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:
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.
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.
A school in Norway has stopped using popular video conferencing service Whereby after a naked man apparently “guessed” the link to a video lesson.
According to Norwegian state broadcaster NRK, the man exposed himself in front of several young children over the video call. The theory, according to the report, is that the man guessed the meeting ID and joined the video call.
One expert quoted in the story said some are “looking” for links.
Last year security researchers told TechCrunch that malicious users could access and listen in to Zoom and Webex video meetings by cycling through different permutations of meeting IDs in bulk. The researchers said the flaw worked because many meetings were not protected by a passcode.
School and workplaces across the world are embracing remote teaching as the number of those infected by the coronavirus strain, known as COVID-19, continues to climb. There are some 523,000 confirmed cases of COVID-19 across the world as of Thursday, according to data provided by Johns Hopkins University. Norway currently has over 3,300 confirmed cases.
More than 80% of the world’s population is said to be on some kind of lockdown to help limit the spread of the coronavirus in an effort to prevent the overrunning of health systems.
The ongoing global lockdown has forced companies to embrace their staff working from home, pushing Zoom to become the go-to video conferencing platform for not only remote workers but also for recreation, like book clubs and happy hours.
An earlier version of this article incorrectly said the video service used by the school was Zoom. The video conferencing service was Whereby.
Stocks soared on Thursday even as the U.S. reported its worst unemployment numbers in 50 years of tracking data.
The pain felt on main street was offset for investors by the federal government opening its wallet to Wall Street, businesses and (at some point) workers in the form of the $2 trillion stimulus package designed as a response to business closures as a result of the COVID-19 epidemic.
Details of the plan and its implications for startup companies are still being assessed, but the spigot is now on for businesses large and small to avail themselves of low interest stimulus loans and financing that should keep them afloat even as prolonged shutdowns look to continue in the nation’s most populous cities.
Here’s the tale of the tape:
Tech stocks followed the broader markets and posted gains on the day. Facebook was up nearly 4.5% and Alphabet (Google’s parent company) was up 5.5%. Shares of Apple were up over 5% as well and Amazon rose 3% on the day.
When Eliot Buchanan tried to use his credit card to pay his Harvard tuition bill, the payment was rejected because the university said it doesn’t accept credit. Realizing the same problem exists for thousands of different transactions like board, rent and vendor payments, he launched Plastiq. Plastiq helps people use credit cards to pay, or get paid, for anything.
Plastiq today announced that it has raised $75 million in venture capital in a Series D round led by B Capital Group. Kleiner Perkins, Khosla Ventures, Accomplice and Top Tier Capital Partners also participated in the round. The round brings the company’s total known venture capital raised to more than $140 million.
To use Plastiq, users enter their credit card information on Plastiq’s platform. In return, Plastiq will charge you a 2.5% fee and get your bills paid. While Plastiq was started with consumers in mind, SMBs have now accounted for 90% of the revenue, according to Buchanan. The new financing round will invest in building out features to give SMBs faster services around payments and processing.
Plastiq provides a way for SMBs and consumers to pay their bills and make sure they have reliable cash flow. For example, restaurants sometimes have a drop in revenue due to seasonality or, as we’re experiencing now with COVID-19, pandemic lockdowns. Or tourism companies for cities that are struggling to attract visitors. Those companies still need cash flow, and using Plastiq’s service, they can use credit cards to pay suppliers even in an off season.
There is no shortage of competition from other companies also trying to solve pain points in small-business cash flow. According to Buchanan, Plastiq’s biggest competitors are traditional lenders, as well as companies like Kabbage and Fundbox. Similar claims could be made about Brex, which offers a credit card for startups to access capital faster.
Kabbage provides funding to SMBs through automated business loans. The SoftBank-backed company landed $200 million in a revolving credit line back in July, fresh off of landing strong partnerships with banks and giants like Alibaba to access more customers. Kabbage loans out roughly $2-3 billion to SMBs every year.
Plastiq, according to its release, is also on track to make more than $2 billion in transactions. But unlike Kabagge, Plastiq doesn’t issue loans or credit, it just unlocks a payment opportunity.
“SMBs don’t need to be burdened with additional debt or additional loans,” Buchanan said. “So rather than trying to reinvent the wheel, let’s use a behavior they have already earned.”
Buchanan would not disclose Plastiq’s current valuation or revenue, but he did say that it’s not too far away from $100 million in revenue run rate. The company’s revenue has grown 150% from 2018 to 2019.
The company also noted that it has surpassed “well over 1 million users,” up 150% in unique new users from 2018 to 2019.
