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SoftBank terminates $3B tender offer for WeWork shares

By Natasha Lomas

SoftBank Group has pulled a $3 billion tender offer for WeWork shares — citing closing conditions not being met.

The investment behemoth had been rumoured to be getting cold feet, when the WSJ reported last month that it was using regulatory investigations as a way to back out of its commitment to buy $3BN in shares from existing WeWork shareholders.

Under the terms of the share buyback deal negotiated last year, WeWork founder Adam Neumann had been set to receive almost $1BN for his shares in the co-working company. The former CEO had already been forced out at that stage after public markets balked over his managerial acumen, as we reported it at the time.

In a press statement issued today SoftBank SVP and chief legal officer, Rob Townsend, writes:

SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team. The tender offer was an offer to buy shares directly from other major stockholders and its termination has no impact on WeWork’s operations or customers. The tender offer closing was conditioned on the satisfaction of certain closing conditions the parties agreed to in October of last year for SoftBank’s protection. Several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer.

SoftBank lists the unfulfilled conditions that have led it to terminate the offer as:

  • The failure to obtain the necessary antitrust approvals by April 1, 2020;
  • The failure to sign and close the roll up of the China joint venture by April 1, 2020;
  • The failure to close the roll up of the Asia (ex-China and ex-Japan) joint venture by April 1, 2020;
  • The existence of multiple, new, and significant pending criminal and civil investigations that have begun since the MTA was signed in October 2019, in which authorities have requested information regarding, among other things, WeWork’s financing activities, communications with investors, business dealings with Adam Neumann, operations, and financial condition; and
  • The existence of multiple new actions by governments around the world related to COVID-19, imposing restrictions against WeWork and its operations.

A spokeswomen for WeWork declined to comment on SoftBank withdrawing the offer. But Reuters has reported that a special committee of WeWork’s board said it was “disappointed” by the development and is  considering “all of its legal options, including litigation.”

At the time of writing SoftBank had not responded to a request for comment.

Its press note makes a point of emphasizing that “Neumann, his family, and certain large institutional stockholders, such as Benchmark Capital, were the parties who stood to benefit most from the tender offer”.

“Together, Mr. Neumann’s and Benchmark’s equity constitute more than half of the stock tendered in the offering. In contrast, current WeWork employees tendered less than 10 percent of the total,” it writes, adding: “SoftBank previously worked with WeWork to complete an earlier phase of the tender offer that allowed over 4,000 employees to reprice out-of-the-money stock options at lower strike prices, delivering value in excess of $140 million to these employees in the form of reduced exercise prices (where such options would have been worth substantially less or nothing absent such repricing).”

Earlier this week WeWork announced the sale of Meetup, a social networking platform designed to connect people in person, for an undisclosed sum that’s reportedly far less than the $156M acquisition price WeWork paid for it back in 2017.

The novel coronavirus has certainly brought disruption to the hipster white collar co-working and social networking business, as populations are encouraged do to the opposite of mingle. The near term prospects for co-working spaces in a new age of social distancing and encouraged (or enforced) home working look bleak.

Yet, outside Asia, WeWork has to date closed only a tiny minority of its locations globally as a result of the coronavirus pandemic.

Even in heavily affected cities in Europe, such as Madrid and Milan — where governments have imposed strict quarantine measures to try to stem the tide of COVID-19 deaths — WeWork has not taken the step of shuttering co-working spaces.

Instead, in Europe and the US, it has only been temporarily closing buildings or even just individual floors if infections are identified.

It’s a different story in Asia. Per an updated list of building closures on WeWork’s website, the company closed more than 30 locations across cities in India on March 23 — but only after the government imposed a three-week nationwide lockdown, instructing India’s 1.3BN people to stay at home.

Elsewhere, WeWork members may see little reason to break quarantine in order to travel to a shared workspace when, provided they have Internet at home, they can stay where they are and be just as productive without risking spreading or catching the virus — hence the Zoom videoconferencing boom.

WeWork’s handling of the coronavirus crisis has also caused some rifts with its membership, with press reports of members angry at it for refusing refunds for spaces they can’t (in good conscience) use.

It has also faced criticism from members angry it’s prioritizing rent collection from now very cash-strapped small businesses rather than closing down during a public health crisis. (We’ve heard similar stories from members who did not wish to be publicly identified.)

WeWork, meanwhile, has justified staying open in a pandemic by claiming its locations contain people doing essential work.

When we asked the company about its response to the coronavirus last month, it told us: “We are monitoring the coronavirus (COVID-19) pandemic closely and have implemented a number of precautionary measures” — saying then it had strengthened “on-site cleanliness measures” and suspended all internal and member events until further notice, as of March 12.

On the same date it had offered its own staff the option of working from home — though its doors remained open to keycard-holding, fee-paying members.

Proposed amendments to the Volcker Rule could be a lifeline for venture firms hit by market downturn

By Jonathan Shieber

In the wake of the financial crisis, Congress passed regulations limiting the types of investments that banks could make into private equity and venture capital funds. As cash strapped investors pull back on commitments to venture funds given the precipitous drop of public market stocks, loosening restrictions on the how banks invest cash could be a lifeline for venture funds.

That’s the position that the National Venture Capital Association is taking on the issue in comments sent to the chairs of the Federal Reserve, the Securities and Exchange Commission and the Federal Deposit Insurance Corp., and the Commodities Future Trading Commission.

The proposed revisions of the Volcker Rule would exclude qualifying venture capital funds from the covered fund definition.

“The loss of banking entities as limited partners in venture capital funds has had a disproportionate impact on cities and regions with emerging entrepreneurial ecosystems — areas outside of Silicon Valley and other traditional technology centers,” NVCA president and chief executive Bobby Franklin wrote. “The more challenging reality of venture fundraising in these areas of the country tends to require investment from a more diverse set of limited partners.”

Franklin cited the case of Renaissance Venture Capital, a Michigan-based regionally focused fund that estimated the Volcker Rule cost them $50 million in potential capital commitments resulting in the loss of a potential $800 million in capital invested in the state of Michigan.

“This narrative unfortunately repeats itself, as we have heard firsthand from investors about how the Volcker Rule has affected venture capital investment and entrepreneurial activity across the country,” wrote Franklin. “The majority of these concerns about the Volcker Rule have come from members located in regions with emerging ecosystems, including states like Ohio, Michigan, North Carolina, New Hampshire, Wisconsin, Georgia, and Virginia, to name a few.”

It’s not only small states that could be impacted by the decision to reverse course on banking investments into venture firms in these uncertain times.

There’s a growing concern among venture investors that — just like in 2008 — their limited partners might find that they’re over-allocated into venture investments given the decline in markets, which would force them to pull back on making commitments to new funds.

“Institutional LPs will run into the same issues they had in 2008. If you used to manage $10B and the market declines and you now manage $6B, the percentage allocated to private equity has now increased relative to the whole portfolio,” Hyde Park Ventures partner, Ira Weiss told a Forbes columnist in a March interview. “They’re really not going to look at new managers. If you’ve done really well as a manager, they will probably re-up but may reduce commitment amounts. This will bleed backwards into the venture market. This is happening at a time when Softbank has already had a lot of trouble and people had not really modulated for that yet, but now they will.”

Some of the largest investment funds have already closed on capital, insulating them from the worst hits. These include funds like New Enterprise Associates and General Catalyst . But newer funds are going to have a harder time raising. For them, giving banks the ability to invest in venture firms could be a big boon — and a confidence boost that the industry needs at a time when investors across the board are getting skittish.

“Fundraising for new funds in 2020 and 2021 might prove to be more difficult as asset managers think about rebalancing their portfolio and/or protecting their assets from the current volatility in the market,” Aaron Holiday told Forbes . “This means that VC investing could slow down in 12 – 24 months after the most recent wave of funds (i.e. 2018 and 2019 vintages) are fully deployed.”

Mobile payments firms in India are now scrambling to make money

By Manish Singh

Vijay Shekhar Sharma, founder and chief executive of India’s most valuable startup, Paytm, posed an existential question in a recent press conference.

“What do you think of the commercial model for digital mobile payments. How do we make money?” Sharma asked Nandan Nilekani, one of the key architects of the Universal Payments Infrastructure that created a digital payments revolution in the country.

It’s the multi-billion-dollar question that scores of local startups and international giants have been scrambling to answer as many of them aggressively shift their focus to serving merchants and building lending products and other financial services .

New Delhi’s abrupt move to invalidate much of the paper bills in the cash-dominated nation in late 2016 sent hundreds of millions of people to cash machines for months to follow.

For a handful of startups such as Paytm and MobiKwik, this cash crunch meant netting tens of millions of new users in a span of a few months.

India then moved to work with a coalition of banks to develop the payments infrastructure that, unlike Paytm and MobiKwik’s earlier system, did not act as an intermediary “mobile wallet” to serve as an intermediary between users and their banks, but facilitated direct transaction between two users’ bank accounts.

Silicon Valley companies quickly took notice. For years, Google and the likes have attempted to change the purchasing behavior of people in many Asian and African markets, where they have amassed hundreds of millions of users.

In Pakistan, for instance, most people still run errands to neighborhood stores when they want to top up credit to make phone calls and access the internet.

With China keeping its doors largely closed for foreign firms, India, where many American giants have already poured billions of dollars to find their next billion users, it was a no-brainer call.

