Uber Advanced Technologies Group will start mapping Washington, D.C., ahead of plans to begin testing its self-driving vehicles in the city this year.
Initially, there will be three Uber vehicles mapping the area, a company spokesperson said. These vehicles, which will be manually driven and have two trained employees inside, will collect sensor data using a top-mounted sensor wing equipped with cameras and a spinning lidar. The data will be used to build high-definition maps. The data will also be used for Uber’s virtual simulation and test track testing scenarios.
Uber intends to launch autonomous vehicles in Washington, D.C. before the end of 2020.
At least one other company is already testing self-driving cars in Washington, D.C. Ford announced in October 2018 plans to test its autonomous vehicles in Washington, D.C. Argo AI is developing the virtual driver system and high-definition maps designed for Ford’s self-driving vehicles.
Argo, which is backed by Ford and Volkswagen, started mapping the city in 2018. Testing was expected to begin in the first quarter of 2019.
Uber ATG has kept a low profile ever since one of its human-supervised test vehicles struck and killed a pedestrian in Tempe, Arizona in March 2018. The company halted its entire autonomous vehicle operation immediately following the incident.
Nine months later, Uber ATG resumed on-road testing of its self-driving vehicles in Pittsburgh, following a Pennsylvania Department of Transportation decision to authorize the company to put its autonomous vehicles on public roads. The company hasn’t resumed testing in other markets such as San Francisco.
Uber is collecting data and mapping in three other cities in Dallas, San Francisco and Toronto. In those cities, just like in Washington, D.C., Uber manually drives its test vehicles.
Uber spun out the self-driving car business in April 2019 after closing $1 billion in funding from Toyota, auto-parts maker Denso and SoftBank’s Vision Fund. The deal valued Uber ATG at $7.25 billion, at the time of the announcement. Under the deal, Toyota and Denso are providing $667 million, with the Vision Fund throwing in the remaining $333 million.
Tencent, one of the world’s biggest videogaming companies by revenue, today made another move to help cement that position. The Chinese firm has made an offer to fully acquire Funcom, the games developer behind Conan Exiles (and others in the Conan franchise), Dune and some 28 other titles. The deal, when approved, would value the Oslo-based company at $148 million (NOK 1.33 billion) and give the company a much-needed cash injection to follow through on longer-term strategy around its next generation of games.
Funcom is traded publicly on the Oslo Stock Exchange, and the board has already recommended the offer, which is being made at NOK 17 per share, or around 27% higher than its closing share price the day before (Tuesday).
The news is being made with some interesting timing. Today, Tencent competes against the likes of Sony, Microsoft and Nintendo in terms of mass-market, gaming revenues. But just earlier this week, it was reported that ByteDance — the publisher behind breakout social media app TikTok — was readying its own foray into the world of gaming.
That would set up another level of rivalry between the two companies, since Tencent also has a massive interest in the social media space, specifically by way of its messaging app WeChat . While many consumers will have multiple apps, when it comes down to it, spending money in one represents a constraint on spending money in another.
Today, Tencent is one of the world’s biggest video game companies: in its last reported quarter (Q3 in November), Tencent said that it make RMB28.6 billion ($4.1 billion) in online gaming revenue, with smartphone games accounting for RMB24.3 billion of that.
Acquisitions and controlling stakes form a key part of the company’s growth strategy in gaming. Among its very biggest deals, Tencent paid $8.6 billion for a majority stake in Finland’s Supercell back in 2016. It also has a range of controlling stakes in Riot Games, Epic, Ubisoft, Paradox, Frontier and Miniclip. These companies, in turn, also are making deals: just earlier this month it was reported (and sources have also told us) that Miniclip acquired Israel’s Ilyon Games (of Bubble Shooter fame) for $100 million.
Turning back to Funcom, Tencent was already an investor in the company: it took a 29% stake in it in September 2019 in a secondary deal, buying out KGJ Capital (which had previously been the biggest shareholder).
“Tencent has a reputation for being a responsible long-term investor, and for its renowned operational capabilities in online games,” said Funcom CEO Rui Casais at the time. “The insight, experience, and knowledge that Tencent will bring is of great value to us and we look forward to working closely with them as we continue to develop great games and build a successful future for Funcom.”
In retrospect, this was laying the groundwork and relationships for a bigger deal just months down the line.
“We have a great relationship with Tencent as our largest shareholder and we are very excited to be part of the Tencent team,” Casais said in a statement today. “We will continue to develop great games that people all over the world will play, and believe that the support of Tencent will take Funcom to the next level. Tencent will provide Funcom with operational leverage and insights from its vast knowledge as the leading company in the game space.”
The rationale for Funcom is that the company had already determined that it needed further investment in order to follow through on its longer-term strategy.
