FreshRSS

🔒
❌ About FreshRSS
There are new available articles, click to refresh the page.
Before yesterdayYour RSS feeds

Modsy confirms layoffs, 10 months after announcing its $37M Series C

By Natasha Mascarenhas

Modsy, an e-commerce company that creates 3D renderings of customized rooms, has confirmed to TechCrunch that it laid off a number of staff. In addition, several of its executives, including CEO Shanna Tellerman, will take a 25% pay cut. TechCrunch first heard about the layoffs from a source. The company’s confirmation of cuts comes amid a wave of layoffs in the technology and startup communities

In a statement from the CEO Shanna Tellerman to TechCrunch, Modsy said that “[i]n an effort to maintain a sustainable business during these unprecedented circumstances, we made a round of necessary layoffs and ended a number of designer contracts this week.” The company reaffirmed belief in its “long-term growth plans” in the same statement.

Modsy did not immediately respond when asked about how many individuals were impacted by this layoff. Update: The company declined to share the number of employees impacted.

The startup is backed by investors including TCV, Comcast Ventures, Norwest Venture Partners, GV, BBG Ventures, according to Crunchbase data. It has raised $70.8 million in known capital to date. 

Modsy bets on individuals looking to glam up their homes by better visualizing the new furniture they want to buy. Users can enter the measurements of their living room and add budget and style preferences, and Modsy will help them with custom designs and finding furniture that fits — literally.

The layoffs show that customer appetite might be changing. Last week, home improvement platform Houzz confirmed that it has scratched plans to create in-house furniture for sale. It also laid off 10 people across three locations: the U.K., Germany and China. Houzz is comparatively larger than Modsy, with a roughly $4 billion valuation. But scratching its in-house plan that would have likely brought in more capital is yet another data point in how e-commerce companies are struggling right now to get consumers to spend on items other than beans, booze and bread starters.

In retrospect there were rumblings that the company was cutting staff. A number of recent reviews from its Glassdoor page note layoffs, with one review from March 25, 2020 calling them “mass” in nature; our original source on the company’s recent cuts also noted their breadth.

You can find other social media posts concerning the company’s layoffs, some noting more than one wave. TechCrunch has not confirmed if the recent layoffs are the first of two, or merely the first set of cuts. 

A little over 10 months ago the company was in a very different mood. Back in May of 2019, flush with new capital, Modsy’s CEO said that the “home design space, the inspiration category is thriving.” 

Pinterest just IPO’d, and it seems as if every TV channel is entering the home design category,” she said. “Meanwhile, e-commerce sites have barely changed since the introduction of the Internet.”

ARCH Venture Partners raises $1.46 billion across two funds for biotech investing

By Jonathan Shieber

Against a backdrop where the life-or-death consequences of biotechnology innovation are becoming increasingly apparent as the world races to develop vaccines and therapies to treat COVID-19, life sciences investor ARCH Venture Partners has raised $1.46 billion in funding to finance new tech development.

The two funds, ARCH Venture Fund X and ARCH Venture Fund X Overage, are the latest in the firm’s long line of investment vehicles dedicated to invest in early stage biotechnology companies.

“ARCH has always been driven to invest in great science to impact human health. There isn’t a better illustration of our principles than our all-in battle against COVID-19,” said co-founder and Managing Director Robert Nelsen in a statement. “The healthcare revolution will be accelerated by the changes that are happening now and we are excited to continue to invest aggressively in risk takers doing truly transformational science.”

ARCH portfolio companies Vir Biotechnology, Alnylam Pharmaceuticals, VBI Vaccines, Brii Biosciences, and Sana Biotechnology are all working on COVID-19 therapeutics; while Quanterix is developing technology to support clinical testing and clinical trial development. Another company that ARCH has backed, Twist Biosciences, has gene editing tools that the company believes can support therapeutic and vaccine development; and Bellerophon, a developer of inhaled nitric oxide delivery technologies, received emergency access approval from the FDA as a treatment to help alleviate respiratory distress associated with COVID-19.

The firm’s Overage fund will be used to take larger stakes in later-stage companies that require more capital, the firm said.

“Our companies bring cutting-edge science, tools and talent to bear in developing medicines for a wide range of diseases and conditions faced by millions. With these two new funds, we are continuing that work with urgency and a deep sense of purpose,” managing director Kristina Burow said in a statement. “We invest at all levels, whether it’s fifty thousand dollars or hundreds of millions, so that each company and each technology has the best chance to advance and change the landscape.”

The two new funds are roughly the same size as ARCH’s last investment funds, which closed in 2016 with $1.1that billion, but are a big jump from the 2014 ARCH funds that raised $560 million in total capital commitments.

The increasing size of the ARCH funds is a reflection of a broader industry trend which has seen established funds significantly expand their capital under management, but also is indicative of the rising status of biotech investing in the startup landscape.

These days, it’s programmable biology, not software, that’s eating the world.

“ARCH remains committed to our mission of the last 35 years, advancing the most promising innovations from leading life science and physical sciences research to serve the worldwide community by addressing critical health and well-being challenges,” said Keith Crandell in a statement. “ARCH has been privileged to found, support and invest in groundbreaking new companies pursuing advancements in infectious disease, mental health, immunology, genomic and biological tools, data sciences and ways of reimagining diagnostics and therapies.”

Managing directors for the new fund include Robert Nelsen, Keith Crandell, Kristina Burow, Mark McDonnell, Steve Gillis and Paul Thurk.

‘A perfect storm for first time managers,’ say VCs with their own shops

By Connie Loizos

Until very recently, it had begun to seem like anyone with a thick enough checkbook and some key contacts in the startup world could not only fund companies as an angel investor but even put himself or herself in business as a fund manager.