In terms of profitability, Buchanan said that “we could be profitable if we wanted to be,” noting that Plastiq’s revenue and margins could lead them toward profitability if they wanted to focus less on growth. But he added they don’t plan to “slow down” the growth engine any time soon — especially in the wake of the COVID-19 pandemic.
Because the Series D round closed at the end of 2019, Buchanan said the pandemic did not impact the deal. However, the company had planned to time the announcement with tax season. Now, as small businesses struggle to secure capital and stay afloat due to lockdowns across the country, Plastiq’s new raise feels more fitting.
“Our customers are more thankful for solutions like ours as traditional sources of lending are drying up and not as easy to access” Buchanan said. “Hopefully, we can measure how many businesses make it through this because of us.”
The 140-person company is currently hiring across product and engineering roles.
While plenty of tech stocks have seen their market caps dive in the past month, Groupon has taken a harder hit than most. The company’s share price has dropped over 70% in the past five weeks.
The reckoning came for Groupon’s leadership today with both CEO Rich Williams and COO Steve Krenzer ousted. In an announcement, Groupon shared that both execs would be pushed out of their roles and that Groupon’s President of North America Aaron Cooper would serve as interim CEO.
While the impact of COVID-19 on retail across the country will certainly further negatively affect Groupon moving forward, the company was in dire trouble weeks before the crisis fully took root stateside. Groupon took a beating on its Q4 earnings report, where it widely missed expectations and showcased seriously declining revenues.
The company’s board will be leading the search for a full-time chief executive. For the time being, Cooper will be tasked with the company through an undoubtably rough period as many of its current and potential customers close up shop.
“The disruption created by the global pandemic, however, is significant, and our immediate goal is to help millions of Groupon merchants, customers and employees navigate the massive challenges they face,” interim CEO Aaron Cooper said in a statement.
Groupon’s stock was down a hair on the news, though its stock has seen some upward movement from its recent all-time low even as the rest of the market has tanked. One wonders whether investors believe that the entire market enduring a crisis could give the company an opportunity to take stock of its future or if they simply thing they found the share price’s bottom.
OfferUp, a top online and mobile marketplace app, announced this morning it’s raising $120 million in a new round of funding led by competiting marketplace letgo’s majority investor, OLX Group, and others. As a part of the deal, OfferUp will also be acquiring letgo’s classified business, with OLX Group gaining a 40% stake in the newly combined entity.
Other investors in the new round include existing OfferUp backers Andreessen Horowitz and Warburg Pincus. The funds will be put towards continued growth, product innovation, and monetization efforts, OfferUp says.
The round will close with the closing of the acquisition, which is expected to take place sometime in May. To date, OfferUp has raised $380 million.
The acquisition will see two of the largest third-party buying and selling marketplaces — outside of Craigslist, eBay, and Facebook Marketplace, of course — become a more significant threat to the incumbents. Together, the new entity will have more than 20 million monthly active users across the U.S. For consumers, the deal means they’ll no longer have to list in as many apps when looking to unload some household items, electronics, furniture, or whatever else they want to sell.
“My vision for OfferUp has always been to build a company that helps people connect and prosper,” said Nick Huzar, OfferUp CEO, in a statement about the acquisition. “We’re combining the complementary strengths of OfferUp and letgo in order to deliver an even better buying and selling experience for our communities. OLX Group has unparalleled expertise and clear success with growing online marketplace businesses, so they’ll be a great partner as we continue to build the widest, simplest, and most trustworthy experience for our customers.”
OfferUp also acknowledged that mid-pandemic is an odd time to announce such a deal — especially at a time when the COVID-19 outbreak is affecting its own employees, its partners, and the buying and selling community itself. And this will continue for some time.
However, Huzar positions the deal as one that will allow the business to grow, despite the current state of affairs.
“This news helps us to continue to innovate and grow, in spite of these challenging times, and continue to deliver on that promise,” Huzar noted, in a company blog post.
For now, the OfferUp and letgo apps will remain separate experiences and no disruptions to any sales will be made. Consumers will also be able to download both apps to iOS and Android devices for the time being, too.
But soon, both sets of users will gain access to a larger network of buyers and sellers, along with nationwide shipping options, and trust and safety problems. We understand this will involve allowing users of both sets of apps to see more posts and to interact with more buyers and sellers — so some sort of merging of the two networks is at play here. There will be additional changes to improve the user experience for all users in the future, as well, but the company isn’t sharing details on that today.
Letgo is bringing to the table an app with over 100 million worldwide downloads, so there is a potential to reactivate some of the lapsed users who aren’t currently shopping or selling on its marketplace today. The two apps were often neck-and-neck in terms of their app store category rankings, though on iPhone OfferUp has maintained a slight lead. (See App Store and Google Play charts below.)
