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Twitter restricts accounts in India to comply with government legal request

By Manish Singh

Twitter disclosed on Monday that it blocked four accounts in India to comply with a new legal request from the Indian government.

The American social network disclosed on Lumen Database, a Harvard University project, that it took action on four accounts — including those of hip-hop artist L-Fresh the Lion and singer and song-writer Jazzy B — to comply with a legal request from the Indian government it received over the weekend. The accounts are geo-restricted within India but accessible from outside of the South Asian nation. (As part of their transparency efforts, some companies including Twitter and Google make requests and orders they receive from governments and other entities public on Lumen Database.)

All four accounts, like several others that the Indian government ordered to be blocked in the country earlier this year, had protested New Delhi’s agriculture reforms and some had posted other tweets that criticized Prime Minister Narendra Modi’s seven years of governance in India, an analysis by TechCrunch found.

A Twitter spokesperson told TechCrunch that when the company receives a valid legal request, it reviews it under both its own rules and local laws.

“If the content violates Twitter’s Rules, the content will be removed from the service. If it is determined to be illegal in a particular jurisdiction, but not in violation of the Twitter Rules, we may withhold access to the content in India only. In all cases, we notify the account holder directly so they’re aware that we’ve received a legal order pertaining to the account,” the spokesperson added.

The new legal request, which hasn’t been previously reported, comes at a time when Twitter is making efforts to comply with the Indian government’s new IT rules, new guidelines that several of its peers including Facebook and Google have already complied with.

On Saturday, India’s Ministry of Electronics and Information Technology had given a “final notice” to Twitter to comply with its new rules, which it unveiled in February this year. The new rules require significant social media firms to appoint and share contact details of representatives tasked with compliance, nodal point of reference and grievance redressals to address on-ground concerns.

Tension has been brewing between Twitter and the government of India of late. Last month, police in Delhi visited Twitter offices to “serve a notice” about an investigation into its intel on classifying Indian politicians’ tweets as misleading. Twitter called the move a form of intimidation, and expressed concerns for its employees and requested the government to respect citizens’ rights to free speech. Late last month, Twitter had requested New Delhi to extend the deadline for compliance with the new rules by at least three months.

The Jack Dorsey-led company has grappled with several tough situations in India this year. After briefly complying with a New Delhi order early this year, the company faced heat from the government for restoring accounts that had posted tweets critical of the Indian government’s policy or the Prime Minister Narendra Modi.

The two faced off again publicly in April after New Delhi ordered Twitter and Facebook to take down posts that were critical of the government’s handling of the coronavirus pandemic.

Indian giant Tata Digital to invest $75 million in fitness startup CureFit

By Manish Singh

Tata Digital, a subsidiary of Indian conglomerate Tata Sons, said on Monday it has signed a deal to invest up to $75 million in fitness startup CureFit. As part of the deal, CureFit co-founder and chief executive Mukesh Bansal will join Tata Digital as President and continue in his role at the Bangalore-headquartered startup.

Monday’s investment is the salt-to-steel giant’s latest effort to expand its presence in the consumer tech space. Earlier this year, Tata Group acquired majority stakes in online grocery startup BigBasket, and is reportedly in talks to acquire online pharmacy 1mg, according to local media reports.

Prior to today’s announcement, CureFit had raised about $418 million and was last valued at $815 million, according to insight firm Tracxn.

“Joining Tata Digital marks an exciting new step for me and my team and is a recognition of the value we have created with CureFit for fitness enthusiasts in India. Being part of Tata Digital will enable us to nationally scale up our offerings for our customers,” said Bansal, who sold his previous venture Myntra to Flipkart, in a statement.

This is a developing story. More to follow…

In search of a new crypto deity

By Lucas Matney

Hello friends, and welcome back to Week in Review!

Last week, I wrote about tech taking on Disney. This week, I’m talking about the search for a new crypto messiah.

If you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.


The Big Thing

Elon has worn out his welcome among the crypto illuminati, and the acolytes of Bitcoin are searching out a new emperor god king.

This weekend, thousands of crypto acolytes and investors have descended on a Bitcoin-themed conference in Miami, a very real, very heavily-produced conference sporting crypto celebrities and actual celebrities all on a mission to make waves.

Even though I am not at the conference in person (panels from its main stage were live-streamed online), I have plenty of invites in my email for afterparties featuring celebrities, open bars and endless conversations on the perils of fiat. The cryptocurrency community has never been larger or richer thanks to its most fervent bull run yet, and despite a pretty noteworthy correction in the past few weeks, people believe the best is yet to come.

Despite having so much, what they still seem to be lacking is a patron saint.

For the longest bout, that was SpaceX and Tesla CEO Elon Musk who bolstered the currency by pushing Tesla to invest cash on its balance sheet into bitcoin, while also pushing for Tesla to accept bitcoin payments for its vehicles. As I’ve noted in this newsletter in the past, Musk had a tough time reconciling the sheer energy use of bitcoin’s global network with his eco warrior bravado which has seemed to lead to his mild and uneven excommunication (though I’m sure he’s welcome back at any time).

Goods & services are the real economy, any form of money is simply the accounting thereof

— Elon Musk (@elonmusk) June 5, 2021

There are plenty of celebrities looking to fill his shoes — a recent endorsement gone wrong by Soulja Boy was one of the more comical instances.

Crypto has been no stranger to grift — of that even the most hardcore crypto grifters can likely agree — and I think there’s been some agreement that the only leader who can truly preach the gospel is someone who is already so rich they don’t even need more money. It’s one reason the community has offered up so much respect for Ethereum founder Vitalik Buterin who truly doesn’t seem to care too much about getting any wealthier — he donated about $1 billion worth of crypto to Covid relief efforts in India. A Musk-like cheerleader serves a different purpose though, and so the community is in search of a Good Billionaire.

The best runner-up at the moment appears to be one Jack Dorsey, and while — like Musk — he is also another double-CEO, he is quite a bit different from him in demeanor and desire for the spotlight. He was, however, a headline speaker at Miami’s Bitcoin conference.

Dorsey gathers the most headlines for his work at Twitter but it’s Square where he is pushing most of his crypto enthusiasm. Users can already use Square’s Cash App to buy Bitcoin. Minutes before going onstage Friday, Dorsey tweeted out a thread detailing that Square was interested in building its own hardware wallet that users could store cryptocurrency like bitcoin on outside of the confines of an exchange.

Square is considering making a hardware wallet for #bitcoin. If we do it, we would build it entirely in the open, from software to hardware design, and in collaboration with the community. We want to kick off this thinking the right way: by sharing some of our guiding principles.

— jack (@jack) June 4, 2021

“Bitcoin changes absolutely everything,” Dorsey said onstage. “I don’t think there is anything more important in my lifetime to work on.”

And while the billionaire Dorsey seems like a good choice on paper — he tweets about bitcoin often, but only good tweets. He defends its environmental effects. He shows up to House misinformation hearings with a bitcoin tracker clearly visible in the background. He is also unfortunately the CEO of Twitter, a company that’s desire to reign in its more troublesome users — including one very troublesome user — has caused a rift between him and the crypto community’s very vocal libertarian sect.

Dorsey didn’t make it very far into his speech before a heckler made a scene calling him a hypocrite because of all this with a few others piping in, but like any good potential crypto king would know to do, he just waited quietly for the noise to die down.