“Unlike China, we have given equal opportunities to both small and large domestic and foreign companies,” said Dilip Asbe, chief executive of NPCI, the payments body behind UPI.

And thus began the race to participate in the grand Indian experiment. Investors have followed suit as well. Indian fintech startups raised $2.74 billion last year, compared to 3.66 billion that their counterparts in China secured, according to research firm CBInsights.

And that bet in a market with more than half a billion internet users has already started to pay off.

“If you look at UPI as a platform, we have never seen growth of this kind before,” Nikhil Kumar, who volunteered at a nonprofit organization to help develop the payments infrastructure, said in an interview.

In October, just three years after its inception, UPI had amassed 100 million users and processed over a billion transactions. It has sustained its growth since, clocking 1.25 billion transactions in March — despite one of the nation’s largest banks going through a meltdown last month.

“It all comes down to the problem it is solving. If you look at the western markets, digital payments have largely been focused on a person sending money to a merchant. UPI does that, but it also enables peer-to-peer payments and across a wide-range of apps. It’s interoperable,” said Kumar, who is now working at a startup called Setu to develop APIs to help small businesses easily accept digital payments.

Vice-president of Google’s Next Billion Users Caesar Sengupta speaks during the launch of the Google “Tez” mobile app for digital payments in New Delhi on September 18, 2017 (Photo: Getty Images via AFP PHOTO / SAJJAD HUSSAIN)

The Google Pay app has amassed over 67 million monthly active users. And the company has found the UPI pipeline so fascinating that it has recommended similar infrastructure to be built in the U.S.

In August, the Federal Reserve proposed to develop a new inter-bank 24×7 real-time gross settlement service that would support faster payments in the country. In November, Google recommended (PDF) that the U.S. Federal Reserve implement a real-time payments platform such as UPI.

“After just three years, the annual run rate of transactions flowing through UPI is about 19% of India’s Gross Domestic Product, including 800 million monthly transactions valued at approximately $19 billion,” wrote Mark Isakowitz, Google’s vice president of Government Affairs and Public Policy.

Paytm itself has amassed more than 150 million users who use it every year to make transactions. Overall, the platform has 300 million mobile wallet accounts and 55 million bank accounts, said Sharma.

Search for a business model

But despite on-boarding more than a hundred million users on their platform, payment firms are struggling to cut their losses — let alone turn a profit.

At an event in Bangalore late last year, Sajith Sivanandan, managing director and business head of Google Pay and Next Billion User Initiatives, said current local rules have forced Google Pay to operate in India without a clear business model.

Mobile payment firms never levied any fee to users as a strategy to expand their reach in the country. A recent directive from the government has now put an end to the cut they were receiving to facilitate UPI transactions between users and merchants.

Google’s Sivanandan urged the local payment bodies to “find ways for payment players to make money” to ensure every stakeholder had incentives to operate.

Paytm, which has raised more than $3 billion to date, reported a loss of $549 million in the financial year ending in March 2019.

The firm, backed by SoftBank and Alibaba, has expanded to several new businesses in recent years, including Paytm Mall, an e-commerce venture, social commerce, financial services arm Paytm Money and a movies and ticketing category.

This year, Paytm has expanded to serve merchants, launching new gadgets such as a stand that displays QR check-out codes that comes with a calculator and a battery pack, a portable speaker that provides voice confirmations of transactions and a point-of-sale machine with built-in scanner and printer.

In an interview with TechCrunch, Sharma said these devices are already garnering impressive demand from merchants. The company is offering these gadgets to them as part of a subscription service that helps it establish a steady flow of revenue.

The firm’s Money arm, which offers lending, insurance and investing services, has amassed over 3 million users. The head of Paytm Money, Pravin Jadhav, resigned from the company this week, a person familiar with the matter said. A Paytm spokeswoman declined to comment. (Indian news outlet Entrackr first reported the development.)

Flipkart’s PhonePe, another major player in India’s payments market, today serves more than 175 million users, and over 8 million merchants. Its app serves as a platform for other businesses to reach users, explained Rahul Chari, co-founder and CTO of the firm, in an interview with TechCrunch. The company is currently not taking a cut for the real estate on its app, he added.

But these startups’ expansion into new categories means that they now have to face off even more rivals, and spend more money to gain a foothold. In the social commerce category, for instance, Paytm is competing with Naspers-backed Meesho and a handful of new entrants; and heavily-backed OkCredit and KhataBook today lead the bookkeeping market.

BharatPe, which raised $75 million two months ago, is digitizing mom and pop stores and granting them working capital. And PineLabs, which has already become a unicorn, and MSwipe have flooded the market with their point-of-sale machines.

A vendor holds an Mswipe terminal, operated by M-Swipe Technologies Pvt Ltd., in an arranged photograph at a roadside stall in Bengaluru, India, on Saturday, Feb. 4, 2017. (Photographer: Dhiraj Singh/Bloomberg via Getty Images)

“They have no choice. Payment is the gateway to businesses such as e-commerce and lending that you can monetize. In Paytm’s case, their earlier bet was Paytm Mall,” said Jayanth Kolla, founder and chief analyst at research firm Convergence Catalyst.

But Paytm Mall has struggled to compete with giants Amazon India and Walmart’s Flipkart. Last year, Mall pivoted to offline-to-online and online-to-offline models, wherein orders placed by customers are serviced from local stores. The company also secured about $160 million from eBay last year.

An executive who previously worked at Paytm Mall said the venture has struggled to grow because its goal-post has constantly shifted over the years. It has recently started to focus on selling fastags, a system that allows vehicle owners to swiftly pay toll fees. At least two more executives at the firm are on their way out, a person familiar with the matter said.

Kolla said the current dynamics of India’s mobile payments market, where more than 100 firms are chasing the same set of audience, is reminiscent of the telecom market in the country from more than a decade ago.

“When there were just four to five players in the telecom market, the prospect of them becoming profitable was much higher. They were scaling like crazy. They grew with the lowest ARPU in the world (at about $2) and were still profitable.

“But the moment that number grew to more than a dozen overnight, and the new players started offering more affordable plans to subscribers, that’s when profitability started to become elusive,” he said.

To top that off, the arrival of Reliance Jio, a telecom operator run by India’s richest man, in 2016 in the country with the cheapest tariff plans in the world, upended the market once again, forcing several players to leave the market, or declare bankruptcies, or consolidate.

India’s mobile payments market is now heading to a similar path, said Kolla.

If there were not enough players fighting for a slice of India’s mobile payments market that Credit Suisse estimate could reach $1 trillion by 2023, WhatsApp, the most popular app in the country with more that 400 million users, is set to roll out its mobile payments service in the country in a couple of months.

At the aforementioned press conference, Nilekani advised Sharma and other players to focus on financial services such as lending.

Unfortunately, the coronavirus outbreak that promoted New Delhi to order a three-week lockdown last month is likely going to impact the ability of millions of people to use such services.

“India has more than 100 million microfinance accounts, serviced in cash every week by gig-economy workers, who hawk vegetables on street corners or embroider saris sold in malls, among other things. Three out of four workers make a living by working casually for others or at their family firms and farms. Prolonged shutdowns will impair their ability to repay loans of 2.1 trillion rupees ($28.5 billion), putting the world’s largest microfinance industry at risk,” wrote Bloomberg columnist Andy Mukherjee.

Africa Roundup: Africa’s tech ecosystem responds to COVID-19

By Jake Bright

In March, the virus gripping the world — COVID-19 — started to spread in Africa. In short order, actors across the continent’s tech ecosystem began to step up to stem the spread.

Early in March, Africa’s COVID-19 cases by country were in the single digits, but by mid-month those numbers had spiked leading the World Health Organization to sound an alarm.

“About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference on March 19. “It has been an extremely rapid…evolution.” 

By the World Health Organization’s stats Tuesday there were 3,671 COVID-19 cases in Sub-Saharan Africa and 87 confirmed deaths related to the virus, up from 463 cases and 8 deaths on March 18.

As COVID-19 began to grow in major economies, governments and startups in Africa started measures to shift a greater volume of transactions toward digital payments and away from cash — which the World Health Organization flagged as a conduit for the spread of the coronavirus.

Kenya, Africa’s leader in digital payment adoption, turned to mobile money as a public-health tool.

At the urging of the Central Bank and President Uhuru Kenyatta, the country’s largest telecom, Safaricom, implemented a fee-waiver on East Africa’s leading mobile-money product, M-Pesa, to reduce the physical exchange of currency.

The company announced that all person-to-person (P2P) transactions under 1,000 Kenyan Schillings (≈ $10) would be free for three months.

Kenya has one of the highest rates of digital finance adoption in the world — largely due to the dominance of M-Pesa  in the country — with 32 million of its 53 million population subscribed to mobile-money accounts, according to Kenya’s Communications Authority.

On March 20, Ghana’s central bank directed mobile money providers to waive fees on transactions of GH₵100 (≈ $18), with restrictions on transactions to withdraw cash from mobile-wallets.

Ghana’s monetary body also eased KYC requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers, according to a March 18 Bank of Ghana release.

Growth in COVID-19 cases in Nigeria, Africa’s most populous nation of 200 million, prompted one of the country’s largest digital payments startups to act.

Lagos based venture Paga made fee adjustments, allowing merchants to accept payments from Paga customers for free — a measure “aimed to help slow the spread of the coronavirus by reducing cash handling in Nigeria,” according to a company release.

