Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.
This week, the gaming industry again became a target of Beijing, which imposed arguably the world’s strictest limits on underage players. On the other hand, China’s tech titans are hastily answering Beijing’s call for them to take on more social responsibilities and take a break from unfettered expansion.
China dropped a bombshell on the country’s young gamers. As of September 1, users under the age of 18 are limited to only one hour of online gaming time: on Fridays, Saturdays and Sundays between 8-9 p.m.
The stringent rule adds to already tightening gaming policies for minors, as the government blames video games for causing myopia, as well as deteriorating mental and physical health. Remember China recently announced a suite of restrictions on after-school tutoring? The joke going around is that working parents will have an even harder time keeping their kids occupied.
A few aspects of the new regulation are worth unpacking. For one, the new rule was instituted by the National Press and Publication Administration (NPPA), the regulatory body that approves gaming titles in China and that in 2019 froze the approval process for nine months, which led to plunges in gaming stocks like Tencent.
It’s curious that the directive on playtime came from the NPPA, which reviews gaming content and issues publishing licenses. Like other industries in China, video games are subject to regulations by multiple authorities: NPPA; the Cyberspace Administration of China (CAC), the country’s top internet watchdog; and the Ministry of Industry and Information Technology, which oversees the country’s industrial standards and telecommunications infrastructure.
As analysts long observe, the mighty CAC, which sits under the Central Cyberspace Affairs Commission chaired by President Xi Jinping, has run into “bureaucratic struggles” with other ministries unwilling to relinquish power. This may well be the case for regulating the lucrative gaming industry.
For Tencent and other major gaming companies, the impact of the new rule on their balance sheet may be trifling. Following the news, several listed Chinese gaming firms, including NetEase and 37 Games, hurried to announce that underage players made up less than 1% of their gaming revenues.
Tencent saw the change coming and disclosed in its Q2 earnings that “under-16-year-olds accounted for only 2.6% of its China-based grossing receipts for games and under-12-year-olds accounted for just 0.3%.”
These numbers may not reflect the reality, as minors have long found ways around gaming restrictions, such as using an adult’s ID for user registration (just as the previous generation borrowed IDs from adult friends to sneak into internet cafes). Tencent and other gaming firms have vowed to clamp down on these workarounds, forcing kids to seek even more sophisticated tricks, including using VPNs to access foreign versions of gaming titles. The cat and mouse game continues.
While China curtails the power of its tech behemoths, it has also pressured them to take on more social responsibilities, which include respecting the worker’s rights in the gig economy.
Last week, the Supreme People’s Court of China declared the “996” schedule, working 9 a.m. to 9 p.m. six days a week, illegal. The declaration followed years of worker resistance against the tech industry’s burnout culture, which has manifested in actions like a GitHub project listing companies practicing “996.”
Meanwhile, hardworking and compliant employees have often been cited as a competitive advantage of China’s tech industry. It’s in part why some Silicon Valley companies, especially those run by people familiar with China, often set up branches in the country to tap its pool of tech talent.
The days when overworking is glorified and tolerated seem to be drawing to an end. Both ByteDance and its short video rival Kuaishou recently scrapped their weekend overtime policies.
Similarly, Meituan announced that it will introduce compulsory break time for its food delivery riders. The on-demand services giant has been slammed for “inhumane” algorithms that force riders into brutal hours or dangerous driving.
In groundbreaking moves, ride-hailing giant Didi and Alibaba’s e-commerce rival JD.com have set up unions for their staff, though it’s still unclear what tangible impact the organizations will have on safeguarding employee rights.
Tencent and Alibaba have also acted. On August 17, President Xi Jinping delivered a speech calling for “common prosperity,” which caught widespread attention from the country’s ultra-rich.
“As China marches towards its second centenary goal, the focus of promoting people’s well-being should be put on boosting common prosperity to strengthen the foundation for the Party’s long-term governance.”
This week, both Tencent and Alibaba pledged to invest 100 billion yuan ($15.5 billion) in support of “common prosperity.” The purposes of their funds are similar and align neatly with Beijing’s national development goals, from growing the rural economy to improving the healthcare system.
Sunday, an insurtech startup based in Bangkok, announced it has raised a $45 million Series B. Investors include Tencent, SCB 10X, Vertex Growth, Vertex Ventures Southeast Asia & India, Quona Capital, Aflac Ventures and Z Venture Capital. The company says the round was oversubscribed, and that it doubled its revenue growth in 2020.
Founded in 2017, Sunday describes itself as a “full-stack” insurtech, which means it handles everything from underwriting to distribution of its policies. Its products currently include motor and travel insurance policies that can be purchased online, and Sunday Health for Business, a healthcare coverage program for employers. Sunday also offers subscription-based smartphone plans through partners.
The company uses AI and machine learning-based technology underwrite its motor insurance and employee health benefits products, and says its data models also allow it to automate pricing and scale its underwriting process for complex risks. Sunday says it currently serves 1.6 million customers.
The new funding will be used to expand in Indonesia and develop new distribution channels, including insurance agents and SMEs.
Insurance penetration is still relatively low in many Southeast Asian markets, including Indonesia, but the industry is gaining traction thanks to increasing consumer awareness. The COVID-19 pandemic also drove interest in financial planning, including investment and insurance, especially health coverage.
In a statement, Sunday co-founder and chief executive officer Cindy Kuo said, “Awareness for health insurance will continue to increase and we believe more consumers would be open to shop for insurance online. We plan to expand our platform architecture to offer retail insurance to our health members and partners while we continue to grow our portfolio in Thailand and Indonesia.”
India’s top banks five years ago built the interoperable UPI railroads and enabled over 150 million people in the South Asian market to pay digitally. Scores of firms — including local firms Paytm, PhonePe, CRED and international giants Google and Facebook — in India today support the UPI infrastructure, which is now reporting 3 billion transactions each month.
Banks are now ready for their second act.
On Thursday, eight Indian banks announced that they are rolling out — or about to roll out — a system called Account Aggregator to enable consumers to consolidate all their financial data in one place. (Participants banks are HDFC, Kotak, ICICI, Axis, SBI, IndusInd, IDFC, and Federal Bank. Four of them are rolling out the system Thursday, others say they will roll out the new system soon.)
The objective of Account Aggregator (AA) is to aggregate all financial information of an individual, said M Rajeshwar Rao, Deputy Governor of India’s central bank — Reserve Bank of India — at a virtual event Thursday.
The new system makes it possible for banks, tax authorities, insurers, and other finance firms to aggregate data of customers — who have provided their consent — to get better understanding about their potential customers, make informed decisions and ensure smoother transactions.
Users who provide consent — and it only takes a few taps to do so — will be able to share their financial information from one Account Aggregator participant to another through a centralized API-based repository. Users get to decide for how long they wish their data to be shared with a particular Account Aggregator participant.
“For retail loan underwriting (“eligibility check”), rather than submitting previous 3 years bank statements, I can simply authenticate a data transfer via AA (and revoke the data transfer AFTER the loan is approved or sanctioned). For self-employed or freelance professionals, getting Term Insurance has always been difficult since they cannot prove their income – AA lets you provide an audit trail of past income to underwrite the Term Insurance application,” Rahul Mathur, founder and chief executive of insurance aggregator startup BimaPe, told TechCrunch.
An illustration of how the AA system works.
Most countries globally already have privacy laws that recognize the rights of individuals. But even as individuals and businesses have the right to exercise their control over their data, the current system has made it difficult for consumers to operationalize how they provide consent.
“They face this difficult for two reasons,” explained Siddharth Tiwari, head of the Bank for International Settlements in Asia and Pacific. “Firstly, a service provider usually seeks consent to use and transfer data at time when consumers [are] agreeing to participate in an activity with the service provider. Since this consent is granted for a wide variety of possibilities, it is broad and sweeping in nature,” he said.
