According to a recent letter sent to its investors, Tiger Global Management, the New York-based investing powerhouse, is raising a new $3.75 billion venture fund called Tiger Private Investment Partners XIV that it expects to close in March.
The fund is Tiger Global’s 13th venture fund, despite its title — the partners might be superstitious — and it comes hot on the heels of the firm’s 12th venture fund, closed exactly a year ago, also with $3.75 billion in capital commitments.
A spokesperson for the firm declined to comment on the letter or Tiger Global’s broader fundraising strategy when reached this morning.
It’s a lot of capital to target, even amid a sea of enormous new venture vehicles. New Enterprise Associates closed its newest fund with $3.6 billion last year. Lightspeed Venture Partners soon after announced $4 billion across three funds. Andreessen Horowitz, the youngest of the three firms, announced in November it had closed a pair of funds totaling $4.5 billion.
At the same time, Tiger Global has seemingly has a strong case to potential limited partners. Last year alone, numerous of its portfolio companies either went public or was acquired.
Yatsen Holding, the nearly five-year-old parent company of China-based cosmetics giant Perfect Diary, went public in November and is now valued at $14 billion. (Tiger Global’s ownership stake didn’t merit a mention on the company’s regulatory filing.)
Tiger Global also quietly invested in the cloud-based data warehousing outfit Snowflake and, while again, it didn’t have a big enough stake to be included in the company’s S-1, even a tiny ownership percentage would be valuable, given that Snowflake is now valued at $85 billion.
And Tiger Global backed Root insurance, a nearly six-year-old, Columbus, Oh.-based insurance company that went public in November and currently boasts a market cap of $5.3 billion. Tiger owned 10.3% sailing into the offering.
As for M&A, Tiger Global saw at least three of its companies swallowed by bigger tech companies during 2020, including Postmates’s all-stock sale to Uber for $2.65 billion; Credit Karma’s $7 billion sale in cash and stock to Intuit; and the sale of Kustomer, which focused on customer service platforms and chatbots, for $1 billion to Facebook.
Tiger Global, whose roots are in hedge fund management, launched its private equity business in 2003, spearheaded by Chase Coleman, who’d previously worked for hedge-fund pioneer Julian Robertson at Tiger Management; and Scott Shleifer, who joined the firm in 2002 after spending three years with the Blackstone Group. Lee Fixel, who would become a key contributor in the business, joined in 2006.
Shleifer focused on China; Fixel focused on India, and the rest of the firm’s support team (it now has 22 investing professionals on staff) helped find deals in Brazil and Russia before beginning to focus more aggressively on opportunities in the U.S.
Every investing decision was eventually made by each of the three. Fixel left in 2019 to launch his own investment firm, Addition. Now Shleifer and Coleman are the firm’s sole decision-makers.
Whether the firm eventually replaces Fixel is an open question, though it doesn’t appear to be the plan. Tiger Global is known for grooming investors within its operations rather than hiring outsiders, so a new top lieutenant would almost surely come from its current team.
In the meantime, the firm’s private equity arm — which has written everything from Series A checks (Warby Parker) to checks in the multiple hundreds of millions of dollars — is currently managing assets of $30 million, compared with the $49 billion that Tiger is managing more broadly.
A year ago, Tiger Global, which employs 100 people altogether, was reportedly managing $36.2 billion in assets.
According to the outfit’s investor letter, the firm’s gross internal rate of return across its 12 previous funds is 32%, while its net IRR is 24%.
Tiger Global’s investors include a mix of sovereign wealth funds, foundations, endowments, pensions, and its own employees, who are collectively believed to be the firm’s biggest investors at this point.
Some of Tiger Global’s biggest wins to date have include a $200 million bet on the e-commerce giant JD.com that produced a $5 billion for the firm. According to the WSJ, it also cleared more than $1 billion on the Chinese online-services platform Meituan Dianping, which went public in 2018.
Tiger Global also reportedly reaped $3 billion from majority sale of India’s Flipkart to Walmart in 2018, though the Indian government has more recently been trying to recover $1.9 billion from the firm, claiming it has outstanding tax dues on the sale of its share in the company.
One outcome that might surprise even Tiger Global’s investors ties to the connected fitness company Peloton, 20% of which the firm owned at the time of Peloton’s 2019 IPO (a deal that Fixel reportedly brought to the table, along with Flipkart). Fueled by users trapped at home during the pandemic, Peloton — which was valued by private investors at $4 billion and doubled in value immediately as a publicly traded company — now boasts a market cap of $48.6 billion.
Tiger Global has invested its current fund in roughly 50 companies over the last 12 months.
Among its newest bets is Blend, an eight-year-old, San Francisco-based digital lending platform that yesterday announced $300 million in Series G funding, including from Coatue, at a post-money valuation of $3.3 billion.
It also led the newly announced $450 million Series C round for Checkout.com, an eight-year-old, London-based online payments platform that is now valued at $15 billion. And it wrote a follow-on check to Cockroach Labs, the nearly six-year-old, New York-based distributed SQL database that just raised $160 million in Series E funding at a $2 billion valuation, just eight months after raising an $86.6 million Series D round.