It helped that the world of venture fundamentally changed and opened up as information about its inner workings flowed more freely. It didn’t hurt, either, that many billions of dollars poured into Silicon Valley from outfits and individuals around the globe who sought out stakes in fast-growing, privately held companies — and who needed help in securing those positions.

Of course, it’s never really been as easy or straightforward as it looks from the outside. While the last decade has seen many new fund managers pick up traction, much of the capital flooding into the industry has accrued to a small number of more established players that have grown exponentially in terms of assets under management. In fact, talk with anyone who has raised a first-time fund and you’re likely to hear that the fundraising process is neither glamorous nor lucrative and that it’s paved with very short phone conversations. And that’s in a bull market.

What happens in what’s suddenly among the worst economic environments the world has seen? First and foremost, managers who’ve struck out on their own suggest putting any plans on the back burner. “I would love to be positive, and I’m an optimist, buut I would have to say that now is probably one of the toughest times” to get a fund off the ground,” says Aydin Senkut, who founded the firm Felicis Ventures in 2006 and just closed its seventh fund.

It’s a perfect storm for first-time managers,” adds Charles Hudson, who launched his own shop, Precursor Ventures, in 2015.

Hitting pause doesn’t mean giving up, suggests Eva Ho, cofounder of the three-year-old, seed-stage L.A.-based shop Fika Ventures, which last year closed its second fund with $76 million. She says not to get “too dismayed” by the challenges. Still, it’s good to understand what a first-time manager is up against right now, and what can be learned more broadly about how to proceed when the time is right.

Know it’s hard, even in the best times

As a starting point, it’s good to recognize that it’s far harder to assemble a first fund than anyone who hasn’t done it might imagine.

Hudson knew he wanted to leave his last job as a general partner with SoftTech VC when the firm — since renamed Uncork Capital — amassed enough capital that it no longer made sense for it to issue very small checks to nascent startups. “I remember feeling like, ‘Gosh, I’ve reached a point where the business model for our fund is getting in the way of me investing in the kind of companies that naturally speak to me,” which is largely pre-product startups.

Hudson suggests he may have overestimated interest in his initial idea to create a single GP fund that largely backs ideas that are too early for other investors. “We had a pretty big LP based [at SoftTech] but what I didn’t realize is the LP base that’s interested in someone who is on fund three or four is very different than the LP base that’s interested in backing a brand new manager.”

Hudson says he spent a “bunch of time talking to fund of funds, university endowments — people who were just not right for me until someone pulled me aside and just said, ‘Hey, you’re talking to the wrong people. You need to find some family offices. You need to find some friends of Charles. You need to find people who are going to back you because they think this is a good idea and who aren’t quite so orthodox in terms of what they want to see in terms partner composition and all that.'”

Collectively, it took “300 to 400 LP conversations” and two years to close his first fund with $15 million. (Its now raising its third pre-seed fund).

Ho says it took less time for Fika to close its first fund but that she and her partners talked with 600 people in order to close their $41 million debut effort, adding that she felt like a “used car salesman” by the end of the process.

Part of the challenge was her network, she says. “I wasn’t connected to a lot of high-net-worth individuals or endowments or foundations. That was a whole network that was new to me, and they didn’t know who the heck I was, so there’s a lot of proving to do.” A proof-of-concept fund instill confidence in some of these investors, though Ho notes you have to be able to live off its economics, which can be miserly.

She also says that as someone who’d worked at Google and helped found the location data company Factual, she underestimated the work involved in running a small fund. “I thought, ‘Well, I’ve started these companies and run these big teams. How how different could it be? Learning the motions and learning what it’s really like to run the funds and to administer a fund and all responsibilities and liabilities that come with it . . . it made me really stop and think, ‘Do I want to do this for 20 to 30 years, and if so, what’s the team I want to do it with?'”

Investors will offer you funky deals; avoid these if you can

In Hudson’s case, an LP offered him two options, either a typical LP agreement wherein the outfit would write a small check, or an option wherein it would make a “significant investment that have been 40% of our first fund,” says Hudson.

Unsurprisingly, the latter offer came with a lot of strings. Namely, the LP said it wanted to have a “deeper relationship” with Hudson, which he took to mean it wanted a share of Precursor’s profits beyond what it would receive as a typical investor in the fund.

“It was very hard to say no to that deal, because I didn’t get close to raising the amount of money that I would have gotten if I’d said yes for another year,” says Hudson. He still thinks it was the right move, however. “I was just like, how do I have a conversation with any other LP about this in the future if I’ve already made the decision to give this away?”

Fika similarly received an offer that would have made up 25 percent of the outfit’s debut fund, but the investor wanted a piece of the management company. It was “really hard to turn down because we had nothing else,” recalls Ho. But she says that other funds Fika was talking with made the decision simpler. “They were like, ‘If you sign on to those terms, we’re out.” The team decided that taking a shortcut that could damage them longer term wasn’t worth it.

Your LPs have questions, but you should question LPs, too

Senkut started off with certain financial advantages that many VCs do not, having been the first product manager at Google and enjoying the fruits of its IPO before leaving the outfit in 2005 along with many other Googleaires, as they were dubbed at the time.

Still, as he tells it, it was “not a friendly time a decade ago” with most solo general partners spinning out of other venture funds instead of search engine giants. In the end, it took him “50 no’s before I had my first yes” — not hundreds —   but it gave him a taste of being an outsider in an insider industry, and he seemingly hasn’t forgotten that feeling.

Indeed, according to Senkut, anyone who wants to crack into the venture industry needs to get into the flow of the best deals by hook or by crook. In his case, for example, he shadowed angel investor Ron Conway for some time, working checks into some of the same deals that Conway was backing.

“If you want to get into the movie industry, you need to be in hit movies,” says Senkut. “If you want to get into the investing industry, you need to be in hits. And the best way to get into hits is to say, ‘Okay. Who has an extraordinary number of hits, who’s likely getting the best deal flow, because the more successful you are, the better companies you’re going to see, the better the companies that find you.”

