Many people in emerging markets depend on informal public transport to move across cities. But while there are ride-hailing and bus-hailing applications in some of these cities, there’s a dire need for journey-planning apps to improve mobility for users and reduce the time they spend commuting.
South African-founded startup WhereIsMyTransport is one such company filling that gap for now. Today, it is announcing a $14.5 million Series A extension to continue its expansion across emerging markets; the company already has a presence in South Africa and Mexico.
Naspers, via its investment arm, Naspers Foundry, co-led the investment with Cathay AfricInvest Innovation Fund. According to Naspers, the size of its check was $3 million. Japan’s SBI Investment also participated in the round.
The extension round is coming a year after WhereIsMyTransport received a $7.5 million Series A investment from VC firms and strategic investment from Google, Nedbank, and Toyota Tsusho Corporation (TTC).
Devin de Vries, Chris King and Dave New started the company in 2015. As a mobility startup, WhereIsMyTransport maps formal and informal public transport networks. The company then uses data gotten to improve the public transport experience, making commute safe and accessible.
In addition to this, WhereIsMyTransport licenses some of this data to governments, DFIs, NGOs, operators, and third-party developers. It claims this is done for research, analytics, insights and consumer and enterprise solutions purposes.
“WhereIsMyTransport started in South Africa, focused on becoming a central source of accurate and reliable public transport data for high-growth markets. We’re thrilled to welcome Naspers as an investor as our journey continues in megacities across the majority world,” said CEO Devin de Vries in a statement.
Last year when we covered the company, it had mapped 34 cities in Africa while actively mapping some in India, Southeast Asia and Latin America. Since then, it expanded into Mexico City last November and has completed multiple data production projects in the city alongside Lima, Bangkok, Gauteng, Dhaka. Right now, the company has worked in 41 cities across 28 countries.
WhereIsMyTransport also launched its first consumer product Rumbo which provides network information from all modes of public transport in Mexico with more than 100,000 users delivering over 750,000 real-time network alerts. The company says there are plans to launch Rumbo in Lima, Peru, later this year.
Devin de Vries (CEO WhereIsMyTransport)
For co-lead investor Naspers Foundry, this is the firm’s first investment in mobility. So far, it has funded four other South African startups — Aerobotics, SweepSouth, Food Supply Network, and The Student Hub — with a focus on edtech, food and cleaning sectors.
“We couldn’t pass on the opportunity to back an extraordinary South African founder who has built his business here in Cape Town to a global market leader in mapping formal and informal transportation with a strong focus on emerging markets,” Head of Naspers Foundry Fabian Whate said to TechCrunch.
He also adds that there is an overlap between mobility and the food and e-commerce businesses that seem to be Naspers main focus from a Naspers perspective. “The global food and e-commerce businesses, often operating in emerging markets, are quite reliant on mobility solutions. So there’s a great overlap between what the Naspers Group does and the vision for WhereIsMyTransport.”
In South Africa, WhereIsMyTransport’s clients include Johannesburg commuter rail system Gautrain and Transport for Cape Town. On the other hand, its international client base Google, the World Bank and WSP, and others.
South Africa CEO of Naspers, Phuthi Mahanyele-Dabengwa, said: “Mobility remains an obstacle for billions of people in high-growth markets across the world. Our investment in WhereIsMyTransport is a testimony of our belief that great innovation and tech talent is found in South Africa, and with the right backing and support, these businesses can provide solutions to local challenges that can improve the lives of ordinary people in South Africa and abroad.”
In 2014 Alexis Patjane was at a local hookah bar in Mexico City with some friends and the bar ran out of tobacco. They thought maybe they could buy some online and have it delivered to the bar in real-time, but it turns out that service didn’t exist.
At the time, Patjane was running a food truck-making business, which was responsible for about 80% of all the food trucks in Mexico, so he had experience doing business in the region.
A couple of weeks later, to solve the instant delivery problem he had faced at the hookah bar, Patjane launched 99 minutos, a website that sold products and delivered them within 99 minutes, hence the name.
Today, 99 minutos announced a $40 million Series B from Prosus and Kaszek Ventures which it plans to use to grow its business in Latin America.
The company currently operates within 40 major markets across Mexico, Chile, Colombia, and Peru and offers four services: less than 99 minutes delivery, same-day delivery, next-day delivery, and CO2-free delivery.
What started as an e-commerce company with fast delivery quickly became a last-mile delivery service for other e-commerce companies.
“We started to build the API connections and plug-ins, and any e-commerce could add our delivery service to their business,” Patjane told TechCrunch.
99 minutos makes money by charging the customer a flat fee for delivery and then offering the driver a flat rate as well, but today, the volume is so large on each route, that it’s become very lucrative.
“We ship about 60-80 packages per route,” Patjane said, and from the consumer’s perspective, the delivery app works similarly to Waze. “You can pause the delivery, you can change the address. You can say, “Oh, I’m not at home, I’m at the Starbucks on the corner, can you drop it off there?”’ he added.
Patjane said that initially, the company offered delivery only within Mexico City, but it quickly grew to offer its services between cities and now operates between 21 cities in Mexico.
“E-commerce is growing quickly in Latin America, but it is still [the] early days. E-commerce penetration in Latin America is at 6%, while China is reaching 30% and the U.S. is at 20%,” the company said in a statement.
“When we hear big e-commerce players saying that 99 minutos is ‘their most reliable partner’ and that they are ‘the provider with the most potential,’ it tells us that the team is executing extremely well and is on a path to disrupt e-commerce delivery in Latin America,” said Banafsheh Fathieh, Head of Americas Investments at Prosus Ventures.