According to a statement issued before it recommended the offer, the company is continuing to build out the “Open World Survival segment” using the Games-as-a-Service business model (where you pay to fuel up with more credits); and is building an ambitious Dune project set to launch in two years.
“Such increased focus would require a redirection of resources from other initiatives, the most significant being the co-op shooter game, initially scheduled for release during 2020 that has been impacted by scope changes due to external/market pressures with increasingly strong competition and internal delays,” the board writes, and if it goes ahead with its strategy, “It is likely that the Company will need additional financing to supplement the revenue generated from current operations.”
Google’s strategy for bringing new customers to its cloud is to focus on the enterprise and specific verticals like healthcare, energy, financial service and retail, among others. It’s healthcare efforts recently experienced a bit of a setback, with Epic now telling its customers that it is not moving forward with its plans to support Google Cloud, but in return, Google now got to announce two new customers in the travel business: Lufthansa Group, the world’s largest airline group by revenue, and Sabre, a company that provides backend services to airlines, hotels and travel aggregators.
For Sabre, Google Cloud is now the preferred cloud provider. Like a lot of companies in the travel (and especially the airline) industry, Sabre runs plenty of legacy systems and is currently in the process of modernizing its infrastructure. To do so, it has now entered a 10-year strategic partnership with Google “to improve operational agility while developing new services and creating a new marketplace for its airline, hospitality and travel agency customers.” The promise, here, too, is that these new technologies will allow the company to offer new travel tools for its customers.
When you hear about airline systems going down, it’s often Sabre’s fault, so just being able to avoid that would already bring a lot of value to its customers.
“At Google we build tools to help others, so a big part of our mission is helping other companies realize theirs. We’re so glad that Sabre has chosen to work with us to further their mission of building the future of travel,” said Google CEO Sundar Pichai . “Travelers seek convenience, choice and value. Our capabilities in AI and cloud computing will help Sabre deliver more of what consumers want.”
The same holds true for Google’s deal with Lufthansa Group, which includes German flag carrier Lufthansa itself, but also subsidiaries like Austrian, Swiss, Eurowings and Brussels Airlines, as well as a number of technical and logistics companies that provide services to various airlines.
“By combining Google Cloud’s technology with Lufthansa Group’s operational expertise, we are driving the digitization of our operation even further,” said Dr. Detlef Kayser, Member of the Executive Board of the Lufthansa Group. “This will enable us to identify possible flight irregularities even earlier and implement countermeasures at an early stage.”
Lufthansa Group has selected Google as a strategic partner to “optimized its operations performance.” A team from Google will work directly with Lufthansa to bring this project to life. The idea here is to use Google Cloud to build tools that help the company run its operations as smoothly as possible and to provide recommendations when things go awry due to bad weather, airspace congestion or a strike (which seems to happen rather regularly at Lufthansa these days).
Delta recently launched a similar platform to help its employees.
Foxconn Technology Group, the Taiwanese electronics giant best known for its iPhone manufacturing contract, is forming a joint venture with Fiat Chrysler Automobiles to build electric vehicles in China.
According to the filing, each party will own 50% of the venture to develop and manufacture electric vehicles and engage in an IOV, what Foxconn parent company Hon Hai calls the “internet of vehicles” business. Hon Hai’s direct shareholding in the subsidiary will not exceed 40%, the filing says.
The venture will initially focus on making electric vehicles for China. But these vehicles could be exported at a later date, according to Foxconn.
The wording in the regulatory filing suggests these will be new vehicles that are designed and built from the ground up and not a project to electrify any of the vehicles in FCA’s current portfolio.
The venture could give FCA a better path to capturing more business in China, the world’s largest market for electric vehicles.
Foxconn has invested in other electric vehicle ventures before, although this appears to be the first tie-up in which the company will develop and build the product. EV startup Byton was originally started as Future Mobility Corporation as a joint venture between Harmony Auto, Tencent and Foxconn. And Foxconn is also an investor in XPeng Motors, the Chinese electric vehicle startup that recently raised a fresh injection of $400 million in capital and has taken on Xiaomi as a strategic investor.
Joby Aviation has raised a $590 million Series C round of funding, including $394 million from lead investor Toyota Motor Corporation, the company announced today. Joby is in the process of developing an electric air taxi service, which will make use of in-house developed electric vertical take-off and landing (eVTOL) aircraft that will in part benefit from strategic partner Toyota’s vehicle manufacturing experience.
This brings the total number of funding in Joby Aviation to $720 million, and its list of investors includes Intel Capital, JetBlue Technology Ventures, Toyota AI Ventures and more. Alongside this new round of funding, Joby gains a new board member: Toyota Motor Corporation EVP Shigeki Tomoyama.