Another of its newest, biggest bets centers on the online education platform Zuowebang, in China. Back in June, Tiger Global co-led a $750 million Series E round in the company.
Last month, it was back again, co-leading a $1.6 billion round in the distance-learning company.
Pictured: Scott Shleifer, managing director of Tiger Global Management LLC, right, speaks with an attendee during the UJA-Federation of New York Wall Street Dinner in New York, on Wednesday, Dec. 14, 2011.
Six years after launching its service linking employer-sponsored insurance plans with surgical centers of excellence, Carrum Health has raised $40 million in a new round of financing to capitalize on tailwinds propelling its business forward.
As the COVID-19 pandemic exposes cracks in the U.S. healthcare system, one of the ways that employers have tried to manage the significant costs of insuring employees is by taking on the management of care themselves.
As they shoulder more of the burden, companies like Carrum, which offer services that manage some of the necessary points of care for businesses, at lower costs, are becoming increasingly attractive targets for investors.
That’s why Carrum was able to attract investors led by Tiger Global Management, GreatPoint Ventures and Cross Creek, all firms that joined returning investors Wildcat Venture Partners and SpringRock Ventures in backing the company’s Series A round.
Carrum said the money will go toward sales and marketing to more customers, adding more services and improving its existing technology stack.
Carrum uses machine learning to collect and analyze data on surgical outcomes and care to identify what it considers to be surgical centers of excellence across the U.S.
The company offers self-insured employers the opportunity to buy services directly from surgical centers for a bundled price. That can mean savings of up to 50% on surgical expenses.
Using Carrum, there are no co-pays, deductibles or co-insurance. Instead, Carrum Health’s customers pay a fee and in return receive a 30-day warranty on procedures, meaning that the healthcare provider will cover any costs associated with care from botched operations or complications.
Employees have access to a mobile application that gives them access to virtual care before, during and after surgeries.
“For years, the industry has talked about redesigning healthcare to benefit patients, but the only way to really do that is to tackle the underlying economics of care, a truly difficult task,” said Sach Jain, CEO and founder of Carrum Health, in a statement. “Employers now have a modern, technology-driven solution to help patients get better care without financial headache and we’re not stopping at surgery. In 2021 we’ll be expanding our reach and impact with additional services. It’s such an honor to pave the way for a better healthcare future and we’re so excited for what’s to come.”
Carrum Health’s customers include Quest Diagnostics, US Foods, and other, undisclosed organizations in retail, manufacturing, communications and insurance, the company said.
Hinge Health, the San Francisco-based company that offers a digital solution to treat chronic musculoskeletal (MSK) conditions — such as back and joint pain — has closed a $310 million in Series D funding, according to sources.
The round is led by Coatue and Tiger Global, and values 2015-founded Hinge at $3 billion post-money, people familiar with the investment tell me. It comes off the back of a 300% increase in revenue in 2020, with investors told to expect revenue to nearly triple again in 2021 based on the company’s booked pipeline.
I also understand that Hinge’s founders — Daniel Perez and Gabriel Mecklenburg — retain voting control of the board. I’ve reached out to CEO Perez for comment and will update this post should I hear back.
Hinge’s existing investors include Bessemer Venture Partners, which backed the company’s $90 million Series C round in February, along with Lead Edge Capital, Insight Partners (which led the Series B), Atomico (which led the Series A), 11.2 Capital, Quadrille Capital and Heuristic Capital.
Originally based in London, Hinge Health primarily sells into U.S. employers and health plans, billing itself as a digital healthcare solution for chronic MSK conditions. The platform combines wearable sensors, an app and health coaching to remotely deliver physical therapy and behavioral health.
The basic premise is that there is plenty of existing research to show how best to treat chronic MSK disorders, but existing healthcare systems aren’t up to the task due to funding pressures and for other systematic reasons. The result is an over tendency to use opioid-based painkillers or surgery, with poor results and often at even greater cost. Hinge wants to reverse this through the use of technology and better data, with a focus on improving treatment adherence.
Meanwhile, Hinge’s jump in valuation is significant. According to sources, the company’s February round produced a valuation of around $420 million, so the new valuation is more than a 6x increase.
The two founders of Parrot Software, Roberto Cebrián and David Villarreal, first met in high school in Monterrey, Mexico. In the eleven years since , both have pursued successful careers in the tech industry and became family (they’re brothers-in-law).
Now, they’re starting a new business together leveraging Cebrián’s experience running a point-of-sale company and Villarreal’s time working first at Uber and then at the high-growth, scooter and bike rental startup, Grin.
Cebrían’s experience founding the point-of-sale company S3 Software laid the foundation for Parrot Software, and its point of sale service to manage restaurant operations.
“Roberto has been in the industry for the past six or seven years,” said Villarreal. “And he was telling me that no one has been serving [restaurants] properly… Roberto pitched me the idea and I got super involved and decided to start the company.”
Parrot Software co-founders Roberto Cebrían and David Villarreal. Image Credit: Parrot Software
Like Toast in the U.S., Parrot manages payments including online and payments and real-time ordering, along with integrations into services that can manage the back-end operations of a restaurant too, according to Villarreal. Those services include things like delivery software, accounting and loyalty systems.