(Photo by BRENDAN SMIALOWSKI/AFP via Getty Images)

Other things 

Here are the TechCrunch news stories that especially caught my eye this week:

Facebook’s Trump ban will last at least 2 years
In response to the Facebook Oversight Board’s recommendations that the company offer more specificity around its ban of former President Trump, the company announced Friday that it will be banning Trump from its platforms through January 2023 at least, though the company has basically given itself the ability to extend that deadline if it so desires…

Nigeria suspends Twitter
Nigeria is shutting down access to Twitter inside the country with a government official citing the “use of the platform for activities that are capable of undermining Nigeria’s corporate existence.” Twitter called the shutdown “deeply concerning.”

Stack Overflow gets acquired for $1.8 billion
Stack Overflow, one of the most-visited sites of developers across the technology industry, was acquired by Prosus. The heavy hitter investment firm is best known for owning a huge chunk of Tencent. Stack Overflow’s founders say the site will continue to operate independently under the new management.

Spotify ups its personalization
Music service Spotify launched a dedicated section this week called Only You which aims to capture some of the personalization it has been serving up in its annual Spotify Wrapped review. Highlights of the new feature include blended playlists with friends and mid-year reviews.

Supreme Court limits US hacking law in landmark case
Justices from the conservative and liberal wings joined together in a landmark ruling that put limits on what kind of conduct can be prosecuted under the controversial Computer Fraud and Abuse Act.

This one email explains Apple
Here’s a fun one, the email exchange that birthed the App Store between the late Steve Jobs and SVP of Software Engineering, Bertrand Serlet as annotated by my boss Matthew Panzarino.


illustration of money raining down

Image Credits: Bryce Durbin / TechCrunch

Extra things

Some of my favorite reads from our Extra Crunch subscription service this week:

For SaaS startups, differentiation is an iterative process
“The more you know about your target customers’ pain points with current solutions, the easier it will be to stand out. Take every opportunity to learn about the people you are aiming to serve, and which problems they want to solve the most. Analyst reports about specific sectors may be useful, but there is no better source of information than the people who, hopefully, will pay to use your solution..”

3 lessons we learned after raising $6 million from 50 investors
“…being pre-product at the time, we had to lean on our experience and our vision to drive conviction and urgency among investors. Unfortunately, it just wasn’t enough. Investors either felt that our experience was a bad fit for the space we were entering (productivity/scheduling) or that our vision wasn’t compelling enough to merit investment on the terms we wanted.

The existential cost of decelerated growth
“Just because a technology startup has a hot start, that doesn’t mean it will grow quickly forever. Most will wind up somewhere in the middle — or worse. Put simply, there is a larger number of tech companies that do fine or a little bit worse after they reach scale.”

 

Again, if you’re reading this on the TechCrunch site, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.

Indian health insurance startup Plum raises $15.6 million in Tiger Global-led investment

By Manish Singh

The vast majority of people in India, the world’s second most populous nation, don’t have health insurance coverage. A significant portion of the population that does have coverage get it from their employers.

Plum, a young startup that is making it easier and more affordable for more firms in the nation to provide insurance coverage to their employees, said on Monday it has raised $15.6 million in its Series A funding to accelerate its growth. Tiger Global led the funding round.

Existing investors Sequoia Capital India’s Surge, Tanglin Venture Partners, Incubate Fund, Gemba Capital, also participated in the new round, which brings the one-a-half-year-old startup’s to-date raise to $20.6 million.

Kunal Shah (founder of Cred), Gaurav Munjal, Roman Saini and Hemesh Singh (founders of Unacademy), Lalit Keshre, Harsh Jain and Ishan Bansal (founders of Groww), Ramakant Sharma and Anuj Srivastava (founders of Livspace), and Douglas Feirstein (founder of Hired) also participated in the new round.

Plum offers health insurance coverage on a B2B2C model. The startup partners with small businesses to provide health insurance coverage to all their employees (and their family members), charging as little as $1 a month for an employee.

The startup has developed the insurance stack from scratch and partnered with insurers to include additional coverage on pre-existing conditions and dental, said Abhishek Poddar, co-founder and chief executive of Plum, in an interview with TechCrunch.

(Like fintech firms, which partner with banks and NBFCs to provide credit to customers, online insurance startups have partnerships with insurers to provide health insurance coverage. Plum maintains partnerships with ICICI Lombard, Care Health, Star Health and New India Assurance.)

Poddar, who has worked at Google and McKinsey, said Plum is making it increasingly affordable and enticing for businesses to choose the startup as their partner. Most insurance firms and online aggregators in India today currently serve consumers. There are very few players that engage with businesses. Even among those that do, they tend to be costlier and not as flexible.

Plum offers its partnered client’s employees the option to top up their health insurance coverage or extend it to additional members of the family. Unlike its competitors that require all the premium to be paid annually, Plum gives its clients the ability to pay each month. And signing up an entire firm for Plum takes less than an hour. (The speed is a key differentiator for Plum. Small businesses have to typically spend months in negotiating with other insurers. Bangalore-based Razorpay has also partnered with Plum to give the fintech startup’s clients a three-click, one-minute option to sign up for insurance coverage.)

The startup plans to deploy the fresh capital to further expand its offerings, making its platform open to smaller businesses with teams as small as seven employees to sign up, said Poddar. The startup plans to cover 10 million people in India with insurance by 2025, and eventually expand to international markets, he said.

India has an under-penetrated insurance market. Within the under-penetrated landscape, digital distribution through web-aggregators today accounts for just 1% of the industry, analysts at Bernstein wrote in a recent report.

“As India’s healthcare insurance industry rapidly expands and transforms, Plum is well positioned to make comprehensive health insurance accessible to millions of Indians. We are excited to partner with Abhishek, Saurabh and the Plum team as they scale their leading tech-enabled platform to employers across the country,” said Scott Shleifer, Partner at Tiger Global, in a statement.

Jai Kisan, a fintech startup aimed at rural India, raises $30 million

By Manish Singh

Jai Kisan, an Indian startup that is attempting to bring financial services to rural India, where commercial banks have a single-digit penetration, said on Monday it has raised $30 million in a new financing round as it looks to scale its business.

Hundreds of millions of people in India today live in rural areas. Most of them don’t have a credit score. The professions they work on — largely farming — aren’t considered a business by most lenders in India. These farmers and other professionals also don’t have a documented credit history, which puts them in a risky category for banks to grant them a loan.

Much of the credit these people do raise ends up getting invested in unproductive usage, which leads to higher interest and default rates.

Three-year-old Mumbai-headquartered Jai Kisan is attempting to address this by treating farmers and other similar professionals as businesses instead of consumers.

The startup has developed its own system — which it calls Bharat Khata — that is helping individuals and businesses get access to cheaper financing and ensures that the money they raise is being used for agri-inputs and equipment and other income generating purposes and enablement of rural commerce transactions.

Arjun Ahluwalia, co-founder and chief executive of Jai Kisan, said financial services is crucial for these individuals as their entire economy depends on it. “The ability to buy now and pay later is how most people shop for things in India. Credit is an expectation by the Indian customer — it’s not a value added service,” he told TechCrunch in an interview.