Founded in 2009, Joby Aviation is based in Santa Cruz, California. The company was founded by JoeBen Bevirt, who also founded consumer photo and electronics accessory maker Joby. Its proprietary aircraft is a piloted eVTOL, which can fly at up to 200 miles per hour for a total distance of over 150 miles on a single charge. Because it uses an electric drivetrain and multi rotor design, Joby Aviation says it’s “100 times quieter than conventional aircraft during takeoff and landing, and near-silent when flying overhead.”
These benefits make eVTOL craft prime candidates for developing urban aerial transportation networks, and a number of companies, including Joby as well as China’s EHang, Airbus and more are all working on this type of craft for use in this kind of city-based short-hop transit for both people and cargo.
The sizeable investment made by Toyota in this round is a considerable bet for the automaker on the future of air transportation. In a press release detailing the round, Toyota President and CEO Akio Toyoda indicated that the company is serious about eVTOLs and air transport in general.
“Air transportation has been a long-term goal for Toyota, and while we continue our work in the automobile business, this agreement sets our sights to the sky,” Toyoda is quoted as saying. “As we take up the challenge of air transportation together with Joby, an innovator in the emerging eVTOL space, we tap the potential to revolutionize future transportation and life. Through this new and exciting endeavor, we hope to deliver freedom of movement and enjoyment to customers everywhere, on land, and now, in the sky.”
Joby Aviation believes that it can achieve significant cost benefits vs. traditional helicopters for short aerial flights, eventually lowering costs through maximizing utilization and fuel savings to the point where it can be “accessible to everyone.” To date, Joby has completed sub-scale testing on its aircraft design, and begun full flight tests of production prototypes, along with beginning the certification process for its aircraft with the Federal Aviation Administration (FAA) at the end of 2018.
2019 brought more global attention to Africa’s tech scene than perhaps any previous year.
A high profile IPO, visits by both Jacks (Ma and Dorsey), and big Chinese startup investment energized that.
The last 12 months served as a grande finale to 10 years that saw triple digit increases in startup formation and VC on the continent.
Here’s an overview of the 2019 market events that captured attention and capped off a decade of rapid growth in African tech.
The story of the year is the April IPO on the NYSE of Pan-African e-commerce company Jumia. This was the first listing of a VC backed tech company operating in Africa on a major global exchange — which brought its own unpredictability.
Founded in 2012, Jumia pioneered much of its infrastructure to sell goods to consumers online in Africa.
With Nigeria as its base market, the Rocket Internet backed company created accompanying delivery and payments services and went on to expand online verticals into 14 Africa countries (though it recently exited a few). Jumia now sells everything from mobile-phones to diapers and offers online services such as food-delivery and classifieds.
Seven years after its operational launch, Jumia’s stock debut kicked off with fanfare in 2019, only to be followed by volatility.
The online retailer gained investor confidence out of the gate, more than doubling its $14.95 opening share price post IPO.
That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud. The American activist investor’s case was bolstered, in part, by a debate that played out across Africa’s tech ecosystem on Jumia’s legitimacy as an African startup, given its (primarily) European senior management.
The entire affair was further complicated by Jumia’s second quarter earnings call when the company disclosed a fraud perpetrated by some of its employees and sales agents. Jumia’s CEO Sacha Poignonnec emphasized the matter was closed, financially marginal and not the same as Andrew Left’s short-sell claims.
Whatever the balance, Jumia’s 2019 ups and downs cast a cloud over its stock with investors. Since the company’s third-quarter earnings-call, Jumia’s NYSE share-price has lingered at around $6 — less than half of its original $14.95 opening, and roughly 80% lower than its high.
Even with Jumia’s post-IPO rocky road, the continent’s leading e-commerce company still has heap of capital and is on pace to generate over $100 million in revenues in 2019 (albeit with big losses).
The company plans reduce costs by generating more revenue from higher-margin internet services, such as payments and classifieds.
There’s a fairly simple equation for Jumia to rebuild shareholder confidence in 2020: avoid scandals, increase revenues over losses. And now that the company’s publicly traded — with financial reporting requirements — there’ll be four earnings calls a year to evaluate Jumia’s progress.
Jumia may not be the continent’s standout IPO for much longer. Events in 2019 point to Interswitch becoming the second African digital company to list on a global exchange in 2020. The Nigerian fintech firm confirmed to TechCrunch in November it had reached a billion-dollar unicorn valuation, after a (reported) $200 million investment by Visa.
Founded in 2002 by Mitchell Elegbe, Interswitch created much of the initial infrastructure to digitize Nigeria’s (then) predominantly cash-based economy. Interswitch has been teasing a public listing since 2016, but delayed it for various reasons. With the company’s billion-dollar valuation in 2019, that pause is likely to end.
“An [Interswitch] IPO is still very much in the cards; likely sometime in the first half of 2020,” a source with knowledge of the situation told TechCrunch .
2019 was the year when Chinese actors pivoted to African tech. China is known for its strategic relationship with Africa based (largely) on trade and infrastructure. Over the last 10 years, the country has been less engaged in the continent’s digital-scene.