The company is already live in over 500 restaurants in Mexico and is used by chains including Cinnabon, Dairy Queen, Grupo Costeño, and Grupo Pangea.
Based in Monterrey, Mexico, the company has managed to attract a slew of high profile North American investors including Joe Montana’s Liquid2 Ventures, Foundation Capital, Superhuman angel fund, Toby Spinoza, the vice president of DoorDash, and Ed Baker, a product lead at Uber. Together they’ve poured $2.1 million into the young company.
Since its launch, Parrot has managed to land contracts in 10 cities, with the largest presence in Northeastern Mexico, around Monterrey, said Villarreal.
The market for restaurant management software is large and growing. It’s a big category that’s expected to reach $6.94 billion in sales worldwide by 2025, according to a reporter from Grand View Research.
Investors in the U.S. market certainly believe in the potential opportunity for a business like Toast. That company has raised nearly $1 billion in funding from firms like Bessemer Venture Partners, the private equity firm TPG, and Tiger Global Management.
Unacademy, an online learning platform in India, has added two more marquee investors to its cap table. The Bangalore-based startup, which focuses on K-12 online education, said on Wednesday it has raised new funds from Tiger Global Management and Dragoneer Investment Group.
The funding round, which is between $75 million to $100 million in size (according to a person familiar with the matter; Unacademy has not disclosed the figure), valued the four-and-a-half-year-old startup at $2 billion, up from about $500 million in February this year when Facebook joined its list of backers, and $1.45 billion in September, when SoftBank led the round.
“Our mission from Day One has been to democratise education and make it more affordable and accessible. We have consistently built the most iconic products that deliver high quality education to everyone. Today, I’m delighted to welcome Tiger Global and Dragoneer as our partners in the journey. They are both marquee global investors with a history of partnering with innovative companies that are making an impact on people’s lives,” said Gaurav Munjal, co-founder and chief executive of Unacademy, in a statement.
Unacademy helps students prepare for competitive exams to get into college, as well as those who are pursuing graduate-level courses. On its app, students watch live classes from educators and later engage in sessions to review topics in more detail. In recent months, the startup has held several online interviews of high-profile individuals, such as Indian politician Shashi Tharoor, on a range of topics, which has expanded its appeal beyond its student base.
The platform has amassed over 47,000 educators, who teach students in 5,000 cities in India in more than 14 languages. Over 150,000 live classes are conducted on the platform each month and the collective watch time across platforms is more than 2 billion minutes per month, the startup said.
“The opportunity to improve lives through online education is enormous because of its sheer accessibility. The Unacademy team has innovated rapidly to build a leading platform that is taking education to the farthest corners of India. We are very excited to partner with Unacademy and look forward to seeing it scale further,” said Scott Shleifer, partner at Tiger Global, in a statement.
Spend on education in India is among the highest globally (Source: A report from analysts at Goldman Sachs to clients earlier this year)
Scores of education startups in India have reported skyrocketing growth in recent months as schools remain shut across the country amid the coronavirus pandemic. Even as most Indians tend not to pay for online services — just ask Google and Facebook, both of which count India as their biggest market by users but make little in the country — the education category is an outlier. Indian families continue to spend heavily on their children’s education in hopes of paving the way for a better future.
U.S. challenger bank Current, which has doubled its member base in less than six months, announced this morning it raised $131 million in Series C funding, led by Tiger Global Management. The additional financing brings Current to over $180 million in total funding to date, and gives the company a valuation of $750 million.
The round also brought in new investors Sapphire Ventures and Avenir. Existing investors returned for the Series C, as well, including Foundation Capital, Wellington Management Company and QED.
Current began as a teen debit card controlled by parents, but expanded to offer personal checking accounts last year, using the same underlying banking technology. The service today competes with a range of mobile banking apps, offering features like free overdrafts, no minimum balance requirements, faster direct deposits, instant spending notifications, banking insights, check deposits using your phone’s camera and other now-standard baseline features for challenger banks.
When Current raised its Series B last fall, it had over 500,000 accounts on its service. Today, it touts over 2 million members. Revenue has also grown, increasing by 500% year-over-year, the company noted today.
“We have seen a demonstrated need for access to affordable banking with a best-in-class mobile solution that Current is uniquely suited to provide,” said Current founder and CEO Stuart Sopp, in a statement about the fundraise. “We are committed to building products specifically to improve the financial outcomes of the millions of hard-working Americans who live paycheck to paycheck, and whose needs are not being properly served by traditional banks. With this new round of funding we will continue to expand on our mission, growth and innovation to find more ways to get members their money faster, help them spend it smarter and help close the financial inequality gap,” he added.
The additional funds will be used to further develop and expand Current’s mobile banking offerings, the company says.
3D-printed rocket startup Relativity Space has closed $500 million in Series D funding (making official the earlier reported raise), the company announced today. This funding was led by Tiger Global Management, and included participation by a host of new investors, including Fidelity Management & Research Company, Baillie Gifford, Iconiq Capital, General Catalyst and more. This brings the company’s total raised so far to nearly $700 million, as the startup is poised to launch its first-ever fully 3D-printed orbital rocket next year.
