Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Earlier this week, the popular free stock trading service Robinhood suffered downtime over a two-day period. The company, a well-funded unicorn taking on incumbents in its industry, failed to operate properly when the public markets were surging on Monday (bad) and falling on Tuesday (very bad).
Complaints flooded investing forums and social media. Images of Robinhood account screens featuring huge losses from the periods of downtime (or missed upside) weren’t hard to find. For Robinhood, it wasn’t its first misstep, but it was perhaps its worst. Mishandling the rollout of a high-yield savings function? Embarrassing, but hardly a serious wound. Some options oddness? Eh, not the worst.
Going down during surging volatility? Much worse. The company is already in the market with apologies and some give-aways to try to stem the negative news cycle. But what’s notable so far is that, while you might expect to see rival apps and services to Robinhood boom in the wake of its downtime, it instead appears that only select competitors to the popular company are seeing a jump in downloads this week. And given the insane market movements, it’s hard to pin some of their gains on Robinhood instead of, say, what stocks are themselves doing.
I’d expected by today to have some data in hand that painted a starker picture for Robinhood, given that the company’s recent missteps triggered a lot of negative press and user reaction. Let’s peek at what numbers can tell us, and try to figure out if there’s a lesson for consumer fintech and finservies companies while we’re at it.
Amazon today is opening its first grocery store to pilot the use of the retailer’s cashierless “Just Walk Out” technology that has previously powered 25 Amazon Go convenience stores in a handful of major U.S. metros. Based in Amazon’s hometown of Seattle, the new Amazon Go Grocery store allows customers to shop for everyday grocery items like fresh produce, meat, seafood, bakery items, household essentials, dairy, easy-to-make dinner options, beer, wine and spirits and more.
The store is 7,700 square feet in the front of the house and 10,400 square feet overall, making it the largest use of Amazon’s Just Walk Out technology to date.
As with Amazon Go convenience stores, shoppers first use the Amazon Go app to scan in as they enter the store, then shop as usual. Cameras and sensors track the items removed from the shelves which are then added to the shopper’s virtual cart. When the customer exits the store, their cart is checked out automatically using their payment card on file.
The end result is a grocery store with no lines or waiting. Meanwhile, store staff are freed up to take care of other aspects of the business — like restocking shelves and customer service.
This model has been working for Amazon’s convenience stores, where customers come in to grab items quickly. But grocery shopping presents a new challenge for Amazon’s cashierless technology. Grocery shoppers tend to examine items more closely — often picking up fresh produce, giving it a squeeze, then putting it back. They may push the produce around on the shelf to find one they like. Or they comparison shop, by picking up two products to compare labels, then put one in the cart and another back on the shelf — sometimes in an incorrect spot. They even discard items on different isles instead of walking back to return it to the proper area when they change their minds.
In traditional grocery stores, this wouldn’t be an issue — if another shopper later grabbed the misplaced item, it could still be rung up properly. Amazon’s technology may struggle to determine what that item was, however.
The Seattle store is located at AVA Capital Hill (610 E. Pike Street). Its hours of operation are 7 AM – 11 PM Sunday through Thursday, and 7 AM – midnight on Friday, Saturday and Sunday.
In addition to the typical grocery items, the store promises also a mix that includes organic brands, special finds, and are favorites. Local vendors in the debut assortment include La Parisienne, Donut Factory, Tony’s Coffee, Seattle Bagel Bakery, Lopez Island Creamery, Ellenos Yogurt, Uli’s Famous Sausage, Beecher’s, Eat Local, Sri Bella, Carso’s Pasta Company, and Theo’s Chocolate.
Reports that Amazon was looking to launch its own grocery store business, separate from Whole Foods, began to circulate last year. But it was unconfirmed at the time whether or not Amazon’s grocery plans included the use of its cashierless, A.I.-driven technology, or if the new stores would be more conventional grocery stores designed also to serve as hubs for Amazon’s grocery-delivery business.
It seems Amazon is interested in testing out how well its cashierless technology can scale, but it’s not yet clear how many cashierless stores it wants to open in the months and years ahead.
Ordway, a Washington, DC startup, is building a platform to deal with all of the stuff that happens after you make sale. It starts with the order and goes all the way to revenue as a one-time payment or recurring subscription. Today the company announced a $10 million Series A.