However, letgo’s business outside of North America will be separately owned and operated as part of the OLX Group, the companies said.
“Letgo and OfferUp have always shared the same core vision for how large America’s secondhand economy can become – harnessing tech innovation to bring about an extraordinarily positive impact on consumers’ wallets and also on the environment,” said letgo co-founder Alec Oxenford. “Bringing our apps together moves us much closer to that vision,” he added.
The deal is still subject to regulatory approval. If given, the combined businesses will be operated by OfferUp, headquartered in Bellevue, Washington. Huzar will continue to be CEO of OfferUp and Chairman of the Board. Oxenford, meanwhile, will join the Board and serve as a senior advisor to OLX Group and Prosus.
Because the deal is still in the process of closing, the companies can’t speak to any team changes, including potential layoffs as a result of overlapping positions or other redundancies, we’re told.
Specifically, the deal was reached with iGraal’s majority owner M6 Group, and consists of €35 million in cash and the remaining made up of an exchange of shares. The acquisition is said to be one of the largest in the cashback and loyalty space in recent years, with iGraal considered the leading digital cashback player in France.
“In 2019, GSG and iGraal jointly saw more than six million members using its loyalty tools and connected advertisers to around 400 million consumers,” says GSG. “The deal makes GSG the largest rewards, savings and shopping content platform in Europe”.
As a result of the acquisition, Munich-based GSG says it expects to have more than half a billion shopping-related touchpoints and to facilitate over 40 million transactions to its merchant partners in 2020. (Coronavirus world recession permitting.)
It is also talking up the data is has access too, saying that the additional user interactions provide GSG with valuable new insights into the shopping behaviour of millions of consumers worldwide and will enable it to build an “even smarter” advertising platform for its partners.
In combination, iGraal and GSG say the two companies intend to expand their cashback and loyalty solutions into new European markets and significantly increase its member base and reach. Despite strong investments and market expansion, GSG expects to stay profitable also in 2020,” adds the company.
Meanwhile, the acquisition of iGraal follows GSG buying Pouch, the U.K.-based money-saving browser extension, in January 2019. This saw the Pouch team join GSG, and Pouch founders Ben Corrigan, Jonny Plein, and Vikram Simha becoming Pouch “Global Product Leads” at GSG.
Launched publicly in September 2016, Pouch is best known for its shopping tool that automatically alerts buyers to working voucher codes as they visit over 3,000 U.K. e-commerce sites. The Pouch browser extension is available for Google Chrome, Safari and Firefox.
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.
Some big moves in the payments platform space: Ant Financial Group, the owner of China’s Alipay payment platform has announced it’s taking a minority stake in Swedish payments platform Klarna — which has a strong European presence and a flagship product that lets shoppers buy now and pay later in interest-free instalments (typically 14 or 30 days after the purchase).
The pair have not disclosed terms of the deal but Reuters reported the stake amounts to less than 1% and was made up of existing and new shares. It also cites its source telling it the stake was done at a “slight uptick” to Klarna’s $460 million funding round last August — which valued the company at $5.5BN.
A spokeswomen for Klarna told us it’s not disclosing the value of the investment but she confirmed Reuters reporting, saying the stake is less than 1%.
Ant Financial is part of Chinese ecommerce and retail services multinational giant, Alibaba Group, which took a 33% stake in the fintech affiliate back in 2018 that gave it direct ownership of its suite of products and services — including an investment fund, micro-loans, insurance services, a digital bank and the Alipay mobile payments platform.
Klarna and Alipay had already been collaborating via Alibaba’s global ecommerce marketplace, AliExpress — which offers Klarna’s ‘Pay later’ option in multiple markets.
Now the pair touted their deepening partnership as set to bring more “innovative and convenient” financial services to consumers worldwide.
They are also clearly hoping to further grease the wheels of East to West ecommerce by expanding opportunities for China’s growing middle class to tap into Klarna’s network of European and global merchants via their preferred local online payment method.
Commenting in a statement, Klarna CEO Sebastian Siemiątkowski said: “For too long consumers have had to endure non-intuitive, boring and overly complex services when shopping both online and offline. At the heart of this cooperation between Klarna and Alipay is a shared ambition of innovating truly superior shopping experiences and creating destinations of inspiration for consumers across the world.”
“Alipay, and the wider Alibaba Group, have truly set the global pace on retail innovation and the app economy. We are delighted in this confidence shown in Klarna in defining the future of payments and shopping and are very much looking forward to working together further in the future,” he added.
Klarna said its technology is being used by more than 200,000 retailers and e-commerce platforms globally at this point, including AliExpress, H&M, ASOS, Expedia Group, IKEA, Farfetch, Adidas, Spotify, Samsung and Nike .