“If there is availability of formal financing to customers, it’s not just customer who does well. The entire ecosystem that revolves around that customer benefits,” he said, pointing to the rise of Bajaj Finance, which has helped several businesses flourish in India by giving credit to customers at the time of purchase, and Xiaomi, India’s largest smartphone vendor, which sells a large number of its devices to customers on monthly instalment plans.

Bharat Khata service, which was launched in April last year, captured more than $380 million of annualized GTV run-rate across over 25,000 storefronts by the financial year that ended in March this year, the startup said.

“Jai Kisan has financed over 15% of the transactions which portrays the monetizability and quality of commerce being captured. The ability to have visibility and virality of high-quality transactions has enabled Jai Kisan to scale business by over 50% in 3 months. The unprecedented growth trajectory stands testament to Jai Kisan’s capabilities to deploy capital efficiently by focusing on core customer credit needs,” the startup said.

The startup, which operates in eight Indian states in South India, is now looking to scale its presence across the country and also increase the headcount. On Monday, it said it had raised $30 million in a Series A round led by Mirae Asset, Syngenta Ventures, and existing investors Blume, Arkam Ventures, NABVENTURES, Prophetic Ventures and Better Capital.

An unspecified amount of the financing was raised as debt from Blacksoil, Stride Ventures, and Trifecta Capital.

“Jai Kisan is at the cusp of disrupting the rural financing industry and we’re glad to be a part of their growth story. Jai Kisan’s stellar growth, excellent asset quality and expanding footprint make them a highly differentiated player in the segment,” said Ashish Dave, chief executive of the India Venture Investments for the South Korean firm Mirae Asset.

“Mirae Asset has always believed in backing companies which aim to become category leaders which is evident from our other investments and we believe Jai Kisan is on the journey of doing so for rural finance,” he added.

Like most fintech startups, Jai Kisan has so far relied on its banking and other financial institutions to finance credit to businesses. The startup said it will now finance 20% of all loans by itself. Which is why it is also raising some money in debt in the new round.

Indian logistics giant Delhivery raises $277 million ahead of IPO

By Manish Singh

Delhivery, India’s largest independent e-commerce logistics startup, has raised $277 million in what is expected to be the final funding round before the firm files for an IPO later this year.

In a regulatory filing, the Gurgaon-headquartered startup disclosed it had raised $277 million in a round led by Boston-headquartered investment firm Fidelity. Singapore’s sovereign wealth fund GIC, Abu Dhabi’s Chimera, and UK’s Baillie Gifford also participated in the new round, a name of which the startup didn’t specify.

The new round valued the 10-year-old startup at about $3 billion. Delhivery — which also counts SoftBank Vision Fund, Tiger Global Management, Times Internet, The Carlyle Group, and Steadview Capital among its investors — has raised about $1.23 billion to date. The startup didn’t comment on Sunday.

Delhivery began its life as a food delivery firm, but has since shifted to a full suite of logistics services in over 2,300 Indian cities and more than 17,500 zip codes.

It is among a handful of startups attempting to digitize the demand and supply system of the logistics market through a freight exchange platform.

Research and image: Bernstein

Its platform connects consigners, agents and truckers offering road transport solutions. The startup says the platform reduces the role of brokers, makes some of its assets such as trucking — the most popular transportation mode for Delhivery — more efficient, and ensures round the clock operations.

This digitization is crucial to address the inefficiencies in the Indian logistics industry that has long stunted the national economy. Poor planning and forecasting of demand and supply increases the carrying costs, theft, damages, and delays, analysts at Bernstein wrote in a report last month about India’s logistics market.

Delhivery, which says it has delivered over 1 billion orders, works with “all of India’s largest e-commerce companies and leading enterprises,” according to its website, where it also says the startup has worked with over 10,000 customers. For the last leg of the delivery, its couriers are assigned an area that never exceeds 2 sq km, allowing them to make several delivery runs a day to save time.

Indian logistics market’s TAM (total addressable market) is over $200 billion, Bernstein analysts said.

The startup said late last year that it was planning to invest over $40 million within two years to expand and increase its fleet size to meet the growing demand of orders as more people shop online amid the pandemic.

Facebook, WhatsApp, Google and other internet giants comply with India’s IT rules

By Manish Singh

Google, Facebook, Telegram, LinkedIn and Tiger Global-backed Indian startups ShareChat and Koo have either fully or partially complied with the South Asian nation’s new IT rules, according to two people familiar with the matter and a government note obtained by TechCrunch.

India’s new IT rules, unveiled in February this year, required firms to appoint and share contact details of representatives tasked with compliance, nodal point of reference, and grievance redressals to address on-ground concerns.

The aforementioned firms have complied with this requirement, the government note and a person familiar with the matter said. Twitter has yet to comply with the rules. “Twitter sent a communication late last night, sharing details of a lawyer working in a law firm in India as their Nodal Contact Person and Grievance Officer,” a note prepared by New Delhi said, adding that the rules require for the aforementioned officials to be direct employees.

WhatsApp has complied with the aforementioned rules, but not with the requirement about traceability, a person familiar with the matter told TechCrunch. WhatsApp sued the Indian government earlier this week over the requirement about bringing a way to trace the originator of messages.

It is unclear at this point whether Apple, which operates iMessage, has complies with the rules.

This is a developing story. More to follow…

Amazon is now letting Indians read magazine articles in its shopping app

By Manish Singh

Amazon, in its ever-growing desire to become a super app in India, is testing a new category to persuade users to spend more time on the shopping service: Feature articles.

The American e-commerce giant has quietly launched “Featured Articles” on its shopping app and website in India that showcases feature articles, commentary and analysis on a wide-range of topics including politics, governance, entertainment, sports, business, finance, health, fitness, books, and food.

Some of these articles are “exclusively” available on Amazon, the company says on the website. To drive engagement, Amazon is also sending notifications to some Kindle users.

Image: Himanshu Gupta

The latest addition, which was spotted and shared with TechCrunch by Himanshu Gupta, comes days after Amazon launched a free video streaming service within the shopping app in the South Asian nation.

An Amazon spokesperson confirmed the new feature to TechCrunch, adding, “we remain focused on creating new and engaging experiences for our customers and as part of this endeavour, we have been testing a new service that brings articles on different topics like current affairs, books, business, entertainment, sports and lifestyle amongst others for readers.”

This isn’t the first time Amazon has explored integrating some reading material to its shopping service in India. In 2018, Amazon India started to feature some gadget reviews and listicles, sourced from local media houses.

Twitter says concerned with India intimidation, requests 3 more months to comply with new IT rules

By Manish Singh

Twitter called the recent visit by police to its Indian offices a form of intimidation and said it was concerned by some of the requirements in New Delhi’s new IT rules.

Speaking for the first time since a special squad of Delhi police made a surprise visit to two of its offices on Monday, Twitter said it is “concerned by recent events regarding our employees in India and the potential threat to freedom of expression for the people we serve.”

The company also said that it joins many organizations in India and around the world that have “concerns with regards to the use of intimidation tactics by the police in response to enforcement of our global Terms of Service, as well as with core elements of the new IT Rules.”

A Twitter spokesperson added: “We plan to advocate for changes to elements of these regulations that inhibit free, open public conversation. We will continue our constructive dialogue with the Indian Government and believe it is critical to adopt a collaborative approach. It is the collective responsibility of elected officials, industry, and civil society to safeguard the interests of the public.”