CRV led the round with participation from Clocktower Ventures and existing investors Lerer Hippeau and Revolution Rise of the Rest fund. The company has now raised a total of $12.5 million, according to Crunchbase data.
Sameer Gulati, founder and CEO at Ordway, says the company wanted to build a flexible tool to sit between the CRM and financial systems of a company. “So in that sense, we do everything for post-sales from billing automation, payment collection, revenue recognition, analytics, all the way to cash. We have a streamlined workflow for managing order to revenue,” Gulati told TechCrunch.
It sounds a lot like the Quote-to-Cash space where companies like Apttus (acquired by Thoma Bravo in 2018) or SteelBrick (acquired by Salesforce in 2015) tried to stake a claim, but Gulati says while his company’s solution handles the quote-to-cash workflow, it can do much more than that.
“We absolutely can handle the workflow from quote to billing to payments to revenue, for sure. But the reason Ordway has a niche is because we are a lot more configurable and a lot more flexible to accommodate any workflow out there,” he said.
He says his company’s solution connects to the CRM system on one side and the financial systems on the other. They are compatible with all the major CRM tools including Salesforce and Dynamics 365. And they support a range of financial tools like NetSuite or QuickBooks.
“In fact, we can work with any back-end small system to a large scale ERP system, but our value add is automating the movement of data into the ERP. So we are the operational framework between sales and traditional ERP. We will handle everything in between,” he said.
As for the funding, Gulati has the kind of plans you would expect with a Series A investment. “The core goal is definitely to accelerate all aspects of our business from sales and marketing to product and engineering, and most importantly, customer success. Basically, in a sense we are doubling down on making sure our customers are successful in solving their core sales to finance business challenges,” he said.
The company launched in 2018 and has 25 employees today. Gulati says his company’s goal is to grow 4x in the next 12 months and grow employees at a similar rate.
7-Eleven is the latest retailer to test the “cashierless” store concept, following Amazon’s big push into the market with its Amazon Go convenience stores that use technology, instead of people, to monitor stock levels, track purchases, and process payments. This week, 7-Eleven announced it’s piloting its own take on the cashierless concept with a 700-square-foot store at its corporate HQ in Irving, Texas, open only to company employees.
The store stocks 7-Eleven’s most popular products, including beverages, snacks, food, groceries, over-the-counter drugs, and non-food items. This product mix may be refined over the course of the testing.
Similar to Amazon Go, the 7-Eleven pilot store will involve a mobile app that customers use to check into the store, pay for items, and view their receipts.
Meanwhile, to differentiate shoppers and their purchases, 7-Eleven is using a proprietary mix of algorithms and predictive technology, it says.
“Ultimately, our goal is to exceed consumers’ expectations for faster, easier transactions and a seamless shopping experience,” said Mani Suri, 7-Eleven Senior Vice President and Chief Information Officer, in a statement. “Introducing new store technology to 7-Eleven employees first has proven to be a very productive way to test and learn before launching to a wider audience. They are honest and candid with their feedback, which enables us to learn and quickly make adjustments to improve the experience. This in-house, custom-built technology by 7-Eleven engineers is designed for our current and future customers. We continue to innovate, and coupling fresh, innovative, healthy food options with a frictionless shopping experience could be a game-changer,” he added.
The company has been working to adapt to the changes needs of customers in other ways, before now, including through its on-demand delivery service and mobile checkout, for example. But given Amazon’s intention to directly compete in 7-Eleven’s market, it likely had no choice but to begin experimenting with cashierless technology sooner, rather than later.
7-Eleven is not alone on that front.
Since Amazon introduced its Amazon Go concept in 2018, other retailers have followed suit. Walmart and Walmart-owned Sam’s Club and supermarket chain Giant Eagle are testing A.I. technology similar to Amazon Go, among others. And several companies sell cashierless technology to retailers, including Standard Cognition, Zippin, Grabango, AiFi, and Trigo, to name a few.
The pilot program at 7-Eleven is underway now, but the company didn’t give any indication as to how long the tests would run or if and when it would expand to the public. It also didn’t detail the proprietary technology it’s using. But typically, cashierless stores use a combination of sensors, cameras, and A.I.
The retailer today operates, franchises and licenses more than 70,000 stores in 17 countries, including 11,800 in North America.