Last year it said it added over 75,000 new merchants — describing itself as a “strategic growth partner” for these retailers and claiming it’s driving “millions of referrals and traffic each month” from owned channels to partner merchants from consumers who it says are actively seeking where they can shop with Klarna. (It claims a base of 85 million shoppers.)
Ant Financial, meanwhile, has been working on expanding Alipay’s global footprint by cutting local deals in markets outside China where it cannot build up its transaction volume organically. Notably, back in 2015, it took a stake in India’s One97 — which operates a major local mobile payment platform, Paytm.
TechCrunch’s Ingrid Lunden contributed to this report
BMW unveiled Tuesday a concept version of its upcoming i4, an all-electric four-door Gran Coupe with an estimated EPA range of 270 miles and the ability to produce 530 horsepower, pushing it past its high-performance M3 combustion vehicle.
The i4 concept vehicle, which was unveiled online because the Geneva International Motor Show was cancelled due to the coronavirus, is slated to enter production in 2021. BMW has been talking about and teasing what would follow its i3 electric vehicle for awhile now. BMW released some specs on the upcoming i4 at the LA Auto Show back in November. This latest unveiling shows off more of what we can expect the i4 to look like, plus a bit more information on the interior and expected range.
The concept has a long wheelbase, fastback roofline and short overhangs, suggesting that the production version will have a similar profile — a far cry from the wedge-shaped i3.
The front end shows a closed-off grille. BMW says it has given the grille of the concept a purpose beyond just a reminder of its combustion engine past. The grille will be used to house various sensors, according to BMW.
Perhaps the most noticeable features, besides the mammoth kidney-shaped grille, is the glass roof and a curved digital display in the interior.
While it is not clear if the production version will integrate these same features, we can expect that the interior will be more touch-based and have fewer buttons and knobs. It will be interesting to see if BMW sticks to the single-screen design. In the photo below, you’ll notice at least one knob located in the console area.
Close followers of BMW’s EV plans might remember that the i4 was going to have a range of 600 kilometers, or about 400 miles. But it wasn’t clear if that figure, which would push it ahead of the competition, was based on the EPA or European WLTP. EPA estimates tend to be more conservative. BMW is now clarifying the range and has said the EPA estimate will be 270 miles.
The i4 will have the fifth-generation BMW eDrive, a platform that features a brand new electric motor, power electronics, charging unit and high-voltage battery. This fifth-gen platform will also show up in the iNEXT SUV and the iX3, which is headed for the Chinese market. The 80-kilowatt battery pack in the i4 is flat, according to BMW, and weighs 550 kilograms. For comparison, the battery pack in the Tesla Model 3 weighs 480 kg.
The unveiling of the i4 concept builds upon earlier announcements from BMW to push deeper into electrification. In November, BMW announced it would spend more than €10 billion euros ($11.07 billion) on battery cells from Chinese battery cell manufacturer Contemporary Amperex Technology Co. and Samsung SDI. BMW’s original deal with CATL, which was announced in mid-2018, was for €4 billion worth of battery cells. This new contract is from 2020 to 2031, the German automaker said at the time.
BMW Group will be the first customer of CATL’s battery cell factory that is under construction in Erfurt, Germany. BMW played an active part in establishing CATL in Germany, according to Andreas Wendt, member of the Board of Management of BMW AG responsible for purchasing and supplier network.
iPrice Group, which helps comparison shoppers in Southeast Asia by pulling together prices from different e-commerce platforms, has closed a $10 million Series B. Led by ACA Investments, the round also included participation from Daiwa PI Partners and returning investors Line Ventures, Mirae Asset-Naver Asia Growth Fund.
The company’s last funding announcement, from Line’s venture capital arm, was in May 2018 and its new round brings iPrice’s total funding so far to about $19.8 million.
The company said it has more than 20 million monthly visitors and about 5 million transactions were made through its platforms in 2019. Its core iPrice unit accounted for about half of its revenue and operated at a 30% EBITDA margin, a level of profitability the company expects its other businesses to hit in the next two to three years.
iPrice will use its funding to develop product discovery features, including recommendations and professional product reviews. The platform currently partners with “super apps,” like Line and Home Credit, that offer a wide array of services, through one app.
iPrice began by collecting coupons and discount codes when it launched, before expanding into price aggregation to help consumers navigate the growing roster of e-commerce platforms in Southeast Asia, such as Zalora, Shoppee and Lazada.
The platform is divided into verticals, including electronics and appliances, fashion and automotive, and now claims to aggregate more than 1.5 billion products from more than 1,500 e-commerce partners. It says it is the leading product aggregator in Indonesia, Vietnam, Thailand, the Philippines, Singapore, Malaysia and Hong Kong.