Tension between American tech giants Twitter and Facebook and the Indian government has been brewing for months. Twitter faced heat from politicians after it refused to block accounts that criticised New Delhi’s reforms and Indian Prime Minister Narendra Modi.

India is one of the largest markets for American tech firms that poured billions of dollars in the country in the past decade to get more people online. According to Indian government estimates, Twitter has 175 million users in India, while WhatsApp has amassed over 530 million users.

The tension escalated Wednesday after WhatsApp sued the Indian government in a court in Delhi over the new IT rules that it said would compromise users’ privacy and give New Delhi the power to conduct mass surveillance.

India announced the new IT rules in February and gave firms three months to comply. The deadline expired this week, and on Wednesday the Ministry of Electronics and IT asked social media firms for an update on their compliant status, TechCrunch first reported.

Twitter said Thursday that the new IT rules’ requirements to make a compliance officer criminally liable for content on the platform, proactive monitoring, and blanket authority to seek information about users represented a dangerous overreach that was inconsistent with open and democratic principles.

The microblogging platform also requested New Delhi to consider granting a minimum of 3 months extension to comply with the new IT rules and publish Standard Operating Protocols on aspects of compliance of public consultation.

Twitter said it was recently served with another non-compliance notice in India and withheld a portion of the content identified in the notice under. The content identified in the notice, Twitter said, was originally reported in the blocking orders since February 2021.

It said in recent months it has been compelled to withhold content in response to a non-compliance notice. Not doing so, it said, poses penal consequences with many risks for Twitter employees.

India says WhatsApp’s lawsuit over new regulations a clear act of defiance

By Manish Singh

India said on Wednesday WhatsApp’s lawsuit challenging the new local IT rules is an “unfortunate last moment” attempt to prevent new regulations from going into effect in “a clear act of defiance,” and said the Facebook-owned service didn’t raise any specific objection about the traceability requirement in writing after October 2018.

Ravi Shankar Prasad, India’s Electronics and IT Minister, said WhatsApp’s refusal to comply with the guidelines, the deadline of which expired Wednesday, is a “clear act of defiance of a measure whose intent can certainly not be doubted.”

WhatsApp sued the Indian government earlier on Wednesday in a Delhi High Court, saying the world’s second largest internet market’s new IT rules could allow authorities to make people’s private messages “traceable,” and conduct mass surveillance.

The Ministry of Electronics and IT said the government needs to trace the first originator of a message for the “purposes of prevention, investigation, punishment etc. of inter alia an offence relating to sovereignty, integrity and security of India, public order incitement to an offence relating to rape, sexually explicit material or child sexual abuse material punishable with imprisonment for not less than five years.”

“It is in public interest that who started the mischief leading to such crime must be detected and punished. We cannot deny as to how in cases of mob lynching and riots etc. repeated WhatsApp messages are circulated and recirculated whose content are already in public domain. Hence the role of who originated is very important.”

WhatsApp argues that the end-to-end encryption it offers on its messaging platform to users — a move that security and policy experts have long praised — makes it impossible for the firm to find identifying information about a user.

India is the largest market by users for the Facebook-owned popular instant messaging service. According to government estimates, WhatsApp has amassed over 530 million users in India.

The Ministry of Electronics and IT said any company’s operations in India is “subject to the law of the land,” and argued that similar or much tougher regulations have been enforced or proposed in other markets.

“What India is asking for is significantly much less than what some of the other countries have demanded,” it said, adding that it would be “foolhardy” to doubt the objective of the new rules.

One one hand, “WhatsApp seeks to mandate a privacy policy wherein it will share the data of all its user with its parent company, Facebook, for marketing and advertising purposes,” the ministry added. “On the other hand, WhatsApp makes every effort to refuse the enactment of the Intermediary Guidelines which are necessary to uphold law and order and curb the menace of fake news.”

The ministry wrote to social media firms earlier on Wednesday to ask for an update on whether they had complied with the new rules, TechCrunch first reported. In the letter, the ministry sought information (name and contact address) of officials who the firms had appointed as part of the compliance to the new rules that require officers to be available on the ground to address local concerns.

“WhatsApp’s attempt to portray the Intermediary Guidelines of India as contrary to the right to privacy is misguided. […] The Government of India recognises that ‘Right to Privacy’ is a Fundamental right and is committed to ensure the same to its citizens,” the ministry said in a statement.

India asks social media firms if they have complied with the new regulations

By Manish Singh

India has asked social media firms to provide an update on whether they have complied with its new IT rules “as soon as possible” and “preferably today” even as the new regulations are being legally challenged by WhatsApp.

In a letter to “significant social media intermediaries” — which New Delhi defines as social media firms with over 5 million registered users in India — on Wednesday, Ministry of Electronics and Information Technology asked the firms to share the names of their apps, websites, or services that will come under the scope of the new IT rules and the status of their compliance.

The letter, obtained by TechCrunch, also asks the firms to provide names and contact details of chief compliance officer, nodal contact person, and resident grievance officer that they have appointed in India as part of the compliance, and also asked for the physical address of the local office. The new rules, unveiled in February this year, mandate that firms have several officials in India to address on-ground concerns.

The letter also implies that India doesn’t plan to give social media firms any extension on the deadline, which expires on Wednesday, to comply with the new regulations. “The additional due diligence required from SSMI [significant social media intermediaries] have come into effect today, at the conclusion of three additional months given to SSMIs,” it said. Shortly after unveiling the new IT rules, India had notified firms to comply within three months.

“If you are not considered as SSMI, please provide the reasons for the same including the registered users on each of the services provided by you,” the letter adds. “The government reserves the right to seek any additional information, as may be permitted within these Rules and the IT Act.”

Earlier on Wednesday, WhatsApp sued the Indian government challenging the second largest internet market’s new regulations that it said could allow authorities to make people’s private messages “traceable,” and conduct mass surveillance.

Tension has been brewing between American technology giants and the Indian government over the past few months. Earlier this year, Twitter refused to block accounts that criticized New Delhi and Prime Minister Narendra Modi.

Last month, the Indian government ordered Facebook, Instagram, and Twitter to take down posts that were critical of Modi’s handling of the coronavirus pandemic. Last week, New Delhi objected to Twitter’s labeling of some of its politicians’ tweets as manipulated media.  This week, police in Delhi visited Twitter offices to “serve a notice” about an investigation into its intel on classifying politicians’ tweets as misleading.

“Big tech like Facebook, Twitter, Instagram, Whatsapp, and Google often make terrible policies and decisions that are often harming millions of Indians. All of us at IFF, are consistently advocating with our public authorities for user rights centric regulations that help address them,” said New Delhi-based digital rights advocacy group Internet Freedom Foundation, in a statement.

“It is our clear belief that the Intermediaries Rules do not fix these outstanding issues, suffer from core defects of procedural and substantive legality and end up harming your rights as well as the innovation which makes the internet so special and exciting. Today, more than ever we need to follow a path that is led by experts and the values of the Indian constitution.”

With new Partner Colin Hanna, and Shikha Ahluwalia as Associate, Balderton puts down roots in Berlin

By Mike Butcher

As of now, one fo the UK’s biggest and most active tech VCs has a new partner. Principal Colin Hanna has spearheaded several of Balderton’s deals in the past couple of years, and has now been appointed a Partner. But there’s a twist to this plot. He will be officially based in Berlin (where he’s lived since 2019), thus giving the VC a more powerful reach, being based, as it is, solely in London.