That was until a torrent of investment and partnerships this past year.
July saw Chinese-owned Opera raise $50 million in venture spending to support its growing West African digital commercial network, which includes browser, payments and ride-hail services.
In September, China’s Transsion — the largest smartphone seller in Africa — listed in an IPO on Shanghai’s new STAR Market. The company raised ≈ $394 million, some of which it is directing toward venture funding and operational expansion in Africa.
The last quarter of 2019 brought a November surprise from China in African tech. Over 15 Chinese investors placed over $240 million in three rounds. Transsion backed consumer payments startup PalmPay raised a $40 million seed, stating its goal to become “Africa’s largest financial services platform.”
In the new year, TechCrunch will continue to cover the business arc of this surge in Chinese tech investment in Africa. There’ll surely be a number of fresh macro news-points to develop, given the debate (and critique) of China’s engagement with Africa.
On debate, the case could be made that 2019 was the year when Nigeria become Africa’s unofficial capital for fintech investment and digital finance startups.
Kenya has held this title hereto, with the local success and global acclaim of its M-Pesa mobile-money product. But more founders and VCs are opting for Nigeria as the epicenter for digital finance growth on the continent.
A rough tally of 2019 TechCrunch coverage — including previously mentioned rounds — pegs fintech related investment in the West African country at around $400 million over the last 12 months. That’s equivalent to roughly one-third of all startup VC raised for the entire continent in 2018, according to Partech stats.
From OPay to PalmPay to Visa — startups, big finance companies and investors are making Nigeria home-base for their digital finance operations and Africa expansion strategies.
The founder of early-stage payment startup ChipperCash, Ham Serunjogi, explained the imperative to operating there. “Nigeria is the largest economy and most populous country in Africa. Its fintech industry is one of the most advanced in Africa, up there with Kenya and South Africa,” he told TechCrunch in May.
When all the 2019 VC numbers are counted, it will be worth matching up fintech stats for Nigeria to Kenya to see how the countries compared.
Tech acquisitions continue to be somewhat rare in Africa, but there were several to note in 2019. Two of the continent’s powerhouse tech incubators joined forces in September, when Nigerian innovation center and seed-fund CcHub acquired Nairobi based iHub, for an undisclosed amount.
The acquisition brought together Africa’s most powerful tech hubs by membership networks, volume of programs, startups incubated and global visibility. It also elevated the standing of CcHub’s Bosun Tijani across Africa’s tech ecosystem, as the CEO of the new joint-entity, which also has a VC arm.
CcHub/iHub CEO Bosun Tijani
In other acquisition activity, French television company Canal+ acquired the ROK film studio from Nigerian VOD company IROKOtv, for an undisclosed amount. The deal put ROK founder and producer Mary Njoku in charge of a new organization with larger scope and resources.
Many outside Africa aren’t aware that Nigeria’s Nollywood is the Hollywood of the continent and one of the largest film industries in the world (by production volume). Canal+ told TechCrunch it looks to bring Mary and the Nollywood production ethos to produce content in French speaking African countries.
Other notable 2019 African tech takeovers included Kenyan internet company BRCK’s acquisition of ISP Surf, Nigerian digital-lending startup OneFi’s Amplify buy and Merck KGaa’s purchase of Kenya-based online healthtech company ConnectMed.
In 2019, Africa’s motorcycle ride-hail market — worth an estimated $4 billion — saw a flurry of investment and expansion by startups looking to scale on-demand taxi services. Uber and Bolt got into the motorcycle taxi business in Africa in 2018.
Ampersand in Rwanda
A number of local and foreign startups have continued to grow in key countries, such as Nigeria, Uganda and Kenya.
A battle for funding and market-share emerged in Nigeria in 2019, between key moto ride-hail startups Max.ng, Gokada, and Opera owned ORide.
The on-demand motorcycle market in Africa has attracted foreign investment and moved toward EV development. In May, MAX.ng raised a $7 million Series A round with participation from Yamaha and is using a portion to pilot renewable energy powered e-motorcycles in Africa.
In August, the government of Rwanda announced a national policy to phase out gas-motorcycle taxis altogether in favor of e-motos, in partnership with early-stage EV startup Ampersand.
The past year saw several new funding initiatives for Africa’s startups. Senegalese VC investor Marieme Diop spearheaded Dakar Network Angels, a seed-fund for startups in French-speaking Africa — or 24 of the continent’s 54 countries.
Africinvest teamed up with Cathay Innovation to announce the Cathay Africinvest Innovation Fund, a $100+ million capital pool aimed at Series A to C-stage startup investments in fintech, logistics, AI, agtech and edutech.
Accion Venture Lab launched a $24 million fintech fund open to African startups.