In a press statement, ACA Investments chief investment officer Tomohiro Fujita said, “The e-commerce industry in Southeast Asia is at its emerging stage and we see huge potential. iPrice Group will play an important role, especially with its comprehensive coverage of markets in Southeast Asia. It’s the prime gateway to online shopping.”
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.
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.
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 (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.
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.
SparkLabs Group announced today that it has launched SparkLabs Connex, the latest program in its network of startup accelerators and venture funds. Focused on real estate technology (proptech) and the Internet of Things, SparkLabs Connex will tap into startup ecosystems in Silicon Valley, Seoul, Shenzhen, Taipei and Singapore.
The program will support startups working with tech, like artificial intelligence, 5G, low-power wide area networks, eSIMS and security, essential to green building and smart city programs. Charles Reed Anderson, the founder of Singapore-based IoT, mobility and smart city advisory firm CRA & Associates, will lead SparkLabs Connex as its managing partner.
The program’s partners include Nokia, True Digital, Beca and Skyroam, as well as the cities of Taipei, Taiwan, Songdo, South Korea and Darwin, Australia, which will be working with its portfolio startups to test and deploy their technology. SparkLabs Connex is also working with Go Smart, the Taipei City initiative to create a global network of smart cities, and the Urban Technology Alliance, which tests smart city tech in France, Spain, Japan, South Korea and Taiwan.
In a press statement, Anderson said, “My ambition for SparkLabs Connex is to become the innovation hub for the IoT, smart city and prop tech ecosystems, and I’m excited with the quality and variety of partnerships we have signed at launch-and will sign in the future. SparkLabs Connex is more than an accelerator, it’s an ecosystem play, and we believe it creates a unique value proposition for startups, partners and investors.”
One of the biggest roadblocks to reducing costs in the American healthcare system is the system’s inherent lack of transparency.
Most healthcare networks and hospital systems can’t even accurately account for the doctors that they manage and which insurance plans those doctors accept — let alone how good those doctors actually are at providing care, according to Ribbon Health chief executive Nate Maslak.
The former healthcare consultant founded Ribbon Health to address just that issue, and the company has raised $10.25 million in new financing to roll its software services out to a broader network of payers providers and digital health companies.
The new financing was led by Andreessen Horowitz and included Y Combinator and the New York-based investment firm, BoxGroup. Individual health care executives like Nat Turner, the chief executive of Flatiron Health; Vivek Garipalli, chief executive and co-founder of Clover Health; and Eric Roza, the former chief executive of DataLogix also participated in the financing.
It’s the first deal for Andreessen’s newest healthcare focused partner, Julie Yoo, and is in an area that Yoo is quite familiar with. The former serial healthcare entrepreneur developed a similar business to tackle better data collection and delivery for hospitals at Kyruus.
Taking an api-based approach, Ribbon Health is building on the Kyruus approach, Yoo said, with the potential to expand across the entire breadth of the American healthcare system.
Simply, Ribbon Health is trying to create an accurate database of what doctors and health plans have which specializations offer their services to which insurance providers and produce the best outcomes for patients.
“$700 billion wasted because of poor decisions,” said Maslak. “The information not flowing to the right place at the right time. Over a third of healthcare spending is wasted and we think that over half is data-addressable.”
“The majority of decisions in health care rely on data about a provider or health plan, yet our industry lacks the systematic infrastructure to centralize this information and contextualize it for those who need it. There is a clear need for a single platform that can provide comprehensive, up-to-date data to enable informed decision making across health care, and we believe Ribbon is poised to lead in this space,” said Yoo, in a statement.
Along with the new financing, Ribbon also unveiled a tool that provides cost and quality information for patients to understand their potential out-of-pocket cost estimates based on their deductible, plan design, and provider prices.
“So much of the innovation in health care relies on accurate data. Our goal is to provide these companies the critical data infrastructure needed to improve quality of care, health outcomes, and control costs,” said Nate Fox, co-founder and chief technology officer at Ribbon Health, in a statement. “Our platform and seamless API make it easy for customers to trust us to deliver the most comprehensive, accurate data, allowing them to focus on what they do best on the front lines of health care.”
“Provider data is a basic building block of every healthcare transactions,” said Yoo. “Whether it’s you or I trying to enroll… or referral claim processing… there are tens of billions oftransactions all of which require information about a provider.”
Customer engagement platform Freshworks today announced that it has acquired AnsweriQ, a startup that provides AI tools for self-service solutions and agent-assisted use cases where the ultimate goal is to quickly provide customers with answers and make agents more efficient.