Hanna said: “Having been with Balderton for five years, I am humbled to now call my mentors my Partners. I look forward to strengthening Balderton’s unique approach from Berlin as we engineer serendipity for European founders with planet-scale ambition.”

Bernard Liautaud, Managing Partner of Balderton commented: “We are delighted to announce Colin’s promotion to Partner. Since he joined Balderton in 2016, Colin has had a significant impact on both Balderton and our portfolio… Colin has strengthened our position in DACH by establishing our permanent presence in Berlin and bringing in Shikha Ahluwalia, whom we are delighted to have. In addition, he was instrumental in the definition of the Balderton Sustainable Future Goals. We have no doubt Colin will be highly successful in his new role.”

The story does not end there, however. Joining him will be tech entrepreneur and founder Shikha Ahluwalia as an Associate covering the DACH region.

co-founded SBL, the D2C women’s fashion e-commerce company in India. Prior to that she was had a tech advisory boutique, and was previously with JP Morgan’s Investment Banking Division in London.

Balderton has 10 current investments across DACH including Contentful, Infarm, SOPHiA Genetics, McMakler, Demodesk, and vivenu.

Ahluwalia commented: “Over the past few years, I have seen the DACH start-up ecosystem evolve rapidly. We at Balderton believe the next European giant will be a technology company and know that the DACH ecosystem plays a significant role in helping form category-leading technology companies. As a former founder myself, I have first-hand experience with the unique challenges of running young businesses. I am excited to contribute and support founders on their own journey as part of Balderton Capital.”

Speaking to me over an interview Hanna said: “Shikha’s hiring deepens our commitment to the local Berlin ecosystem and to the DACH region more broadly. We have been actively supporting Founders in Germany for more than a decade.”

After spending his childhood in Jakarta and Hong Kong, and picking up a degree in Political Economy, Hanna has carved out a career in venture investing – at Balderton since July 4, 2016 – looking at it through the prism on the rise of urban living, grassroots-driven technologies like open source and crypto, and the political ramifications of technology.

He sits on the Board of companies like e-bikes startup VanMoof, Finoa (a crypto custodian), Rahko (quantum computing drug discovery, and helped lead on investments into Traefik and Luno and Vivenu).

One these you might pick up from all those is that they err towards the ‘purpose-driven’ side of the equation.

He told me: “I believe the next generation of Founders, particularly in Europe, care more about just their bank accounts and want to build companies that generate impact and are not afraid to take a view on how they want the world to change. Measuring this is a challenge and something we are trying to do with our SFGs at Balderton which I helped spearhead. I believe that when companies like Coinbase and others go “apolitical” they commit themselves to defending the structural status quo rather than becoming agents of deliberate change.”

“My point about purpose driven companies is that when I think when employees want to work with companies believe in their values and you try to tell them those aren’t important, that could be viewed as political. I don’t think we should be we should be muffling the employees.”

Does he think Coinbase, and also recent more recently Basecamp / 37 Signals were wrong to so-called ‘depoliticize’ their businesses?

“I think, I think every CEO is free to run their company how they see fit. But I think that that poses challenges for them on the talent side. I understand, as an American, how charged and how destructive the political climate became, and so I can really understand and empathize why certain choices were made at that time, because you get to a point where that where the conversation becomes toxic… I hope that the steps that they’ve taken, don’t strangle dialogue and conversation that’s constructive about how we want to make an impact and change the world, either as individuals or with the companies we work for,” he said.

Hanna also told me that he think VCs should be wary that the shift to remote will make it easier to invest more widely. “You have to more background checks on founders now, and things like that. But is it a ‘little bit’ more dangerous or is it ‘50% more dangerous’ the fact that people aren’t meeting up in person?”

AI-powered Jerry raises $28M to help you save money on car insurance

By Mary Ann Azevedo

When Art Agrawal was growing up in India, a car ride was a rare treat, and car ownership was a dream. When he moved to the U.S. and bought his first car, he was shocked by how much it cost and how difficult it was to maintain a car.

In 2012, he co-founded a company called YourMechanic (and won TechCrunch’s Disrupt that year) that provides on-demand automotive mobile maintenance and repair services. Over the years, the challenge of helping consumers more easily find car insurance was in the back of his mind. So in 2017, he teamed up with Lina Zhang and Musawir Shah to found Jerry, a mobile-first car ownership “super app.” The Palo Alto-based startup launched a car insurance comparison service using artificial intelligence and machine learning in January 2019. It has quietly since amassed nearly 1 million customers across the United States as a licensed insurance broker.

“Today as a consumer, you have to go to multiple different places to deal with different things,” Agrawal said. “Jerry is out to change that.”

And now today, Jerry is announcing that it has raised more than $57 million in funding, including a new $28 million Series B round led by Goodwater Capital. A group of angel investors also participated in the round include Greenlight president Johnson Cook and Greenlight CEO Timothy Sheehan; Tekion CEO Jay Vijayan; Jon McNeill, CEO of DVx Ventures and former president of Tesla and ex-COO of Lyft; Brandon Krieg, CEO of Stash and Ed Robinson, co-founder and president of Stash.

CEO Argawal says Jerry is different from other auto-related marketplaces out there in that it aims to help consumers with various aspects of car ownership (from repair to maintenance to insurance to warranties), rather than just one. Although for now it is mostly focused on insurance, it plans to use its new capital to move into other categories of car ownership.

The company also believes it is set apart from competitors in that it doesn’t refer a consumer to an insurance carrier’s site so that they still have to do the work of signing up with them separately, for example. Rather, Jerry uses automation to give consumers customized quotes from more than 45 insurance carriers “in 45 seconds.” The consumers can then sign on to the new carrier via Jerry, which would even cancel former policies on their behalf.

Image Credits: Jerry

“With Jerry, you can complete the whole transaction in our app,” Argawal said. “We don’t send you to another site. You don’t have to fill out a bunch of forms. You just give us some information, and we’ll instantly provide you with quotes.”

Its customers save on average about $800 a year on car insurance, the company claims. Jerry also offers a similar offering for home insurance but its focus is on car ownership.

The company must be doing something right. In 2020, Jerry saw its revenue surge by “10x.”

For some context, Jerry sold a few million dollars of insurance in 2019, according to Agrawal. This year, he said, the company is on track to do “three to four times” more than last year’s numbers.

“There’s no other automated way to compare and buy car insurance, because all the APIs are not easily accessible,” he said. “What we have done is we have automated the end to end journey for the consumer using our infrastructure, which will only scale over time.”

Jerry makes recurring revenue from earning a percentage of the premium when a consumer purchases a policy on its site from carriers such as Progressive.

“A lot of the marketplaces are lead-gen. A very small percent of their revenue is reoccurring,” Agrawal said. “For us, it’s 100% of our revenues.”

Goodwater Capital’s Chi-Hua Chien notes that the insurance space has historically been a very challenging category from a customer experience perspective.

“They took something that has historically been painful, intimidating and difficult for the customer and made it effortless,” he told TechCrunch. “That experience will more broadly over time apply to comparison shopping and maintenance, too.”

Chien said he was also drawn to the category itself.

“This is a competitive category because 100% of drivers need to have auto insurance 100% of the time,” he said. “That’s a large market that’s not going to go away. And since Jerry is powered by AI, it will only serve customers better over time, and just grow faster.”