Part of the funds will also be to speed up their city-to-city deliveries. “We’ll be doing same day [delivery] from city to city and will be using small aircraft to connect the cities,” Patjane said.
Grupo Bursátil Mexicano (GBM) is a 35-year-old investment platform in the Mexican stock market. In its first three decades of life, GBM was focused on providing investment services to high net worth individuals and local and global institutions.
Over the past decade, the Mexico City-based brokerage has ramped up its digital efforts, and, in the past five years, has evolved its business model to offer services to all Mexicans with the same products and services it offers large estates.
Today, GBM is announcing it has received an investment of “up to” $150 million from SoftBank via the Japanese conglomerate’s Latin America Fund at a valuation of “over $1 billion.” The investment is being made through one of GBM’s subsidiaries and is not contingent on anything, according to the company.
Co-CEO Pedro de Garay Montero told TechCrunch that GBM has built an app, GBM+, that organizes and invests clients’ money through three different tools: Wealth Management, Trading and Smart Cash.
Last year was a “historic” one for the company, he said, and GBM went from having 38,000 investment accounts in January 2020 to more than 650,000 by year’s end. In the first quarter of 2021, that number had grown to over 1 million — representing more than 30x growth from the beginning of 2020.
For some context, according to the National Banking and Securities Commission (CNBV), there were only 298,000 brokerage accounts in Mexico at the end of 2019, and that number climbed to 940,000 by the end of 2020 — with GBM holding a large share of them.
Most of GBM’s clients are retail clients, but the company also caters to “most of the largest investment managers worldwide,” as well as global companies such as Netflix, Google and BlackRock. Specifically, it services 40% of the largest public corporations in Mexico and a large base of ultra high net worth individuals.
The company is planning to use its new capital in part to invest “heavily” in customer acquisition.
Montero said that half of its team of 450 are tech professionals, and that the company plans to also continue hiring as it focuses on growth in its B2C and B2B offerings and expanding into new verticals.
“We are improving our already robust financial education offering,” he added, “so that Mexicans can take control of their finances. GBM’s mission is to transform Mexico into a country of investors.”
Because Mexico is such a huge market — with a population of over 120 million and a GDP of more than $1 trillion — GBM is laser-focused on growing its presence in the country.
“The financial services industry is dominated by big banks and is inefficient, expensive and provides a poor client experience. This has resulted in less than 1% of individuals having an investment account,” Montero told TechCrunch. “We will be targeting clients through our own platform and internal advisors, as well as growing our base of external advisors to reach as many people as possible with the best investment products and user experience.”
When it comes to institutional clients, he believes there is “enormous potential” in serving both the large corporations and the SMEs “who have received limited services from banks.”
Juan Franck, investment lead for SoftBank Latin America Fund in Mexico, believes the retail investment space in Mexico is at an inflection point.
“The investing culture in Mexico has historically been low compared to the rest of the world, even when specifically compared to other countries in Latin America, like Brazil,” he added. “However, the landscape is quickly changing as, through technology, Mexicans are being provided more education around investing and more investment alternatives.”
In the midst of this shift, SoftBank was impressed by GBM’s “clear vision and playbook,” Franck said.
So, despite being a decades-old company, SoftBank sees big potential in the strength of the digital platform that GBM has built out.
“GBM is the leading broker in Mexico in terms of trading activity and broker accounts,” he said. “The company combines decades of industry know-how with an entrepreneurial drive to revolutionize the wealth management space in the country.”
Here in the U.S. the concept of using driver’s data to decide the cost of auto insurance premiums is not a new one.
But in markets like Brazil, the idea is still considered relatively novel. A new startup called Justos claims it will be the first Brazilian insurer to use drivers’ data to reward those who drive safely by offering “fairer” prices.
And now Justos has raised about $2.8 million in a seed round led by Kaszek, one of the largest and most active VC firms in Latin America. Big Bets also participated in the round along with the CEOs of seven unicorns including Assaf Wand, CEO and co-founder of Hippo Insurance; David Velez, founder and CEO of Nubank; Carlos Garcia, founder and CEO Kavak; Sergio Furio, founder and CEO of Creditas; Patrick Sigris, founder of iFood and Fritz Lanman, CEO of ClassPass. Senior executives from Robinhood, Stripe, Wise, Carta and Capital One also put money in the round.
Serial entrepreneurs Dhaval Chadha, Jorge Soto Moreno and Antonio Molins co-founded Justos, having most recently worked at various Silicon Valley-based companies including ClassPass, Netflix and Airbnb.
“While we have been friends for a while, it was a coincidence that all three of us were thinking about building something new in Latin America,” Chadha said. “We spent two months studying possible paths, talking to people and investors in the United States, Brazil and Mexico, until we came up with the idea of creating an insurance company that can modernize the sector, starting with auto insurance.”
Ultimately, the trio decided that the auto insurance market would be an ideal sector considering that in Brazil, an estimated more than 70% of cars are not insured.
The process to get insurance in the country, by any accounts, is a slow one. It takes up to 72 hours to receive initial coverage and two weeks to receive the final insurance policy. Insurers also take their time in resolving claims related to car damages and loss due to accidents, the entrepreneurs say. They also charge that pricing is often not fair or transparent.
Justos aims to improve the whole auto insurance process in Brazil by measuring the way people drive to help price their insurance policies. Similar to Root here in the U.S., Justos intends to collect users’ data through their mobile phones so that it can “more accurately and assertively price different types of risk.” This way, the startup claims it can offer plans that are up to 30% cheaper than traditional plans, and grant discounts each month, according to the driving patterns of the previous month of each customer.