The companies did not disclose the acquisition price. AnsweriQ last raised a funding round in 2017, when it received $5 million in a Series A round from Madrona Venture Group.
Freshworks founder and CEO Girish Mathrubootham tells me that he was introduced to the company through a friend, but that he had also previously come across AnsweriQ as a player in the customer service automation space for large clients in high-volume call centers.
“We really liked the team and the product and their ability to go up-market and win larger deals,” Mathrubootham said. “In terms of using the AI/ML customer service, the technology that they’ve built was perfectly complementary to everything else that we were building.”
He also noted the client base, which doesn’t overlap with Freshworks’, and the talent at AnsweriQ, including the leadership team, made this a no-brainer.
AnsweriQ, which has customers that use Freshworks and competing products, will continue to operate its existing products for the time being. Over time, Freshworks, of course, hopes to convert many of these users into Freshworks users as well. The company also plans to integrate AnsweriQ’s technology into its Freddy AI engine. The exact branding for these new capabilities remains unclear, but Mathrubootham suggested FreshiQ as an option.
As for the AnsweriQ leadership team, CEO Pradeep Rathinam will be joining Freshworks as chief customer officer.
Rathinam told me that the company was at the point where he was looking to raise the next round of funding. “As we were going to raise the next round of funding, our choices were to go out and raise the next round and go down this path, or look for a complementary platform on which we can vet our products and then get faster customer acquisition and really scale this to hundreds or thousands of customers,” he said.
He also noted that as a pure AI player, AnsweriQ had to deal with lots of complex data privacy and residency issues, so a more comprehensive platform like Freshworks made a lot of sense.
Freshworks has always been relatively acquisitive. Last year, the company acquired the customer success service Natero, for example. With the $150 million Series H round it announced last November, the company now also has the cash on hand to acquire even more customers. Freshworks is currently valued at about $3.5 billion and has 2,7000 employees in 13 offices. With the acquisition of AnsweriQ, it now also has a foothold in Seattle, which it plans to use to attract local talent to the company.
Silicon Valley air purifier startup Molekule was born out of an idea Florida University Dr. Yogi Goswami had back in the 90’s using photo-voltaic technology to kill air pollutants. His son, a young boy at the time, suffered from severe allergies and Dr. Goswami wanted to build something those like him could use in their home to clear the air. But the sleekly designed Molekule took a bit of a blow last fall when Wirecutter called it “the worst air purifier we’ve ever tested.”
Molekule has since told TechCrunch comparing its PECO technology to the more common HEPA air filter technology is like comparing apples to oranges. “Up until now, everything has been air filtration, not real air purification,” co-founder and CEO of the company Jaya Rao told TechCrunch.
To disprove the naysayers, Molekule sent off its tech for testing at the Berkeley Lab, which concluded no measurable amount of VOC’s or ozone were emitted, Molekule effectively removed harmful chemicals in the air like toluene, limonene, formaldehyde as well as ozone and that “no secondary byproducts were observed when the air cleaner was operated in the presence of a challenge VOC mixture.”
Compare that to Wirecutter’s own assessment that, “on its auto setting, which is its medium setting, the Molekule reduced 0.3-micron particulates by (in the best case) only 26.4 percent over the course of half an hour. Compare that with the 87.6 percent reduction the Coway Mighty achieved on its medium setting.” TechCrunch reached out to Wirecutter and was told it still stands by its findings and does not recommend consumers purchase a Molekule.
It should be noted Consumer Reports also tested the Molekule device and it, too, did not recommend a purchase as the unit was not “proficient at catching larger airborne particles.” However, Molekule demonstrated to other news outlets at its own facilities that the photochemical reaction in its units did break down contaminants and kill mold spores.
“To test PECO technology you actually need really sophisticated equipment,” Rao said. “Boiling it down to really simple factors is not enough because air is made up of many tiny but toxic things. These are air-born chemicals nanometers in size, which Wirecutter admittedly did not test at all for.”
Wirecutter’s Tim Heffernan disputes Molekule’s claims of superiority in the category, however. “Now they are comparing apples to oranges,” he told TechCrunch. “The claims about destroying bacteria and viruses, for example, HEPA filters capture them and they capture them permanently.”
So how’s a consumer to know what’s right? First, take into account Molekule commissioned the Berkeley Lab for their independent testing and that Wirecutter and Consumer reports ran their own independent testing. However, it might boil down to understanding the premise of the technology. HEPA filters came out of the Manhattan Project in the 40’s, when scientists needed to develop a filter suitable for removing radioactive materials from the air. It works by capturing and filtering out harmful particles, viruses and mold. However, PECO, the technology in a Molekule unit, uses the science of light to kill mold and bacteria and break down harmful particulates in the air.