Equity Monday: Elon Musk Elon Musks the crypto markets, while Indian startups raise huge rounds

By Alex Wilhelm

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our weekly kickoff that tracks the latest private market news, talks about the coming week, digs into some recent funding rounds and mulls over a larger theme or narrative from the private markets. You can follow the show on Twitter here and myself here.

There was lots to get through today, so, in order, here’s the rundown:

Equity drops every Monday at 7:00 a.m. PST, Wednesday, and Friday at 6:00 AM PST, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts!

Gojek and Tokopedia merge to form GoTo Group

By Manish Singh

Ride-hailing giant Gojek and marketplace Tokopedia said on Monday they have combined their businesses to form GoTo Group, the largest technology group in Indonesia, the fourth most populous nation that is currently navigating to contain the economic fallout from the coronavirus pandemic.

Gojek’s Andre Soelistyo will lead the combined business as GoTo Group CEO, with Tokopedia’s Patrick Cao serving as GoTo Group President. Kevin Aluwi will continue as CEO of Gojek and William Tanuwijaya will remain CEO of Tokopedia, the two firms said in a joint announcement.

The combined entity is “a globally unique and highly complementary ecosystem,” the two firms said, claiming that GoTo features:

  • Total Group Gross Transaction Value (GTV) of over $22 billion in 2020
  • Over 1.8 billion transactions in 2020
  • Total registered driver fleet of over two million as of December 2020
  • Over 11 million merchant partners as of December 2020
  • Over 100 million monthly active users (MAU)
  • An ecosystem that encompasses 2% of Indonesia’s GDP

The deal, which has been in the works for several months, comes after Gojek spent several quarters exploring a merger with its chief Southeast Asian rival Grab. Tokopedia meanwhile was in talks late last year to pursue a public listing this year. Gojek and Tokopedia last month moved to seek approval from their respective investors. During their talks, the proposed valuation of GoTo was $18 billion.

The companies, which have together raised about $8.2 billion (according to research firm Tracxn) didn’t comment on the final valuation today nor did they disclose any other financial terms of the deal.

The friendship of founders of Gojek and Tokopedia — two of the largest startups in Indonesia — may have helped secure this deal. The two companies first began working together in 2015 to accelerate e-commerce deliveries using Gojek’s local network of drivers.

“The companies will continue to thrive and coexist as stand-alone brands within the strengthened ecosystem,” they said on Monday.

In the meantime, Grab has since announced plans to go public in the U.S. via SPAC, and is seeking a valuation of $39.6 billion, which if materializes at the current terms, would be the biggest-ever deal of its kind. GoTo plans to go public as soon as this year via listings in New York and Jakarta, according to media reports.

“Today is a truly historic day as we mark the beginning of GoTo and the next phase of growth for Gojek, Tokopedia and GoTo Financial. Gojek drivers will deliver even more Tokopedia packages, merchant partners of all sizes will benefit from strengthened business solutions and we will use our combined scale to increase financial inclusion in an emerging region with untapped growth potential. For the consumer, GoTo Group will continue to reduce frictions and provide best in class delivery of goods and services. This is the next step of an exciting journey and I am humbled and proud to lead the GoTo movement,” said Andre Soelistyo, CEO of GoTo Group, in a statement.

A historic day for Indonesian Internet: the union of its two largest Internet companies @gojekindonesia @tokopedia

We got insanely lucky to partner w both for 6+ yrs
Priceless war stories & scars @Sequoia_India 🙏🙏🙏

Inspired, filled w gratitude, excited about future #GoTo

— Shailendra J Singh (@singh_sequoia) May 17, 2021

Existing investors — including Alibaba Group, Astra International, BlackRock, Capital Group, DST, Facebook, Google, JD.com, KKR, Northstar, Pacific Century Group, PayPal, Provident, Sequoia Capital India, SoftBank Vision Fund 1, Telkomsel, Temasek, Tencent, Visa and Warburg Pincus — backed the merger, the two firms said.

Tokopedia’s Co-founder and CEO William Tanuwijaya said, “The establishment of GoTo Group proves that you can believe in an ‘Indonesian dream’ and make it a reality. Our goal has always been to build a company that creates social impact at scale, levelling the playing field for small businesses and giving consumers equal access to goods and services across the country. In addition to accelerating the growth of Indonesia’s digital economy, GoTo Group will make it easier for people from all walks of life to access quality products and services, anytime and anywhere. We still have a long way to go to achieve our goals, but today is about starting that journey together.”

India’s Moglix valued at $1 billion in $120 million fundraise

By Manish Singh

Moglix, an industrial business-to-business marketplace in India, said on Monday it has raised $120 million in a new financing round at $1 billion valuation, becoming the 13th firm from the world’s second largest market to attain the unicorn status this year.

The startup’s Series E financing round was led by Falcon Edge Capital and Harvard Management Company (HMC). Existing investors, Tiger Global, Sequoia Capital India and Venture Highway also participated in the round, which brings Moglix‘s to-date raise to about $220 million. TechCrunch reported earlier this year that Tiger Global was in talks to invest in Moglix at $1 billion valuation.

“We started six years ago with a firm belief in the untapped potential of the Indian manufacturing sector. We had the trust of stalwarts like Ratan Tata, and a mission to enable the creation of a $1 trillion manufacturing economy in India. Today, as we enter the next stage of our evolution, we feel this financing milestone is a testimony to our journey of innovation and disruption,” said Rahul Garg, founder and chief executive of Moglix, in a statement.

Six-year-old Moglix — founded by IIT Kanpur and ISB alumnus Rahul Garg — serves over 500,000 small, medium-sized business and enterprises. It has established 3,000 manufacturing plants across India, Singapore, the UK and the UAE and counts manufacturing giants such as Hero MotoCorp, Vedanta, Tata Steel, Unilever and Air India and NTPC as its customers.

Moglix runs a supply chain network of 16,000 suppliers, over 35 warehouses and logistics infrastructure. With close to 500,000+ SKUs on its platform, the startup claims to be the largest e-commerce platform of industrial goods in India.

Moglix, Zetwerk, and Infra.Market have built business-to-business e-commerce platforms for niche categories in the South Asian nation in recent years, illustrating wider adoption of e-commerce in India.

“Moglix’s distinctive customer value proposition and ROI are visible in its outstanding customer and revenue retention numbers. We believe Moglix is now well poised to scale and we are thrilled to back the Company in the next phase of its growth,” said Navroz D. Udwadia, Co-Founder of Falcon Edge Capital, in a statement. He said the investment firm studied and tracked Moglix for years before writing its check.

Monday’s announcement follows nearly two-dozen large-sized investments secured by Indian startups in recent months. Earlier on Monday, Pine Labs said it was raising $285 million at $3 billion valuation, up from $1 billion in early 2020. KKR said it had invested $95 million in Lenskart.

Social commerce Meesho, subscription platform Chargebee, social network ShareChat, messaging platform Gupshup, and fintech firm CRED are among some of the Indian startups that have become unicorns in recent weeks. Most of these rounds have been led by Tiger Global or Falcon Edge Capital.

This is a developing story. More to follow…

Merchant commerce platform Pine Labs valued at $3 billion in new fundraise

By Manish Singh

Pine Labs, a startup that offers merchants payments terminals, invoicing tools and working capital, said on Monday it has completed the first close of a $285 million funding as the nearly two-decade-old firm looks to expand its offerings and build and scale an online payments gateway.