“We measure how safely people drive using the sensors on their cell phones,” Chadha said. “This allows us to offer cheaper insurance to users who drive well, thereby reducing biases that are inherent in the pricing models used by traditional insurance companies.”
Justos also plans to use artificial intelligence and computerized vision to analyze and process claims more quickly and machine learning for image analysis and to create bots that help accelerate claims processing.
“We are building a design driven, mobile first and customer experience that aims to revolutionize insurance in Brazil, similar to what Nubank did with banking,” Chadha told TechCrunch. “We will be eliminating any hidden fees, a lot of the small text and insurance specific jargon that is very confusing for customers.”
Justos will offer its product directly to its customers as well as through distribution channels like banks and brokers.
“By going direct to consumer, we are able to acquire users cheaper than our competitors and give back the savings to our users in the form of cheaper prices,” Chadha said.
Customers will be able to buy insurance through Justos’ app, website, or even WhatsApp. For now, the company is only adding potential customers to a waitlist but plans to begin selling policies later this year..
During the pandemic, the auto insurance sector in Brazil declined by 1%, according to Chadha, who believes that indicates “there is latent demand rearing to go once things open up again.”
Justos has a social good component as well. Justos intends to cap its profits and give any leftover revenue back to nonprofit organizations.
The company also has an ambitious goal: to help make insurance become universally accessible around the world and the roads safer in general.
“People will face everyday risks with a greater sense of safety and adventure. Road accidents will reduce drastically as a result of incentives for safer driving, and the streets will be safer,” Chadha said. “People, rather than profits, will become the focus of the insurance industry.”
Justos plans to use its new capital to set up operations, such as forming partnerships with reinsurers and an insurance company for fronting, since it is starting as an MGA (managing general agent).
It’s also working on building out its products such as apps, its back end and internal operations tools as well as designing all its processes for underwriting, claims and finance. Justos’ data science team is also building out its own pricing model.
The startup will be focused on Brazil, with plans to eventually expand within Latin America, then Iberia and Asia.
Kaszek’s Andy Young said his firm was impressed by the team’s previous experience and passion for what they’re building.
“It’s a huge space, ripe for innovation and this is the type of team that can take it to the next level,” Young told TechCrunch. “The team has taken an approach to building an insurance platform that blends being consumer centric and data driven to produce something that is not only cheaper and rewards safety but as the brand implies in Portuguese, is fairer.”
Fintech and proptech are two sectors that are seeing exploding growth in Latin America, as financial services and real estate are two categories in particular dire need of innovation in a region.
Brazil’s QuintoAndar, which has developed a real estate marketplace focused on rentals and sales, has seen impressive growth in recent years. Today, the São Paulo-based proptech has announced it has closed on $300 million in a Series E round of funding that values it at an impressive $4 billion.
The round is notable for a few reasons. For one, the valuation — high by any standards but especially for a LatAm company — represents an increase of four times from when QuintoAndar raised a $250 million Series D in September 2019.
It’s also noteworthy who is backing the company. Silicon Valley-based Ribbit Capital led its Series E financing, which also included participation from SoftBank’s LatAm-focused Innovation Fund, LTS, Maverik, Alta Park, an undisclosed U.S.-based asset manager fund with over $2 trillion in AUM, Kaszek Ventures, Dragoneer and Accel partner Kevin Efrusy.
Having backed the likes of Coinbase, Robinhood and CreditKarma, Ribbit Capital has historically focused on early-stage investments in the fintech space. Its bet on QuintoAndar represents clear faith in what the company is building, as well as its confidence in the startup’s plans to branch out from its current model into a one-stop real estate shop that also offers mortgage, title, insurance and escrow services.
The latest round brings QuintoAndar’s total raised since its 2013 inception to $635 million.
Ribbit Capital Partner Nick Huber said QuintoAndar has over the years built “a unique and trusted brand in Brazil” for those looking for a place to call home.
“Whether you are looking to buy or to rent, QuintoAndar can support customers through the entire transaction process: from browsing verified inventory to signing the final contracts,” Huber told TechCrunch. “The ability to serve customers’ needs through each phase of life and to do so from start to finish is a unique capability, both in Brazil and around the world.”
QuintoAndar describes itself as an “end-to-end solution for long-term rentals” that, among other things, connects potential tenants to landlords and vice versa. Last year, it expanded also into connecting a home buyers to sellers.
Image Credits: QuintoAndar
TechCrunch spoke with co-founder and CEO Gabriel Braga and he shared details around the growth that has attracted such a bevy of high-profile investors.
Like most other businesses around the world, QuintoAndar braced itself for the worst when the COVID-19 pandemic hit last year — especially considering one core piece of its business is to guarantee rents to the landlords on its platform.
“In the beginning, we were afraid of the implications of the crisis but we were able to honor our commitments,” Braga said. “In retrospect, the pandemic was a big test for our business model and it has validated the strength and defensibility of our business on the credit side and reinforced our value proposition to tenants and landlords. So after the initial scary moments, we actually felt even more confident in the business that we are building.”
QuintoAndar describes itself as “a distant market leader” with more than 100,000 rentals under management and about 10,000 new rentals per month. Its rental platform is live in 40 cities across Brazil, while its home-buying marketplace is live in four. Part of its plans with the new capital is to expand into new markets within Brazil, as well as in Latin America as a whole.
The startup claims that, in less than a year, QuintoAndar managed to aggregate the largest inventory among digital transactional platforms. It now offers more than 60,000 properties for sale across Sao Paulo, Rio de Janeiro, Belho Horizonte and Porto Alegre. To give greater context around the company’s growth of that side of its platform: In its first year of operation, QuintoAndar closed more than 1,000 transactions. It has now surpassed the mark of 8,000 transactions in annualized terms, growing between 50% and 100% quarter over quarter.