Adds Senkut, “The danger in this business is that it’s very easy to make a mistake. It’s very easy to chase deals that are not going to go anywhere. And so I think that’s where [following others] things really helped me.”

Senkut has developed an enviable track record over time. The companies that Felicis has backed and been acquired include Credit Karma, which was just gobbled up by Intuit; Plaid, sold in January to Visa; Ring, sold in 2018 to Amazon, and Cruise, sold to General Motors in 2016, and that’s saying nothing of its portfolio companies to go public.

That probably gives him a kind of confidence that it’s harder to earlier managers to muster. Still, Senkut also says it’s very important for anyone raising a fund to ask the right questions of potential investors, who will sometimes wittingly or unwittingly waste a manager’s time.

He says, for example, that with Felicis’s newest fund, the team asked many managers outright about how many assets they have under management, how much of those assets are dedicated to venture and private equity, and how much of their allotment to each was already taken. They did this so they don’t find themselves in a position of making a capital call that an investor can’t meet, especially given that venture backers have been writing out checks to new funds at a faster pace than they’ve ever been asked to before.

In fact, Felicis added new managers who “had room” while cutting back some existing LPs “that we respected . .. because if you ask the right questions, it becomes clear whether they’re already 20% over-allocated [to the asset class] and there’s no possible way [they are] even going to be able to invest if they want to.”

It’s a “little bit of an eight ball to figure out what are your odds and the probability of getting money even if things were to turn south,” he notes.

Given that they have, the questions look smarter still.

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.”

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

500 Startups moves to rolling admissions instead of cohorts

By Jonathan Shieber

500 Startups is scrapping its cohort model for accelerating companies and moving to a rolling admissions process, the accelerator said during its latest demo day.

One of the progenitors of the accelerator model in the US along with Techstars and Y Combinator, 500 has been a cornerstone of the early-stage company building platform. The move to a rolling admissions mirrors an approach taken by other accelerator programs including MuckerLab, the wildly successful Los Angeles-based early stage program.

“Demo is changing the way it runs its accelerator to be rolling recruitment,” said Aaron Blumenthal, a 500 Startups venture partner. “It will be making investment decisions year round instead of twice a year. Demo Days will still happen twice a year, founders can pick which Demo Day they want to be a part of.”

Given the profusion of accelerator programs globally, the move to a rolling admissions schedule likely makes sense, giving entrepreneurs more flexibility around when and how they join.

The decision from 500 follows other significant changes from Y Combinator, which is moving to a virtual model for its own accelerator program — a decision influenced by the global response to the COVID-19 epidemic which has disrupted economies and threatened lives globally.

Blumenthal explained the switch in a blog post. Writing:

In a business where timing is everything, I realized the current accelerator model was serving an injustice to founders. That’s why shortly after I was put in charge of our flagship accelerator, I knew it was time to do exactly what we tell our founders to do every day—to innovate. So, after shepherding 26 batches of thousands of founders over the past 10 years, 500 is shaking things up.

We’re proud to announce that we’ve designed an entirely new platform that’s flexible and tailored to our founders’ timing and needs—not our own. Our goal is to move away from the one-size-fits-all approach of the past, and towards delivering relevant content, based on each founders’ growth stage and needs, precisely when they’re ready for it.

This new flexible approach reinforces our continued commitment to invest in founders from all over the world. We realize it’s not always feasible for every founder to move to San Francisco for four months at the drop of a hat, and we want to accommodate for that.

You can expect to see our new model in action in the near future. After we wrap up Batch 26’s Demo Day on March 26th, our accelerator applications will open indefinitely. We’ll begin accepting founders to our program on a continuous rolling basis, with more flexibility on start and end dates. That means no more application deadlines, and no more missing out on companies because the timing isn’t right. There will still be two demo days per year and plenty of opportunities to take advantage of the expertise the entire 500 community has to offer — all that changes is our flexibility to invest in companies and founders we believe in and their ability to join our programming when it’s the right time for them.

TechCrunch has covered 500’s current batch of startups here, and will have a post up shortly about our favorites from its demo day.

Airbnb to provide free or subsidized housing for 100,000 COVID-19 healthcare workers

By Darrell Etherington

The hospitality and travel industry may be reeling, but Airbnb is still doing what it can to support the global effort to fight the spread of the coronavirus causing a worldwide pandemic. The company announced today that it will provide “free or subsidized housing” for 100,000 people working as frontline healthcare, relief for first response professionals focused on stemming the COVID-19 crisis.

Airbnb’s effort will work by allowing Hosts on its platform to opt-in to making their space available, with any fees that Airbnb would normally charge for using its platform waived for those who participate. The program will include new protocols around cleanliness that are designed to keep spaces safe for those workers who use it, and Airbnb will be working with the Red Cross, the International Rescue Committee, the International Medical Corps and other non-profit groups to help allocated space where it’s needed most.

Already, Airbnb had been operating smaller scale programs in both Italy and France to address the crises there, with 6,000 hosts across both countries making their spaces available. This extended program was partly the result of many requests from hosts to the platform about how they could volunteer their spaces and help with the effort, and Airbnb will be making it possible for hosts to offer their spaces for free if they want – though even those who still want to participate but keep a stay charge in place won’t be charged any fees by Airbnb itself.

The advanced cleaning protocols that Airbnb has put in place are developed to align with guidance from leading national health authorities, including the CDC in the U.S., and Airbnb says they will evolve as updated guidance becomes available. Some of the enhanced rules to help try to ensure safety include guidance that there should be a minimum of 72 hours between stays, as well as maintaining proper social distancing between hosts and any guests.