Baron Capital Group, Duro Capital, Marshall Wace, Moore Strategic Ventures and Ward Ferry Management financed the new funding round, while existing investors Temasek, Lone Pine Capital and Sunley House Capital also participated in it, the Indian startup said.

The new round valued Pine Labs at $3 billion, up from about $2 billion in a December round last year and $1 billion in early 2020. Pine Labs operates in several Southeast Asian markets as well.

B. Amrish Rau, chief executive of Pine Labs, told TechCrunch in an interview that the new financing round enabled secondary transactions for its founder, employees and early investors including Sequoia Capital. The round may also be extended, he said.

“We’re thrilled to welcome marquee investors like Marshall Wace, Baron Capital Group, Ward Ferry Management, Duro Capital and Moore Strategic Ventures to the already pristine cap table of Pine Labs. This is an exciting phase in our journey as we enter newer markets,” said Rau in a statement.

The startup, which also counts PayPal among its investors, serves over 140,000 merchants. Its payments terminal — also known as point-of-sale machines — are connected to the cloud, and offer a range of additional services such as working capital — to the merchants.

Pine Labs’s payments terminal has integration with over two dozen banks and financial and technology partners. This differentiates Pine Labs from the competition, whose terminals typically have integration with just one bank. Each time a rival firm strikes a new partnership with a bank, they need to deploy new machines into the market. (This is why you often see a restaurant has multiple terminals at the check out.)

Rau said Pine Labs, which has deployed about 600,000 payment terminals, has been able to assemble such a wide integration with the banking ecosystem because of its years-long relationship and expertise.

Pine Labs runs an analytics app on debit card base of banks it tied up to determine the extent of credit to be made available to every cardholder. Pine Labs then converts large payments into EMIs (equated monthly instalment) using its Pine Pay Later application. mid the pandemic late last year, the startup was onboarding over 10,000 new businesses to the platform each month.

Pine Labs is the market leader in many categories. The startup — which acquired Qwikcilver in 2019 — assumed over 95% of the market share in gift cards in the financial year that ended in March 2020. Its point-of-sale machines are some of the most widely used in the industry.

FinTechs expanding into newer segments to increase engagement, the addressable market and drive monetisation (Image: Credit Suisse; Data: Companies, Credit Suisse)

“We are very excited to be a part of the technological transformation that Pine Labs is driving on the ground in payments and the multiple interlinkages and efficiencies it is able to create by providing faster, cost effective consumer access to a broader range of financial products such as BNPL (Buy Now Pay Later), where it is driving a pioneering effort on behalf of the financial system. We are also excited about an Indian business being able to drive regional and potentially global adoption of its Intellectual Property and this represents significant optionality for the future,” said Amit Rajpal, CEO and Portfolio Manager of Marshall Wace Asia, in a statement.

Rau said the startup will deploy the fresh capital to build and expand an online payments gateway and engage with hospitals, pharmacies, governments and other entities as its first set of clients. The startup also plans to make offers of Fave, a Southeast Asian startup it acquired last month, available to merchants in India.

Amazon launches free video streaming service in India

By Manish Singh

Amazon has long maintained that its video streaming service, Prime Video, helps it drive more sales on the shopping app. Now the e-commerce giant is testing what happens when it brings the video streaming service to the shopping app itself.

The e-commerce giant on Saturday launched miniTV, an ad-supported video streaming service that is available within the Amazon shopping app and is “completely free.” miniTV is currently available only in India, Amazon said.

miniTV features web-series, comedy shows, and content around tech news, food, beauty, fashion “to begin with,” Amazon said. Some of the titles currently available have been produced by leading studios such as TVF and Pocket Aces — two of the largest web studios in India — and comedians such as Ashish Chanchlani, Amit Bhadana, Round2Hell, Harsh Beniwal, Shruti Arjun Anand, Elvish Yadav, Prajakta Koli, Swagger Sharma, Aakash Gupta and Nishant Tanwar.

“Viewers will be informed on latest products and trends by tech expert Trakin Tech, fashion and beauty experts such as Sejal Kumar, Malvika Sitlani, Jovita George, Prerna Chhabra and ShivShakti. Food lovers can enjoy content from Kabita’s Kitchen, Cook with Nisha, and Gobble. In the coming months, miniTV will add many more new and exclusive videos,” the company added, without sharing its future roadmap plans. (Amazon began integrating reviews and other web clippings — from media houses — on its shopping service in India for more than two years ago.)

miniTV is currently available on Amazon’s Android app, and will arrive on the iOS counterpart and mobile web over the coming months, Amazon said.

Amazon’s move follows a similar step by Walmart’s Flipkart, the company’s marquee rival in India, which rolled out video streaming service within its app in 2019. In recent years, scores of firms in India including Zomato have explored adding a video streaming offering to their own apps.

The video streaming landscape in “N2B” countries — the nations with the potential to help firms find their next two billion users. (UBS)

Amazon has also aggressively pushed to expand its Prime Video offerings in India in recent quarters. The company — which partnered with Indian telecom network Airtel earlier this year to launch a new monthly mobile-only, single-user, standard definition (SD) tier (for $1.22) — has secured rights to stream some cricket matches in the country. Amazon also offers Prime Video as part of its Amazon Prime subscription in India. The service is priced at 999 Indian rupees ($13.6) for a year and also includes access to Amazon Music and faster-delivery.

Prime Video had over 60 million monthly active users in India in April, ahead of Netflix’s 40 million users, according to mobile insight firm App Annie (data of which an industry executive shared with TechCrunch). Netflix, which spent about $420 million on locally produced Indian content in 2019 and 2020, said in March that it will invest “significantly more this year” in India. But in the company’s recent earnings call, founder and co-CEO Reed Hastings said investment in India was more “speculative” than those in other markets.

Times Internet’s MX Player had over 180 million users during the same period, and DIsney+ Hotstar had about 120 million. Their biggest competition in India remains YouTube, which has amassed over 450 million monthly active users.

But other than competition, video streaming services face another challenge in India. In late March, Amazon issued a rare apology to users in India for an original political drama series over allegations that a few scenes in the nine-part mini series hurt religious sentiments of some people in the key overseas market.

Amazon’s apology came days after New Delhi announced new rules for on-demand video streaming services and social media firms.

Why SPACs aren’t targeting African startups

By Tage Kene-Okafor

One. That’s the number of African tech companies that have gone public on the NYSE in the last 10 years. Two, if you’re counting local exchanges. The former is African-focused e-commerce company Jumia and the latter is Egyptian fintech company Fawry.

As a tech company, Fawry’s listing on the Egyptian Stock Exchange is a rarity. Typically, most exchanges in emerging markets like Africa, India, and Latin America are filled with traditional companies in age-old sectors like banking, telecoms, manufacturing, and energy.

Unlike Fawry, what you see these days are new-age tech companies from these markets going public abroad, especially in the U.S. Due to the friendly nature of U.S. exchanges such as Nasdaq and the NYSE, and their history building up the FAANG and other multibillion-dollar companies, they have become the top destination for IPO-ready companies in emerging markets. 

Last year, the U.S. IPO market was caught in a frenzy with a different way of going public: via special purpose acquisition companies (SPACs). Although these acquisition vehicles have been around for quite some time, they’ve lacked the sensational attributes we’ve now become accustomed to. Public and influential entrepreneurs from Chamath Palihapitiya to Richard Branson have made sure that SPACs — which many have called a fad — are here to stay.