As for the rentals side of its business, Braga said QuintoAndar has more than 100,000 rentals under management and is closing about 10,000 new rentals per month. The company is not profitable as it’s focused on growth, although it’s unit economics are particularly favorable in certain markets such as Sao Paulo, which is financing some of its growth in other cities, according to Braga.
Now, the 2,000-person company is looking to begin its global expansion with plans to enter the Mexican market later this year. With that, Braga said QuintoAndar is looking to hire “top-tier” talent from all over.
“We want to invest a lot in our product and tech core,” he said. “So we’re trying to bring in more senior people from abroad, on a global basis.”
CEO Braga and CTO André Penha came up with the idea for QuintoAndar after receiving their MBAs at Stanford University. As many startups do, the company was founded out of Braga’s personal “nightmare” of an experience — in this case, of trying to rent an apartment in Sao Paulo.
The search process, he recalls, was difficult as there was not enough information available online and renters were forced to provide a guarantor, or co-signer, from the same city or pay rent insurance, which Braga described as “very expensive.”
“Overall, I felt it was a very inefficient and fragmented process with no transparency or tech,” Braga told me at the time of the company’s last raise. “There was all this friction and high cost involved, just real tangible problems to solve.”
The concept for QuintoAndar (which can be translated literally to “Fifth Floor” in Portuguese) was born.
“Little by little, we created a platform that consolidated supply and inventory in a uniform way,” Braga said.
The company took the search phase online for the first time, according to Braga. It also eliminated the need for tenants to provide a guarantor, thereby saving them money. On the other side, QuintoAndar also works to help protect the landlord with the guarantee that they will get their rent “on time every month,” Braga said.
It’s been interesting watching the company evolve and grow over time, just as it’s been fascinating seeing the region’s startup scene mature and shine in recent years.
As a longtime real estate developer based in Chile, Benjamin Labra was able to spot gaps in the buying and renting markets in Latin America. To meet demands, he started Houm, an all-in-one platform that helps homeowners rent and sell their properties in the region.
Fresh out of Y Combinator’s W21 cohort, today Houm announced an $8 million seed round.
If you think the concept sounds like Brazil’s unicorn, QuintoAndar, it’s because Houm is very similar. While QuintoAndar dominates the Brazilian market, Houm operates in Chile, Mexico and Colombia, and aims to capture the rest of Spanish-speaking LatAm.
Think of Houm as a homeowner-run Zillow meets TaskRabbit. The company offers a marketplace run by the property owners themselves and cuts out the realtor by employing 200 freelancers who prepare the property for sale or to manage it.
Houmers, as they are called, go to the owner’s home, take photos and then help possible buyers or renters view the property. For their work, Houmers are compensated each time a home they worked on sells or gets rented.
However, Houm’s selling proposition isn’t just the ease of use it provides; instead, it also serves as a guarantor in my ways, making the buying process more accessible.
“In Colombia and Mexico, for someone to be your guarantor, they have to have a property that’s free of mortgage so it can be used as collateral,” Labra told TechCrunch.
On the flip side, the company also guarantees that renters will get paid every month, and if a tenant falters, Houm covers the cost. “You really have nothing to lose if you use Houm,” Labra said.
You can imagine that a company like Houm now has all sorts of data on the real estate market, especially around sales and rental prices. As a result, Houm uses this data in an algorithm that helps the homeowner determine a fair price for their property, but the listed price remains up to the owner.
The company, which was founded in 2018 and is based in Chile, now has about 200 full-time employees, in addition to their freelance team. While Labra declined to say how many active users it has, he said Houm is now showing a property every eight minutes.
The current funding round had no lead investor but includes Y Combinator, Goodwater Ventures, OneVC, Vast VC, Liquid2 and Myelin. The company plans to use the money to expand within the region, perfect its algorithm and generally speed up growth.
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.
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.”
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.”
What moves the needle for digital lenders is serving loans to their respective customers. But where does this money come from? The pool is usually equity or debt. While some lenders use the former, it can be seen as folly because, over time, the founders tend to lose ownership of their businesses after giving out too much equity to raise capital for loans. Hence the reason why most lending companies secure debt facilities.
TechCrunch has recently reported on two prominent digital lenders (also digital banks in their own rights) gaining steam in Africa — Carbon and FairMoney. In 2019, Carbon secured $5 million in debt financing and the following year, FairMoney did the same but raised a higher sum, $13 million.
Enter Lendable, the UK-based firm responsible for supplying both lenders with debt finance.
The company with offices in Nairobi, New York, and Singapore advances loans to fintechs across eight markets in Africa, Southeast Asia, and Latin America. Since launching in 2014, the company has disbursed over $125 million to these fintechs — SME lenders, payment platforms, asset lenders, marketplaces, and consumer lenders.
In a phone conversation with TechCrunch, Samuel Eyob, a principal at the firm, said the company is raising almost $180 million to continue its investment efforts across the three continents.
“We want to raise more than $180 million and we have investors that have committed cash to us,” he said. “Right now, we’re already investing out of that amount because we’ve already closed on a bunch of it. Ideally, the goal is to invest that amount over this year.”
Lendable was founded by Daniel Goldfarb and Dylan Friend. It was based on an insight that they had while Daniel was a partner at Greenstart, a venture capital firm focused on data, finance and energy. That insight was that the poorest people in the world pay the most for goods and services, so if capital markets could provide a path to ownership, that could help individuals build assets. So the pair set out to solve this by providing capital to fintechs catering to the needs of these people.