Like any tech ecosystem, not every startup in Africa killed it or even continued to tread water in 2019. Two e-commerce companies — DealDey in Nigeria and Afrimarket in Ivory Coast — closed up digital shop.
Southern Africa’s Econet Media shut down its Kwese TV digital entertainment business in August.
And South Africa based, Pan-African focused cryptocurrency payment startup Wala ceased operations in June. Founder Tricia Martinez named the continent’s poor infrastructure as one of the culprits to shutting down. A possible signal to the startup’s demise could have been its 2017 ICO, where Wala netted only 4% of its $30 million token-offering.
2019 saw more startups expand products and business models developed in Africa to new markets abroad. In March, Flexclub — a South African venture that matches investors and drivers to cars for ride-hailing services — announced its expansion to Mexico in a partnership with Uber.
In May, ExtraCrunch profiled three African founded fintech startups — Flutterwave, Migo and ChipperCash — developing their business models strategically in Africa toward plans to expand globally.
As we look to what could come in the new year and decade for African tech, it’s telling to look back. Ten years ago, there were a lot of “if” questions on whether the continent’s ecosystem could produce certain events: billion dollar startup valuations, IPOs on major exchanges, global expansion, investment from the world’s top VCs.
All those questionable events of the past have become reality in African tech, even if some of them are still in low abundance.
There’s no crystal ball for any innovation ecosystem — not the least Africa’s — but there are several things I’ll be on the lookout for in 2020 and beyond.
Two In the near term, start with what Twitter/Square CEO Jack Dorsey may do around Bitcoin and cryptocurrency on his return to Africa (lookout for an upcoming TechCrunch feature on this).
I’ll also follow the next-phase of e-commerce in Africa, which could pit Jumia more competitively against DHL’s Africa eShop, Opera and China’s Alibaba (which hasn’t yet entered Africa in full).
On a longer-term basis, a development to follow is how the continent’s first wave of millionaire and billionaire tech-founders could disrupt 21st century dynamics in Africa around politics, power, and philanthropy — hopefully for the better.
More notable 2019 Africa-related coverage @TechCrunch
GetYourGuide has made a name for itself as the startup that helped the stale idea of guided tours for travellers on its head. Tapping into the generation of consumers who think of travel not just as going somewhere, but having an “experience” (and, ideally, recording it for Insta-posterity), it has built a marketplace to connect them with people who will help guarantee that this is what they will get. It’s a concept that has helped it sell more than 25 million tickets, hit a $1 billion valuation, and raise hundreds of millions of dollars in VC funding.
And the startup has grown quite a lot since passing the 25 million mark in May. “We’ve had 40 million travelers over the last 12 months. We’re the market leader in every European geography. We’re #2 in the U.S. and about to become #1,” co-founder and CEO Johannes Reck said at TechCrunch Disrupt Berlin.
Now GetYourGuide is taking the next step in its strategy to expand its touchpoints with users, and grow and diversify its business in the process. The company is expanding its “Originals” business — its own in-house tour operation — into one-day tours and other longer journeys, with the aim of hitting 1 million sales of Originals this year. It will kick off the effort with a small number — between five and 10 — one-day tours in different exotic locations. Examples will include “dune-bashing in Dubai,” glacier excursions from Reykjavik, and trips to Bali’s “most instagrammable hidden spots.”
GetYourGuide Originals have been working well. “We’ve had tremendous success, we have an average score of 4.8 [out of 5] compared to 4.4 for the other marketplace activities,” Reck said. Originals have a 40% higher repeat rate than other activities.
“And we’re now extending it to day trips. For those who are not familiar with the travel experience, day trip is the single biggest vertical inside of experiences,” Reck said.
Originals was launched a year and a half ago as a way for GetYourGuide to build its own tours — which it kicked off first with shorter walking tours — as a complement to the marketplace where it offers travellers a way of discovering and purchasing places on tours organised by third parties. Today it offers 23 different Originals in 17 cities like Paris, London, Berlin and Rome.
Up to now, GYG has sold some 200,000 places on its Originals tours — which is actually a tiny proportion of business, when you consider that the number of tours booked through the platform has passed 25 million.
The startup likes to describe its own Orignals as “like Netflix Originals, but in the real world!” And that analogy is true in a couple of ways. Not only does it give GYG more curatorial control on what is actually part of the tour, where it’s run, who guides it and more; but it gives the company potentially a bigger margin when it comes to making money off the effort, and means it does not have to negotiate with third parties on revenue share and other business details.
That’s, of course, not considering the challenges of scaling in this way.
Adding in more Originals and extending to transportation to get to the destination (and potentially staying overnight at some point) will mean taking on costs and organizational efforts, and risks, around more operational segments: making sure vehicles are safe and working, that hotels have clean sheets (and rooms), and more. More things can go wrong, and customers will have many more reasons to complain (or praise). It will be one of those moments when the startup will have to rethink what it’s core competency is, and whether it can deliver on that.