LA-based Relativity had a big 2020, completing work on a new 120,000-square-foot manufacturing facility in Long Beach. Its rocket construction technology, which is grounded in its development and use of the largest metal 3D printers in existence, suffered relatively few setbacks due to COVID-19-related shutdowns and work stoppages as it involves relatively few actual people on the factory floor managing the 3D printing process, which is handled in large part by autonomous robotic systems and software developed by the company.
Relativity also locked in a first official contract from the U.S. government this year, to launch a new experimental cryogenic fluid management system on behalf of client Lockheed Martin, as part of NASA’s suite of Tipping Point contracts to fund the development of new technologies for space exploration. It also put into service its third-generation Stargate 3D metal printers — the largest on Earth, as mentioned.
The company’s ambitions are big, so this new large funding round should provide it with fuel to grow even more aggressively in 2021. It’s got new planned initiatives underway, both terrestrial and space-related, but CEO and founder Tim Ellis specifically referred to Mars and sustainable operations on the red planet as one possible application of Relativity’s tech down the road.
In prior conversations, Ellis has alluded to the potential for Relativity’s printers when applied to other large-scale metal manufacturing — noting that the cost curve as it stands makes most sense for rocketry, but could apply to other industries easily as the technology matures. Whether on Mars or on Earth, large-scale 3D printing definitely has a promising future, and it looks like Relativity is well-positioned to take advantage.
We’ll be talking to Ellis at our forthcoming TC Sessions: Space event, so we’ll ask him more about this round and his company’s aspirations, too.
African cross-border fintech startup Chipper Cash has raised a $30 million Series B funding round led by Ribbit Capital with participation of Bezos Expeditions — the personal VC fund of Amazon CEO Jeff Bezos.
Chipper Cash was founded in San Francisco in 2018 by Ugandan Ham Serunjogi and Ghanaian Maijid Moujaled. The company offers mobile-based, no fee, P2P payment services in seven countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa and Kenya.
Parallel to its P2P app, the startup also runs Chipper Checkout — a merchant-focused, fee-based payment product that generates the revenue to support Chipper Cash’s free mobile-money business. The company has scaled to 3 million users on its platform and processes an average of 80,000 transactions daily. In June 2020, Chipper Cash reached a monthly payments value of $100 million, according to CEO Ham Serunjogi .
As part of the Series B raise, the startup plans to expand its products and geographic scope. On the product side, that entails offering more business payment solutions, crypto-currency trading options, and investment services.
“We’ll always be a P2P financial transfer platform at our core. But we’ve had demand from our users to offer other value services…like purchasing cryptocurrency assets and making investments in stocks,” Serunjogi told TechCrunch on a call.
Image Credits: Chipper Cash
Chipper Cash has added beta dropdowns on its website and app to buy and sell Bitcoin and invest in U.S. stocks from Africa — the latter through a partnership with U.S. financial services company DriveWealth.
“We’ll launch [the stock product] in Nigeria first so Nigerians have the option to buy fractional stocks — Tesla shares, Apple shares or Amazon shares and others — through our app. We’ll expand into other countries thereafter,” said Serunjogi.
On the business financial services side, the startup plans to offer more API payments solutions. “We’ve been getting a lot of requests from people on our P2P platform, who also have business enterprises, to be able to collect payments for sale of goods,” explained Serunjogi.
Chipper Cash also plans to use its Series B financing for additional country expansion, which the company will announce by the end of 2021.
Jeff Bezos’s backing of Chipper Cash follows a recent string of events that has elevated the visibility of Africa’s startup scene. Over the past decade, the continent’s tech ecosystem has been one of the fastest growing in the world by year year-over-year expansion in venture capital and startup formation, concentrated in countries such as Nigeria, Kenya, and South Africa.
Image Credits: TechCrunch/Bryce Durbin
Bringing Africa’s large unbanked population and underbanked consumers and SMEs online has factored prominently. Roughly 66% of Sub-Saharan Africa’s 1 billion people don’t have a bank account, according to World Bank data.
As such, fintech has become Africa’s highest-funded tech sector, receiving the bulk of an estimated $2 billion in VC that went to startups in 2019. Even with the rapid venture funding growth over the last decade, Africa’s tech scene had been performance light, with only one known unicorn (e-commerce venture Jumia) a handful of exits, and no major public share offerings. That changed last year.
In April 2019, Jumia — backed by investors including Goldman Sachs and Mastercard — went public in an NYSE IPO. Later in the year, Nigerian fintech company Interswitch achieved unicorn status after a $200 million investment by Visa.
One of the more significant liquidity events in African tech occurred last month, when Stripe acquired Nigerian payment gateway startup Paystack for a reported $200 million.
In an email to TechCrunch, a spokesperson for Bezos Expeditions confirmed the fund’s investment in Chipper Cash, but declined to comment on further plans to back African startups. Per Crunchbase data, the investment would be the first in Africa for the fund. It’s worth noting Bezos Expeditions is not connected to Jeff Bezo’s hallmark business venture, Amazon.