Airbnb also has a fund established for those who want to provide monetary support, with 100 percent of all proceeds going to nonprofits working on COVID-19 relief. These funds will help further subsidize housing costs for any responders in the case of hosts making housing available at a fee.

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.

Financial markets may be sliding globally, but interest in stock trading apps soars

By Jonathan Shieber

The stock markets are having a very rough month, but interest in stock trading apps is skyrocketing, according to data from industry trackers and companies themselves.

Across the board from speculative stock trading apps from startups like Robinhood to savings-focused investment applications like Acorns and established companies like Etrade, would-be investors are turning to trading even as the markets are at their most volatile.

Following precipitous declines over the past week, stocks were roaring back today, with major market indices posting their biggest gains since the financial crisis of 2008.

Over the same period the stock trading startup, Robinhood, which had suffered early outages as the markets began their wild swings, recorded some of its biggest growth numbers of the year.

According to data supplied by Robinhood, the company has already seen roughly ten times the net deposits for the month versus its monthly average in the fourth quarter of 2019. Daily trading volume is also up more than three times the monthly trading volumes the company recorded in the fourth quarter of 2019.

App Annie data over the period indicates that downloads haven’t slowed since Robinhood’s early month outages either.

Robinhood may be one beneficiary of the markets’ movement, but it’s hardly the only one.

New customer growth at Acorns hit a new high of 9,800 signups last Thursday — a day that stock markets recorded their second-worst day of trading since 1987.  That 9,800 sign up figure is about 45 percent more than the company normally records. In total, the company recently hit a milestone of 7 million signups.

That surge in interest shows that far from being scared off from the market, users of the tradings apps are showing some confidence in the longterm health of the markets.

“The market is down 30 percent,” said Noah Kerner, the chief executive officer of Acorns. “It’s on sale.”

Kerner said that now is the time when investors may see the biggest gains from getting into the market. “Every downturn in history has ended in an upturn,” Kerner said. Pulling your money out of the market now means you lock in losses. Last time I checked, nobody likes losses.”

The emphasis that President Trump places on the markets may also be playing a role in increasing awareness among everyday Americans, according to Kerner.

“The President and Administration have brought a lot of focus on economics and the markets more generally. You have a lot of products in fintech, especially ours, that have prioritized financial education — and spreading information in simple, digestible ways,” he said. “The message is out there that the market is on sale and people are engaging with it.”

Some of the largest names in stock trading are also enjoying new boosts in downloads and activity. Etrade, for instance, is showing a surge of interest from new investors, at least according to App Annie data.

 

Stocks fall again on continued coronavirus worries

By Jonathan Shieber

Is it good news to say that stocks fell less sharply than they had on previous days?

That’s the bright side of another turbulent trading day across the Nasdaq and New York Stock Exchange. The major indices were down again — although their declines were less severe than they had been during the week.

Investors appeared to shake off positive labor statistics (the U.S. added 273,000 jobs, ahead of expectations), as the expanding number of coronavirus cases in the U.S. and lack of a coordinated response from the Trump Administration took their toll on investor confidence that the impact on the economy would be minimal.

With that said, things could have been worse?

The Dow fell 256.50 points, or just under 1%, to close at 25,864.78, while the S&P stumbled 51.57 points, or 1.7%, to close at 2,972.37 while the Nasdaq slid 1.8%, or 162.98 to close at 8,575.62. The benchmark indices are in the territory of a market correction — hovering at around a 10% loss already on the year.

For startups, it’s important to note that these market pressures can have implications for their businesses. Jittery buyers may be inclined to curb spending and save to conserve cash on their own balance sheets; consumers may rethink priorities and focus on essential purchases as they tighten their own belts.

Sequoia Capital warned in a blog post yesterday that things may change as time rolls along and the global economy stutters.

Here’s their take:

  • Drop in business activity. Some companies have seen their growth rates drop sharply between December and February. Several companies that were on track are now at risk of missing their Q1–2020 plans as the effects of the virus ripple wider.
  • Supply chain disruptions. The unprecedented lockdown in China is directly impacting global supply chains. Hardware, direct-to-consumer, and retailing companies may need to find alternative suppliers. Pure software companies are less exposed to supply chain disruptions, but remain at risk due to cascading economic effects.
  • Curtailment of travel and canceled meetings. Many companies have banned all “non-essential” travel and some have banned all international travel. While travel companies are directly impacted, all companies that depend on in-person meetings to conduct sales, business development, or partnership discussions are being affected.

This isn’t the first time that one of the country’s most successful venture capital firms has warned its portfolio about the possibility of an economic crisis. In the wake of the 2008 financial crisis the firm issued an infamous slide deck warning “RIP Good Times”.

For financial markets the funeral bells are already tolling in the early part of the year. Now, a reckoning may be coming for startups that were on the edge of the bubble.

Airbnb and three other P2P rental platforms agree to share limited pan-EU data

By Natasha Lomas

The European Commission announced yesterday it’s reached a data-sharing agreement with vacation rental platforms Airbnb, Booking.com, Expedia Group and Tripadvisor — trumpeting the arrangement as a “landmark agreement” which will allow the EU’s statistical office to publish data on short-stay accommodations offered via these platforms across the bloc.

It said it wants to encourage “balanced” development of peer-to-peer rentals, noting concerns have been raised across the EU that such platforms are putting unsustainable pressure on local communities.

It expects Eurostat will be able to publish the first statistics in the second half of this year.

“Tourism is a key economic activity in Europe. Short-term accommodation rentals offer convenient solutions for tourists and new sources of revenue for people. At the same time, there are concerns about impact on local communities,” said Thierry Breton, the EU commissioner responsible for the internal market, in a statement.

“For the first time, we are gaining reliable data that will inform our ongoing discussions with cities across Europe on how to address this new reality in a balanced manner. The Commission will continue to support the great opportunities of the collaborative economy, while helping local communities address the challenges posed by these rapid changes.”