Regardless of whether you want an air purifier that captures particulates or breaks them down, Molekule has continued to move forward. The company has since launched a mini unit meant for smaller rooms and started to grow business verticals outside of the direct-to-consumer model, forging partnerships with hotels and hospitals.
It has also raised just announced a raise of $58 million in Series C funding, bringing just over $91 million to its coffers. Rao tells TechCrunch the raise was unexpected but came out of chats with Samantha Wang from RPS Ventures, which led the round.
“We feel confident in Molekule’s PECO technology, and have taken an extensive look at the science behind it. It is not only backed by decades of academic research, it has also gone through the peer-reviewed process numerous times, and has been tested and validated by third-party scientists and laboratories across the country,” Wang told TechCrunch.
Molekule also tells TechCrunch it has seen a healthy growth trajectory in the past year, despite the negative press. According to the company, Molekule has seen a 3x increase in our year over year filter subscription revenue since launch and its repeat customer growth sits at about 200%.
It’s a well-designed, though pricier air purification machine with an interesting future in the commercial space, particularly in hospitals, schools, commercial manufacturing, and hotels, as Wang points out. As long as the tech truly works.
Other participation in the round included Founder’s Circle Capital and Inventec Appliances Corp (IAC). Existing investors Foundry Group, Crosslink Capital, Uncork Capital, and TransLink Capital also participated in the financing.
Pan-African e-commerce company Jumia got into the black (by a small amount) on its gross profit vs. fulfillment expenses, expanded financial services and still posted losses.
The online sales company, with an operations center in China, also anticipates some negative impact on 2020 growth from the coronavirus outbreak, CEO Sacha Poigonnec said.
These were highlights today for Jumia’s fourth-quarter and full-year results — 10 months after the company became the first vc-backed startup in Africa to go public on a major exchange.
Jumia — with online goods and services verticals in 11 countries — posted 2019 revenues of €160, representing growth of 24% over 2018. The company increased its annual active customer base in the fourth-quarter by 54%, to 6.1 million, from 4.0 million for the same period last year.
Jumia’s 2019 Gross Merchandise Value (GMV) — the total amount of goods sold over the period — contracted by 3% to €301 million in the fourth-quarter.
Poignonnec attributed the decline to “business mix re-balancing”, which entailed reducing expenditures on promotions. The company also saw a contraction in sales of phones and electronics, which impacted GMV.
The online retailer had a 49% increase in orders from 5.5 million in Q4 2018 to 8.3 million in Q4 2019.
Perhaps the brightest spot in Jumia’s 2019 performance was the company’s ability to reach a gross profit of €1.0 million after fulfillment expenses in Q4.
That obviously doesn’t get them to profitability over all the company’s other expenses, but fulfillment costs have been historically high for Jumia as an online-retailer in Africa.
The overall pattern of growing revenues and customers YoY has been consistent for Jumia.
But so too have the company’s losses, which widened 34% in 2019 to €227.9 million, compared to €169.7 million in 2018. Negative EBITDA for Q4 increased 5% to €51.2 million from €48.6 over the same period in 2018.
CEO Sacha Poignonnec pointed to Jumia’s ability in Q4 to reach positive gross-profit over fulfillment expenses — one of the company’s largest costs — as a sign it could eventually get into the black overall.
“As we reach these milestones we’ll bring new milestones. This year we were profitable after fulfillment expenses and one day we’ll be profitable after marketing [expenses] and so on and so forth,” he said.
Jumia exited several countries in 2019 — suspending e-commerce operations in Tanzania, Cameroon, and Rwanda. “We believe those countries have…potential in the long-term but decided to allocate our resources to the countries that best support our long-term growth and path to profitability,” said Poignonnec.
Jumia also saw lift in its JumiaPay digital finance product — and notably — is developing new financial services (including for SMEs) aided by its big financial investors, Mastercard and Axa.
Jumia launched an Axa money market fund product in Nigeria in 2019 and some promotional programs on Mastercard’s network, as noted in page 10 of its investor presentation.
Total payment volume on JumiaPay increased 57% year-over-year to €45.6 million in 2019 and JumiaPay was used for 29% of Jumia e-commerce orders.
This is significant, as the company has committed to generate more revenues from higher margin digital payment products and offer JumiaPay as a standalone service across Africa.
Since its founding in 2012, Jumia has been forced to adapt to slower digital payments integration in its core market Nigeria and allow cash-on-delivery payments, which are costly and more problematic than digital processing.
Poignonnec also acknowledged the company’s 2020 revenues could be negatively impacted by the coronavirus. “The recent…outbreak in China is likely to affect growth over the coming quarters, and here we are starting to face some challenges to fulfill our cross-border sales,” he said.