Eyob, a first-generation American from Ethiopia, knows what a lack of access to fair finance does to people and countries. Given the millions of people and businesses not effectively served by banks and MFIs, Eyob joined the team to drive financial inclusion in these markets.
“Over a billion people still lack access to financial services and multiple reports indicate that the financing gap for micro and small businesses is trillions of dollars and growing. We believe this is a massive opportunity. So, whilst we started in Africa, the lack of access to fair financing solutions is a problem across all emerging markets, which we want to address,” he said.
Samuel Eyob (Principal, Lendable)
So in 2014, Lendable started as a SaaS platform to democratize access to African capital markets by providing risk and analytics software. “We hoped to do this by bringing the securitization market from the Global North into Africa,” Eyob added.
The company built an analytics platform to analyze loans and used machine learning to predict loan portfolio cashflows. In addition to that, they created an automated investment platform helping ventures to raise nondilutive (not equity) capital to help scale their businesses.
After sufficiently proving out its tech, the firm made a pivot. According to Eyob, the previous model wasn’t experiencing enough growth and was incurring unsustainable costs. So the company began raising capital based on its own analytics in 2016. It had only raised $600,000 and was focused on East African startups with SME financing and Pay-Go solar home models. That number has since increased to over $125 million across Africa, Southeast Asia and Latin America.
So why do these companies actually need debt financing? Here’s a clearer picture of the instance used at the beginning of this piece.
Imagine a VC-backed startup whose ultimate goal is to help scale up female-founded SMEs with one-year loans. The startup could easily use its equity to provide the capital for all the one-year loans. The payoff from the loans, after one year, would be the interest due to them. Or, it could put that capital into hiring developers, build a go-to-market strategy, hire a CTO, all of which would likely have payoffs that are up to a 100x multiple of the interest they would have made on the single SME loan that is tied up for an entire year.
So ultimately, debt would be an ideal source of nondilutive capital for the startup as they wouldn’t have to tie up equity for one year. Therefore, debt would be a much cheaper source of capital to scale up their operations, especially if it has scaled up to having tens of thousands of one-year loans. If it were equity, they would have to raise an endless amount with constant dilution as they scale.
In its five years of official operations, Lendable has given debt facilities to more than 20 startups. While the stage at which Lendable gives money differs, it is particular about startups that are post Series A.
Apart from Carbon and FairMoney, some startups to have raised debt from Lendable include Tugende, Uploan, KoinWorks, Planet42, TerraPay, Watu Credit, Trella, Amartha, Payjoy, Solar Panda, Cars45 and MFS Africa. Collectively, Eyob said, Lendable has reached 1.2 million end borrowers through its partners and helped finance up to 290,000 SMEs.
Of the $125 million disbursed so far as debt, Eyob said the company has a default rate of about 0.01%. The reason behind this low number, Eyob reckons, is because Lendable ensures to be in constant conversation with the companies offering help, advice or connections when necessary.
“We view lending as a partnership and typically when both parties act in good faith, there are ways to solve problems,” Eyob said.
The debt facilities start at $2 million but can go up to over $15 million, Eyob said. But while the global standard at which lenders pay back their debt investments is typically 4 to 6 years, Lendable expects the companies it gives cash to do so in 3 to 4 years.
Eyob pushes that founders in emerging markets should be willing to take more debt financing to scale their startups. These days, startups tend to be high on giving out equity instead of weighing options on effectively using debt in critical points when scaling.
Equity could be used to help attract the best talent or expand into new markets. Still, debt proves essential when scaling up capital-intensive operations like working capital or pre-funding activities. More often than not, debt and equity are complementary to one another, and Lendable is hoping to use the new funds it’s raising to push that notion.
“I think, just like everywhere else in the world, debt and equity are tools that should be used to support one another, supporting the venture’s ultimate mission. We have lasting relationships with multiple VC teams across emerging markets that we work with to ultimately support one another’s partner investees.”
Restoring and preserving the world’s forests has long been considered one of the easiest, lowest cost, and simplest ways to reduce the amount of greenhouse gases in the atmosphere.
It’s by far the most popular method for corporations looking to take an easy first step on the long road to decarbonizing or offsetting their industrial operations. But in recent months the efficacy, validity, and reliability of a number of forest offsets have been called into question thanks to some blockbuster reporting from Bloomberg.
It’s against this uncertain backdrop that investors are coming in to shore up financing for Pachama, a company building a marketplace for forest carbon credits that it says is more transparent and verifiable thanks to its use of satellite imagery and machine learning technologies.
That pitch has brought in $15 million in new financing for the company, which co-founder and chief executive Diego Saez Gil said would be used for product development and the continued expansion of the company’s marketplace.
Launched only one year ago, Pachama has managed to land some impressive customers and backers. No less an authority on things environmental than Jeff Bezos (given how much of a negative impact Amazon operations have on the planet), gave the company a shoutout in his last letter to shareholders as Amazon’s outgoing chief executive. And the largest ecommerce company in Latin America, Mercado Libre, tapped the company to manage an $8 million offset project that’s part of a broader commitment to sustainability by the retailing giant.
Amazon’s Climate Pledge Fund is an investor in the latest round, which was led by Bill Gates’ investment firm Breakthrough Energy Ventures. Other investors included Lowercarbon Capital (the climate-focused fund from über-successful angel investor, Chris Sacca), former Über executive Ryan Graves’ Saltwater, the MCJ Collective, and new backers like Tim O’Reilly’s OATV, Ram Fhiram, Joe gebbia, Marcos Galperin, NBA All-star Manu Ginobilli, James Beshara, Fabrice Grinda, Sahil Lavignia, and Tomi Pierucci.