“Secondly, newly created data are often gathered and retained in proprietary silos and stored in various institutions in incompatible formats. Consumers can find it difficult to share their data as they have only limited options. […] Thus, service providers who are custodians of data effectively act as defacto owner of the data,” he said, adding that Account Aggregator is designed to potentially address these challenges. “A robust consent-based data sharing system has the potential for consumers derive value from their data while maintaining control.”
Account Aggregator is built in part to help consumers and businesses access financial services such as loans. Existing credit bureaus in India have data of only a fraction of the nation’s 1.4 billion population, which makes it very difficult for most in the country to access working capital, explained Infosys chairman Nandan Nilekani, who’s been an adviser to the initiative, at the event Thursday.
“Talks are on to onboard telecom operators as well,” he said, adding that the system has already achieved the sophistication that it could be extended to other industries.
“It’s an architecture that can now be applied to several additional industries,” he said, pointing to healthcare, fitness, testing labs as examples. “We can confidently say that there is no other country in the world that has built a robust infrastructure of this kind and at scale where its people can leverage their data. This approach is now getting global recognition.”
The Account Aggregator system is also positioned to dramatically increase the addressable market for online insurers, lenders, and players in several other industries.
“This is a big step towards a connected financial ecosystem, and will be very significant in Fi’s journey to help working millennials get better with their money. With the successful demonstration of the framework today we are excited to have all our users experience the power and convenience of the AA integration once it’s rolled out to all users,” said Sumit Gwalani, co-founder of Fi.
This is a developing story. More to follow…
Summer is still technically in session, but a snowball is slowly developing in the world of apps, and specifically the world of in-app payments. A report in Reuters today says that the Competition Commission of India, the country’s monopoly regulator, will soon be looking at an antitrust suit filed against Apple over how it mandates that app developers use Apple’s own in-app payment system — thereby giving Apple a cut of those payments — when publishers charge users for subscriptions and other items in their apps.
The suit, filed by an Indian non-profit called “Together We Fight Society”, said in a statement to Reuters that it was representing consumer and startup interests in its complaint.
The move would be the latest in what has become a string of challenges from national regulators against app store operators — specifically Apple but also others like Google and WeChat — over how they wield their positions to enforce market practices that critics have argued are anti-competitive. Other countries that have in recent weeks reached settlements, passed laws, or are about to introduce laws include Japan, South Korea, Australia, the U.S. and the European Union.
And in India specifically, the regulator is currently working through a similar investigation as it relates to in-app payments in Android apps, which Google mandates use its proprietary payment system. Google and Android dominate the Indian smartphone market, with the operating system active on 98% of the 520 million devices in use in the country as of the end of 2020.
It will be interesting to watch whether more countries wade in as a result of these developments. Ultimately, it could force app store operators, to avoid further and deeper regulatory scrutiny, to adopt new and more flexible universal policies.
In the meantime, we are seeing changes happen on a country-by-country basis.
Just yesterday, Apple reached a settlement in Japan that will let publishers of “reader” apps (those for using or consuming media like books and news, music, files in the cloud and more) to redirect users to external sites to provide alternatives to Apple’s proprietary in-app payment provision. Although it’s not as seamless as paying within the app, redirecting previously was typically not allowed, and in doing so the publishers can avoid Apple’s cut.
South Korean legislators earlier this week approved a measure that will make it illegal for Apple and Google to make a commission by forcing developers to use their proprietary payment systems.
And last week, Apple also made some movements in the U.S. around allowing alternative forms of payments, but relatively speaking the concessions were somewhat indirect: app publishers can refer to alternative, direct payment options in apps now, but not actually offer them. (Not yet at least.)
Some developers and consumers have been arguing for years that Apple’s strict policies should open up more. Apple however has long said in its defense that it mandates certain developer policies to build better overall user experiences, and for reasons of security. But, as app technology has evolved, and consumer habits have changed, critics believe that this position needs to be reconsidered.
One factor in Apple’s defense in India specifically might be the company’s position in the market. Android absolutely dominates India when it comes to smartphones and mobile services, with Apple actually a very small part of the ecosystem.
As of the end of 2020, it accounted for just 2% of the 520 million smartphones in use in the country, according to figures from Counterpoint Research quoted by Reuters. That figure had doubled in the last five years, but it’s a long way from a majority, or even significant minority.
The antitrust filing in India has yet to be filed formally, but Reuters notes that the wording leans on the fact that anti-competitive practices in payments systems make it less viable for many publishers to exist at all, since the economics simply do not add up:
“The existence of the 30% commission means that some app developers will never make it to the market,” Reuters noted from the filing. “This could also result in consumer harm.”
PhonePe, one of the largest digital payments services in India, on Thursday launched Pulse, a free product to offer insights into how people in the world’s second largest internet market are paying digitally.
And PhonePe would know: the Flipkart-backed five-year-old startup said its insights are based on over 22 billion transactions it has processed over the years.
Pulse offers an unprecedented level of understanding of the inroads digital payments and various financial services have made across Indian states, districts and over 19,000 zip codes. The new product offers a range of granular data including how many of its transactions in a state were made between users, to merchants, and to pay utility bills.
The startup, which has anonymized users’ data, will publish new data and analysis periodically and one major report each year, it said. The startup also published its maiden report (PDF) Thursday.
A look at PhonePe’s Pulse product (Screengrab)
PhonePe co-founder and chief executive Sameer Nigam said at a virtual conference that PhonePe is also making its insights available through an API for academics, analysts and other players to use at no charge.
More than 100 million Indians have started to transact digitally in the past five years buoyed by New Delhi’s move to invalidate much of the cash in circulation in 2016 and establishment of UPI railroads by retail banks in India that offers interoperability across apps. UPI has emerged as the most popular way Indians pay digitally today and PhonePe commands more than 40% of its market share.
The sudden surge in the adoption of mobile payments has also attracted several international giants — including Google, Facebook, Amazon, and Samsung — to launch their payment offerings in the South Asian nation. India’s mobile payments market is estimated to be worth $1 trillion by 2023, according to Credit Suisse.
The rationale behind launching Pulse, an effort that was initially conceptualized by the startup’s communications team, is to offer clarity to people on the digital payments behavior as there have been too much unverified noise in the industry, PhonePe executives said at a virtual event Thursday.
When asked about potentially losing the competitive advantage, Nigam said PhonePe is publishing the data for the greater good and he encouraged other players in the industry to also take similar steps. The data could help businesses better inform their decisions, he said.
This is a developing story. More to follow…
RISE, one of Asia’s largest tech conferences, is returning to Hong Kong in March 2022 as an in-person event, and will be held there for at least five years, announced organizer Web Summit today. Last year, Web Summit said RISE would move to Kuala Lumpur, but its return to Hong Kong means the conference will no longer be held in Malaysia’s capital, though a spokesperson told TechCrunch that it is plans to host other events there in the future.
RISE will take place at the AsiaWorld-Expo from March 14 to 17, 2022.
In November 2019, while large pro-democracy demonstrations were taking place, Web Summit announced it was postponing RISE to 2021. Then in December 2020, it said that the 2021 event would not be held, and RISE would instead resume in Kuala Lumpur in 2022.
In an emailed statement, a RISE spokesperson told TechCrunch, “The political situation in Hong Kong did not impact our decision to consider Kuala Lumpur as a host city. Rise 2022 was originally meant to take place in Kuala Lumpur. However, this is no longer feasible. We would like to thank the MDEC, who invited us to host RISE in their wonderful city,” adding “RISE has already had five successful years in Hong Kong since its launch in 2015. Our long-standing relationship with the city made it a natural decision to stay.”