Per the Commission’s press release, data that will be shared with Eurostat on an ongoing basis includes number of nights booked and number of guests, which will be aggregated at the level of “municipalities.”

“The data provided by the platforms will undergo statistical validation and be aggregated by Eurostat,” the Commission writes. “Eurostat will publish data for all Member States as well as many individual regions and cities by combining the information obtained from the platforms.”

We asked the Commission if any other data would be shared by the platforms — including aggregated information on the number of properties rented; and whether rentals are whole properties or rooms in a lived in property — but a Commission spokeswoman could not confirm any other data would be provided under the current arrangement. Update: It has now confirmed a second phase will involve more data being published — see below for details.

She also told us that municipalities can be defined differently across the EU, so it may not always be the case that city-level data will be available to be published by Eurostat.

In recent years, multiple cities in the EU — including Amsterdam, Barcelona, Berlin and Paris — have sought to put restrictions on Airbnb and similar platforms in order to limit their impact on residents and local communities, arguing short-term rentals remove housing stock and drive up rental prices, hollowing out local communities and creating other sorts of anti-social disruptions.

However, a ruling in December by Europe’s top court — related to a legal challenge filed against Airbnb by a French tourism association — offered the opposite of relief for such cities, with judges finding Airbnb to be an online intermediation service, rather than an estate agent.

Under current EU law on Internet business, the CJEU ruling makes it harder for cities to apply tighter restrictions as such services remain regulated under existing ecommerce rules. Although the Commission has said it will introduce a Digital Services Act this year that’s slated to upgrade liability rules for platforms (and at least could rework aspects of the ecommerce directive to allow for tighter controls).

Last year, ahead of the CJEU’s ruling, ten EU cities penned an open letter warning that “a carte blanche for holiday rental platforms is not the solution,” calling for the Commission to introduce “strong legal obligations for platforms to cooperate with us in registration-schemes and in supplying rental-data per house that is advertised on their platforms.”

So it’s notable the Commission’s initial data-sharing arrangement with the four platforms does not include any information about the number or properties being rented, nor the proportion which are whole property rentals vs rooms in a lived in property — both of which would be highly relevant metrics for cities concerned about short-term rental platforms’ impact on local housing stock and rents.

When asked about this, the Commission spokeswoman told us it had to “ensure a fair balance between the transparency that will help the cities to develop their policies better and then to protect personal data, because this is about private houses.”

“The decision was taken on this basis to strike a fair balance between the different interests at stake,” she added.

When we pointed out that it would be possible to receive property data in aggregate, in a way that does not disclose any personal data, the spokeswoman had no immediate response.

Without pushing for more granular data from platforms, the Commission initiative looks like it will achieve only a relatively superficial level of transparency in the first instance — and one which might best suit platforms’ interests by spotlighting attention on tourist dollars generated in particular regions rather than offering data to allow for cities to drill down into flip-side impacts on local housing and rent affordability.

Gemma Galdon, director of a Barcelona-based research consultancy, called Eticas, which focuses on the ethics of applying cutting edge technologies, agreed the Commission move appears to fall short — though she welcomed increasing transparency as “a good step.”

“This is indeed disappointing. Cities like Barcelona, NYC, Portland or Amsterdam have agreements with Airbnb to access data (even personal and contact data for hosts!),” she told us.

“Mentioning privacy as a reason not to provide more data shows a serious lack of understanding of data protection regulation in Europe. Aggregate data is not personal data. And still, personal data can be shared as long as there is a legal basis or consent,” she added.

“So while this is a good step, it is unclear why it falls so short as the reason provided (privacy) is clearly not relevant in this case.”

Update: We understand a second phase of the Commission’s data-sharing arrangement will see Eurostat also publish data on the number of properties rented and the proportion which are full property rentals vs rooms in occupied properties. However it intends to wait until it’s confident it can accurately exclude double-counting of the same rental properties advertised on different platforms.

In the first phase Eurostat will publish the following occupancy data: Number of stays (number of rentals of each listing during the reference period); number of nights rented out (number of nights each listing was rented out during the reference period); and number of overnight stays (number of guest nights spent at each listing during the reference period (based on number of guests indicated when booking was made).

In a second phase, which does not yet have a timeline attached to it, the following capacity data will also be published: Number of hosts (number of hosts renting out one or more listings); number of listings; and number of bed places (best possible approximation based on e.g. maximum capacity shown for each listing). This second phase will also include data on the type of accommodation (i.e. individual room in a shared property vs entire property).

Female-founded startups landed more deals globally in 2019 than ever before

By Natasha Mascarenhas

We all know the disruptive stories of female-founded startups like Glossier and ezCater. And we also know how those success stories belie the much harder time thousands of other women entrepreneurs have when it comes to raising capital.

That’s why it’s so important to have historical data and a window into how these things may be changing, so that the industry can consistently benchmark its successes and failures in an attempt to correct historical inequities in the ways venture firms distributed capital. 

Looking at the latest numbers from All Raise and Pitchbook, it’s clear that for every step forward, the industry still has a long way to go. 

In 2019, female-founded startups across the world landed a record 4,399 investments, according to data from All Raise, a nonprofit organization that wants to increase the diversity in the venture capital industry, and Pitchbook data.

While deal count has increased, dollars raised declined in 2019 sliding to $37.7 billion from $49.9 billion in 2018. It’s worth noting that 2018 included an outsized round from Ant Financial, which may have skewed dollar totals. It’s also worth pointing out that over the same period venture capital firms in the U.S. alone invested more than $130 billion into startup companies

For what it’s worth, 2019 broke all kinds of records. All Raise and Pitchbook’s data shows that 2019, compared to a decade ago, had a 1408% increase in deal value. Additionally, according to Crunchbase data, female-founded unicorns, companies valued at over $1 billion, were being born at an unprecedented rate in 2019. While a female-founded unicorn is still rare, the proliferation is notable, and goes well with one of All Raise’s goals: to increase investment in female-founded companies.