Surprisingly absent from Jumia’s earnings call (and the subsequent Q&A) was discussion of the company’s share price, which spiked then plummeted after its April 2019 NYSE listing.
The online retailer gained investor confidence out of the gate, more than doubling its $14.50 opening share price post IPO.
That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud — which sent the company’s share price plummeting — from $49 to $26.
Then on its second-quarter earnings call in August, Jumia offered greater detail on the fraud perpetrated by some employees and agents of its JForce sales program.
The company declared the matter closed, but Jumia’s stock price plummeted more after the August earnings call (and sales-fraud disclosure), and has lingered in single-digit value for several months.
That’s 50% below the company’s IPO opening in April and 80% below its high.
For the remainder of 2020, bringing back growth in GMV and delivering more positive metrics, such as attaining gross profit after fulfillment expenses, could revive investor confidence in Jumia and its share price.
It could also put the company in a better position to match competition — such as the Marketplace Africa e-commerce platform of MallforAfrica and DHL — and possible expansion in Africa of China’s Alibaba.
Some of Latin America’s leading venture capital investors are now backing hotel chains.
In fact, Ayenda, the largest hotel chain in Colombia, has raised $8.7 million in a new round of funding, according to the company.
Led by Kaszek Ventures, the round will support the continued expansion of Ayenda’s chain of hotels in Colombia and beyond. The hotel operator already has 150 hotels operating under its flag in Colombia and has recently expanded to Peru, according to a statement.
Financing came from Kaszek Ventures and strategic investors like Irelandia Aviation, Kairos, Altabix and BWG Ventures.
The company, which was founded in 2018, now has more than 4,500 rooms under its brand in Colombia and has become the biggest hotel chain in the country.
Investments in brick and mortar chains by venture firms are far more common in emerging markets than they are in North America. The investment in Ayenda mirrors big bets that SoftBank Group has made in the Indian hotel chain Oyo and an investment made by Tencent, Sequoia China, Baidu Capital and Goldman Sachs, in LvYue Group late last year, amounting to “several hundred million dollars”, according to a company statement.
“We’re seeking to invest in companies that are redefining the big industries and we found Ayenda, a team that is changing the hotel’s industry in an unprecedented way for the region”, said Nicolas Berman, Kaszek Ventures partner.
Ayenda works with independent hotels through a franchise system to help them increase their occupancy and services. The hotels have to apply to be part of the chain and go through an up to 30-day inspection process before they’re approved to open for business.
“With a broad supply of hotels with the best cost-benefit relationship, guests can travel more frequently, accelerating the economy,” says Declan Ryan, managing partner at Irelandia Aviation.
The company hopes to have more than 1 million guests in 2020 in their hotels. Rooms list at $20 per-night, including amenities and an around the clock customer support team.
Oyo’s story may be a cautionary tale for companies looking at expanding via venture investment for hotel chains. The once high-flying company has been the subject of some scathing criticism. As we wrote:
The New York Times published an in-depth report on Oyo, a tech-enabled budget hotel chain and rising star in the Indian tech community. The NYT wrote that Oyo offers unlicensed rooms and has bribed police officials to deter trouble, among other toxic practices.
Whether Oyo, backed by billions from the SoftBank Vision Fund, will become India’s WeWork is the real cause for concern. India’s startup ecosystem is likely to face a number of barriers as it grows to compete with the likes of Silicon Valley.
Over the past four years, TechCrunch has brought together some of the biggest names in robotics — founders, CEOs, VCs and researchers — for TC Sessions: Robotics + AI. The show has provided a unique opportunity to explore the future and present of robotics, AI and the automation technologies that will define our professional and personal lives.
While the panels have been curated and hosted by our editorial staff, we’ve also long been interested in providing show-goers an opportunity to engage with guests. For this reason, we introduced the Q&A stage, where some of the biggest names can more directly engage with attendees.
This year, we’ve got top names from SoftBank, Samsung, Sony’s Innovation Fund, Qualcomm, Nvidia and more joining us on the stage to answer questions. Here’s the full agenda of this year’s Q&A stage:
11:30 – 12:00 Russell Book signing
1:15 – 2:00 Founders
Sebastien Boyer (FarmWise)
Noah Campbell-Ready (Built Robotics)
3:15 – 4:00 Building Robotics Platforms
Steven Macenski (Samsung)
Claire Delaunay (Nvidia)
$345 General admission tickets are still on sale — book yours here and join 1,000+ of today’s leading minds in the business for networking and discovery. The earlier you book the better, as prices go up at the door.
Students, save big with a $50 ticket and get full access to the show. Student tickets are available to current students only. Book yours here.