For Chipper Cash, the $30 million Series B raise caps an event-filled two years for the San Francisco-based payments company and founders Ham Serunjogi and Maijid Moujaled. The two came to America for academics, met in Iowa while studying at Grinnell College and ventured out to Silicon Valley for stints in big tech: Facebook for Serunjogi and Flickr and Yahoo! for Moujaled.
Chipper Cash founders Ham Serunjogi (R) and Maijid Moujaled; Image Credits: Chipper Cash
The startup call beckoned and after launching Chipper Cash in 2018, the duo convinced 500 Startups and Liquid 2 Ventures — co-founded by American football legend Joe Montana — to back their company with seed funds. The startup expanded into Nigeria and Southern Africa in 2019, entered a payments partnership with Visa in April and raised a $13.8 million Series A in June.
Chipper Cash founder Ham Serunjogi believes the backing of his company by a notable tech figure, such as Jeff Bezos (the world’s richest person), has benefits beyond his venture.
“It’s a big deal when a world class investor like Bezos or Ribbit goes out of their sweet spot to a new area where they previously haven’t done investments,” he said. “Ultimately, the winner of those things happening is the African tech ecosystem overall, as it will bring more investment from firms of that caliber to African startups.”
Nigeria based startup Autochek looks to bring the sales and servicing of cars in Africa online. The newly founded venture has closed a $3.4 million seed-round co-led by TLcom Capital and 4DX ventures toward that aim.
The raise comes fresh off of Autochek’s September acquisition of digital car sales marketplace Cheki in Nigeria and Ghana. It also follows the recent departure of Autochek CEO Etop Ikpe from Cars45 — the startup he co-founded in 2016, now owned by Amsterdam based OLX Group.
That’s a lot of news in a short-time for Ikpe. His new company will likely be in direct competition with his previous venture (also located in Nigeria). Still, the Nigerian entrepreneur — who built his early tech credentials at e-commerce startups DealDey and Konga — says Autochek is a new model.
“It’s different in the type of technology we’re building and that it’s asset light. I don’t have any inventory. I don’t buy cars. I don’t transact any [physical] cars. I don’t own any inspection locations. I don’t own any dealerships,” Ikpe told TechCrunch on a call from Lagos.
Autochek’s model, according to its CEO, is aimed at creating the digital infrastructure for a new system to better coordinate sales, servicing, and vehicle records of the car market in Nigeria and broader Africa.
Autochek CEO Etop Ikpe, Image Credit: Autochek
Ikpe characterizes that market as still largely informal and fragmented. “We’re basically focused on technology solutions to build the rails of [Africa’s] automotive sector to run on. We’re focusing on three foundations of the market: transactions and trading, maintenance, and financing,” he said.
Autochek’s platform — managed by a developer team in Lagos and Nairobi — is a network for consumers and businesses to buy cars, sell cars, service cars, and finance cars sales.
On the financing side, the startup launched with 10 bank partnerships in Nigeria and two in Ghana, according to Ikpe. Creating more financing options is both a big opportunity for the startup and consumers, he explained. “The used car market in Africa is a $45 billion a year market that has only a 5% financing penetration rate…so there’s huge upside for growth.”
Image Credit: Autochek
Across its core product offerings, Autochek has created a network of partners and standards. The company generates revenues through fees charged on consumer transactions and commissions paid by dealers and service shops on the platform. Consumers can sign up and use the Autochek app for free.
On the sudden departure from his previous startup, Cars45, “I left because I wanted to build something else,” explained Ikpe. There’s been plenty of speculation in local tech press as to what happened, including reports of forced exits by investors. Ikpe declined to get into the details except to say, “I’ve resigned. I’ve moved on and I’m focused on doing what I’m doing right now.”
In addition to its operations in Nigeria — Africa’s most populous nation, largest economy and top VC destination — Autochek plans to use its seed-financing to expand services and geographic scope. The startup will add associated auto related services, such as insurance and blue book pricing products. Autochek is also eying possible entry in new countries such as Ivory Coast, Senegal, South Africa, Kenya, Egypt and Algeria. More M&A could also be in play. “Acquisitions are going to be a core part of our expansion strategy,” said Ikpe.
TLcom Capital Partner Andreata Muforo confirmed the fund’s co-lead on the $3.4 million seed round. Speaking to TechCrunch on a call from Nairobi, she named Autochek’s asset light model, Ikpe’s repeat founder status, and the fund’s view of auto sales and service as an underserved market in Africa as reasons for backing the venture. Golden Palm Investments, Lateral Capital, MSA Capital, and Kepple Africa Ventures also joined the investment round.
While fintech gains the majority of VC financing across Africa’s top tech hubs — such as Nigeria, Kenya and South Africa — mobility related startups operating on the continent have attracted notable support. Drone delivery venture Zipline and trucking logistics company Kobo360 have both received backing from Goldman Sachs. In 2019, FlexClub, a South African startup that matches investors and drivers to cars for ride-hailing services, used a $1.3 million round to expand to Mexico in partnership with Uber.
The African continent is currently one of the fastest-growing regions when it comes to mobile growth, and financial technology companies that are building services to meet that rapidly-expanding market are getting a lot of attention.