In Web Summit’s announcement, co-founder and chief executive officer Paddy Cosgrove said, “We are extremely grateful for the support the city of Hong Kong has given RISE over the last five years, and we couldn’t be more excited to return in-person in 2022.”
The announcement included a statement from Hong Kong’s secretary for commerce and economic development, Edward Yau, who said, “I’m very excited that RISE, the world-renowned tech event, has chosen to return to Hong Kong and stay here in the coming five years.”
Apple has made a settlement with Japanese regulator that it will allow developers of “reader” apps link to their own website for managing users account. The change goes to effect in early 2022.
This settlement comes after the Japan Fair Trade Commission (JFTC) has forced Apple to make a change its polices on the reader apps, like Netflix, Spotify, Audible and Dropbox, that provide purchased content or content subscriptions for digital magazines, newspapers, books, audio, music, and video.
“We have great respect for the Japan Fair Trade Commission and appreciate the work we’ve done together, which will help developers of reader apps make it easier for users to set up an manage their apps and service, while protecting their privacy and maintaining their trust,” Phill Schiller, who oversees the App Stores at Apple.
Before the change takes into effect next year, Apple will continue to update its guidelines and review process for users of readers app to make sure to be a better marketplace for users and developers alike, according to its statement.
Apple Stores announced last week several updates, which allow developers more flexibility for their customer, and the company also launched the News Partner Program to support local journalists.
Apple will also apply this change globally to all reader apps on the store.
Global lawmakers have been increasingly under scrutiny over the market dominance of Apple and other tech giants. Australia’s Competitions and Consumer Commission is also considering regulations for the digital payment system of Apple, Google and WeChat while South Korea became the first country to curb Apple and Google from imposing their own payment system on in-app purchases.
Apple provides more than 30 million registered developers.
“Traditional voice-based call center service is difficult and costly. This is where artificial intelligence and voice technology have presented an opportunity for enterprises to overcome the challenges of scale and engagement at their customer contact centers,” co-founder and CEO Skit Sourabh Gupta told TechCrunch.
The Covid-19 pandemic led to an unprecedented increase in call volumes at bank call centers as customers tried to manage their portfolios amid the chaos of work from home policy and financial instability, Gupta said. And that presented an opportunity for companies like Skit.
“Customers have a natural tendency to prefer voice call support over other self-service channels and this has led to the increase in pressure on the traditional interactive voice responses (IVR) systems and support agents to respond to all incoming queries,” he said.
Bengaluru-based artificial intelligence SaaS voice automation company Skit, formerly known as Vernacular.ai, developed its AI-based voice automation platform VIVA, short for Vernacular Intelligent Voice Assistant, which enables corporations to automate 90% of their call center operations powered by Natural Language Understanding (NLU) technology. Its product VIVA covers more than 16 languages and 160 dialects.
Skit announced today it has closed $23 million Series B round to accelerate its growth in domestic and global markets including the US and South East Asia and enhance its voice automation platform.
The company was founded in 2016 by two co-founders, Indian Institute of Technology alumni, Roorkee alumnus, Sourabh Gupta and Akshay Deshraj.
The latest funding was led by WestBridge Capital along with existing investors Kalaari Capital and Exfinity Ventures, IAN Fund, LetsVenture and Sense AI. Angel investors including Prophetic Ventures’ Aaryaman Vir Shah also participated the round. The Series B round brings Skit’s total funding to $30 million.
Skit will use the fresh funding for sales, marketing, further R&D to strengthen its personalized solutions and voice products, as well as its global expansion.
“We want to double down and scale operations in both Indian and global markets. We are also planning on increasing our employee headcount. Through our new headquarters in New York, we want to build a strong customer base in North America by our product available to US enterprises,” Gupta told TechCrunch.
The company said it has quadrupled its amount of revenue and numbers of customers in 2020-2021 since its previous fundraising, $5.1 million Series A, in May 2020. Its average order book has also been growing in CAGR 200-300% every year, Gupta added. It currently has 150 employees.
Skit recently expanded into the US and South East Asia market.
“We noticed that there (South East Asia) is a high potential market for the adoption of conversational AI. Most importantly, these markets are home to a multitude of languages and dialects,” Gupta said in an exclusive interview with TechCrunch.
Given that language and hyper-personalization are Skit’s strongest suit, the company is witnessing increase adoption in South East Asia market, where is easier for the company to expand with similar demographics and business challenges as in India, Gupta explained.
It also opened headquarters in NYC, “It is a mature market, ahead in technology adoption with a level-playing for strong competition,” he said.
Venture advisor at WestBridge Capital Sashi Reddi said in a statement: “Skit’s success in helping India’s largest companies, positions them well to enter the US market where there is a massive need for voice AI solutions.”
The global contact center market size is expected to increase steadily and reach $496 billion by 2027. Skit will potentially address the $300 billion voice customer service market with its voice AI platform VIVA, Gupta said.
Its B2B and B2C clients are in diverse industries including banking, insurance, finance, securities, non-banking finance companies, travels, logistics, food & beverage, e-commerce. It has more than 25 B2B clients including Axis Bank, Hathway, Porter and Barbeque Nation, according to Gupta.
Call centers are traditionally places where there are high costs and high attrition rates, and for the end-users the traditional interactive voice responses (IVRs) and the wait times are irritating. There were longer than usual wait-times, call drops and going through extensive IVR menus and frequent agent transfers which increase customer frustration.
With over 10 million hour of training data, Skit’s VIVA replicates human-like conversation and understands speaker’s intent and can translate other unique speech characteristics that enable more efficient query resolutions, Gupta said.
Skit has been listed in Forbes 30 Under 30 Asia start-ups 2021.
On the heels of Heroes announcing a $200 million raise earlier today, to double down on buying and scaling third-party Amazon Marketplace sellers, another startup out of London aiming to do the same is announcing some significant funding of its own. Olsam, a roll-up play that is buying up both consumer and B2B merchants selling on Amazon by way of Amazon’s FBA fulfillment program, has closed $165 million — a combination of equity and debt that it will be using to fuel its M&A strategy, as well as continue building out its tech platform and to hire more talent.
Apeiron Investment Group — an investment firm started by German entrepreneur Christian Angermayer (known first for biopharmaceuticals, then investing and crypto, including playing a role in SoftBank investing in Wirecard) — led the Series A equity round, with Elevat3 Capital (another Angermayer firm that has a strategic partnership with Founders Fund and Peter Thiel) also participating. North Wall Capital was behind the debt portion of the deal. We have asked and Olsam is only disclosing the full amount raised, not the amount that was raised in equity versus debt. Valuation is also not being disclosed.
Being an Amazon roll-up startup from London that happens to be announcing a fundraise today is not the only thing that Olsam has in common with Heroes. Like Heroes, Olsam is also founded by brothers.
Sam Horbye previously spent years working at Amazon, including building and managing the company’s Business Marketplace (the B2B version of the consumer Marketplace); while co-founder Ollie Horbye had years of experience in strategic consulting and financial services.
Between them, they had also built and sold previous marketplace businesses, and they believe that this collective experience gives Olsam — a portmanteau of their names, “Ollie” and “Sam” — a leg up when it comes to building relationships with merchants; identifying quality products (versus the vast seas of search results that often feel like they are selling the same inexpensive junk as each other); and understanding merchants’ challenges and opportunities, and building relationships with Amazon and understanding how the merchant ecosystem fits into the e-commerce giant’s wider strategy.