That’s not even the full list of the company’s backers. What’s made Pachama so successful, and given the company the ability to attract top talent from companies like Google, Facebook, SapceX, Tesla, OpenAI, Microsoft, Impossible Foods and Orbital Insights, is the combination of its climate mission applied to the well-understood forest offset market, said Saez Gil.
“Restoring nature is one of the most important solutions to climate change. Forests, oceans and other ecosystems not only sequester enormous amounts of CO2from the atmosphere, but they also provide critical habitat for biodiversity and are sources of livelihood for communities worldwide. We are building the technology stack required to be able to drive funding to the restoration and conservation of these ecosystems with integrity, transparency and efficiency” said Diego Saez Gil, Co-founder and CEO at Pachama. “We feel honored and excited to have the support of such an incredible group of investors who believe in our mission and are demonstrating their willingness to support our growth for the long term”.
Customers outside of Latin America are also clamoring for access to Pachama’s offset marketplace. Microsoft, Shopify, and Softbank are also among the company’s paying buyers.
It’s another reason that investors like Y Combinator, Social Capital, Tobi Lutke, Serena Williams, Aglaé Ventures (LVMH’s tech investment arm), Paul Graham, AirAngels, Global Founders, ThirdKind Ventures, Sweet Capital, Xplorer Capital, Scott Belsky, Tim Schumacher, Gustaf Alstromer, Facundo Garreton, and Terrence Rohan, were able to commit to backing the company’s nearly $24 million haul since its 2020 launch.
“Pachama is working on unlocking the full potential of nature to remove CO2 from the atmosphere,” said Carmichael Roberts from BEV, in a statement. “Their technology-based approach will have an enormous multiplier effect by using machine learning models for forest analysis to validate, monitor and measure impactful carbon neutrality initiatives. We are impressed by the progress that the team has made in a short period of time and look forward to working with them to scale their unique solution globally.”
Nearly exactly one month ago, digital real estate platform Loft announced it had closed on $425 million in Series D funding led by New York-based D1 Capital Partners. The round included participation from a mix of new and existing investors such as DST, Tiger Global, Andreessen Horowitz, Fifth Wall and QED, among many others.
At the time, Loft was valued at $2.2 billion, a huge jump from its being just near unicorn territory in January 2020. The round marked one of the largest ever for a Brazilian startup.
Now, today, São Paulo-based Loft has announced an extension to that round with the closing of $100 million in additional funding that values the company at $2.9 billion. This means that the 3-year-old startup has increased its valuation by $700 million in a matter of weeks.
Baillie Gifford led the Series D-2 round, which also included participation from Tarsadia, Flight Deck, Caffeinated and others. Individuals also put money in the extension, including the founders of Better (Vishal Garg), GoPuff, Instacart, Kavak and Sweetgreen.
Loft has seen great success in its efforts to serve as a “one-stop shop” for Brazilians to help them manage the home buying and selling process.
Image courtesy of Loft
In 2020, Loft saw the number of listings on its site increase “10 to 15 times,” according to co-founder and co-CEO Mate Pencz. Today, the company actively maintains more than 13,000 property listings in approximately 130 regions across São Paulo and Rio de Janeiro, partnering with more than 30,000 brokers. Not only are more people open to transacting digitally, more people are looking to buy versus rent in the country.
“We did more than 6x YoY growth with many thousands of transactions over the course of 2020,” Pencz told TechCrunch at the time of the company’s last raise. “We’re now growing into the many tens of thousands, and soon hundreds of thousands, of active listings.”
The decision to raise more capital so soon was due to a variety of factors. For one, Loft has received “overwhelming investor interest” even after “a very, very oversubscribed main round,” Pencz said.
“We have seen a continued acceleration in our market share growth, especially in São Paulo and Rio de Janeiro, the two markets we currently operate in,” he added. “We saw an opportunity to grow even faster with additional capital.”
Pencz also pointed out that Baillie Gifford has relatively large minimum check size requirements, which led to the extension being conducted at a higher price and increased the total round size “by quite a bit to be able to accommodate them.”
While the company was less forthcoming about its financials as of late, it told me last year that it had notched “over $150 million in annualized revenues in its first full year of operation” via more than 1,000 transactions.
The company’s revenues and GMV (gross merchandise value) “increased significantly” in 2020, according to Pencz, who declined to provide more specifics. He did say those figures are “multiples higher from where they were,” and that Loft has “a very clear horizon to profitability.”
Pencz and Florian Hagenbuch founded Loft in early 2018 and today serve as its co-CEOs. The aim of the platform, in the company’s words, is “bringing Latin American real estate into the e-commerce age by developing online alternatives to analogue legacy processes and leveraging data to create transparency in highly opaque markets.” The U.S. real estate tech company with the closest model to Loft’s is probably Zillow, according to Pencz.
In the United States, prospective buyers and sellers have the benefit of MLSs, which in the words of the National Association of Realtors, are private databases that are created, maintained and paid for by real estate professionals to help their clients buy and sell property. Loft itself spent years and many dollars in creating its own such databases for the Brazilian market. Besides helping people buy and sell homes, it offers services around insurance, renovations and rentals.
In 2020, Loft also entered the mortgage business by acquiring one of the largest mortgage brokerage businesses in Brazil. The startup now ranks among the top-three mortgage originators in the country, according to Pencz. When it comes to helping people apply for mortgages, he likened Loft to U.S.-based Better.com.