On the other side, if it works, GYG will diversify its the business while finding new revenue streams. But the strategy to grow Originals is a logical next step for other reasons, too.
The most important of these is probably competition: GYG may have been the pioneer of hipster travel experiences, but today it is by no means the only company focusing on this segment. Companies like Airbnb and TripAdvisor have tacked on tours and “Experiences” as a complement to their own offerings, as ways of extending their own consumer touchpoints beyond, respectively, booking a place to say or finding a cool place that popular with locals, or figure out what attractions to see.
Get Your Guide needs to find ways of keeping existing and new users returning to its own platform, rather than simply tacking on its tour packages while organising other aspects of their vacation.
The other is that, as Get Your Guide continues to break ground on changing the conversation around travel, building its own content rather than relying on others to fulfil its vision will become ever more essential, and paves the way for how the company will approach adding ever more components into the chain between your home and your destination.
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. Last week, we looked at how Alibaba and Tencent fared in the last quarter; the talk in Silicon Valley and Beijing this week is on Y Combinator’s sudden retreat from China. We will also discuss the enduring food delivery war in the country later.
The storied Silicon Valley accelerator Y Combinator announced the closure of its China unit just a little over a year after it entered the country. In a vague statement posted on its official blog, the organization said the decision came amid a change in leadership. Sam Altman, its former president who hired legendary artificial intelligence scientist Lu Qi to initiate the China operation, recently left his high-profile role to join research outfit OpenAI. With that, YC has since refocused its energy to support “local and international startups from our headquarters in Silicon Valley.”
What was untold is the insurmountable challenge that multinationals face in their attempt to win in a wildly different market. Lu Qi, who wore management hats at Baidu and Microsoft before joining YC, was clearly aware of the obstacles when he said in an interview (in Chinese) in May that “multinational corporations in China have almost been wiped out. They almost never successfully land in China.” The prescription, he believes, is to build a local team that’s given full autonomy to make decisions around products, operations, and the business.
A former executive at an American company’s China branch, who asked to remain anonymous, argued that Lu Qi’s one-man effort can’t be enough to beat the curse of multinationals’ path in China. “All I can say is: Lu has taken a detour. Going independent is the best decision. When it comes to whether Chinese startups are suited for mentorship, or whether incubators bring value to China, these are separate questions.”
What’s curious is that YC China seemed to have been given a meaningful level of freedom before the split. “Thanks to Sam Altman and the U.S. team, who agreed with my view and supported with much preparation, YC China is not only able to enjoy key resources from YC U.S. but can also operate at a completely independent capacity,” Lu said in the May interview.
Moving on, the old YC China team will join Lu Qi to fund new companies under a newly minted program, MiraclePlus, announced YC China via a Wechat post (in Chinese). The initiative has set up its own fund, team, entity and operational team. The deep ties that Lu has fostered with YC will continue to benefit his new portfolio, which will receive “support” from the YC headquarters, though neither party elaborated on what that means.
The food delivery war in China is still dragging on two years after the major consolidation that left the market with two major players. Meituan, the local services company backed by Tencent, has managed to attain an expanding share against Alibaba-owned Ele.me. According to third-party data (in Chinese) provided by Trustdata, Meituan accounted for 65.1% of China’s overall food delivery orders during the second quarter, steadily rising from just under 60% a year ago. Ele.me, on the other hand, has lost nearly 10% of the market, slumping to 27.4% from 36% a year ago.
In terms of monetization, Meituan generated 15.6 billion yuan ($2.2 billion) in revenue from its food delivery segment in the quarter ended September 30. That dwarfs Ele.me, which racked up 6.8 billion yuan ($970 million) during the same period. Both are growing north of 30% year-over-year.
This may not be all that surprising given Alibaba has arguably more imminent battles to fight. The e-commerce leader has been consumed by the rise of Pinduoduo, which has launched an assault on China’s low-tier cities with its ultra-cheap products and social-driven online shopping experience. Meituan, on the other hand, is fixated on beefing up its main turf of on-demand neighborhood services after divesting its costly bike-sharing endeavor.
When both contestants have the capital to burn through — as they have demonstrated through heavily subsidizing customers and restaurants — the race comes down to which has greater control of user traffic. Meituan holds a competitive edge thanks to its merger with Dianping, a leading restaurant review app akin to Yelp, back in 2015. Dianping today operates as a standalone brand but its food app is deeply integrated with Meituan’s delivery services. For example, hundreds of millions of users are able to place Meituan-powered food delivery orders straight from Dianping.