In the latest development, Kuda, a startup out of Nigeria that operates a popular mobile-first challenger bank for consumers and (soon) small businesses, is announcing that it has raised $10 million — the biggest seed round ever to be raised in Africa. The funding comes on the back of strong demand for its services and its ambitions — according CEO Babs Ogundeyi — to become the go-to bank not just for those living on the continent, but for the African diaspora.
“We want to bank every African on the planet, wherever you are in the world,” he said in an interview. It’s starting first in its home market: since launching in September 2019, it has picked up around 300,000 customers — first consumers and now also small businesses — and on average processes over $500 million of transactions each month.
The $10 million is being led by Target Global, the giant VC out of Europe, with Entrée Capital and SBI Investment (once part of SoftBank, now no longer) also participating, along with a number of other notable individual fintech founders and angels.
The list includes Raffael Johnen (founder of Auxmoney), Johan Lorenzen (founder of Holvi), Brandon Krieg/Ed Robinson (founders of Stash), and Oliver and Lish Jung (angel investors in Nubank, Revolut, and Chime).
Prior to this Kuda — which is co-founded by Ogundeyi and CTO Musty Mustapha — had raised $1.6 million in a pre-seed round to launch a beta of its service, and Ogundeyi said he’s already working on a much bigger Series A. No valuation is currently being disclosed.
In a year where many have been watching the world economy with some trepidation on the back of a raging health pandemic hitting multiple geographies, fintech in Africa has been in the spotlight of late.
Most recently, Paystack — a payments startup out of Nigeria — got acquired by Stripe for over $200 million, making it not only Stripe’s biggest acquisition, but the largest exit-by-acquisition to-date for any Nigerian startup. That news followed closely on the heels of Interswitch, another payments startup, hitting a $1 billion valuation on the back of an investment from Visa.
But in truth, startups focused around the business of financial transactions — which also includes the adjacent industry of e-commerce (See: Jumia, the first venture-backed startup out of the region to go public) have been some of the most eagerly-watched, and their services mostly widely-adopted, of all tech plays in the region.
The reason is logical. As a contintent, Africa is one of the most populous, yet one of the more underdeveloped economically, continents in the world. And in our modern times, digital inclusion has become synonymous with financial inclusion. So, as the population begins to adopt mobile technology in earnest, those users represent a big opportunity: there is pent-up demand, and competition is relatively sparse.
That has meant a number of efforts, leveraging the growth in mobile phone usage to provide services to people to make transactions beyond those that they would otherwise only do in person, using cash. These have included innovative services like Mpesa, which uses a person’s phone (which can be a basic feature phone) as a proxy for a bank account, allowing people to pay in and pay out using their phone numbers and prepay accounts.
Nigeria — currently the biggest single economy in Africa — has also been at the center of a lot of fintech activity, and Kuda has been taking that opportunity by the horns.
In its case, that has started with building Kuda’s footprint from the ground up.
The rise of the challenger bank has been one of the more interesting developments in the world of consumer fintech, with companies like N26, Monzo, Starling, Chime, NuBank and Revolut finding a lot of traction with younger users.
But unlike many of these, Kuda does not partner with other banks to manage and back deposits with the challenger bank to in turn focus on customer service, and building user-friendly experiences and value-added services around money management. Instead, Kuda has obtained a microfinance banking license from the central bank of Nigeria.
This means that it manages payments, transfers, issues debit cards (in partnership with Visa and Mastercard). It also, he said, has partnerships with the incumbent banks Zenith Bank, Guaranteed Trust and Access Bank for people to come in for physical deposits and withdrawals when needed.
“We have built the core banking services in-house so we own the full stack,” he said. “It means we don’t have to piggy back on another financial institution. We may choose to partner on certain products but we don’t have to.” He added that the plan will be to get full licenses “in what we consider key regions” but possibly partner in others where the existing infrastructure makes it more logical to do so.
“The reason for the full license is because of monetization,” he added. “As a bank you need to be able to lend, and in Nigeria if you don’t have a full license it’s hard to lend and make money.”
Having an account is free, and so Kuda makes money through other services. Among them, users can top up their phones directly from the Kuda app (most accounts are prepaid), so Kuda acts as a kind of broker in that transaction and makes a percentage from it.
Users can also pay bill through the app, where Kuda also makes a percentage. And, like other banks, Kuda manages its float and invests it in treasury bills, mutual funds and soon other credit products. There are also fees collected from debit transactions but these are not the real focus, he said.
Kuda’s mobile-first interface is not unlike a lot of the new wave of banking services built around apps, including an aim to be more than just a “dumb box” for storing money.
In its case, Kuda uses machine learning to personalize every customer, Ogundeyi said, generating suggested budgets and savings plans for its users. “The plan for our credit service is that we will base how much we issue and at what terms based on your existing spending habits,” he said.
That focus on spending dovetails with the kind of customers that Kuda is targeting. Some 70% of Nigerians are under the age of 30, and they are “smart and entrepreneurial” said Ogundeyi.