This latest financing brings Loft’s total funding raised to an impressive $800 million. Other backers include Brazil’s Canary and a group of high-profile angel investors such as Max Levchin of Affirm and PayPal, Palantir co-founder Joe Lonsdale, Instagram co-founder Mike Krieger and David Vélez, CEO and founder of Brazilian fintech Nubank. In addition, Loft has also raised more than $100 million in debt financing through a series of publicly listed real estate funds.
Loft plans to use its new capital in part to expand across Brazil and eventually in Latin America and beyond. The company is also planning to explore more M&A opportunities.
Buy now, pay later is a way of paying for purchases via installment loans that generally have no interest. The concept has grown in popularity in recent years, especially in markets such as the United States, Europe and Australia. Numerous players abound, all fighting for market share — from Affirm to Klarna to Afterpay, among others.
But notably, none of these bigger players have yet to penetrate another very large market — Latin America. Enter Nelo, a startup founded by former Uber international growth team leads, which is building buy now, pay later in Mexico. The company is already live with more than 45 merchants and over 150,000 users.
San Francisco-based fintech-focused VC firm Homebrew led its recent seed round of $3 million, which also included participation from Susa Ventures, Crossbeam, Rogue Capital, Unpopular Ventures and others. With the latest capital infusion, Nelo has raised a total of $5.6 million since its 2019 inception.
Nelo is not the only player in the Mexican market. A number of others, including Alchemy and Addi, have recently outlined plans for buy now, pay later offerings in the region. But where Nelo has an advantage, believes CEO Kyle Miller, is its established relationships with about 45 merchants.
“What I’m excited about is the relationship with the merchants,” Miller told TechCrunch. “If we find a large global one and increase conversion for them, that is our defensibility [against competitors]. What’s important here is signing on merchants, since they usually only have one offering in their checkout.”
He and co-founder Stephen Hebson used to work for Uber’s international growth team, growing financial services products in India, Mexico, China and Brazil.
“We got to see a cross market where countries were accelerating and where others weren’t,” Miller recalls. “For example, China was a leader in mobile payments and digital finance in India was completely transformed.”
Nelo co-founders Stephen Hebson and Kyle Miller; Image courtesy of Nelo
But in markets like Mexico, the percentage of cash payments for trips was very high. And to Miller and Hebson, this spelled opportunity.
Nelo launched its first product in Mexico in January 2020, similar to a debit card offering from a neobank. In the middle of the year, the company launched credit installment loans.
“It became immediately clear that it was going to be our most popular feature,” Miller said. “By the end of the year, it was the vast majority of our business and something that our users were telling their friends about. We were solving a real pain point.”
Indeed, cash remains the dominant method of payment in Mexico, with an estimated 86% of all payments being in the form of cash. According to eMarketer, the region was the fastest-growing e-commerce market in the world in 2020, with 37% year over year growth.
“Access to credit is something we take for granted in the U.S.,” Miller said. “By the end of the year, we realized this was the future of business, and we decided to focus just on credit.”
In March, Nelo launched its first product via an Android app and will be launching a web app soon.
Customers can use its offering like a credit card, connecting directly with merchants such as Netflix and Spotify. Many users are paying for things like utility bills and cell phone bills, turning them from prepaid to postpay.
With its current product, the company has lent about $2 million, and is seeing growth of about 20% month over month.
“We’re seeing massive demand for this new product in the way of organic signups,” Miller said, “for all the reasons Buy Now, Pay Later has been successful in markets like the U.S., Europe and Australia.”
Paying for installments is already common in Latin America, particularly in Brazil, so the concept is not foreign to residents in the region.
“We expected this is soon going to be a competitive market, so we’re hiring data scientists and engineers to continue improving our product, and grow,” Miller said.
Nelo has about 14 employees with an engineering team in New York.
Homebrew Partner Satya Patel says he’s excited about Nelo because he believes the startup “solves a serious problem related to the lack of credit for Mexican consumers.”
“Credit card penetration is less than 10% in Mexico and other forms of credit are effectively non-existent,” he wrote via email. “Nelo makes it possible for Mexicans to easily and inexpensively increase their purchasing power at the point of sale. And importantly, Nelo is delivering this solution online, supporting growing interest in e-commerce, and also offline, where consumers regularly shop today.”
Patel adds that what Nelo is building is valuable because he is not aware of any reliable, comprehensive consumer credit rating data set in Mexico.
“They are building underwriting models based on proprietary data and growing the merchant network at an incredible rate,” he said. “This buy now, pay later opportunity is untapped in Mexico but requires a very different approach than what has been successful in other markets.”
The Nelo team, according to Patel, understands the nuances of the market and “is executing at an exceptional pace.”
The pandemic has made telemedicine video visits in the U.S. almost commonplace, but in Latin America, where broadband isn’t widely available, 1Doc3 is using text and chat to provide access to care. Today, the Colombia-based company announced a $3 million pre-Series A led by MatterScale Ventures and Kayyak Ventures.
“I’m on a nice MacBook for this interview, but that’s not the case of most people in LatAm,” said Javier Cardona, co-founder and CEO of 1Doc3. The company’s name is a play on the phonetics of 1, 2, 3 in Spanish.
Reaching your primary care doctor when you’re not feeling well is getting harder and harder, and 1Doc3 aims to solve that problem in LatAm by offering a telemedicine platform powered by AI that does symptom assessment, triage and pre-diagnosis before connecting the patient to a doctor.
“In 97% of our consultations, you’re connected to a doctor in a matter of minutes,” Cardona said.
After seeing the doctor, the patient can also get their prescriptions delivered to their home through 1Doc3. The startup, like others in the space, is trying to close the loop so patients can get care quickly without having to leave their homes.