Olsam is also taking a slightly different approach when it comes to target companies, by focusing not just on the usual consumer play, but also on merchants selling to businesses. B2B selling is currently one of the fastest-growing segments in Amazon’s Marketplace, and it is also one of the more overlooked by consumers.”It’s flying under the radar,” Ollie said.
“The B2B opportunity is very exciting,” Sam added. “A growing number of merchants are selling office supplies or more random products to the B2B customer.”
Estimates vary when it comes to how many merchants there are selling on Amazon’s Marketplace globally, ranging anywhere from 6 million to nearly 10 million. Altogether those merchants generated $300 million in sales (gross merchandise value), and its growing by 50% each year at the moment.
And consolidating sellers — in order to achieve better economies of scale around supply chains, marketing tools and analytics, and more — is also big business. Olsam estimates that some $7 billion has been spent cumulatively on acquiring these businesses, and there are more out there: Olsam estimates that there are some 3,000 businesses in the UK alone making more than $1 million each in sales on Amazon’s platform.
(And to be clear, there are a number of other roll-up startups beyond Heroes also eyeing up that opportunity. Raising hundreds of millions of dollars in aggregate, others have made moves this year include Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), Heyday, The Razor Group, Branded, SellerX, Berlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.)
“The senior team behind Olsam is what makes this business truly unique,” said Angermayer in a statement. “Having all been successful in building and selling their own brands within the market and having worked for Amazon in their marketplace team – their understanding of this space is exceptional.”
Even as hundreds of millions of people in India have a bank account, only a tiny fraction of this population invests in any financial instrument.
Fewer than 30 million people invest in mutual funds or stocks, for instance. In recent years, a handful of startups have made it easier for users — especially the millennials — to invest, but the figure has largely remained stagnant.
Now, an Indian startup believes that it has found the solution to tackle this challenge — and is already seeing good early traction.
The startup’s eponymous six-month-old Android app enables users to start their savings journey for as little as 1 Indian rupee.
Users on Jar can invest in multiple ways and get started within seconds. The app works with Paytm (PhonePe support is in the works) to set up a recurring payment. (The startup is the first to use UPI 2.0’s recurring payment support.) They can set up any amount between 1 Indian rupee to 500 for daily investments.
The Jar app can also glean users’ text messages and save a tiny amount based on each monetary transaction they do. So, for instance, if a user has spent 31 rupees in a transaction, the Jar app rounds that up to the nearest tenth figure (40, in this case) and saves nine rupees. Users can also manually open the app and spend any amount they wish to invest.
Once users have saved some money in Jar, the app then invests that into digital gold.
The startup is using gold investment because people in the South Asian market already have an immense trust in this asset class.
India has a unique fascination for gold. From rural farmers to urban working class, nearly everyone stashes the yellow metal and flaunts jewelry at weddings.
Indian households are estimated to have a stash of over 25,000 tons of the precious metal whose value today is about half of the country’s nominal GDP. Such is the demand for gold in India that the South Asian nation is also one of the world’s largest importers of this precious metal.
Jar’s Android app (Image Credits: Jar)
“When you’re thinking about bringing the next 500 million people to institutional savings and investments, the onus is on us to educate them on the efficacies of the other instruments that are in the market,” said Nishchay.
“We want to give them the instrument they trust the most, which is gold,” he said. The startup plans to eventually offer several more investment opportunities, he said.
The founders met several years ago when they were exploring if MarsPlay and Bounce could have any synergies. They stayed in touch and, last year during one of their many conversations, realized that neither of them knew much about investments.
“That’s when the dots started to connect,” said Ashraf, drawing stories from his childhood. “I come from a small town in Bihar called Bihar Sharif. During my childhood days, I saw my family deeply troubled with debt because of poor financial decisions and no savings,” he said.
“We both understand what a typical middle class family goes through. Someone who comes from this background never had any means in the past but their aspirations are never-ending. So when you start earning, you immediately start to spend it all,” said Nishchay.
“The market needs products that will help them get started,” he said.
That idea, which is similar to Acorn and Stash’s play in the U.S. market, is beginning to make inroads. The app has already amassed about half a million downloads, the founders said. Investors have taken notice, too.
On Wednesday, Jar announced it has raised $4.5 million from a clutch of high-profile investors, including Arkam Ventures, Tribe Capital, WEH Ventures, and angels including Kunal Shah (founder of CRED), Shaan Puri (formerly with Twitch), Ali Moiz (founder of Stonks), Howard Lindzon (founder of Social Leverage), Vivekananda Hallekere (co-founder of Bounce), Alvin Tse (of Xiaomi) and Kunal Khattar (managing partner at AdvantEdge).
“Over 400 million Indians are about to embrace digital financial services for the first time in their lives. Jar has built an app that is poised to help them — with several intuitive ways including gamification — start their investment journey. We love the speed at which the team has been executing and how fast they are growing each week,” said Arjun Sethi, co-founder of Tribe Capital, in a statement.
Transactions and AUM on the Jar app are surging 350% each month, said Nishchay. The startup plans to broaden its product offerings in the coming days, he said.
Heroes, one of the new wave of startups aiming to build big e-commerce businesses by buying up smaller third-party merchants on Amazon’s Marketplace, has raised another big round of funding to double down on that strategy. The London startup has picked up $200 million, money that it will mainly be using to snap up more merchants. Existing brands in its portfolio cover categories like babies, pets, sports, personal health and home and garden categories — some of them, like PremiumCare dog chews, the Onco baby car mirror, gardening tool brand Davaon and wooden foot massager roller Theraflow, category best-sellers — and the plan is to continue building up all of these verticals.
Crayhill Capital Management, a fund based out of New York, is providing the funding, and Riccardo Bruni — who co-founded the company with twin brother Alessio and third brother Giancarlo — said that the bulk of it will be going toward making acquisitions, and is therefore coming in the form of debt.
Raising debt rather than equity at this point is pretty standard for companies like Heroes. Heroes itself is pretty young: it launched less than a year ago, in November 2020, with $65 million in funding, a round comprised of both equity and debt. Other investors in the startup include 360 Capital, Fuel Ventures and Upper 90.
Heroes is playing in what is rapidly becoming a very crowded field. Not only are there tens of thousands of businesses leveraging Amazon’s extensive fulfillment network to sell goods on the e-commerce giant’s marketplace, but some days it seems we are also rapidly approaching a state of nearly as many startups launching to consolidate these third-party sellers.
Many a roll-up play follows a similar playbook, which goes like this: Amazon provides the marketplace to sell goods to consumers, and the infrastructure to fulfill those orders, by way of Fulfillment By Amazon and its Prime service. Meanwhile, the roll-up business — in this case Heroes — buys up a number of the stronger companies leveraging FBA and the marketplace. Then, by consolidating them into a single tech platform that they have built, Heroes creates better economies of scale around better and more efficient supply chains, sharper machine learning and marketing and data analytics technology, and new growth strategies.
What is notable about Heroes, though — apart from the fact that it’s the first roll-up player to come out of the U.K., and continues to be one of the bigger players in Europe — is that it doesn’t believe that the technology plays as important a role as having a solid relationship with the companies it’s targeting, key given that now the top marketplace sellers are likely being feted by a number of companies as acquisition targets.
“The tech is very important,” said Alessio in an interview. “It helps us build robust processes that tie all the systems together across multiple brands and marketplaces. But what we have is very different from a SaaS business. We are not building an app, and tech is not the core of what we do. From the acquisitions side, we believe that human interactions ultimately win. We don’t think tech can replace a strong acquisition process.”
Image Credits: Heroes
Heroes’ three founder-brothers (two of them, Riccardo and Alessio, pictured above) have worked across a number of investment, finance and operational roles (the CVs include Merrill Lynch, EQT Ventures, Perella Weinberg Partners, Lazada, Nomura and Liberty Global) and they say there have been strong signs so far of its strategy working: of the brands that it has acquired since launching in November, they claim business (sales) has grown five-fold.