In March, Africa’s largest innovation incubator, CcHub, announced funding and engineering support to tech projects aimed at curbing COVID-19 and its social and economic impact.

The Lagos and Nairobi based organization posted an open application on its website to provide $5,000 to $100,000 funding blocks to companies with COVID-19 related projects.

CcHub’s CEO Bosun Tijani expressed concern for Africa’s ability to combat a coronavirus outbreak. “Quite a number of African countries, if they get to the level of Italy or the UK, I don’t think the system… is resilient enough to provide support to something like that,” Tijani said.

Cape Town based crowdsolving startup Zindi — that uses AI and machine learning to tackle complex problems — opened a challenge to the 12,000 registered engineers on its platform.

The competition, sponsored by AI4D, tasks scientists to create models that can use data to predict the global spread of COVID-19 over the next three months. The challenge is open until April 19, solutions will be evaluated against future numbers and the winner will receive $5,000.

Zindi will also sponsor a hackathon in April to find solutions to coronavirus related problems.

Image Credits: Sam Masikini via Zindi

On the digital retail front, Pan-African e-commerce company Jumia announced measures it would take on its network to curb the spread of COVID-19.

The Nigeria headquartered operation — with online goods and services verticals in 11 African countries — said it would donate certified face masks to health ministries in Kenya, Ivory Coast, Morocco, Nigeria and Uganda, drawing on its supply networks outside Africa.

The company has also offered African governments use of of its last-mile delivery network for distribution of supplies to healthcare facilities and workers.

Jumia is reviewing additional assets it can offer the public sector. “If governments find it helpful we’re willing to do it,” CEO Sacha Poignonnec told TechCrunch.

More Africa-related stories @TechCrunch

African tech around the ‘net

OneWeb to file for bankruptcy as effort to secure funding, including from investor SoftBank, falls through

By Darrell Etherington

Broadband constellation satellite operator OneWeb will file for bankruptcy protection in the U.S., likely some time Friday, after attempts to secure new funding, including from existing investor SoftBank, fell through, TechCrunch has learned. The Financial Times also reported on the failure of its funding attempt on Friday, based on its own separate sources. The company will be laying off most of its staff, with a team remaining in place to continue to operate its existing satellites in space, according to our sources.

OneWeb, founded in 2012 as WorldVu Satellites, had been seeking to build out a constellation of broadband internet satellites that would operate in low Earth orbit, providing low-cost connections to customers on the ground with coverage that extends into more remote and hard-to reach areas that are not addressed by current ground-based networks.

Earlier this month, Bloomberg reported that OneWeb had been considering a bankruptcy protection filing, while also weighing other options. One of those other options was a new funding round targeting a raise of around $2 billion. The company had previously raised $3 billion over multiple rounds, including a $1.3 billion and $1.2 billion round in 2019 and 2016 respectively, both of which had SoftBank as lead investor.

OneWeb also just completed a launch earlier in March, bringing the total number of its satellites in orbit to 74. The company then reduced its headcount by as much as 10% through layoffs we reported last week.

This latest step essentially means that OneWeb had exercised all other options for continued cash to stay afloat, and it required considerable reserves in order to continue its planned rapid pace of launches, with the ultimate aim of putting over 650 satellites in orbit in order to provide its service globally. SoftBank backing away as an investor leaves a big hole that’s difficult to fill in terms of scale and depth of pockets among the rest of the VC field, and the company has been stepping away from a number of its more high-profile investments since encountering difficulties of its own in terms of returning value on the biggest checks its cut, including for WeWork .

OneWeb’s funding situation can’t have been helped by the current global comic climate, also, rocked as it has been by the ongoing coronavirus pandemic. Reports suggest that at least some investors are taking a more conservative approach, suggesting that traditional routes to securing more investment may have proven more difficult to unlock than usual.

Africa turns to mobile payments as a tool to curb COVID-19

By Jake Bright

Africa is using digital finance as a means to stem the spread of COVID-19.

Governments and startups on the continent are implementing measures to shift a greater volume of payment transactions toward mobile money and away from cash — which the World Health Organization flagged as a conduit for the spread of the coronavirus.

It’s an option facilitated by the boom in fintech that’s occurred in Africa over the last decade. By several estimates, the continent is home to the largest share of the world’s unbanked population and has a sizable number of underbanked consumers and SMEs.

But because of that, fintech — and startups focused on financial inclusion — now receive the majority of VC funding annually in Africa, according to recent data.

As COVID-19 cases began to grow in the continent’s major economies last week, the continent’s leader in digital payment adoption — Kenya — turned to mobile-money as a public-health tool.

The country’s largest teleco, Safaricom, implemented a fee-waiver on East Africa’s leading mobile-money product, M-Pesa, to reduce the physical exchange of currency in response to COVID-19.

Image Credits: Flickr

The company announced that all person-to-person (P2P) transactions under 1,000 Kenyan Schillings (≈ $10) would be free for three months.

The move came after Safaricom met with the country’s Central Bank and per a directive from Kenya’s President Uhuru Kenyatta “to explore ways of deepening mobile-money usage to reduce risk of spreading the virus through physical handling of cash,” according to a release provided to TechCrunch from Safaricom.

Kenya has one of the highest rates of mobile-money adoption in the world, largely due to the dominance of M-Pesa in the country, which stands as Africa’s 6th largest economy. Across Kenya’s population of 53 million, M-Pesa has 20.5 million customers and a network of 176,000 agents.

M-PESA Sector Stats 4Q 2019 per Kenya’s Communications Authority

With all major providers in Kenya there are 32 million subscribers, which means roughly 60% of the country’s population has access to mobile-money.

Ghana is also using digital finance as a monetary policy lever to reduce the spread of COVID-19

On March 20, the West African country’s central bank directed mobile money providers to waive fees on transactions of GH₵100 (≈ $18), with restrictions on transactions to withdraw cash from mobile-wallets.

Ghana’s monetary body also eased KYC requirements on mobile-money, allowing citizens to use existing mobile phone registrations to open accounts with the major digital payment providers, according to a March 18 Bank of Ghana release.

The trajectory of the coronavirus in Africa is prompting more countries and tech companies to include mobile finance as part of a broader response. The continent’s COVID-19 cases by country were in the single digits until recently, but those numbers spiked last week leading the World Health Organization to sound an alarm.

“About 10 days ago we had 5 countries affected, now we’ve got 30,” WHO Regional Director Dr Matshidiso Moeti said at a press conference Thursday. “It’s has been an extremely rapid…evolution.” 

Source; World Health Organization

By the World Health Organization’s stats Monday there were 1321 COVID-19 cases in Sub-Saharan Africa and 34 confirmed deaths related to the virus — up from 463 cases and 10 deaths last Wednesday.

The country with 40% of the region’s cases is South Africa, which declared a national disaster last week, banned public gatherings and announced travel restrictions on the U.S.

Unlike Ghana and Kenya, the government in Africa’s second largest economy hasn’t issued directives toward mobile payments, but the situation with COVID-19 is pushing fintech startups to act, according to Yoco CEO Katlego Maphai.

The Series B stage venture develops and sells digital payment hardware and services for small businesses on a network of 80,000 clients that processes roughly $500 million annually.

Image Credits: Jake Bright

With the growth in coronavirus cases in South Africa, Yoco has issued a directive to clients to encourage customers to use the contactless payment option on its point of sale machines. The startup has also accelerated its development of a remote payment product, that would enable transfers on its client network via a weblink.

“This is an opportunity to start driving contactless adoption,” Maphai told TechCrunch on a call from Cape Town.

In Nigeria — home to Africa’s largest economy and population of 200 million — the growth of COVID-19 cases has shifted the country toward electronic payments and prompted one of the country’s largest digital payments startups to act.

Lagos based venture Paga made fee adjustments, allowing merchants to accept payments from Paga customers for free — a measure “aimed to help slow the spread of the coronavirus by reducing cash handling in Nigeria,” according to a company release.

Parts of Lagos — which is connected to Nigeria’s largest commercial hub of Lagos State — have begun to require digital payments in response to COVID-19, according to Paga’s CEO Tayo Oviosu .

“We’re seeing some stores that are saying they are not accepting cash anymore,” he told TechCrunch on a call from Lagos.

Cash only Nigeria Paga

Image Credits: Paga

Paga already offers free P2P transfers on its multi-channel network of 24,840 agents and 14 million customers. The startup, that recently expanded to Mexico and partnered with Visa, will also allow free transfers up to roughly 5000 Naira (≈ $15) from customer accounts to bank accounts, to encourage more digital payments use in Nigeria.

Paga’s CEO believes the current COVID-19 crisis will encourage more digital finance adoption in Nigeria, which has shown a cash-is-king reluctance by parts of the population to use mobile payments.

“I think it will help move the needle, but it won’t be the final straw that breaks the camel’s back,” he said.

Time and research will determine if efforts of African governments and tech companies to encourage digital payments over physical currency yield results in halting the spread of COVID-19 on the continent.

It is a unique case-study of mobile finance in Africa being employed to impact human behavior during a public health emergency.

Flexport, Arnold Schwarzenegger and others launch a fund to get supplies to front-line responders

By Darrell Etherington

There’s a global shortage of available protective equipment (PPE) and medical supplies for use by frontline responders working to fight the spread of the novel coronavirus, and the Frontline Responders Fund wants to channel donations to help address that shortage. The fund, which is seeking public donations via GoFundMe, will use all proceeds to cover the costs of transportation of these crucial supplies to the hospitals, clinics and public agencies that need them most.