Despite issues with the SEC as a liquidity option, SPACs have continued to remain popular for many companies because they have less completion time and regulatory hurdles than a traditional IPO.

We’ve covered a lot on this subject within the past year, and this article does a good job explaining SPACs.

In the U.S. alone, there are more than 300 SPACs. Last year, more than 85% of deals completed were executed with companies in the country, per Bloomberg. With fewer targets to acquire, an increasing number of SPACs are eyeing startups in other markets like Asia and Latin America, with the same endgame: take them public in the U.S.

Although Africa cannot be compared to these other regions in terms of technology and investment activities, it has some success stories. Companies like Jumia, GetSmarter, Paystack and Flutterwave are bright examples from the continent. But except for Tidjane Thiam’s $300 million blank-check company Freedom Acquisition I Corp (which has found no fintech target yet), there’s practically no SPAC targeting African tech companies.

Not SPACworthy

Iyinoluwa Aboyeji, founder and general partner at Future Africa, an early-stage VC firm, told TechCrunch that SPAC targets are most often billion-dollar companies. “The way the economics of a SPAC work, you want a billion-dollar company, and that’s a very short list in Africa. You can’t SPAC anything less than a billion dollars as you wouldn’t make enough money for it to be worth your while,” he said.

There are only a handful of African tech companies worth that much. Just recently, Flutterwave joined the illustrious club that includes Jumia, Fawry, and Interswitch. If what Aboyeji said is anything to go by, SPACs can only target Flutterwave and Interswitch. Yet, the chances of this happening are quite slim because the pair have expressed interest in going public via IPOs on local and international exchanges.

So, where exactly does it leave the continent if there are no billion-dollar companies to SPAC?

Aboyeji thinks SPACs could narrow down targets to companies that could become unicorns with their next rounds.

Eghosa Omoigui, managing partner at EchoVC Partners, an early-stage VC firm focused on sub-Saharan Africa, shares this view and adds that selecting these companies will boil down to the thrill they offer blank check companies should they choose to look Africa’s way.

“When you think about it, there’s only a small number of startups on the continent that have enough traction or excitement to be [packaged] in a SPAC,” he said.

From a neutral lens, some companies fit into this box of attractive African-focused companies with unicorn potential. A few of them, including Andela, Branch, Gro Intelligence and TymeBank, are worth more than $500 million and can easily double that with any SPAC activity.

But Omoigui believes a large number of these startups aren’t ready to go public yet.

“The real question I think is, even if you file for a SPAC and merge it with an African target, is that company ready to be public? The truth of the matter is that the valuations they get when private are much better than what they’ll get in the public markets.” 

Private capital seems sufficient… for now

The continent’s tech ecosystem is still very much nascent. In 2019, African startups raised a total of $2 billion, which is the peak of investments to have flowed in a year so far. That same year, Indian startups raised $14.5 billion. This disparity in investments is one reason there are few unicorns and acquisitions in the region. So it pretty much shows that there’s still a lot of ground to cover for African startups before thinking of going public. Maybe this is why SPACs aren’t targeting African startups now. 

“The way I see it, African startups are not ready yet to go public,” Aboyeji remarked. “They still need more time in the private markets. If you’re pursued by private capital and you see what happened to the likes of Jumia that went public, your inclination is just to take the private capital.”

In addition to that, private equity is catching up with what public financing can offer. Startups globally are staying private longer than ever. In the U.S., the number of publicly listed companies has dropped by 52% from the late 1990s to 2016. It’s a trend that has been passed to other markets, so it’s likely that African companies might stay private for the foreseeable future.

Nevertheless, Omoigui is optimistic that this situation might change in fewer than three years. In his opinion, SPACs will run out of interesting targets in other emerging markets and might start broadening their scope to include African companies.

The EchoVC managing partner added that the continent could do well with more SPACs from indigenous personalities like Thiam while waiting for those from foreign entities. This will build more excitement on the continent because in most cases, it isn’t the target that people usually get enthusiastic about but the vehicle itself.

“Sometimes you realize that it’s not really the startups that need to be hot and exciting; it is the SPAC sponsor. That’s what people are hopping on the bandwagon for.”

Before running Future Africa full-time, Aboyeji had stints with Andela as a co-founder and as CEO of Flutterwave. The startups are still private to date but are on anyone’s cards to go public within this decade. For Aboyeji, however, make that three as the entrepreneur-cum-investor wants to take his investment firm public, maybe via a SPAC.

“I’m definitely going to exit on the public market with Future Africa. That’s my goal. I would consider a SPAC as an entrepreneur, but it’s likely that I’ll decide to directly list as well,” he said.

Andela CEO Jeremy Johnson told me SPACs are here to stay, and most African startups will go public that way. However, he didn’t budge when asked if there were any chance his company would do the same.

“One of the benefits is that they allow you to talk about the future, and Africa’s growth rate means its future is going to be brighter than the past,” he said. “I think African startups will end up going public via this route.”

 

Facebook rolls out vaccine finder tool in India, donates $10 million

By Manish Singh

Facebook has announced a $10 million grant to support emergency response efforts in India and has rolled out its Vaccine Finder tool in the country as the South Asian nation grapples with the latest wave of the coronavirus pandemic.

The American social network said that it has partnered with a number of organizations including United Way, Swasth, Hemkunt Foundation, I Am Gurgaon, Project Mumbai and US-India Strategic Partnership Forum (USISPF) to help augment critical medical supplies with over 5,000 oxygen concentrators and other life-saving equipments such as ventilators, BiPAP machines and to increase hospital bed capacity.

Facebook also said it has partnered with the Government of India to roll out a Vaccine Finder tool on the company’s marquee app. The tool, available in 17 languages, is designed to help people identify and spot vaccine centres in their vicinity.

Last week, India opened vaccination to people aged between 18 to 45, though its website quickly crashed and wasn’t immediately accepting appointment requests from most people in that age group.

Also worth checking out: Folks over at WiFi Dabba, a Bangalore-based startup that is working to build a low-cost ISP, have also developed a tool to help people easily find vaccination slots.

A bigger challenge confronting India currently, however, is the shortage of vaccine.

Facebook said it is also supporting non-government organizations and United Nation agencies in India with ad credits to reach the majority of people on Facebook with Covid-19 vaccine and preventive health information.

Additionally, the company said it is providing health resources to people from UNICEF India about when to seek emergency care and how to manage mild Covid-19 symptoms at home.

I am thinking of our friends in India going through such a difficult time with COVID and grateful for all the work people are doing to help one another.  We're working with health partners to support helplines on WA like this one from @mygovindia https://t.co/pqE0VGHQbK https://t.co/uhmyEN5U7f

— Will Cathcart (@wcathcart) May 1, 2021

Scores of firms, startups, entrepreneurs, and investors have stepped up their efforts in recent weeks to help India, the world’s second most populous country, fight the pandemic after the federal and state governments were caught ill-prepared to handle it.

On Monday, Pfizer said it was sending medicines worth $70 million to India. “We are committed to being a partner in India’s fight against this disease and are quickly working to mobilize the largest humanitarian relief effort in our company’s history,” said company’s chairman and chief executive Albert Bourla.

❌