Collectively, the roll-up startups are raising hundreds of millions of dollars to fuel these efforts. Other recent hopefuls that have announced funding this year include Suma Brands ($150 million); Elevate Brands ($250 million); Perch ($775 million); factory14 ($200 million); Thrasio (currently probably the biggest of them all in terms of reach and money raised and ambitions), Heyday, The Razor Group, Branded, SellerX, Berlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia.
The picture that is emerging across many of these operations is that many of these companies, Heroes included, do not try to make their particular approaches particularly more distinctive than those of their competitors, simply because — with nearly 10 million third-party sellers today on Amazon globally — the opportunity is likely big enough for all of them, and more, not least because of current market dynamics.
“It’s no secret that we were inspired by Thrasio and others,” Riccardo said. “Combined with COVID-19, there has been a massive acceleration of e-commerce across the continent.” It was that, plus the realization that the three brothers had the right e-commerce, fundraising and investment skills between them, that made them see what was a ‘perfect storm’ to tackle the opportunity, he continued. “So that is why we jumped into it.”
In the case of Heroes, while the majority of the funding will be used for acquisitions, it’s also planning to double headcount from its current 70 employees before the end of this year with a focus on operational experts to help run their acquired businesses.
Apna, a 21-month-old startup that is helping millions of blue- and gray-collar workers in India upskill themselves, find communities and land jobs, is inching closer to becoming the fastest tech firm in the world’s second-largest internet market to become a unicorn.
Tiger Global is in advanced stages of talks to lead a $100 million round in Apna, according to four sources familiar with the matter. The proposed terms value the startup at over $1 billion, the sources said.
The round hasn’t closed yet, so terms of the deal may change, some of the sources cautioned.
If the round materializes, Apna will become the youngest Indian startup to attain the much-coveted unicorn status. The startup, which launched its app in December 2019, was valued at $570 million in its Series B financing round in June this year. It will also be the third financing round Apna would have secured in a span of less than seven months.
Tiger Global, an existing investor in Apna, didn’t respond to a request for comment earlier this month. Apna founder and chief executive Nirmit Parikh, an Apple alum, declined to comment on Tuesday.
Indian cities are home to hundreds of millions of low-skilled workers who hail from villages in search of work. Many of them have lost their jobs amid the coronavirus pandemic that has slowed several economic activities in the world’s second-largest internet market.
Apna, whose name is inspired from a 2019 Bollywood song, is building a scalable networking infrastructure so that these workers can connect to the right employers and secure jobs. On its eponymous Android app, users also upskill themselves, review their interview skills and become eligible for more jobs.
As of June this year, Apna had amassed over 10 million users and was facilitating more than 15 million job interviews each month. All jobs listed on the Apna platform are verified by the startup and free of cost for the candidates.
The startup has also partnered with some of India’s leading public and private organizations and is providing support to the Ministry of Minority Affairs of India, National Skill Development Corporation and UNICEF YuWaah to provide better skilling and job opportunities to candidates.
The investment talks further illustrate Tiger Global’s growing interest in India. The New York-headquartered firm has made several high-profile investments in India this year, including in BharatPe, Gupshup, DealShare, Classplus, Urban Company, CoinSwitch Kuber and Groww.
More than two dozen Indian startups have become a unicorn this year, up from 11 last year, as several high-profile investors, including Tiger Global, SoftBank and Falcon Edge, have increased the pace of their investments in the world’s second most populous nation.
Apna also counts Insight Partners, Lightspeed and Sequoia Capital among its existing investors.
Urbanbase, a Seoul-based company that develops a 3D spatial data platform for interior planning and design, announced today it has raised $11.1 million (13 billion won) in a Series B+ round as it scales up.
This round of funding was led by Hanwha Hotel & Resort, which is a subsidiary of South Korean conglomerate Hanwha Corporation.
Urbanbase, founded in 2013 by chief executive officer and a former architect Jinu Ha, has now raised $20 million (approximately 23 billion won) in total.
Existing investors did not join this round. The company had raised Series A funding of $1.8 million and an additional $1.2 million in 2017 and its first Series B round in April 2020, from backers that included South Korea-based Shinsegae Information & Communication, Woomi Construction, SL Investment, KDB Capital, Shinhan Capital, Enlight Ventures, CKD Venture Capital, and Breeze Investment, Ha said.
The latest funding will be used for enhancing its B2B SaaS, investing in R&D for advanced virtual reality (VR), augmented reality (AR) and 3D tools, which are considered core technologies of metaverse that is its new business Urbanbase plans to enter, according to Ha. Global metaverse market size is projected to increase $280 billion by 2025 from $30.7 billion in 2021, based on Strategy Analytics’ report.
Companies that focus on opportunities in the so-called “metaverse” have been growing as part of a next-generation approach to building viable business models in areas like virtual and augmented reality, and all the hardware and software and new tech that are being built for them. Big tech corporations, ranging from Facebook, Intel to Microsoft, are targeting to move in the area. Apple also waded into the area of virtual reality, working on developing a high-end VR headset.
Urbanbase also plans to upgrade its home interior software platform, Urbanbase Studio, that has functions to transform 2D indoor space images into 3D displays via Urbanbase’s patented algorithm, visualize interior products in augmented reality and analyze spatial images based on the AI technology.
Urbanbase claims 50,000 monthly active users with 70,000 registered B2C users. The company has about 50 B2B customers.
“Most of our B2B clients are large conglomerates in South Korea and Japan, for example, LG Electronics, Japan-based Mitsubishi Real Estate Service, Nitori Holdings, Dentsu Group and SoftBank, but we would like to extend our B2B clients base to small, midsized companies and bring more B2C users after closing the Series B+ funding,” Ha mentioned.
Urbanbase is seeking an acquisition target in prop-tech and construction technology sectors, Ha told TechCrunch. Urbanbase currently focuses on developing the interior tools for apartment buildings because about 70-80 percent of total households in South Korea and Japan live in apartments, Ha said, adding that it will diversify its portfolio by acquiring a startup that covers different types of residence.
It currently operates the platform in Korean and Japanese, but it will add English language service prior to entering in Singapore in the end of 2021, Ha said.
Hello and welcome back to TechCrunch’s China roundup, a digest of recent events shaping the Chinese tech landscape and what they mean to people in the rest of the world.
The biggest news of the week again comes from Beijing’s ongoing effort to dampen the influence of the country’s tech giants. Regulators are now going after the exploitative use of algorithm-powered user recommendations. We also saw a few major acquisitions this week. Xiaomi is acquiring an autonomous vehicle startup called Deepmotion, and ByteDance is said to be buying virtual reality hardware startup Pico.
Beijing has unveiled the draft of a sweeping regulation to rein in how tech companies operating in China utilize algorithms, the engine of virtually all lucrative tech businesses today from short videos and news aggregation to ride-hailing, food delivery and e-commerce. My colleague Manish Singh wrote an overview of the policy, and here’s a closer look at the 30-point document proposed by China’s top cyberspace watchdog.
Beijing is clearly wary of how purely machine-recommended content can stray away from values propagated by the Communist Party and even lead to the detriment of national interests. In its mind, algorithms should strictly align with the interest of the nation:
Algorithmic recommendations should uphold mainstream values… and should not be used for endangering national security (Point 6).
Regulators want more transparency on companies’ algorithmic black boxes and are making them accountable for the consequences of their programming codes. For example:
Service providers should be responsible for the security of algorithms, create a system for… the review of published information, algorithmic mechanisms, security oversight… enact and publish relevant rules for algorithmic recommendations (Point 7).