Flexport is facilitating the deliveries via their supply chain management platform and services, and are receiving donations via their grant making partner Charities Add Foundation of America (CAF), which facilitates the acceptance of charitable donations for Flexport.org, Flexport’s NGO for social good projects.

Already, Flexport has been taking steps to get equipment where it’s needed most: last week, it got 60,000 surgical masks, 34,000 gloves, 2,000 surgical gowns and 50 thermometers from MedShare to San Francisco’s Department of Public Health. But the organization wants to do more, both for SF and for other cites in that are looking for ways to shore up their own supplies.

“My neighbor is on the board of supervisors and she told me the city really needed help,” Petersen said via email earlier this week. “Naturally our team stepped in and applied our knowledge of supply chains and logistics plus a long standing partnership with MedShare.org to get them PPE quickly. Now we’re scaling that effort to get more supplies for SF as well as other cities and hospitals that are also in desperate need.”

The funds made available through this fundraising effort will go to securing not only PPE, but also “testing kits, thermometers, ventilators and medicines,” according to the project’s GoFundMe page, based on what medical service providers deem to be highest priority in terms of need.

Petersen says that effectively all of his time now is focused on logistics to support these ongoing efforts, and it looks like it’ll remain that way for the foreseeable future.

Other organizations, including Apple, and now SoftBank, have been donating large volumes of N95 respirators, a key piece of frontline protective equipment. Flexport’s work could facilitate continued supply, leveraging their supply chain relationships, to ensure that equipment makes its way to frontline staff as fast as it’s able to be produced.

Donations can be made directly through the fund’s GoFundMe page, and the total raised is sitting at just under $3 million as of this writing – helped in large part by sizeable donations from Silicon Valley leaders including Paul Graham, Jack Dorsey and Ron Conway, as well as celebrities including Edward Norton and Arnold Schwarzenegger.

Revolut launches its neobank in the US

By Romain Dillet

European fintech startup Revolut is launching its app and service in the U.S. Starting today, anybody can sign up and get a Revolut debit card. In the U.S., Revolut has partnered with Metropolitan Commercial Bank for the banking infrastructure — deposits are FDIC insured up to $250,000.

In just a few years, Revolut has managed to attract over 10 million customers by building a financial hub that lets you spend, send, receive and manage money from a single app. The company recently raised a $500 million funding round, valuing the company at $5.5 billion.

But the U.S. has been watching from the sidelines. Tens of thousands of customers have signed up to the waiting list and they’ll now be able to access all of Revolut’s core features.

Like competing challenger banks, such as Chime and N26, Revolut lets you open an account from your phone. After downloading the app, you enter personal details and send a few official documents to comply with know-your-customer regulation.

After that, you get U.S. account details and you can instantly top up your account with a bank transfer or a card transfer. A few days later, you also receive a physical debit card. You can also generate a virtual debit card from the app.

Revolut lets you control your debit card from the app directly. You can receive notifications every time you make a transaction. You can freeze and unfreeze your card, set some limits and restrict some feature, such as online payments or ATM withdrawals.

One of Revolut’s key features is that you can convert from one currency to another at a low fee — sometimes without any markup for popular currencies and small transactions (more details on foreign exchange fees here). You can hold foreign currencies in your Revolut account or send money to another Revolut user or a bank account in another country. Revolut also gives you local banking details to receive EUR or GBP.

In the U.S., Revolut offers the ability to receive your salary two days in advance if you share your Revolut banking details with your employer.

Revolut offers a ton of additional features in Europe, but the company is starting with this basic feature set in the U.S. You can expect more features in the future, such as the ability to purchase cryptocurrencies and invest on the stock market.

In Europe, Revolut also offers insurance products through premium monthly subscriptions, mobile phone insurance, savings accounts, credit, rewards and more. Many of those features require partnerships with third-party companies. But it gives you an idea of Revolut’s roadmap in the U.S.

Netflix is reducing its traffic on ISPs by 25% in India

By Manish Singh

Netflix said on Tuesday that it is lowering its traffic on network providers by 25% in India for a period of 30 days, following a similar move in Europe in a bid to reduce the congestion on internet pipelines.

The American giant said that despite lowering the strain it puts on internet service providers, it will “maintain the quality” of its service. Amazon Prime Video said it has also started to lower the data consumption that streaming takes up on its platform, while local services Disney’s Hotstar, Times Internet’s MX Player and Zee5 say they are working to enforce similar measures.

Vijay Venkataramanan, Director of Post-Production at Netflix India, offers clarity on how reducing the traffic would impact the quality of video streams.

“Given the crisis, we’ve developed a way to reduce Netflix’s traffic on telecommunications networks by 25% while also maintaining the quality of our service. So consumers should continue to get the quality that comes with their plan – whether it’s Ultra-High, High or Standard Definition. We believe that this will provide significant relief to congested networks and will be deploying it in India for the next 30 days,” Ken Florance, VP Content Delivery of Netflix, said in a statement to TechCrunch.

TechCrunch understands that Netflix, which maintains several different streams for a single title, is removing the highest bandwidth streams as part of this move. For most Netflix subscribers in India, this wouldn’t affect them.

The mobile-only plan that Netflix introduced in India last year is its most popular tier in the country, a person familiar with the matter said. Both mobile-only plan and the basic plan, the immediate advanced tier above it, offer limit streaming in standard definition.

Netflix’s announcement follows a local telecom group’s (Cellular Operators Association of India) appeal to on-demand video streaming services to put less burden on internet pipelines that are facing surge in usage as more people stay and work from home in the wake of coronavirus outbreak.

A report by Bank of America, obtained by TechCrunch, said this week that internet service providers in India were witnessing a 10% surge in the volume of daily traffic and data consumption. The firm analyzed traffic at internet exchanges and spoke with internet service providers to reach that conclusion, it said in the report.

More to follow…

Streaming service fuboTV to merge with virtual entertainment technology company, FaceBank

By Sarah Perez

Over-the-top live TV streaming service fuboTV announced today it plans to merge with the virtual entertainment technology company, FaceBank Group. The proposed merger would retain the name fuboTV for the combined company, consisting of fuboTV’s direct-to-consumer live TV streaming platform and FaceBank’s technology IP in sports, movies and live performances.

FaceBank is not a household name, but is a developer of hyper-realistic digital humans — including those of celebrities and consumers — for use in emerging technologies, like VR and AR, as well as in live entertainment, interactive, media, social networking and AI-driven applications.

You may remember the company from its creation the hologram of Michael Jackson as The Billboard Music Awards in 2014, when it was then called Pulse Evolution. It also created a virtual Tupac in 2012, and owns the rights to develop digital representations of Elvis Presley and Marilyn Monroe and others. The company has also worked to create virtual creatures and characters in movies like “The Lord of the Rings: The Two Towers,” “Star Wars III: Revenge of the Sith,” “Transformers,” “Benjamin Button,” and more, per its website.

According to the proposed merger agreement, the plan is to create a leading digital entertainment company that combines fuboTV with FaceBank’s IP in order to create a content delivery platform for both traditional and “future-form IP.”

That is to say, you’ll be able to stream your live TV and these virtual/digital human performances on one platform, it seems.

FuboTV also says it plans to leverage FaceBank’s IP sharing relationships with leading celebrities and other digital technologies to enhance its sports and entertainment offerings.

“The business combination of FaceBank Group and fuboTV accelerates our ability to build a category-defining company and supports our goal to provide consumers with a technology-driven cable TV replacement service for the whole family,” said fuboTV CEO David Gandler, in a statement. “With our growing businesses in the U.S., and recent beta launches in Canada and Europe, fuboTV is well-positioned to achieve its goal of becoming a world-leading live TV streaming platform for premium sports, news and entertainment content. In the current COVID-19 environment, stay-at-home stocks make perfect sense – we plan to accelerate our timing to uplist to a major exchange as soon as practicable. We look forward to working with John and his team of creative visionaries,” he added.

“As a tech-driven IP company, FaceBank was looking to find the perfect delivery platform for its celebrity and consumer-driven content, with a dynamic user interface that could support the global consumers’ rapidly evolving practices of content consumption,” added FaceBank founders John Textor and Alex Bafer. “David and his team have a clear vision of the future and fuboTV’s technology is second to none among the disruptor class of content delivery – a perfect match for FaceBank Group,” their statement read.

FaceBank is buying FuboTV — or merging, as the legal wording appears to indicate — for preferred stock, the SEC filing reveals. The new shares, dubbed “Series AA Convertible Preferred Stock” will have with 0.8 votes per share, and convert to two shares of common stock. The acquiring entity changed its articles of incorporation to get rid of all prior forms of preferred shares in favor of the new, Series AA shares. It isn’t clear yet how many shares FuboTV shareholders will receive in the deal, but as the total number of Series AA shares created was 35.8 million, we can note that there is a cap.

FaceBank also says it took out a secured revolving line of credit of $100 million, the first $10 million of which will be provided to fuboTV on April 1 or the closing date of the merger, whichever is later.

The merger will allow fuboTV to continue its international expansion, by way of FaceBank Group’s Nexway — an e-commerce and payment platform live in 180 countries, the company says.

FuboTV was founded in 2015, first as a soccer streaming service, then later expanded into more sports and entertainment. It competes with YouTube TV, Hulu with Live TV, AT&T TV Now, and before its shutdown, PlayStation Vue.