However, All Raise’s latest data doesn’t touch on one of its goals, which is to double the percentage of female investment partners at tech VC firms over the next 10 years. Last month, Pam Kostka, the CEO of All Raise, wrote a Medium blog on how more women became VC partners than ever before in 2019. All Raise claimed major US firms added 52 women partners in 2019. Last month, Recode said those numbers might be “overstating the progress” due to the different definitions of partner. For example, some female partners may have the title of partner, but not the decision-making capabilities. 

Bottom line: the numbers are important, but the nuance within them is more telling, especially when it comes to diversity. For proof, look as far as Kostka’s headline: “More Women Became VC Partners Than Ever Before In 2019 But 65% of Venture Firms Still Have Zero Female Partners.” 

Bird launches Scoot Mopeds in Austin ahead of SXSW

By Kirsten Korosec

The Scoot Moped — an electric moped born out of Bird’s acquisition of Scoot — will launch in Austin five months after unveiling the shared micromobility vehicle.

The new moped is the latest effort by Bird to diversify its product offerings to capture more customers. The Scoot Mopeds, which are now available on the Bird app, feature large-volume tires, hydraulic disc brakes, two side mirrors, an LCD display for vehicle speed information as well as two sizes of helmets, which are stored in a box on the vehicle. Users of the Scoot Moped must be 18 years or older and have a valid driver’s license. 

Bird first unveiled the Scoot Moped in October following its acquisition of Scoot. Initially the mopeds were piloted in Los Angeles, according to Bird. The Austin launch, which kicks off the week before the city’s SXSW music, tech, film and comedy festival begins, marks the official roll out of the Scoot Mopeds. The SXSW festival has not been cancelled yet, although numerous companies are pulling out over concerns of the coronavirus. SXSW organizers said March 2 that the “2020 event is proceeding with safety as a top priority.”

The Scoot Mopeds will join a bevy of shared mobility vehicles that are already on Austin’s city streets. The Austin City Council approved in February 2018 the creation of a “dockless” bike share pilot program. Some companies were already operating these services; this action created a regulatory framework. But then scooters came en masse.

The scooters upended bike share, and prompted companies to take some of their bikes off the streets do to lack of demand, according to several city officials who spoke to TechCrunch during SXSW 2019.

Bird is “working closely with the city to help achieve the goal of 50-50 mode shift by 2039 and looks forward to collaborating on more solutions in support of the Austin Strategic Mobility Plan,” Blanca Laborde, a government partnerships team member for Bird said in a statement. “We think Austinites are going to love this new way to get around.”

Did African startups raise $496M, $1B or $2B in 2019?

By Jake Bright

Five years ago, it was hard to come by any numbers for annual VC investment in Africa. These days the challenge is choosing which number to follow.

That’s the case for three venture funding studies for Africa that turned up varied results.

The numbers and variance

Investment stats released by media outlet Disrupt Africa, data-base WeeTracker and Africa focused fund Partech have left some people scratching their heads.

From high to low, Partech pegged total 2019 VC for African startups at $2 billion, compared to WeeTracker’s $1.3 billion estimate and Disrupt Africa’s $496 million.

That’s a fairly substantial spread of $1.5 billion between the assessments. The variance filtered down to country VC valuations, though it was a little less sharp.

Africa VC markets 2019Partech and WeeTracker shared the same top-three countries for 2019 VC investment in Africa — Nigeria, Kenya, and Egypt — but with hundred-million dollar differences.

Disrupt Africa came up with a different lead market for startup investment on the continent — Kenya — though its $149 million estimate for the East African country was some $500 million lower than Partech and WeeTracker’s VC leader, Nigeria.

So what accounts for the big deviations? TechCrunch spoke to each organization (and reviewed the reports) and found the contrasting stats derive from different methodologies — namely defining what constitutes a startup and an African startup.

Partech’s larger overall VC valuation for the continent comes from broader parameters for companies and quantifying investment.

“We do not limit the definition of startups by age of the incorporation or size of funds raised,” Partech General Partner Tidjane Deme told TechCrunch.

This led the fund, for example, to include Visa’s $200 million investment in Nigerian financial-services company Interswitch . The corporate round was certainly tech-related, though few would classify Interswitch — which launched in 2002, acquires companies, and has a venture fund — as a startup.

Partech’s higher annual VC value for Africa’s startups could also connect to tallying confidential investment data.

“We…collect and analyze undisclosed deals, accessing more detailed information thanks to our relationships within the ecosystem,” the fund’s report disclosed.

WeeTracker’s methodology also included data on undisclosed startup investments and opened up the count to funding sources beyond VC.

“Debt/loans, grants/awards/prizes/non-equity assistance, crowdfunding, [and] ICOs are included,” WeeTracker clarified in a methodology note.

Disrupt Africa used a more conservative approach across companies and investment. “We are a bit more narrow on what we consider a startup to be,” the site’s co-founder Tom Jackson told TechCrunch.

“In the clearest scenario, an African startup would be headquartered in Africa, founded by an African, and have Africa as its primary market,” Disrupt Africa’s report stated  — though Jackson noted all these factors don’t always align.

“Disrupt Africa tackles this issue on a case-by-case basis,” he said.

Partech was more liberal in its definition of an African startup, including investment for tech-companies that count Africa as their primary market, but not insisting they be incorporated or operate HQs on the continent.

Andela FoundersThat opened up inclusion of large 2019 rounds to Africa focused, New York headquartered tech-talent accelerator Andela and investment to Opera’s verticals, such as OPay in Nigeria.