Service providers… should not create algorithmic models that entice users into addiction, high-value consumption, or other behavior that disrupts public orders (Point 8).
The government is also clamping down on discriminative algorithms and putting some autonomy back in the hands of consumers:
Service providers… should not use illegal or harmful information as user interests to recommend content or create sexist or biased user tags (Point 10).
Service providers should inform users of the logic, purpose, and mechanisms of the algorithms in use (Point 14).
Service providers… should allow users to turn off algorithmic features (Point 15).
The regulators don’t want internet giants to influence public thinking or opinions. Though not laid out in the document, censorship control will no doubt remain in the hands of the authorities.
Service providers should not… use algorithms to censor information, make excessive recommendations, manipulate rankings or search results that lead to preferential treatment and unfair competition, influence online opinions, or shun regulatory oversight (Point 13).
Like many other aspects of the tech business, certain algorithms are to obtain approval from the government. Tech firms must also hand over their algorithms to the police in case of investigations.
Service providers should file with the government if their recommendation algorithms can affect public opinions or mobilize civilians (Point 20).
Service providers… should keep a record of their recommendation algorithms for at least six months and provide them to law enforcement departments for investigation purposes (Point 23).
If passed, the law will shake up the fundamental business logic of Chinese tech companies that rely on algorithms to make money. Programmers need to pore over these rules and be able to parse their codes for regulators. The proposed law seems to have even gone beyond the scope of the European Union’s data rules, but how the Chinese one will be enforced remains to be seen.
In Xiaomi’s latest earnings call, the smartphone maker said it will acquire DeepMotion, a Beijing-based autonomous driving startup, to aid its autonomous driving endeavor. The deal will cost Xiaomi about $77.3 million, and “a lot of that will be in terms of stock” and “a lot of these payments will be deferred until certain milestones are hit,” said Wang Xiang, Xiaomi president on the call.
Xiaomi’s founder Lei Jun earlier hinted at the firm’s plan to enter the crowded space. On July 28, Lei announced on Weibo, China’s Twitter equivalent, that the company is recruiting 500 autonomous driving experts across China.
Automation has become a selling point for China’s new generation of electric vehicle makers, often with companies conflating advanced driver-assistance systems (ADAS) with Level 4 autonomous driving. Such overstatements in marketing material mislead consumers and make one question the real technical capability of these nascent EV players.
Xiaomi has similarly unveiled plans to manufacture electric cars through a separate car-making subsidiary. The ADAS capabilities brought by DeepMotion are naturally a nice complement to Xiaomi’s future cars. As Wang explained:
We believe that there’s a lot of synergies with [DeepMotion’s ADAS] technology with our EV initiatives. So I think it tells you a couple of points. Number one is, we will roll out EV business. And I said in our prepared remarks, we’ve been very focused on hiring the right team for the EV business at this point in time, formulating our strategy, formulating our product strategy, et cetera, et cetera. But at the same time, we are not afraid to apply it and integrate other teams if we find that those will help us accelerate our plan right.
It’s noteworthy that DeepMotion, founded by Microsoft veterans, specializes in perception technologies and high-precision mapping, which puts it in the vision-driven autonomous driving camp. A number of major Chinese EV makers rely on consumer-grade lidar to automate their cars.
ByteDance is said to be buying Beijing-based VR hardware maker Pico for 5 billion yuan ($770 million), according to Chinese VR news site Vrtuoluo. ByteDance could not be immediately reached for comment.
Advanced VR headsets are often expensive due to the cost of high-end processors. Experts observe that most VR hardware makers are yet to enter the mass consumer market. They are hemorrhaging cash and living off generous venture money and corporate deals.
ByteDance might be buying a money-losing business, but Pico, one of the major VR makers in China, provides a fast track for the TikTok parent to enter VR manufacturing. As the world’s largest short video distributor and an aggressive newcomer to video games, ByteDance has no shortage of creative talent. We will see how it works on producing virtual content if the Pico deal goes through.
With more than 270,000 stickers, Stipop’s library of colorful, character-driven expressions has a little something for everyone.
The company offers keyboard and social app stickers through ad-supported mobile apps on iOS and Android, but it’s recently focused more on providing stickers to developers, creators and other online businesses.
“We were able to gather so many artists because we actually began as our own app that provided stickers,” Stipop co-founder Tony Park told TechCrunch. The team took what they learned from running their own consumer-facing app — namely that collecting and licensing hundreds of thousands of stickers from artists around the world is hard work — and adapted their business to help solve that problem for others.
Stipop was the first Korean company to go through Yellow, Snapchat’s exclusive accelerator. The company is also part of Y Combinator’s Summer 2021 cohort.
Stipop’s sticker library is accessible through an SDK and an API, letting developers slot the searchable sticker library into their existing software. The company already has more than 200 companies that tap into its huge sticker trove, which offers a “single-day solution” for a process that would otherwise necessitate a lot more legwork. Stipop launched a website recently that helps developers integrate its SDK and API through quick installs.
“They can just add a single line of code inside their product and will have a fully customized sticker feature [so] users will be able to spice up their chats,” Park said.
Park points out that stickers encourage engagement — and for social software, engagement means growth. Stickers are a playful way to send characters back and forth in chat, but they also pop up in a number of other less obvious spots, from dating apps to ecommerce and ridesharing apps. Stipop even drives the sticker search in work collaboration software Microsoft Teams.
The company has already partnered with Google, which uses Stipop’s sticker library in Gboard, Android Messages and Tenor, a GIF keyboard platform that Google bought in 2018. That partnership drove 600 million sticker views within the first month. A new partnership between Stipop and Coca-Cola on the near horizon will add Coke-branded stickers to its sticker library and the company is opening its doors to more brands that understand the unique appeal of stickers in messaging apps.
Park says that people tend to compare stickers and gifs, two ways of wordlessly expressing emotion and social nuance, but stickers are a world unto themselves. Stickers exist in their own creative universe, with star artists, regional themes and original casts of characters that take on a life of their own among fans. “Sticker creators have their own profession,” Park said.
Visual artists can also find a lot of traction releasing stickers, even without sophisticated illustrations. And since they’re all about meaning rather than refinement, non-designers and less skilled artists can craft hit stickers too.
“Stickers are great for them because it [is] so easy to go viral,” Park said. The company has partnered with 8,000 sticker creators across 25 languages, helping those artists monetize their creations and generate income based on how many times a sticker is shared.
Stickers command their own visual language around the world, and Park has observed interesting cultural differences in how people use them to communicate. In the West, stickers are often used in place of text, but in Asia, where they’re used much more frequently, people usually send stickers to enhance rather than replace the meaning of text.
In East Asia, users tend to prefer simple black and white stickers, but in India and Saudi Arabia, bright, golden stickers top the trends. In South America, popular stickers take on a more pixelated, unique quality that resonates culturally there.
“With stickers, you fall in love with [the] characters you send… that becomes you,” Park said.
China is not done with curbing the influence local internet services have assumed in the world’s largest populous market. Following a widening series of regulatory crackdowns in recent months, the nation on Friday issued draft guidelines on regulating the algorithms firms run to make recommendations to users.
In a 30-point draft guidelines published on Friday, the Cyberspace Administration of China (CAC) proposed forbidding companies from deploying algorithms that “encourage addiction or high consumption” and endanger national security or disrupt the public order.
The services must abide by business ethics and principles of fairness and their algorithms must not be used to create fake user accounts or create other false impressions, said the guidelines from the internet watchdog, which reports to a central leadership group chaired by President Xi Jinping. The watchdog said it will be taking public feedback on the new guidelines for a month (until September 26).