The deal follows several other consolidations in online streaming and media, including Disney’s acquisition of 21st Century Fox, Viacom’s purchase of pluto.tv, and Fox Corp.’s acquisition of TUBI. For smaller streamers, it’s difficult to keep up with the rising costs of programming amid competition from larger competitors, like Disney (Hulu’s majority owner) and Google (which runs YouTube TV).

The Boards of Directors of both companies and the major stockholders of fuboTV have approved the transaction, which is anticipated to close during the first quarter of 2020, subject to the satisfaction of certain closing conditions, the companies said.

Mobile banking app Empower Finance just closed a $20 million Series A round

By Connie Loizos

Another afternoon, another round of funding for a mobile banking app. This time, it’s Empower Finance a San Francisco-based company that is headed up by former Sequoia Capital partner Warren Hogarth and which just closed on $20 million in Series A funding from Icon Ventures and Defy Ventures. David Velez, who is the founder and CEO of Nubank, the largest fintech in Latin America, also joined the round.

We’d first written about the company in 2017, when Hogarth was just getting the business of the ground.  Today, Empower employs 35 people and has attracted more than 600,000 active users to its platform, says Hogarth. How: by combining AI and actual human financial planners to help millennials in particular accrue some wealth, including, more newly, through its own checking account product and a savings account that’s currently promising 1.60% in annual percentage yield with no minimums, no overdraft fees, and unlimited withdrawals.

It’s all part of an overall offering that crunches through an account holder’s bank and credit card accounts, and recommends how much they save into which account, how much they should spend given their overall pictures, various ways they can cut costs, and send users alert when they’ve surpassed their pre-configured budget.

Of course the company has so much competition it’s dizzying, but like the various upstarts against which it’s battling for mindshare, the opportunity it’s chasing is enormous, too. Though companies like Chime can seem overpriced given how fast investors have marked up their rounds — Chime’s newest financing, announced in December, was done at a $5.8 billion post-money valuation, which was four times more than the company was worth at the outset of 2019 —  digital banks are still tiny fish in an ocean of institutional financial services, representing something like 3% of the market.

They’re gaining more market share by the day, too, including by charging far lower fees for much more. In Empower’s case, users pay $6 a month, but Hogarth says they also save on $300 a year in additional fees they would pay a brick-and-mortar bank and that it helps them save $1,300 more annually, too.

As for all those other companies, Hogarth sounds surprisingly sanguine. “If you look at it from the outside, it looks crowded,” he acknowledges. “But the consumer financial services in the U.S. is a $2 trillion business, and we haven’t had a fundamental shift since maybe Schwab came along 30 years ago.”

Indeed, says Hogarth, because Empower and its rivasl are mobile and branchless and don’t have legacy software  to contend with,  they’re able to take 60 to 70 percent of the cost structure out of the business. What that means to them? That even if they can attract 2 to 3 million customers, “you can have a multibillion-dollar market cap,” he says. “That’s why there’s so much interest in this space.”

It’s also why people like Nubank’s Velez who have seen this story play out in Europe and Latin America and who are seeing the early phases of it in the U.S. are apparently keeping the money spigot open for now.

Empower had earlier raised an undisclosed amount of seed funding from Sequoia, followed by a $4.5 million round led by Initialized Capital.

Daily Crunch: Coronavirus prompts more conference cancellations

By Anthony Ha

Google cancels its big developer conference, Justin Kan’s legal startup shuts down and Robinhood offers more details about a recent outage. Here’s your Daily Crunch for March 4, 2020.

1. Google cancels its 2020 I/O developer conference

After Facebook canceled its F8 developer conference and Google itself moved its Cloud Next event in April to a digital-only conference, this wasn’t a huge surprise, but it provides another sign of how the COVID-19 coronavirus is clearing the 2020 industry calendar.

Meanwhile, Mark Zuckerberg has outlined some of the steps that Facebook and his family’s nonprofit, the Chan Zuckerberg Initiative, are taking to respond to the pandemic. Facebook’s response focuses on three areas: providing accurate information, stopping misinformation and providing data for research.

2. $75M legal startup Atrium shuts down, lays off 100

Justin Kan’s hybrid legal software and law firm startup Atrium is shutting down today after failing to figure out how to deliver better efficiency than a traditional law firm. The startup has now laid off all its employees; it will return some of its $75.5 million in funding to investors, including Series B lead Andreessen Horowitz . The separate Atrium law firm will continue to operate.

3. Robinhood offers $15 discount, blames outage on record trades

It wasn’t the leap year, a coding blip or a hack that caused Robinhood’s massive outages earlier this week that left customers unable to trade stocks. Instead, the co-CEOs write that “the cause of the outage was stress on our infrastructure — which struggled with unprecedented load. That in turn led to a ‘thundering herd’ effect — triggering a failure of our DNS system.”

4. India lifts ban on cryptocurrency trading

India’s Supreme Court has overturned the central bank’s two-year-old ban on cryptocurrency trading in the country in what many said was a “historic” verdict. The Reserve Bank of India had imposed a ban on cryptocurrency trading in April 2018 that barred banks and other financial institutions from facilitating “any service in relation to virtual currencies.”

5. The future of gig work could involve unions and co-ops

Behind the scenes, an alternative approach to California’s AB 5 worker protection law has been picking up steam. Called the Cooperative Economy Act, the draft legislation is designed to accomplish much of what AB 5 aims to achieve, such as worker protections and benefits. But it also brings unions and co-ops into the mix. (Extra Crunch membership required.)

6. VSCO’s new editing tool Montage lets you edit and layer both photos and video

VSCO already allowed users to apply photo-like edits to their videos by doing things like applying filters or adjusting the exposure. But Montage is an entirely different sort of video editing experience.

7. Uber sold its food delivery business in India to Zomato for $206M

In January, Uber announced that it had sold the India business of Uber Eats to Zomato for a 9.99% stake in the loss-making Indian food delivery startup. In a regulatory filing, the company has now disclosed that the deal was worth $206 million.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here.

SoftBank-backed Indian startup Oyo to cut 5,000 jobs globally

By Manish Singh

Oyo said on Wednesday it is laying off 5,000 people from its global workforce as the Indian budget hotel startup looks to cut its spendings and chase profitability.

The latest round of job cuts would reduce Oyo’s headcount to 25,000 in over 80 countries where it operates. An Oyo spokesperson said the job cuts are part of restructuring that the startup announced in January.

“The global restructuring exercise at OYO was announced in January 2020 and the recent developments in China are in line with the same. China is a home market for OYO, and we will continue working with our thousands of retained OYOpreneurs to deliver against our core mission of creating quality living experiences for millions of middle-income people around the world,” the spokesperson said.

“During the tough Coronavirus situation, we will continue to support the benevolent and resilient Chinese society, in every possible way. We want to thank our partners, employees and customers for standing strong together.”

Bloomberg reported that the job cuts would largely impact Oyo’s business in China, where the company plans to let go half of its 6,000 direct full-time staff, the U.S., and India. Oyo also plans to “temporarily” lay off 4,000 discretionary workers, some of whom will be invited back once the business recovers, the report said.

Founded by Ritesh Agarwal and heavily backed by SoftBank, Oyo has aggressively expanded to international markets in recent years and sought to become the biggest hotel chain globally.

During its journey, it has also raised more than $1.5 billion. In October, Agarwal, 26, announced that the firm was seeking to raise an additional $1.5 billion, with him financing $700 million personally.

But the startup’s aggressive expansion came under scrutiny last year after things went spectacularly south, and quickly, at WeWork, another SoftBank portfolio startup.

The New York Times reported earlier this year that many of the hotel partners of Oyo felt cheated and in dire financial condition after the startup reneged on its committed promises. Indian business outlet The Ken further documented the increased pressure the startup put on its employees to meet unrealistic expectations.

Oyo reported a loss of $335 million on $951 million revenue globally for the financial year ending March 31, 2019.

“As difficult as some of these decisions have been to make, especially when it comes to changes to our staffing model, we have reasons to believe that this is the right thing to do for the business and for the 25,000+ OYOpreneurs who remain with the company. We are mostly through, and will complete this restructuring shortly, as we prepare for a strong and sustainable growth in 2020, and beyond,” Agarwal wrote in a blog post in January.

India lifts ban on cryptocurrency trading

By Manish Singh

India’s Supreme Court on Wednesday struck down central bank’s two-year-old ban on cryptocurrency trading in the country in what many said was a “historic” verdict.

The Reserve Bank of India had imposed a ban on cryptocurrency trading in April 2018 that barred banks and other financial institutions from facilitating “any service in relation to virtual currencies.”

At the time, RBI said the move was necessary to curb “ring-fencing” of the country’s financial system. It had also argued that Bitcoin and other cryptocurrencies cannot be treated as currencies as they are not made of metal or exist in physical form, nor are they stamped by the government.

The 2018 notice from the central bank sent a panic to several local startups and companies offering services to trade in cryptocurrency. Nearly all of them have since shut shop.

In the ruling today, the bench, headed by Justice Rohinton F Nariman, overruled central bank’s circular on the grounds of disproportionality.

A group of petitioners including trade body the Internet and Mobile Association of India had challenged central bank’s circular, in part, arguing that India should look at most other nations that not only allow cryptocurrency trading, but have moved to launch their own virtual currencies.

Nitin Sharma, a tech investor, said the top court’s ruling was “historic” and it finally brings some clarity to the matter.