Alibaba and Meituan used to be on more friendly terms just a few years ago. In 2011, the e-commerce giant participated in Meituan’s $50 million Series B financing. Before long, the two clashed over control of the company. Alibaba is known to impose a heavy hand on its portfolio companies by taking up majority stakes and reshuffling the company with new executives. That’s because Alibaba believes that “only when you operate can you generate synergies and really create exponential value,” said vice chairman Joe Tsai in an interview. “Whereas if you just make a financial investment, you’re counting an internal rate of return. You’re not creating real value.”
Ele.me lived through that transformation. As of September, Alibaba has reportedly (in Chinese) completed replacing Ele.me’s management with its pool of appointed personnel. Ele.me’s founder Zhang Xuhao left the company with billions of yuan in cash and joined a venture capital firm (in Chinese).
Meituan’s founder Wang Xing had more unfettered pursuits. In a later financing round, he refused to accept Alibaba’s condition for portfolio companies to eschew Tencent investments, a strategy of the giant to hobble its archrival. That botched the partnership and Alibaba has since been gradually offloading its Meituan shares but still held onto small amounts, according to Wang in 2017, “to create trouble” for Meituan going forward.
At its Cloud Next event in London, Google Cloud CEO Thomas Kurian today announced that Smart Compose, the AI-powered feature that currently tries to complete phrases and sentences for you in Gmail, is also coming to G Suite’s Google Docs soon. For now, though, your G Suite admin has to sign up for the beta to try it and it’s only available in English.
Google says in total, Smart Compose in Gmail already saves people from typing about 2 billion characters per week. At least in my own experience, it also works surprisingly well and has only gotten better since launch (as one would expect from a product that learns from the individual and collective behavior of its users). It remains to be seen how well this same technique works for longer texts, but even longer documents are often quite formulaic, so the algorithm should still work quite well there, too.
Google first announced Smart Compose in May 2018, as part of its I/O developer conference. It builds upon the same machine learning technology Google developed for its Smart Reply feature. The company then rolled out Smart Compose to all G Suite and private Gmail users, starting in July 2018, and later added support for mobile, too.
Google today announced that it has finished the install and test of its private Curie cable. When it was announced, Curie, which connects the U.S. to Chile, was the company’s third private cable. Since then, it has announced two more, Dunant and Equiano, which will connect the U.S. to Europe and Portugal to South Africa. The 10,500 kilometers long cable will offer a total capacity of 72Tbps and will go online in Q2 of 2020. Right now, Google’s teams are working on connecting the cable to its own network.
In addition, Google also today announced that Curie will get a branch to Panama. “Once operational, this branch will enhance connectivity and bandwidth to Central America, and increase our ability to connect to other networks in the region, providing resiliency to our global cloud infrastructure,” the company says in today’s announcement.
For Curie’s Panama branch, Google will once again work with SubCom, the same engineering firm that helped it build the rest of the cable. SubCom is also working with Google on the Dunant, while Google opted to partner with Alcatel Submarine Networks for the Equiano cable to South Africa.
While Google is also partnering with other technology firms to share bandwidth on other cables, these private cables give it full control over all of the resources. The company also argues that owning and operating its own cables adds another layer of security, on top of all the other benefits.
Whether you love them or hate them (and you probably hate them), meetings are a fact of corporate life. And how many meetings have you attended that didn’t start on time because of technical difficulties? Microsoft wants to change that by managing your meeting rooms for you — starting at $50 per room. ‘Managed Meeting Rooms,’ as the company calls the service, are now in private preview, but ahead of today’s announcement, Microsoft already quietly worked with more than 100 customers to manage more than 1,500 meetings rooms for them.
As Brad Anderson, Microsoft’s corporate VP for Microsoft 365, told me, the Teams team did a lot of work to optimize its software to make starting video- and audio-based meetings easy.
“But when you think about a room for a minute, there’s a bunch of hardware in the room, in addition to the software that’s operating Teams. There’s the device on the table, you’ve got screens, you got microphones, you’ve got cameras, you’ve got projectors, you’ve got all the cabling,” Anderson said. “And in order for a meeting to be seamless and great, all that hardware also has to be functional. So what we have done with the managed meeting room solution is we have now instrumented all the hardware.”
The solution supports Microsoft Teams Rooms and Skype for Business room systems, but Microsoft can also help companies select the right tools to set up a meeting room. With all of that in place, the company can then monitor all of that through a cloud service and ensure that everything is up and running. When there are issues — at least issues that can be fixed remotely — the team can also fix those and the meeting can start on time.
“Very few organizations have enough rooms to actually get proficient in meeting room management,” Anderson explained. “So it’s one of these things where organizations have to make that choice: do I go and actually try to build up the expertise when it sounds like Microsoft has a solution, which is actually very affordable […] If we just avoid one meeting from going south for ten minutes, you actually make your money back.”
Twiga, a B2B food distribution company, will use its funds to set up a distribution center in Nairobi and deepen its conversion to offering supply chain services for both agricultural and FMCG products.