The guidelines also propose that users should be provided with the ability to easily turn off algorithm recommendations. Algorithm providers who have the power to influence public opinion or mobilize the citizens need to get an approval from the CAC.
Friday’s proposal comes at a time when Beijing is increasingly targeting companies for the way they have handled consumer data and the monopolistic positions they have assumed in the nation.
Earlier this year, Beijing-backed China Consumers Association said local internet companies had been “bullying” users into purchases and promotions and undermining their privacy rights.
Beijing’s recent data-security crackdown and tightening regulations around tutor services have spooked investors and wiped hundreds of billions of dollars.
Friday’s guidelines appear to target ByteDance, Alibaba Group, Tencent, and Didi and other companies whose services are built on top of proprietary algorithms. Shares of Alibaba and Tencent fell slightly on the news.
In recent years, several governments including those in the U.S. and India have attempted — to little to no success — to get better clarity on how these big tech companies’ algorithms work and put checks in place to prevent misuse.
India has a fascination for gold. The households in the South Asian market are estimated to have a stash of over 25,000 tons of the precious metal, whose value today is about half of the country’s nominal GDP. But much of this gold has been sitting idly in lockers in big metal wardrobes for generations.
For generations, Indians across the socio-economic spectrum have preferred to stash their savings — or at least a part of it — in the form of gold. In fact, such is the demand for gold in India — Indians stockpile more gold than citizens in any other country — that the South Asian nation is also one of the world’s largest importers of this precious metal.
They use this gold not only as a savings instrument, which protects them from the ups-and-downs of the financial market, but also as an asset against which they could get credit. However, selling off your gold in the form of jewelry or otherwise has a stigma attached to it — one is so broke that they had to pawn off their last asset of financial security.
The other challenge with keeping gold in the house is that it’s not safe.
Indiagold, a young startup that is attempting to help people put this gold to use, said on Friday it has raised $12 million in its Series A funding. The new financing round was led by Prosus’ PayU — which typically only backs later stage deals — and Falcon’s Alpha Wave Incubation (AWI) fund. Better Tomorrow Ventures, 3one4 Capital, Rainmatter Capital and existing investor Leo Capital also participated in the round.
Indiagold, founded by Nitin Misra and Deepak Abbot — two former executives of Paytm — is building a gold-focused digital alternative credit platform.
The startup today has two major offerings: It has made it very easy and affordable for people to keep their gold in a safe locker; and it’s enabled them the option to take a loan against their gold reserves.
Once a user has signed about Indiagold, the startup’s agents come to their house, inspect and weigh the gold and put it in a tamper-proof bag, which also has a RFID sticker attached to it. Then they put the bag in a steel box, which the customer locks with their fingerprint, and the agent livestreams their journey as they leave the premises to the designated vault location.
The idea is to make it very simple for customers to put their gold in a locker. Traditionally, because of the emotional stigma attached to the yellow metal, most people have hesitated to do anything with the gold jewelry they own. When they engage with the agent who is locking the gold with their biometric in front of them and showing them the live feed of the journey to the safe locker, a trust is established.
“This whole business is built around trust,” said Gupta in an interview with TechCrunch. “Unless a norm in some circles of the startup ecosystem where you are expected to break things and move fast, we have to spend as much time with customers to build that trust,” he said.
Indiagold also offers their locker at a much affordable price — just a few dollars a year, as opposed to hundreds taken by banks. And unlike banks, Indiagold backs the customers’ gold by insurance.
Customers have access to Indiagold app where they can see realtime value of the gold items they have put in the locker. This is when the startup’s second offering kicks in. In the event these customers need to take a loan, the startup facilitates a line of credit to them within 30 seconds.
Tapping on gold as a loan collateral is a very large market in India. “Despite the large gold reserves held by Indian household, the gold loan market has barely scratched the surface. The gold collateral (166 tons) held by Muthoot Finance is less than 1% of the estimated gold reserves in Indian households (~25k tons). This is because gold is seen as a family heirloom and passed along generations,” analysts at Bernstein wrote in a report to clients earlier this year.
This is a developing story. More to follow…
“Voice skins” have become a very popular feature for AI-based voice assistants, to help personalize some of the more anodyne aspects of helpful, yet also kind of bland and robotic, speaking voices you get on services like Alexa. Now a startup that is building voice skins for different companies to use across their services, and for third parties to create and apply as well, is raising some funding to fuel its growth.
LOVO, the Berkeley, California-based artificial intelligence (AI) voice & synthetic speech tool developer, this week closed a $4.5 million pre-Series A round led by South Korean Kakao Entertainment along with Kakao Investment and LG CNS, an IT solution affiliate of LG Group.
Its previous investor SkyDeck Fund and a private investor, vice president of finance at DoorDash Michael Kim, also joined the funding.
The proceeds will be used to propel its research and development in artificial intelligence and synthetic speech and grow the team.
“We plan on hiring heavily across all functions, from machine learning, artificial intelligence and product development to marketing and business development. The fund will also be allocated to securing resources such as GPUs and CPUs,” co-founder and chief operating officer Tom Lee told TechCrunch.
LOVO, founded in November 2019, has 17 people including both co-founders, chief executive office Charlie Choi and COO Lee.
The company plans to double down on improving LOVO’s AI model, enhance its AI voices and develop a better product that surpasses any that exists in the current market, Lee said.
“Our goal is to be a global leader in providing AI voices that touches people’s hearts and emotions. We want to democratize limitations of content production. We want to be the platform for all things voice-related,” Lee said.
With the mission, LOVO allows enterprises and individual content creators to generate voiceover content for using in marketing, e-learning, customer support, movies, games, chatbots and augmented reality (AR) and virtual reality (VR).
“Since our launch a little over a year ago, users have created over 5 million voice content on our platform,” co-founder and CEO Choi said.
LOVO launched its first product LOVO Studio last year, which provides an easy-to-use application for individuals and businesses to find the voice they want, produce, and publish their voiceover content. Developers can utilize LOVO’s Voiceover API to turn text into speeches in real-time, integrated into their applications. Users also can create their own AI voices by simply reading 15 minutes of script via LOVO’s DIY Voice Cloning service.
LOVO owns more than 200 voice skins that provide users with voices categorized by language, style, and situation suited for their various needs.
The global text to speech (TTS) market is estimated at $3 billions, with the global voiceover market at around $10 billion, according to Lee. The Global TTS market is projected to increase $5.61 billion by 2028 from $1.94 billion in 2020, based on Research Interviewer’s report published in August 2021.
LOVO already secured 50,000 users and more than 50 enterprise customers including the US-based J.B. Hunt, Bouncer, CPA Canada, LG CNS, and South Korea’s Shinhan Bank, Lee mentioned.
LOVO’s four core markets are marketing, education, movies and games in entertainment and AR/VR, Lee said. The movie Spiral, the latest film of the Saw Series, features LOVO’s voice in the film, he noted.
It is expected that LOVO will create additional synergies in the entertainment industry in the wake of the latest funding from a South Korean entertainment.
VP of CEO Vision Office at Kakao Entertainment J.H. Ryu said, “I’m excited for LOVO’s synergies with Kakao Entertainment’s future endeavors in the entertainment vertical, especially with web novels and music,” Ryu also added, “AI technology is opening the doors to a new market for audio content, and we expect a future a where an individual’s voice will be utilized effectively as an intellectual property and as an asset.”
Founding Partner at SkyDeck Fund Chon Tang said, “Audio is uniquely engaging as a form of information but also difficult to produce, especially at scale. LOVO’s artificial intelligence-based synthesis platform has consistently out-performed other cloud-based solutions in quality and cost.”