Although a pared-down version of Kuda is available for feature devices — it lacks the AI-based money management features, for one thing — the startup is mainly targeting the segment of the population that is buying and using smartphones, have the kind of incomes and lifestyles that mean they are actively depositing and spending money, and — in an increasing number of cases — also running their own businesses. That overlap means that “targeting small business owners doesn’t deviate from our original business model of younger consumers too much,” he said.
While some users are already running some of their small business banking through Kuda, a more formal small business product, with more features tailored for those users, will be launched by Q1 2021, he said.
Ogundeyi said that despite the uncertainty many are feeling around the pandemic, the relative success of Kuda and the optimism around the future of challenger banks, helped the company close this seed round (and raise other money soon) relatively easily.
“The emergence of digital challenger banks, providing customers with a free, digital and significantly better banking experience compared to services offered by traditional banks, has seen huge success across the globe,” said Dr. Ricardo Schäfer, Partner at Target Global, in a statement. “Kuda is one of Africa’s leading digital challenger banks and one of the fastest growing fintechs on the continent. We are very excited to be working with Babs, Musty and the entire Kuda team to further build on the fantastic momentum they have had since inception and support them in taking the company to the next level.” He is joining Kuda’s board with this round.
“Kuda’s relentless drive and ability to execute quickly has allowed it to carve out a highly disruptive business model in the finance and banking industry,” added Avi Eyal, partner at Entrée Capital.
Funding for any startup from the continent is rare enough that stories around it must also be viewed in the context of the bigger challenges in general that African startups have with raising money in a global market, which seems to generally be heavily biased towards developed economies (and startups in specific regions like Silicon Valley) and more known-quantity founders (which often tends to skew to while males).
“Ultimately I think there is work to be done on both sides,” he said of investors, founders and the situation of building stronger African ecosystems. “On the side of investors, more of them need to appreciate the value of the continent. And from the entrepreneurial side, there is work to be done in understanding how investors invest to get them over the line.”
He thinks that having more investors from the continent itself could help.
“Unfortunately we don’t have many African investors. My belief is that people with money typically will give money to people they understand and connect with. It’s not a surprise that if you have gone through a certain establishment (work or school) it’s easier to get funding from someone who was in that organization,” he said. “My first investment came from a friend who was at school with me.”
Indeed, Ogundeyi knows something about the workings of capital from his own first-hand experience. He was actually born England to Nigerian parents, who eventually moved back to Nigeria but kept him in the UK going to British boarding schools and eventually university. Ogundeyi still splits his time between Lagos and London (which is where he was when we spoke last week). He says that he considers himself Nigerian first.
“Nigeria has the potential to be a great national economy if it’s well harnessed,” he said. “Tech is contributing significantly to that. That is why there is a lot of interest and why we are excited to be there.”
Milk substitutes are a $1 trillion category and Perfect Day is angling to be the leader in the market. Iger’s ascension to a director position at the company just affirms that Perfect Day is a big business in the big business of making milk replacements.
Unlike almond milk or soy milk companies, Perfect Day is angling to be a direct replacement for bovine dairy using a protein cultivated from mushrooms.
The move comes as Perfect Day ramps up its development of consumer products on its own and through investments in startups like the Urgent Company. That’s the consumer food company Perfect Day backed to commercialize technologies and create more sustainable food brands.
For Iger, the Perfect Day board represents the first new board seat the longtime entertainment powerbroker has taken since he left Apple.
“Innovation and leadership are both key to world changing ideas,” said Iger, in a statement. “Perfect Day has established both innovation in its use of technology and novel approach to fighting climate change, and clear leadership in building a category with a multi-year head start in the industry they’re helping to build. I’m thrilled to join at this pivotal moment and support the company’s swift growth into new categories and markets.”
Iger joins Perfect Day’s co-founders Ryan Pandya and Perumal Gandhi, and representatives from the company’s international backers and lead investors, Aftab Mathur, from Temasek Holdings, and Patrick Zhang, of Horizons Ventures.
Until yesterday, Perfect Day was the most well-capitalized protein fermentation company focused on dairy in the world. That’s when Impossible Foods, the alternative meat manufacturer which has raised $1.5 billion from investors, unveiled that it, too, was working on a dairy product.
Perfect Day, by contrast, has raised $360 million in total funding to-date.
“We’re thrilled to have Bob Iger join our team, and are confident his tenured operational expertise and visionary leadership style will further help us scale our ambitions,” said Ryan Pandya, the chief executive and co-founder of Perfect Day, in a statement. “We’re focused on rapid commercialization in the U.S. and globally. But we know we can’t do it alone. That’s why we’re excited and humbled to have a proven leader like Bob to help us thoughtfully transform our purpose-driven aspirations into tangible and sustainable impact.”
Before Nick Macario launched Verifiable, the Austin-based company that just raised $3 million for its api toolkit that verifies healthcare credentials, he ran a series of other businesses designed to offer public credentials for professionals.
His first foray into the world of identity management services was the personal website builder, branded.me. After that company was sold, Macario launched Remote.com, an outsourced provider of human resources services that was constantly running background checks and verifying employee credentials.
That’s where Macario got the idea for Verifiable and struck on a market opportunity that’s exploding thanks to the proliferation of telemedicine and on-demand services, and the shortage of qualified medical candidates to fill positions and meet growing demand.