The startup is also targeting Pan-African expansion to French speaking West Africa by third quarter 2020, CEO Peter Njonjo told TechCrunch.
The venture has moved quickly on diversifying its supply-chain product mix. “We’re not just doing fruits and vegetables…I’d say we’re at 50/50 now between FMCG and fresh,” said Njonjo.
Twiga doesn’t plan to move toward entering or supplying B2C e-commerce, where it could become a competitor to other online retailers, such as Jumia.
But the company has factored for advantages in the B2C e-commerce space. “If you’re able to serve Nairobi’s 180,000 retailers, it means that the furthest customer would be less than two kilometers away from any shop. That’s the power of building a B2C business on top of a B2B platform. So definitely, the potential is there,” said Njonjo.
China is known for its relationship with Africa based on trade and infrastructure, but not so much for tech. That’s changing with a number of Chinese actors increasing the country’s digital influence across the continent’s tech markets.
This includes Africa focused mobile phone Transsion’s IPO and planned expansion in Africa and recent moves on the continent by Alibaba and Chinese owned Opera.
In an ExtraCrunch feature, TechCrunch detailed China’s growing tech ties with Africa and what they could mean for the continent’s innovation ecosystem and Africa’s relationship with China overall.
In two stories in Ocotober, TechCrunch followed Jumia’s IPO lockup expiry and volatile share-price ahead of the Jumia’s November third-quarter earnings call.
The Africa focused e-commerce company — with online verticals in 14 countries — has had a bumpy ride since becoming the first tech venture operating in Africa to list on a major exchange. Jumia saw its opening share price of $14.50 jump 70% after its NYSE IPO in April.
Then in May, Jumia’s stock tumbled when it came under assault from a short-seller, Andrew Left, who accused the company of fraud in its SEC filings.
In August, Jumia’s 2nd quarter earnings showed upside and downside: revenue growth still with big losses. Much of it may have been overshadowed by Jumia’s own admission of a fraud perpetrated by some employees and agents of its JForce sales program.
Jumia’s core investors appeared to show continued confidence in the company in October, when there wasn’t a big sell-off after the IPO lockup period expired.
It appears that what Jumia disclosed does not validate the claims in Citron Research’s May report. But the markets still seem wary of the company’s stock, which now stands at roughly half its opening IPO price.
Jumia will have a chance to clear up any lingering confusion and showcase its latest numbers on its third-quarter earnings call November 12.
TechCrunch reported additional details to two big African tech market events that happened over the last year. First, Naspers Foundry’s new leader, Phuthi Mahanyele-Dabengwa, confirmed the 1.4 billion rand (≈$100 million) VC arm of South Africa’s Naspers is accepting pitches.
Announced in late 2018, Naspers Foundry will make equity investments in various amounts, primarily from Series A up to Series B in South African ventures. Founders from other parts of Africa with startup operations in South Africa can be considered for funding, Mahanyele-Dabengwa clarified.
CcHub and iHub CEO Bosun Tijani revealed more detail about the recent merger of both names. CcHub – iHub will pursue more operating revenue from consulting and VC investing, vs. grants, according to Tijani. The new Nigeria and Kenya based innovation network will also look to bring an Africa startup tour to the U.S. and is considering opening an office in San Francisco, he said.
More Africa-related stories @TechCrunch
At the recent TechCrunch Disrupt SF, Senegalese VC investor Marieme Diop suggested that Silicon Valley’s unicorn IPO model might not be right for African startups. The is largely because the …
African tech around the ‘net
Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.
This week Kate and Alex broke the discussion into two main themes. The first dealt with early-stage companies, and the second, as you can imagine, later-stage affairs. Don’t worry, we don’t get to SoftBank for quite some time.
Up top, we dug into Kate’s story about Quill, a formerly stealthy company that could be taking on Slack. That or something similar to Slack . Next, we turned to ManiMe, a startup in the beauty space that raised a smaller $2.6 million to take on a market that is valued in the billions.
After that it was time to leave the auspices of the early-stage market and move to, of all things, a public company. GrubHub reported earnings this week. It went poorly. Alex wanted to riff over the company’s earnings report and what it could mean for startups that are competing with GrubHub, a leader in the food delivery space that DoorDash and Postmates would prefer to lead themselves.
What impact GrubHub may have on the highly-valued on-demand companies isn’t clear yet, but will be pretty damn interesting to see when it does land.
Sticking to the later-stage markets, Alex dug into the problems at Wag which is struggling and looking for a sale despite raising a castle of cash from the Vision Fund. Kate followed that up with notes on problems at Katerra. The Information is reporting this week that the business is going through a number of layoffs and we’re wondering if it will suffer the same fate of some of SoftBank’s other investments.
And, finally, the changing face of things at SoftBank itself. The great money spigot is slowly cutting flow. How many unicorns that will strand isn’t yet clear. But surely it can’t be zero.