LOVO is also preparing to penetrate further to international market, “We have a strong presence in the US, UK, Canada, Australia and New Zealand, and are getting signals from the rest of Europe, South America and Asia,” Lee said. LOVO has an office in South Korea and is looking to expand into Europe soon, Lee added.
Intellect, a Singapore-based startup that wants to make mental health care more accessible in Asia, announced it has raised $2.2 million in pre-Series A funding. It is taking part in Y Combinator’s current batch, which will hold its Demo Day at the end of this month.
The round was led by returning investor Insignia Venture Partners and included participation from Y Combinator, XA Network and angel investors like Rainforest co-founder J.J. Chai; Prenetics and CircleDNA founder Danny Yeung; and Gilberto Gaeta, Google’s director of global HR operations.
This brings Intellect’s total funding since it launched a year ago to $3 million, including a seed round announced in December 2020 that was also led by Insignia.
Intellect offered two main product suites: a consumer app with self-guided programs based on cognitive behavioral therapy techniques, and a mental health benefits solution for employers with online therapy programs and telehealth services. The startup now claims more than 2.5 million app users, and 20 enterprise clients, including FoodPanda, Shopback, Carousell, Avery Dennison, Schroders and government agencies.
Founder and chief executive officer Theodoric Chew told TechCrunch that Intellect’s usage rate is higher than traditional EAP helpline solutions. On average, its mental health benefits solution sees about 20% to 45% engagement within three months after being adopted by companies with more than 5,000 employees.
In many Asian cultures, there is still a lot of stigma around mental health issues, but that has changed over the last year and a half as people continue to cope with the emotional impact of the COVID-19 pandemic, Chew said. “From individuals, to companies, insurers and governments, all these different types of people and organizations are today prioritizing mental healthcare on an individual and organizational level in an extremely rapid manner.”
Intellect protects user privacy with zero-knowledge encryption, so the startup and employers don’t have access to people’s records or communications with their coaches and counsellors. Any insights shared with employers are aggregated and anonymized. Chew said the company is also compliant with major data privacy regulations like ISO, HIPAA and GDPR.
Intellect is currently collaborating in 10 studies with institutions like the National University of Singapore, King’s College London, University of Queensland and the Singapore General Hospital. It says studies so far have demonstrated improvements in mental well-being, stress levels and anxiety among its users.
The new funding will be used to expand into more Asian markets. Intellect currently covers 12 countries and 11 languages.
More than 10 companies currently compete across Europe with an instant grocery delivery business model. Half of them were established in 2020, the year of the pandemic. These companies have raised more than $2 billion to date.
Existing and well-funded online food-delivery service players like Delivery Hero are also joining the race by launching dedicated grocery offerings. However, if lessons from the world’s largest online grocery market, China ($400 billion), matter, then it’s clear that instant delivery is not the magic bullet to crack the dominance of Europe’s incumbent supermarket chains in the overall $2 trillion-plus flat market.
Instead, China’s quick-commerce equivalents (like Dingdong Maicai, Miss Fresh and Meituan Maicai) compete alongside a wealth of other online grocery models (such as Pinduoduo, JD’s Super and Alibaba’s Taoxianda), which have helped bring total market penetration to 20% and beyond.
Quick commerce suffers from narrower profit margins compared to competing models and is addressing lower consumer demand in China than anyone in the West is expecting it to achieve in Europe and the U.S. If the performance of online grocery platforms in China (a market five to seven years ahead of Europe in terms of online retail) is anything to go by, a range of B2C business models would be more likely to displace the traditional grocery retailers.
The idea of ordering groceries online and having them delivered to consumers in less than an hour is nothing new. Back in the heyday of the dot-com bubble, a company attempted to do just that: Kozmo.com. Founded in 1998, it raised more than $250 million (around $400 million in today’s dollars) from investors, promising to deliver food, among other items, to consumers within an hour, while charging no delivery fees.
In 1999, it had revenues of $3.5 million and a loss of $1.8 million. However, in 2001, the business was shut down by its board after the company could not make the business model work at scale.
Some 15 years later, another company had a go. Gopuff was established in Philadelphia in 2013 and originally targeted students. What started out as a hookah delivery service soon expanded into a much broader convenience store offering and delivered to customers in approximately 30 minutes.
Gopuff was most recently valued at $15 billion after raising a total of $3.4 billion — 75% of which occurred in the past 12 months. Last year, Gopuff grew revenues from around $100 million to $340 million.
Kozmo.com went out of business after just three years. Meanwhile, Gopuff was turned down by several VCs in its early days, and it wasn’t until the pandemic that it saw a rapid acceleration in fundraising. Little did teams at either company know that they would later become the inspiration for a whole generation of founders in Europe.
Has anything fundamentally changed in the 20 years since Kozmo.com? Indeed, we’ve seen little technological progress that would hugely affect the operations of an instant commerce business. However, there have been much larger shifts in consumer habits.
Firstly, the number of global internet users has skyrocketed (from below 500 million to beyond 4 billion), and mobile internet has taken over. Secondly, demand for online grocery delivery has grown significantly due to the COVID-19 pandemic, as consumers have preferred to make retail purchases from home for safety reasons. Thirdly, consumers are now accustomed to paying fees for delivery services, typically around $2 per order, which Kozmo notoriously did not do.
While many online grocery business models exist, the instant grocery, quick-commerce approach has been the favorite of European entrepreneurs and VCs over the past 18 months. The model itself, also referred to as q-commerce, is not that hard to understand.
Companies maintain a small product offering of around 1,000–2,000 SKUs that consumers would otherwise find in convenience or drug stores. These products are purchased directly from brands or through distributors and are stored in self-operated microwarehouses close to customers’ locations.
Marketing tactics are aggressive, often employing vouchers for first-time users of up to $12 (50% of an average shopping basket), and many startups offer their products at supermarket price or even at a discount of 10%–15%. Delivery usually happens by bicycle, e-bike or scooter, within 10-30 minutes of an order being placed, for a fee of around $2 with no minimum order value.
Companies like Getir from Istanbul (total funding: $1 billion, last valuation: $7.5 billion) and Gorillas from Berlin (total funding: $335 million, last valuation: $1 billion) are leading the way. When Gorillas announced its $290 million Series B in March 2021, it became the fastest European startup to achieve unicorn status (nine months after launch). The company is already rumored to be seeking Series C financing at a $2.5 billion valuation.
There are more than 10 companies across Europe with more or less the same business model. Those include the 2020-established Flink (Germany-based, $300 million raised), Zapp (U.K.-based, $100 million raised), Dija (U.K.-based, $20 million raised and just acquired by Gopuff), Jiffy (U.K.-based, $7 million raised) and Cajoo (France-based, $6 million raised).
There is also JOKR, which was started by the founder of Foodpanda. JOKR was only established in Q1 2021, but right after incorporation raised one of the largest ever initial seed rounds (rumored to be $100 million) and subsequently a $170 million Series A in July to bring the model to Europe, Latin America and the U.S.
Likewise, companies coming from food delivery have pushed further into this space and received additional funding in recent months, notably Delivery Hero through Dmart and Glovo through SuperGlovo, following role models in the U.S., such as DoorDash.
As these companies approach later-stage financing sometime in the future, questions will be asked about the path to profitability in an industry of notoriously thin margins. Indeed, this is an uncomfortable truth that hasn’t changed since the early days of Kozmo.com.
The available figures show that old patterns are repeating. Gopuff recently reported an EBITDA of negative $150 million on $340 million in revenue (EBITDA margin: -45%). Furthermore, an analysis by the German business monthly Manager Magazine concluded that Gorillas was operating at negative unit economics of -6%. Additional costs, such as overhead and technology, might push this number up significantly further.