Africa has one of the world’s fastest growing tech markets and Nigeria is becoming its unofficial capital.
While the West African nation is commonly associated with negative cliches around corruption and terrorism — which persist as serious problems, and influenced the Trump administration’s recent restrictions on Nigerian immigration to the U.S.
Even so, there’s more to the country than Boko Haram or fictitious princes with inheritances.
Nigeria has become a magnet for VC, a hotbed for startup formation and a strategic entry point for Silicon Valley. As a frontier market, there is certainly a volatility to the country’s political and economic trajectory. The nation teeters back and forth between its stereotypical basket-case status and getting its act together to become Africa’s unrivaled superpower.
The upside of that pendulum is why — despite its problems — so much American, Chinese and African tech capital is gravitating to Nigeria.
“Whatever you think of Africa, you can’t ignore the numbers,” Africa’s richest man Aliko Dangote told me in 2015, noting that demographics are creating an imperative for global businesses to enter the continent.
The Catalyst Fund has gained $15 million in new support from JP Morgan and UK Aid and will back 30 fintech startups in Africa, Asia, and Latin America over the next three years.
The Boston based accelerator provides mentorship and non-equity funding to early-stage tech ventures focused on driving financial inclusion in emerging and frontier markets.
That means connecting people who may not have access to basic financial services — like a bank account, credit or lending options — to those products.
Catalyst Fund will choose an annual cohort of 10 fintech startups in five designated countries: Kenya, Nigeria, South Africa, India and Mexico. Those selected will gain grant-funds and go through a six-month accelerator program. The details of that and how to apply are found here.
“We’re offering grants of up to $100,000 to early-stage companies, plus venture building support…and really…putting these companies on a path to product market fit,” Catalyst Fund Director Maelis Carraro told TechCrunch.
Program participants gain exposure to the fund’s investor networks and investor advisory committee, that include Accion and 500 Startups. With the $15 million Catalyst Fund will also make some additions to its network of global partners that support the accelerator program. Names will be forthcoming, but Carraro, was able to disclose that India’s Yes Bank and University of Cambridge are among them.
Catalyst fund has already accelerated 25 startups through its program. Companies, such as African payments venture ChipperCash and SokoWatch — an East African B2B e-commerce startup for informal retailers — have gone on to raise seven-figure rounds and expand to new markets.
Those are kinds of business moves Catalyst Fund aims to spur with its program. The accelerator was founded in 2016, backed by JP Morgan and the Bill & Melinda Gates Foundation.
Catalyst Fund is now supported and managed by Rockefeller Philanthropy Advisors and global tech consulting firm BFA.
African fintech startups have dominated the accelerator’s startups, comprising 56% of the portfolio into 2019.
That trend continued with Catalyst Fund’s most recent cohort, where five of six fintech ventures — Pesakit, Kwara, Cowrywise, Meerkat and Spoon — are African and one, agtech credit startup Farmart, operates in India.
The draw to Africa is because the continent demonstrates some of the greatest need for Catalyst Fund’s financial inclusion mission.
Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.
Collectively, these numbers have led to the bulk of Africa’s VC funding going to thousands of fintech startups attempting to scale finance solutions on the continent.
Digital finance in Africa has also caught the attention of notable outside names. Twitter/Square CEO Jack Dorsey recently took an interest in Africa’s cryptocurrency potential and Wall Street giant Goldman Sachs has invested in fintech related startups on the continent.
This lends to the question of JP Morgan’s interests vis-a-vis Catalyst Fund and Africa’s financial sector.
For now, JP Morgan doesn’t have plans to invest directly in Africa startups and is taking a long-view in its support of the accelerator, according to Colleen Briggs — JP Morgan’s Head of Community Innovation
“We find financial health and financial inclusion is a…cornerstone for inclusive growth…For us if you care about a stable economy, you have to start with financial inclusion,” said Briggs, who also oversees the Catalyst Fund.
This take aligns with JP Morgan’s 2019 announcement of a $125 million, philanthropic, five-year global commitment to improve financial health in the U.S. and globally.
More recently, JP Morgan Chase posted some of the strongest financial results on Wall Street, with Q4 profits of $2.9 billion. It’ll be worth following if the company shifts any of its income-generating prowess to business and venture funding activities in Catalyst Fund markets like Nigeria, India and Mexico.