This boom in remote medical services is one reason why Macario, working with co-founder and chief technology officer, Vivekanand Rajkumar, was able to raise $3 million from investors including Tiger Global, Liquid2 Ventures, Struck Capital, Soma Capital, Jack Altman, Max Mullen, and Sahil Lavingia.
“We’re at an inflection point with healthcare,” said Macario. “There are large volumes of healthcare verifications and certifications that are being verified manually… and the lack of infrastructure and credentialing is a big part of the bottleneck holding healthcare back.”
Verifiable uses Dock, a blockchain based ledger company that issues digital credentials and anchors them to a public ledger.
Verifiable provides an API that connects to hundreds of primary sources to keep updated records on the 17 million licensed healthcare providers working in the U.S.
Companies like Talkspace, Sesame and Verge Health are already using the API to automate real-time verifications for more than 50,000 healthcare providers.
“From a broader scale, we’re automating credentialing processes, but specifically we’re automating licensing verification and monitoring,” Macario said.
The Verifiable chief executive estimates that several billions of dollars in revenue and fines are lost every year because healthcare providers don’t keep up with the credentialing and licensing practitioners need to work in the U.S.
“It’s not a one-and-done verification,” says Macario. “You need to check on a monthly basis to make sure that providers are compliant.”
Verifiable’s management service can range anywhere from two to ten dollars depending on how deeply a potential employer wants to dive to confirm the standing and licensing of their practitioners. The price is based on the number of verifications and the number of healthcare providers that need to be verified.
And while Verifiable is starting with a specific focus on verification, the company has much bigger vision. “Where we’re excited about going is identity and healthcare provider data. It connects to many different areas of healthcare,” Macario said.
We’re starting in a specific focus with verification.. Where we’re excited about going is identity and healthcare provider data… it connects to many different areas of healthcare.
On Friday, former Tiger Global Management investor Lee Fixel registered plans for the second fund of his new investment firm, Addition, just four months after closing the first. According to a report on Friday by the Financial Times, the outfit spent last week finalizing the fundraising for the $1.4 billion fund, which Addition reportedly doesn’t plan to begin investing until next year.
But a source close to the firm now says the capital has not been raised. That’s perhaps good news for investors who were shut out of Addition’s $1.3 billion debut fund and who might be hoping to write a check this time around.
The mere fact that Fixel is back in the market already has tongues wagging about the dealmaker, one whose reluctance to talk on the record with media outlets seems only to add to his mystique. Forbes published a lengthy piece about Fixel this summer, in which Fixel seems to have provided just one public statement, confirming the close of Addition’s first fund and adding little else. “We are excited to partner with visionary entrepreneurs, and with our 15-year fund duration, we have the patience to support our portfolio companies on their journey to build impactful and enduring businesses,” it read.
According to Forbes, that first fund — which Fixel is actively putting to work right now — intends to invest one-third of its capital in early-stage startups and two-thirds in growth-stage opportunities.
Whether that includes some of the special purpose acquisition vehicles, or SPACs, that are coming together right and left, isn’t yet known, though one imagines these might appeal to Fixel, who has long seemed to be at the forefront of new trends impacting growth-stage companies in particular. (A growing number of SPACs is right now looking to transform into public companies some of the many hundreds of richly valued private companies in the world.)
Clearer is that Addition is wasting little time in writing some big checks. Among its announced deals is Inshorts, a seven-year-old, New Delhi, India-based popular news aggregation app that last week unveiled $35 million new funding led by Fixel.
The deal represents Addition’s first India-based bet, even while Fixel knows both the country and the startup well. He previously invested in Inshorts on behalf of Tiger; he’s also credited for snatching up a big stake in Flipkart on behalf of Tiger, a move that reportedly produced $3.5 billion in profits when Flipkart sold to Walmart.
Addition also led a $200 million round last month in Snyk, a five-year-old, London-based startup that helps companies securely use open-source code. The round valued the company at $2.6 billion — more than twice the valuation it was assigned when it raised its previous round 10 months ago.
And in August, Addition led a $110 million Series D round for Lyra Health, a five-year-old, Burlingame, California-based provider of mental health care benefits for employers that was founded by former Facebook CFO David Ebersman.
A smaller check went to Temporal, a year-old, Seattle-based startup that is building an open-source, stateful microservices orchestration platform. Last week, the company announced $18.75 million in Series A funding led by Sequoia Capital, but Addition also joined the round, having been an earlier investor in the company.
According to PitchBook data, Addition has made at least 17 investments altogether.
Fixel — whose bets while at Tiger include Peloton and Spotify — isn’t running Addition single-handedly, though according to Forbes, he is the single “key man” around which the firm revolves, as well as the biggest investor in Addition’s first fund.
He has also brought aboard at least three investment principals from Wall Street and a head of data science who worked formerly for Uber (per Forbes). Ward Breeze, a longtime attorney who worked formerly in the emerging companies practice of Gunderson Dettmer, is also working with Fixel at Addition.
(Correction: An earlier version of this story reported that Fixel’s newest fund was already raised, per the FT.)