In addition to following a more conservative definition of African startup, Disrupt Africa’s report was more particular to early-stage ventures. The site’s report primarily counted investment for companies founded within the last five year and excluded “spin-offs of corporates or any other large entity…that [has]…developed past the point of being a startup.”

Commonalities across reports

For all the differences on annual VC counts for Africa, there were some common threads across WeeTracker, Partech, and Disrupt Africa’s investment reports.

The first was the rise of Nigeria — which has Africa’s largest population and economy — as the top destination for startup VC investment on the continent.

The second was the prominence of fintech as the most funded startup sector across Africa, gaining 54% of all VC in Partech’s report and $678 million of the $1.3 billion to startups in WeeTracker’s study.

VC inequality

An unfortunate commonality in each report was the preponderance of startup investment going to English speaking Africa. No francophone country made it into the the top five in any of the three reports. Only Senegal registered on Partech’s country-list, with a small $16 million in VC in 2019.

The Dakar Angel Network launched last year to bridge the resource gap for startups in French-speaking African countries.

Final sum

There may not be a right or wrong stat for annual investment to African startups, just three reports with different methodologies that capture unique snapshots.

Partech and WeeTracker offer a broader view of multiple types of financial support going to tech companies operating in Africa. Disrupt Africa’s assessment is more specific to a standard definition of VC going to startups originating and operating in Africa.

Three reports with varying numbers on the continent’s startup investment is a definite upgrade to what was available not so long ago: little to no formal data on VC in Africa.

Africa Roundup: TLcom closes $71M fund, Jumo raises $55M, AWS partners with Safaricom

By Jake Bright

VC firm TLcom Capital closed its Tide Africa Fund at $71 million in February, and announced plans to invest in 12 startup over the next 18 months.

The group —  with offices in London, Lagos, and Nairobi — is looking for tech-enabled, revenue-driven ventures in Africa from seed-stage to Series B, according to TLcom Managing Partner Maurizio Caio.

He told TechCrunch the fund was somewhat agnostic on startup sectors, but was leaning toward infrastructure, logistics ventures vs. consumer finance companies.

On geographic scope, TLcom Capital will focus primarily on startups in Africa’s big-three tech hubs — Nigeria, Kenya,  South Africa — but is also eyeing rising markets, such as Ethiopia.

TLcom’s current Africa portfolio includes Nigerian trucking logistics venture Kobo360, Kenya’s Twiga Foods,  a B2B food supply-chain company and tech-talent accelerator Andela.

Both of these companies have gone on to expand in Africa and receive subsequent investment by U.S. investment bank, Goldman Sachs .

For those startups who wish to pitch to TLcom Capital, Caio encouraged founders to contact one of the fund’s partners and share a value proposition. “If it’s something we find vaguely interesting, we’ll make a decision,” he said.

One $50 million round wasn’t enough for South Africa’s Jumo, so the fintech firm raised another — $55 million — in February, backed by

Goldman Sachs led the Cape Town based company’s $52 million round back in 2018.

“This fresh investment comes from new and existing…investors including Goldman Sachs,  Odey Asset Management and LeapFrog Investments,” Jumo said in a statement —  though Goldman told TechCrunch its participation in this week’s round isn’t confirmed.

After the latest haul, Jumo has raised $146 million in capital, according to Crunchbase.

Founded in 2015, the venture offers a full tech stack for partners to build savings, lending, and insurance products for customers in emerging markets.

Jumo is active in six markets and plans to expand to two new countries in Africa (Nigeria and Ivory Coast) and two in Asia (Bangladesh and India).

The company’s products have disbursed over $1 billion loans and served over 15 million people and small businesses, according to Jumo data.

Jumo joins a growing list of African digital-finance startups raising big money from outside investors and expanding abroad. A $200 million investment by Visa in 2019 catapulted Nigerian payments firm Interswitch  to unicorn status, the same year the company launched its Verge card product on Discover’s global network.

Amazon Web Services  has entered a partnership with Safaricom — Kenya’s largest telco, ISP and mobile payment provider — in a collaboration that could spell competition between American cloud providers in Africa.

In a statement to TechCrunch,  the East African company framed the arrangement as a “strategic agreement” whereby Safaricom  will sell AWS services (primarily cloud) to its East Africa customer network.

Safaricom — whose products include the famed M-Pesa  mobile money product — will also become the first Advanced Consulting Partner for the AWS partner network in East Africa.

Partnering with Safaricom plugs AWS into the network of one East Africa’s most prominent digital companies.

Safaricom, led primarily by its M-Pesa mobile money product, holds remarkable dominance in Kenya, Africa’s 6th largest economy. M-Pesa has 20.5 million customers across a network of 176,000 agents and generates around one-fourth of Safaricom’s ≈ $2.2 billion annual revenues (2018).

safaricomM-Pesa has 80% of Kenya’s mobile money agent network, 82% of the country’s active mobile-money subscribers and transfers 80% of Kenya’s mobile-money transactions, per the latest sector statistics.

A number of Safaricom’s clients (including those it provides payments and internet services to) are companies, SMEs and startups.

The Safaricom-AWS partnership points to an emerging competition between American cloud service providers to scale in Africa by leveraging networks of local partners.

The most obvious rival to the AWS-Safaricom strategic agreement is the Microsoft -Liquid Telecom collaboration. Since 2017, MS has partnered with the Southern African digital infrastructure company to grow Microsoft’s AWS competitor product — Azure — and offer cloud services to the continent’s startups and established businesses.

More Africa-related stories @TechCrunch

African tech around the ‘net

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.

AWS partners with Kenya’s Safaricom on cloud and consulting services

By Jake Bright

Amazon Web Services has entered a partnership with Safaricom — Kenya’s largest telco, ISP and mobile payment provider — in a collaboration that could spell competition between American cloud providers in Africa.