“Historic day for Crypto in India. We can now innovate. The entire country can participate in the Blockchain revolution,” said Nischal Shetty, founder and chief executive of Bitcoin exchange platform WazirX.

Los Angeles gets a new consumer fund as founders of Sprinkles seek $25 million for CN2 Ventures

By Jonathan Shieber

Charles and Candace Nelson traded their investment banking careers in Silicon Valley for the sweet sweet life as captains of the cupcake and confectionery chain, Sprinkles.

Now they’re putting both their consumer and brand development skills and former investment banking chops to work at CN2 Ventures, a new firm they’re setting up with the goal of pulling in $25 million to invest, incubate and support new business ideas.

The firm already has three businesses in its portfolio and two others that its still in the process of launching said Charles Nelson.

There’s the pizza chain, Pizzana; the kids playspace, Play 2 Progress; and the direct to consumer clothing brand Willy California.

“We’re focusing on retail and consumer areas,” says Charles Nelson. “Both branded retail and doing some direct to consumer. Our plan is to raise a fund… ideally around $25 million if we can.”

The couple sees their investment sweet spot in the marriage of technology and retail. It’s the space where they found their initial success at Sprinkles — which included high tech touches like pre-ordering and customization through its touchscreen services at its retail locations.

“We started as brick and mortar people,” says Candace Nelson. “Even as D2C.. it feels soulless unless you experience the brand physically in some way.”

So far, the firm has been taking large equity stakes in the businesses it’s backing — in part because it can, but also because these portfolio companies can almost be seen as subsidiaries operating under the larger CN2 Ventures umbrella.

Minority investments will be an option, according to Charles Nelson but the company intends to be targeted in the types of investments it makes. For the most part, the defining characteristic for both founders of the firm is that they’re true believers in the businesses they’re backing.

“Candace and I will never invest in something that we aren’t super passionate about and a brand that we don’t love.”

Candace Nelson points to the couple’s investment in Pizzana as an example. “We joked post-Sprinkles no more food businesses, but we met Daniele [Uditi] and he totally turned our minds,” she said.  

Could lessons from the challenger bank revolution kick-start innovation on the climate crisis?

By Mike Butcher

Now that the world is swimming in data we may be able to address the climate and environmental risks to the planet. But while there is plenty of capital to invest in things like ClimateTech, a lot of the data that’s needed to tackle this big issue is badly applied, leading to a big misallocation of resources. So to deal with the climate we have to get the data right. A big part of the solution is open standards and interoperability.

The story of how the Open Banking Standard developed might show a way forward. Its development out of the UK led to regulated sector-wide interoperability (covering a broad range of areas including IP, legal, liability and licensing, and technology to enable data sharing). It’s meant over 300 fintech companies now use the Standard, which has helped to catalyze similar initiatives.

Open Banking has lead to the explosion in tech startups that we see today. Revolut, Monzo, Starling bank – none of them would have existed without Open Banking.

What if someone created something like the Open Banking Standard, but this time to stimulate climate-friendly innovation around financial products. Afterall, it’s more likely we’ll save the planet is we incentivize firms with financial models to make it work.

Well, it just so happens that one of the key players that developed the Open Banking Standard plans to do the same for data about the climate to allow the insurance industry to engage in the solutions to the climate crisis.

Gavin Starks co-chaired the development of the Open Banking Standard, laying the foundations for regulation and catalyzing international innovation.

But Starks has form in this arena. Prior to co-creating Open Banking, he was the Open Data Institute’s founding CEO, working with Sir Tim Berners-Lee. The ODI may not be well known in Silicon Valley, but it’s launched franchises across 20 countries and trained 10,000 people.

Starks’ previous venture was a pioneer in the climate space: AMEE (Avoidance of Mass Extinctions Engine) organized the world’s environmental data and standards into an open web-service, raising $10M and selling in 2015 PredictX.

Starks also chaired the development of the first Gold Standard Carbon Offset.

But what Starks has set himself is a task different to Open Banking.

His new project is Icebreaker One, a new non-profit which last month raised £1m+ investment, largely funded by the UK’s government-backed body UK Research and Innovation. It’s also supported by a consortium of financial and regulatory institutions.

So what’s the big idea this time?

The idea is to develop an open standard for data sharing that will stimulate climate-friendly financial product innovation and deliver new products.

Just like the Open Banking Standard, Icebreaker One will steer the development of the SERI standard. This is the Standard for Environment, Risk and Insurance (SERI) which has been created to design, test and develop financial products with Icebreaker One members ahead of the COP26 conference in Glasgow later this year.

SERI could provide a framework for an addressable, open marketplace, built around the needs of both the market and the new reality of climate change. If it works, this would enable insurers to share data robustly, legally and securely, driving the use and adoption of artificial intelligence tools within the insurance sector.

It would mean insurers being able to invest in demonstrably low-carbon financial products and services, based on real, hard data.

The current SERI launch partners are Aon, Arup, Agvesto, Bird & Bird, Brit Insurance, Dais LLP, Lloyd’s Register Group and the University of Cambridge.

The thinking behind the initiative is that as large catastrophic climate events occur with higher frequency, the UK’s insurance market is under pressure to evolve.

By creating the data platform, insurers can invest in low-carbon financial products, rather than ignore them because they can’t be priced right.

Starks says: “The time for theory is over—we need rapid and meaningful action. The threat of climate change to the global economy is tangible, and the increase in catastrophic climate events is capable of bankrupting markets and even nation-states. We are already witnessing insurance in some areas becoming untenable – which is a genuine threat to communities and wider society.”

He adds: “We are working with some of the most influential organizations in the world to plan policies and regulation to protect citizens, our environment and our economy; to unlock the power of unused and underutilized data to enable governments and business to respond effectively, responsibly and sustainably to the threats posed by the climate emergency.”

Arup, the multinational professional services firm best known for large engineering projects, is one of those in the SERI consortium.

Volker Buscher, Chief Data Officer at Arup, says: “Responding to climate change and futureproofing the market is vital – and working with Gavin and senior industry figures is a big opportunity to make real-world data work harder, to evolve investment strategies, shine a light on inefficiencies and better understand risk. It’s of benefit to everyone that we create the working blueprint for the freer sharing and licensing of data-at-scale that can be a shot in the arm to climate-affected financial products and services.”

Icebreaker One plans to overcome the locked, legacy culture of the insurance industry.

The task ahead is a big one. Currently, the valuable data needed to unlock this potential is in lately closed-off “data lakes”. The goal is to influence $3.6 trillion of investment.

If the insurance industry can innovate around climate change and the new kinds of risk it creates, then the financial world industry can create the kind of boom Open Banking did.

And that would mean not just brand new insurance products but also new startups in what’s been described as “InsureTech”.

But the greater prize, is of course the planet itself.

Thought Machine nabs $83M for a cloud-based platform that powers banking services

By Ingrid Lunden

The world of consumer banking has seen a massive shift in the last ten years. Gone are the days where you could open an account, take out a loan, or discuss changing the terms of your banking only by visiting a physical branch. Now, you can do all this and more with a few quick taps on your phone screen — a shift that has accelerated with customers expecting and demanding even faster and more responsive banking services.

As one mark of that switch, today a startup called Thought Machine, which has built cloud-based technology that powers this new generation of services on behalf of both old and new banks, is announcing some significant funding — $83 million — a Series B that the company plans to use to continue investing in its platform and growing its customer base.

To date, Thought Machine’s customers are primarily in Europe and Asia — they include large, legacy outfits like Standard Chartered, Lloyds Banking Group, and Sweden’s SEB through to “challenger” (AKA neo-) banks like Atom Bank. Some of this financing will go towards boosting the startup’s activities in the US, including opening an office in the country later this year and moving ahead with commercial deals.

The funding is being led by Draper Esprit, with participation also from existing investors Lloyds Banking Group, IQ Capital, Backed and Playfair.

Thought Machine, which started in 2014 and now employs 300, is not disclosing its valuation but Paul Taylor, the CEO and founder, noted that the market cap is currently “increasing healthily.” In its last round, according to PitchBook estimates, the company was valued at around $143 million, which at this stage of funding puts this latest round potentially in the range of between $220 million and $320 million.

Thought Machine is not yet profitable, mainly because it is in growth mode, said Taylor. Of note, the startup has been through one major bankruptcy restructuring, although it appears that this was mainly for organisational purposes: all assets, employees and customers from one business controlled by Taylor were acquired by another.

Thought Machine’s primary product and technology is called VaultOS, a platform that contains a range of banking services — they include current/checking accounts; savings accounts; loans; credit cards and mortgages — that Thought Machine does not sell directly to consumers, but sells by way of a B2B2C model.

The services are provisioned by way of smart contracts, which allows Thought Machine and its banking customers to personalise, vary and segment the terms for each bank — and potentially for each customer of the bank.

It’s a little odd to think that there is an active market for banking services that are not built and owned by the banks themselves. After all, aren’t these the core of what banks are supposed to do?

But one way to think about it is in the context of eating out. Restaurants’ kitchens will often make in-house what they sell and serve. But in some cases, when it makes sense, even the best places will buy in (and subsequently sell) food that was crafted elsewhere. For example, a restaurant will re-sell cheese or charcuterie, and the wine is likely to come from somewhere else, too.

The same is the case for banks, whose “Crown Jewels” are in fact not the mechanics of their banking services, but their customer service, their customer lists, and their deposits. Better banking services (which may not have been built “in-house”) are key to growing these other three.

