — such as a beautician advising another beautician to perform hair dressing in a particular way that tends to make customers happier and tip more, and someone sharing how they negotiated a hike in their salary from their employer.

“The sole idea of this is to create a network for these workers,” Nirmit Parikh, Apna founder and chief executive told TechCrunch in an interview. “Network gap has been a very crucial challenge. Solving it enables people to unlock more and more opportunities,” he said. Harshjit Sethi, principal at Sequoia India, said Apna was making inroads with “building a professional social network for India.”

The startup has become an attraction for several big firms, including Amazon, Flipkart, Unacademy, Byju’s, Swiggy, BigBasket, Dunzo, BlueStar and Grofers, which have joined as recruiters to hire workers. Apna offers a straightforward onboarding process — thanks to support for multiple local languages — and allows users to create a virtual business card, which is then shown to the potential recruiters. Parikh said Apna’s AI understands the cultural nuances, helping recruiters find the best candidates for their needs.

The past six months have been all about growth at Apna, said Parikh. The app, available on Android, had 1.2 million users in August last year, for instance. During this period, there have been 60 million interactions between recruiters and potential applicants, he said. The platform, which has amassed more than 80,000 employers, has a retention rate of over 95%, said Parikh.

“Apna has taken a jobs-centric approach to upskilling that we are very excited about. Lack of accountability has been the core issue with current skill / vocational learning alternatives for grey and blue-collar workers. Apna has turned the problem on its head by creating net-positive job outcomes for anyone who chooses to upskill on the platform,” said Vaibhav Agrawal, partner at Lightspeed India, in a statement.

Image Credits: Nirmit Parikh

Parikh got the idea of building Apna after he kept hearing about the difficulty his family and friends faced in India in hiring people. This was puzzling to Parikh, as he wondered how could there be a shortage of workers in India when there are hundreds of millions of people actively looking for such jobs. The problem, Parikh realized, was that there wasn’t a scalable networking infrastructure in place to connect workers with employers.

Before creating the startup, Parikh met workers and went undercover as an electrician and floor manager to understand the problems workers were facing. That journey has not ended. The startup talks to over 15,000 users each day to understand what else Apna could do for them.

“One of the things we heard was that users were facing difficulties with interviews. So we started groups to practice them with interviews. We also started upskilling users, which has made us an edtech player. We plan to ramp up this effort in the coming months,” said Parikh, who also started an AI firm more than a decade ago to solve challenges with electricity flux and then another startup to solve for information overload. (The first startup is now being run by family and friends, and the second firm was sold to Intel, Parikh said.)

Parikh said the startup is overwhelmed each day with the response it is getting from its customers and the industry. Each day, he said, people share how they were able to land jobs, or increase their earnings. In recent months, several high-profile executives from companies such as Uber and BCG have joined Apna to scale the startup’s vision, he said, adding that the problem Apna is solving in India exists everywhere and the startup’s hope is to eventually serve people across the globe.

The app currently has no ads, and Parikh said he intends to not change that. “Once you get in the ad business, you start doing things you probably shouldn’t be doing,” he said. The startup instead plans to monetize its platform by charging recruiters, and offering upskill courses. But Parikh maintained that Apna will always offer its courses to users for free. The premium version will target those who need extensive assistance, he said. The startup also plans to expand its team.

As is the case elsewhere, millions of people lost their livelihood in India in the past year as coronavirus shut many businesses and workers migrated to their homes. There are over 250 million blue and grey-collar workers in India, and providing them meaningful employment opportunities is one of the biggest challenges in our country, said Sethi.

Google rolls out virtual visiting card in India

Categories: Business News

Corporate sustainability initiatives may open doors for carbon offset startups

2021, March 2 - 7:49am

Commitments to carbon neutrality keep coming from all corners of the business world — over the past few weeks, companies ranging from the fast-casual restaurant chain Sweetgreen to the security-focused networking IT company Palo Alto Networks to the online craft retailer Etsy committed to net-zero carbon emission plans.

As the companies look for ways to reduce their energy consumption, they’re turning to carbon offset programs as a stopgap measure until the energy grid decarbonizes, they implement technologies to reduce their energy consumption, or both.

This push toward corporate sustainability is creating all kinds of strange bedfellows and startup opportunities, with major corporate offset programs and the establishment of new startups focused on offsets creating channels for sustainable technologies to get to market.

The latest example of a company leveraging a sustainability angle to tie a corporate partner even closer to their business is the agreement between Delta and Deloitte, which involves the accounting and consulting firm paying Delta for renewable jet fuel to offset the emissions of its corporate travel.

To be clear, a better policy for Deloitte would be to cut back on non-essential travel significantly and focus on doing as much remote work as possible to reduce the need for flights. But in some cases business travel is unavoidable, and most folks want to get back to a pre-pandemic normal, which — at least in the U.S. and other countries — will include significantly ramping up air travel for a percentage of the population.

As the BBC noted, air travel accounts for roughly 5 percent of the emissions that contribute to global climate change, but only a small percentage of the world actually uses air transport. According to one analysis from the International Council on Clean Transport, just 3 percent of the world’s population flies regularly. And if everyone in the world did fly, aircraft emissions would top the CO2 emissions of the entire U.S.

Which brings us back to Deloitte and Delta and startups.

Delta’s deal to buy sustainable aviation fuel that would offset a portion of the carbon emissions associated with Deloitte’s business travel is one small step toward greening the airline industry, but the question is whether it’s a significant first step or just an attempt to greenwash the unsustainable travel habits of a consulting industry that prides itself on such perks.

Categories: Business News

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