In a statement to TechCrunch, the East African company framed the arrangement as a “strategic agreement” whereby Safaricom will sell AWS services (primarily cloud) to its East Africa customer network.

Safaricom — whose products include the famed M-Pesa mobile money product — will also become the first Advanced Consulting Partner for the AWS partner network in East Africa.

“The APN is…the program for technology…businesses who leverage AWS to build solutions and services for customers…and sell their AWS offerings by providing valuable business, technical, and marketing support,” Safaricom said.

“We chose to partner with AWS because it offers customers the broadest and deepest cloud platform…This agreement will allow us to accelerate our efforts to enable digital transformation in Kenya,” said Safaricom CEO Michael Joseph.

“Safaricom will be able to offer AWS services to East-African customers, allowing businesses of all sizes to quickly get started on AWS cloud,” the company statement continued.

For now, the information provided by Safaricom is a bit sparse on the why and how of the partnership between the American company and East African mobile, financial and ISP provider.

TechCrunch has an inquiry into Amazon and some additional questions posed to Safaricom, toward additional coverage.

An initial what-this-all-means take on the partnership points to an emerging competition between American cloud service providers to scale in Africa by leveraging networks of local partners.

The most obvious rival to the AWS-Safaricom strategic agreement is the Microsoft -Liquid Telecom collaboration. Since 2017, MS has partnered with the Southern African digital infrastructure company to grow Microsoft’s AWS competitor product — Azure — and offer cloud services to the continent’s startups and established businesses.

MS and Liquid Telecom have focused heavily on the continent’s young tech companies. “We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s  Head of Innovation Partnerships Oswald Jumira told TechCrunch in 2018.

Amazon hasn’t gone fully live yet with e-commerce services in Africa, but it has aggressively positioned AWS and built a regional client list that includes startups — such as fintech venture Jumo — and large organizations, such Absa and Standard Bank.

Partnering with Safaricom plugs AWS into the network of one East Africa’s most prominent digital companies.

Safaricom, led primarily by its M-Pesa mobile money product, holds remarkable dominance in Kenya, Africa’s 6th largest economy. M-Pesa has 20.5 million customers across a network of 176,000 agents and generates around one-fourth ($531 million) of Safaricom’s ≈ $2.2 billion annual revenues (2018).

Compared to other players — such as Airtel  Money and Equitel Money — M-Pesa has 80% of Kenya’s mobile money agent network, 82% of the country’s active mobile-money subscribers and transfers 80% of Kenya’s mobile-money transactions, per the latest sector statistics.

A number of Safaricom’s clients (including those it provides payments and internet services to) are companies, SMEs and startups.

Extending AWS services to them will play out next to the building of Microsoft’s $100 million Africa Development Center, with an office in Nairobi, announced last year.

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.

Amazon Transcribe can now automatically redact personally identifiable information

By Frederic Lardinois

Amazon Transcribe, the AWS-based speech-to-text service, launched a small but important new feature this morning that, if implemented correctly, can automatically hide your personally identifiable information from call transcripts.

One of the most popular use cases for Transcribe is to create a record of customer calls. Almost by default, that involves exchanging information like your name, address or a credit card number. In my experience, some call centers stop the recording when you’re about to exchange credit card numbers, for example, but that’s not always the case.

With this new feature, Transcribe can automatically identify information like a social security number, credit card number, bank account number, name, email address, phone number and mailing address and redact that. The tool automatically replaces this information with ‘[PII]’ in the transcript.

There are, of course, other tools that can remove PII from existing documents. Often, though, these are focused on data loss prevention tools and aim to keep data from leaking out of the company when you share documents with outsiders. With this new Transcribe tool, at least some of this data will never be available for sharing (unless, of course, you keep a copy of the audio).

In total, Transcribe currently supports 31 languages. Of those, it can transcribe 6 in real-time for captioning and other use cases.

South African fintech startup Jumo raises second $50M+ VC round

By Jake Bright

South African fintech startup Jumo closed a $55 million round from a diverse group of investors, the company confirmed.

Founded in 2015 and based in Cape Town, the venture offers a full tech stack for partners to build savings, lending, and insurance products for customers in emerging markets.

This week’s funding follows a $52 million raise by Jumo in 2018, led by U.S. investment bank Goldman Sachs, that saw the startup expand to Asia.

“This fresh investment comes from new and existing…investors including Goldman Sachs, Odey Asset Management and LeapFrog Investments,” Jumo said in a statement —  though Goldman told TechCrunch its participation in this week’s round isn’t confirmed.

After the latest haul, Jumo has raised $146 million in capital, according to Crunchbase.

With its latest raise, the company plans to move into new markets and launch new products in Asia and Africa.

“I’m excited for our next phase. This backing will help us build a better business and break new ground,” Jumo founder Andrew Watkins-Ball said.

The company’s products have disbursed over $1 billion loans and served over 15 million people and small businesses, according to Jumo data.

Jumo is active in six markets and plans to expand to two new countries in Africa (Nigeria and Ivory Coast) and two in Asia (Bangladesh and India).

Nigeria, in particular, has become Africa’s unofficial capital for fintech development, surpassing Kenya in 2019 for drawing the most fintech specific and overall VC on the continent, according to WeeTracker.

Jumo joins a growing list of African digital-finance startups raising big money from outside investors and expanding abroad. A $200 million investment by Visa in 2019 catapulted Nigerian payments firm Interswitch to unicorn status, the same year the company launched its Verge card product on Discover’s global network.

In December, Miga expanded its credit products to Brazil, after the startup grew its lending products in Nigeria. Last month, Nigerian payments firm Paga launched in Mexico.

Jumo’s funding also tracks Goldman Sachs’ growing investment in African startups. The U.S. bank has put several hundred million dollars into ventures on the continent —  from Pan-African e-commerce company Jumia to Nigerian trucking-logistics firm Kobo360.

❌