“There are all sorts of banks, and they are all trying to find niches,” said Taylor. Indeed, the startup is not the only one chasing that business. Others include Mambu, Temenos and Italy’s Edera.

In the case of the legacy banks that work with the startup, the idea is that these behemoths can migrate into the next generation of consumer banking services and banking infrastructure by cherry-picking services from the VaultOS platform.

“Banks have not kept up and are marooned on their own tech, and as each year goes by, it comes more problematic,” noted Taylor.

In the case of neobanks, Thought Machine’s pitch is that it has already built the rails to run a banking service, so a startup — “new challengers like Monzo and Revolut that are creating quite a lot of disruption in the market” (and are growing very quickly as a result) — can integrate into these to get off the ground more quickly and handle scaling with less complexity (and lower costs).

It’s not the only company providing a platform for banking services that are in turn

Taylor was new to fintech when he founded Thought Machine, but he has a notable track record in the world of tech that you could argue played a big role in his subsequent foray into banking.

Formerly an academic specialising in linguistics and engineering, his first startup, Rhetorical Systems, commercialised some of his early speech-to-text research and was later sold to Nuance in 2004.

His second entrepreneurial effort, Phonetic Arts, was another speech startup, aimed at tech that could be used in gaming interactions. In 2010, Google approached the startup to see if it wanted to work on a new speech-to-text service it was building. It ended up acquiring Phonetic Arts, and Taylor took on the role of building and launching Google Now, with that voice tech eventually making its way to Google Maps, accessibility services, the Google Assistant and other places where you speech-based interaction makes an appearance in Google products.

While he was working for years in the field, the step changes that really accelerated voice recognition and speech technology, Taylor said, were the rapid increases in computing power and data networks that “took us over the edge” in terms of what a machine could do, specifically in the cloud.

And those are the same forces, in fact, that led to consumers being able to run our banking services from smartphone apps, and for us to want and expect more personalised services overall. Taylor’s move into building and offering a platform-based service to address the need for multiple third-party banking services follows from that, and also is the natural heir to the platform model you could argue Google and other tech companies have perfected over the years.

Draper Esprit has to date built up a strong portfolio of fintech startups that includes Revolut, N26, TransferWise and Freetrade. Thought Machine’s platform approach is an obvious complement to that list. (Taylor did not disclose if any of those companies are already customers of Thought Machine’s, but if they are not, this investment could be a good way of building inroads.)

“We are delighted to be partnering with Thought Machine in this phase of their growth,” said Vinoth Jayakumar, Investment Director, Draper Esprit, in a statement. “Our investments in Revolut and N26 demonstrate how banking is undergoing a once in a generation transformation in the technology it uses and the benefit it confers to the customers of the bank. We continue to invest in our thesis of the technology layer that forms the backbone of banking. Thought Machine stands out by way of the strength of its engineering capability, and is unique in being the only company in the banking technology space that has developed a platform capable of hosting and migrating international Tier 1 banks. This allows innovative banks to expand beyond digital retail propositions to being able to run every function and type of financial transaction in the cloud.”

“We first backed Thought Machine at seed stage in 2016 and have seen it grow from a startup to a 300-person strong global scaleup with a global customer base and potential to become one of the most valuable European fintech companies,” said Max Bautin, Founding Partner of IQ Capital, in a statement. “I am delighted to continue to support Paul and the team on this journey, with an additional £15 million investment from our £100 million Growth Fund, aimed at our venture portfolio outperformers.”

Latin America roundup: SoftBank adds $1B, Stori raises $10M and Grow Mobility puts on the brakes

By Anna Escher
Sophia Wood Contributor
Sophia Wood is a Venture Partner at Magma Partners. Sophia is also the co-founder of LatAm List, an English-language Latin American tech news source.

After investing nearly $2 billion of its Innovation Fund in Latin America in 2019, SoftBank announced this month that it would add an additional $1 billion into the fund to continue supporting tech startups across the region. While the Japanese investor faces the challenge of raising a second global fund after its Vision Fund, SoftBank is still investing heavily in Latin America. 

One of its early Latin American investments – and the first in Colombia – Ayenda Rooms, is performing particularly well, raising $8.7 million from Kaszek Ventures this month. Ayenda is the local version of Oyo Rooms, one of SoftBank’s biggest bets in India, which has looked to expand into Mexico despite a financial crunch last month. In fact, the fund recently came under scrutiny by the Wall Street Journal for funding similar delivery competitors Uber, Rappi, and Didi, suggesting a conflict of interest. 

Most recently, SoftBank invested $125 million in Mexico’s lender, Alphacredit, and they reportedly plan to continue investing in that niche. The firm currently oversees over 650 companies in Latin America, largely concentrated in Brazil, Argentina, Chile, Colombia, and Mexico, and plans to invest $100-150M in seventeen firms and two VCs by the end of the year. To date, over 50% of SoftBank’s investments have been into Brazil, most of which exist in the fintech sector. 

Mexican neobank Stori raises $10 million Series A

In a self-fulfilling prophecy, Mexico’s neobank market became all the more competitive this month with the addition of a new player: Stori. Within the past few months, both TechCrunch and Business Insider pointed to Mexico’s neobank market as the one to watch in Latin America as startups like Albo, Klar, and Nubank battle for market share. In February, digital bank Stori joined the conversation with a $10 million Series A from Bertelsmann Investments (BI) and Source Code Capital, along with an existing investor, Vision Plus Capital.

This round of funding, led by Chinese investors, is part of a growing trend of foreign funds waking up to the Latin American startup ecosystem, Asian VCs in particular. Tencent has invested in Brazil’s Nubank, which has since expanded to Mexico, and in Argentina’s Uala, which is considering a similar move. SoftBank has investments in the largest lending and credit startups in Brazil and Mexico, as well. 

Stori will use the investment to improve its AI technology as it tries to reach over 100,000 Mexicans through its inclusive digital banking services. The neobank has raised over $17 million from investors since it was founded in 2018.

Grow Mobility pulls out of 14 cities

In January, Rappi and Lime pulled back their operations in Latin America in order to focus on technology over rapid growth. Brazil’s top mobility startup, Grow Mobility (which rose out of a merger between e-scooter companies Grin from Mexico and Yellow from Brazil) also pulled back. The startup, which provides e-scooters and bikes shares across Brazil, took bicycles out of operation and removed its scooters from 14 cities. 

Grow also restructured its operations through layoffs that affected employees across Brazil, although they did not comment on how many people were affected. Grow Mobility’s scooters will now only operate in Rio de Janeiro, Sao Paulo, and Curitiba. 

This pattern of pull-back following explosive growth has become more common among Latin America’s biggest startups, pushing these early stage companies to focus on technological solutions that boost revenue, rather than blitzscaling measures that only buy market share.

Amazon Web Services doubles down on Brazil

Amazon Web Services (AWS) announced it would invest $236 million (R$1 billion) into Sao Paulo over the next two years to strengthen its Latin American infrastructure. This effort may be a part of Amazon’s work to consolidate market share in Latin America’s increasingly competitive e-commerce market, where legacy players like MercadoLibre still dominate. This investment will enable Amazon to expand its Brazilian data centers and improve local service offerings to both private and public partners. 

Amazon also announced that it would build a new distribution center in Pernambuco in the north of Brazil to support sales across the country. Brazil accounts for almost 40% of Latin America’s e-commerce market, making the country vital to Amazon’s positioning in the region.

News and Notes: Weel, Global 66, Yuca, and Memed 

Weel, a Brazilian accounts-receivable management platform, announced an $18.4 million investment from Banco Votorantim, Brazil’s seventh-largest bank, in February 2020. This investment was Banco Votorantim’s second in the startup after a $6 million contribution in 2019. Weel will use the investment to explore expansion across Brazil, as well as exploring Chilean and Mexican markets. 

Chilean international transfer startup Global 66 received $3.25 million in February from UK investor Venrex, to continue its expansion across the region. The startup currently offers rates up to eight times better than existing transfer services, especially for the Latin American region. Global 66 recently opened new offices in Peru and plans to expand to Colombia, Argentina, and Mexico within the next two years. Within just two years of operations, Global 66 has processed transactions for over 25,000 users across 60 cities worldwide.

Yuca, a Brazilian proptech, raised $4.7 million from Monashees, ONEVC, and Creditas to help fight housing crises in Brazil’s largest cities. As Brazil’s cities sprawl – Sao Paulo is one of the largest in the world – Yuca creates central co-living spaces for young people that want to shorten their commutes. Inspired by Chinese startup, Ziroom, Yuca currently manages 18 apartments for 80 students and plans to scale to 500 apartments by the end of the year.

Brazil’s digital prescription startup, Memed, recently raised $4.5 million from DNA Capital and Redpoint eVentures to improve the local prescription system for doctors and patients alike. Today, Memed has over 80,000 registered doctors who have created over 10 million prescriptions worth more than $237 million. Memed’s 100% digital prescriptions are said to improve security and efficiency in Brazil’s complex, bureaucratic healthcare system.

While Brazil is still at the forefront of Latin America’s tech ecosystem, Mexican fintechs are edging up, especially with additional support from international investors. 2020 is off to a strong start, hinting at another potential record-breaking year for Latin American tech investment.

Quick notes on the DoorDash IPO filing

By Alex Wilhelm

Earlier today, during an eye-popping market selloff, DoorDash announced that it has privately filed to go public. The decision to file privately will allow the high-valued startup to get its S-1 documents in good order with the SEC before showing the rest of us what it has up its sleeve.

The move to announce its private filing is more interesting and could be related to prepping demand for its shares, providing some PR-cover for backer SoftBank, which could use the assist, or, perhaps, to dampen investor excitement for rival companies, in the face of DoorDash’s implied success and maturity.

Whatever the reasons behind the timing — some of which must deal with the capital requirements of long-running cash burn — the filing is a new milestone for the on-demand and gig economies. And how well DoorDash’s filing is received, predicated in no small part on its recent financial performance, will help set sentiment for a number of other, richly backed startups.

So let’s remind ourselves of what we know about DoorDash’s financial history. This will give us a workable foundation heading into its eventual S-1, and, we presume, old-fashioned IPO. (It’s hard to imagine the cash-fired engine that is DoorDash looking toward a direct listing.) We’ll dig through its fundraising, unearth what we know about its revenue over time and turn over some data concerning its hiring efforts in recent months to better understand its IPO prep.

History

DoorDash’s fundraising history is well-known but worth recalling sequentially.

Meet the first wave of speakers & enter your startup for The Europas Awards, 25 June

By Mike Butcher

Excitement for The Europas Awards for European Tech Startups is heating up. Here is the first wave of speakers and judges — with more coming!

The Awards — which have been running for over 10 years — will be held on 25 June 2020 in London, U.K. on the front lawn of the Geffrye Museum in Hoxton, London — creating a fantastic and fun garden-party atmosphere in the heart of London’s tech startup scene.

TechCrunch is once more the exclusive media sponsor of the awards and conference, alongside The Pathfounder.

The application form to enter is here.

We’re scouting for the top late-stage seed and Series A startups in 22 categories.

You can nominate a startup, accelerator or venture investor that you think deserves to be recognized for their achievements in the last 12 months.

CLOSING DATE FOR APPLICATIONS: 25 March 2020

For the 2020 awards, we’ve overhauled the categories to a set that we believe better reflects the range of innovation, diversity and ambition we see in the European startups being built and launched today. This year we are particularly looking at startups that are able to address the SDGs/Globals Boals.

The Europas Awards
The Europas Awards results are based on voting by experts, experienced founders, hand-picked investors and the industry itself.

But the key to it is that there are no “off-limits areas” at The Europas, so attendees can mingle easily with VIPs.

Timeline of The Europas Awards deadlines:

Submissions now open!
25 March 2020 – Submissions close
14 April – Public voting begins
25 April – Public voting ends
8 June – Shortlist Announced
25 June – Awards evening, winners announced

Amazing networking

We’re also shaking up the awards dinner itself. There are more opportunities to network. Our awards ceremony this year will be in the setting of a garden/lawn party, where you’ll be able to meet and mingle more easily, with free-flowing drinks and a wide selection of street food (including vegetarian/vegan). The ceremony itself will last less than 45 minutes, with the rest of the time dedicated to networking. If you’d like to talk about sponsoring or exhibiting, please contact Claire Dobson on claire@thepathfounder.com

Instead of thousands and thousands of people, think of a great summer event with the most interesting and useful people in the industry, including key investors and leading entrepreneurs.

The Europas Awards have been going for the last 10 years, and we’re the only independent and editorially driven event to recognise the European tech startup scene. The winners have been featured in Reuters, Bloomberg, VentureBeat, Forbes, Tech.eu, The Memo, Smart Company, CNET, many others — and of course, TechCrunch.

• No secret VIP rooms, which means you get to interact with the speakers

• Key founders and investors attending

• Journalists from major tech titles, newspapers and business broadcasters

The Pathfounder Afternoon Workshops
In the afternoon prior to the awards we will be holding a special, premium content event, The Pathfounder, designed be a “fast download” into the London tech scene for European founders looking to raise money or re-locate to London. Sessions include “How to Craft Your Story”; “Term Sheets”; “Building a Shareholding Structure”; Investor Panel; Meet the Press; and a session from former Europas winners. Followed by the awards and after-party!

The Europas “Diversity Pass”
We’d like to encourage more diversity in tech! That’s why we’ve set aside a block of free tickets to ensure that pre-seed female and BAME founders are represented at The Europas. This limited tranche of free tickets ensures that we include more women and people of colour who are specifically “pre-seed” or “seed-stage” tech startup founders. If you are a women/BAME founder, apply here for a chance to be considered for one of the limited free diversity passes to the event.

Meet some of our first speakers and judges:


Anne Boden
CEO
Starling Bank
Anne Boden is founder and CEO of Starling Bank, a fast-growing U.K. digital bank targeting millions of users who live their lives on their phones. After a distinguished career in senior leadership at some of the world’s best-known financial heavyweights, she set out to build her own mobile bank from scratch in 2014. Today, Starling has opened more than one million current accounts for individuals and small businesses and raised hundreds of millions of pounds in backing. Anne was awarded an MBE for services to financial technology in 2018.


Nate Lanxon (Speaker)
Editor and Tech Correspondent
Bloomberg
Nate is an editor and tech correspondent for Bloomberg, based in London. For over a decade, he has particularly focused on the consumer technology sector, and the trends shaping the global industry. Previous to this, he was senior editor at Bloomberg Media and was head of digital editorial for Bloomberg.com in Europe, the Middle East and Africa. Nate has held numerous roles across the most respected titles in tech, including stints as editor of WIRED.co.uk, editor-in-chief of Ars Technica UK and senior editor at CBS-owned CNET. Nate launched his professional career as a journalist by founding a small tech and gaming website called Tech’s Message, which is now the name of his weekly technology podcast hosted at natelanxon.com.


Tania Boler
CEO and founder
Elvie
/> Tania is an internationally recognized women’s health expert and has held leadership positions for various global NGOs and the United Nations. Passionate about challenging taboo women’s issues, Tania founded Elvie in 2013, partnering with Alexander Asseily to create a global hub of connected health and lifestyle products for women.


Kieran O’Neill
CEO and co-founder
Thread
Thread makes it easy for guys to dress well. They combine expert stylists with powerful AI to recommend the perfect clothes for each person. Thread is used by more than 1 million men in the U.K., and has raised $35 million from top investors, including Balderton Capital, the founders of DeepMind and the billionaire former owner of Warner Music. Prior to Thread, Kieran founded one of the first video sharing websites at age 15 and sold it for $1.25 million at age 19. He was then CEO and co-founder of Playfire, the largest social network for gamers, which he grew to 1.5 million customers before being acquired in 2012. He’s a member of the Forbes, Drapers and Financial Times 30 Under 30 lists.


Clare Jones
Chief Commercial Officer
what3words
Clare is the chief commercial officer of what3words; prior to this, her background was in the development and growth of social enterprises and in impact investment. Clare was featured in the 2019 Forbes 30 under 30 list for technology and is involved with London companies tackling social/environmental challenges. Clare also volunteers with the Streetlink project, doing health outreach work with vulnerable women in South London.


Luca Bocchio
Principal
Accel
Luca Bocchio joined Accel in 2018 and focuses on consumer internet, fintech and software businesses. Luca led Accel’s investment in Luko, Bryter and Brumbrum. Luca also helped lead Accel’s investment and ongoing work in Sennder. Prior to Accel, Luca was with H14, where he invested in global early and growth-stage opportunities, such as Deliveroo, GetYourGuide, Flixbus, SumUp and SecretEscapes. Luca previously advised technology, industrial and consumer companies on strategy with Bain & Co. in Europe and Asia. Luca is from Italy and graduated from LIUC University.


Bernhard Niesner
CEO and c-founder
busuu
/> Bernhard co-founded busuu in 2008 following an MBA project and has since led the company to become the world’s largest community for language learning, with more than 90 million users across the globe. Before starting busuu, Bernhard worked as a consultant at Roland Berger Strategy Consultants. He graduated summa cum laude in International Business from the Vienna University of Economics and Business and holds an MBA with honours from IE Business School. Bernhard is an active mentor and business angel in the startup community and an advisor to the Austrian Government on education affairs. Bernhard recently received the EY Entrepreneur of the Year 2018 UK Awards in the Disruptor category.


Chris Morton
CEO and founder
Lyst
Chris is the founder and CEO of Lyst, the world’s biggest fashion search platform used by 104 million shoppers each year. Including over 6 million products from brands including Burberry, Fendi, Gucci, Prada and Saint Laurent, Lyst offers shoppers convenience and unparalleled choice in one place. Launched in London in 2010, Lyst’s investors include LVMH, 14W, Balderton and Accel Partners. Prior to founding Lyst, Chris was an investor at Benchmark Capital and Balderton Capital in London, focusing on the early-stage consumer internet space. He holds an MA in physics and philosophy from Cambridge University.


Husayn Kassai
CEO and co-founder
Onfido
/> Husayn Kassai is the Onfido CEO and co-founder. Onfido helps businesses digitally onboard users by verifying any government ID and comparing it with the person’s facial biometrics. Founded in 2012, Onfido has grown to a team of 300 across SF, NYC and London; received over $100 million in funding from Salesforce, Microsoft and others; and works with over 1,500 fintech, banking and marketplace clients globally. Husayn is a WEF Tech Pioneer; a Forbes Contributor; and Forbes’ “30 Under 30”. He has a BA in economics and management from Keble College, Oxford.

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