In addition to Colombia, the company already has operations in Mexico and plans to use part of the funding to expand further in the region as well as building out a marketing and sales team, which it hasn’t had thus far.
1Doc3 reaches customers directly and by establishing corporate partnerships where the companies themselves pay for their employees’ medical care through the startup. One of Cardona’s goals is to bring the unit economics down so that smaller businesses can also afford 1Doc3, which for corporates, now charges between $3-4 a month/employee.
“For big companies, the money isn’t an issue, but our region is comprised of small to medium-sized businesses,” Cardona said.
The company, which was founded in 2013 and was a finalist in TechCrunch’s Latin American Battlefield in 2018, experienced massive growth in 2020, going from 2,500 to 35,000 consultations per month from February to December 2020, respectively, which led the company to be cashflow positive last year. In March of 2021, the company had $120,000 in MRR.
Like many startups, the jolt to found 1Doc3 came from a personal experience faced by the founder.
“When I was in Tanzania I had a medical need and I was definitely not going to go to a doctor in Tanzania, and I couldn’t reach any doctor online, not even in the U.S., and I became a little obsessed with this problem,” said Cardona, who was working in the Middle East and Africa at the time.
This round brings the total raised by 1Doc3 to $5 million. Other investors that participated in the round include Swanhill Capital, Simma Capital and existing investors The Venture City, EWA capital (previously Mountain Nazca Colombia) and Startup Health.
Olist, a Brazilian e-commerce marketplace integrator, has raised $23 million in a Series D round extension led by new investor Goldman Sachs Asset Management that brings its total Series D financing to $80 million.
Existing backer Redpoint Ventures, which first put money in Olist in 2015, also participated in the latest round. With this latest infusion, Olist has now raised over $126 million since its 2015 inception. This round is reportedly its last before the company plans to go public, according to Bloomberg.
SoftBank led the first tranch of Olist’s Series D in November as well as the company’s $46 million Series C in 2019. Valor Capital, Velt Partners, FJ Labs, Península and angel Kevin Efrusy had previously invested in the first tranche of the Series D.
Olist connects small businesses to larger product marketplaces to help entrepreneurs sell their products to a larger customer base. The company was founded with the mission of helping small merchants gain market share across the country through a SaaS licensing model to small brick and mortar businesses.
As of October 2019, Olist had more than 7,000 customers and used a drop-shipping model to send products directly from stores to clients around the country, allowing them to grow with a capital-light model.
Today, Olist says its platform provides tools that support “all the stages of an e-commerce operation” with the goal of helping merchants see “rapid increases in sales volume.” It currently has about 25,000 merchants on its platform.
The startup is no doubt benefiting from the pandemic-fueled e-commerce boom taking place all over the world as more people have turned to online shopping. Latin America, in general, has been home to increased e-commerce adoption.
Olist says its revenue tripled to a record number in the first quarter of 2021 compared to the previous year, although it did not provide hard figures. It also reportedly doubled revenue in 2020, according to Bloomberg.
Olist Store, the company’s flagship product, gives merchants a way to manage product listings, logistics and store payments. It also offers “a unique sales experience” through channels such as Mercado Livre, B2W and Via Varejo. The product saw a record GMV in the first half of the year, which was up 2.5 times over the same period in the prior year, the company said.
Last year, Olist launched a new product, Olist Shops, giving users the ability to create a virtual showcase “in less than 3 minutes” that also offers payment checkout tools and integration with logistics operators. Shops has interfaces in Portuguese, English, and Spanish, and since its launch, it has attracted more than 200,000 users in 180 countries, according to Olist.
“The pandemic has accelerated digitalizing business processes around the world, thus spurring e-commerce growth in a surprising way,” said Tiago Dalvi, Olist’s founder and CEO, in a written statement.
The company plans to use its new capital to invest in technology and products, pursuing new mergers and acquisitions and boosting its internationalization process. This is on top of two acquisitions Olist made last year — Clickspace and Pax Logistica, which gave Olist entry into the heated logistics space with more than 4,000 registered drivers.
Specifically, CFO Eduardo Ferraz said the company is in preliminary discussions with ERPs, retailers, and companies with complementary solutions to its own.
“That is why we also decided to expand the investment in our Series D and bring Goldman Sachs as another relevant investor to our cap table,” he said.
David Castelblanco, managing director and head of Latin America Corporate and Growth Equity Investing for the Goldman Sachs Asset Management, said his firm was impressed with how Olist empowers SMBs to generate more revenue.
“Tiago and the Olist team are incredibly customer oriented and have created an innovative technological solution for their e-commerce clients,” he added.
Olist is operating in an increasingly crowded space. In March, we covered São Paulo-based Nuvemshop’s $90 million raise that was led by Silicon Valley venture firm Accel. That company has developed an e-commerce platform that aims to allow SMBs and merchants to connect more directly with their consumers.
Given the pandemic, huge changes are being wrought in tech events, something which used to be the lifeblood of the industry. Many a startup has pitched to win funding, and many a hackathon has formed teams that went on to greater things. It’s a sad fact that this era is over, at least until the pandemic has fully passed, but this could take some time. Two significant European events have now had to change in order to carry their brands into new realms.
European breakout success story Infobip (which has raised more than $200 million) was born out of Croatia. And so was the seminal developer conference Shift. With Infobip needing that engineering community, and Shift needing a more stable home in uncertain times, it seems only natural that Infobip would put developers front and center of their company strategy with the acquisition of Shift, and appointing its founder and CEO Ivan Burazin to the board as chief developer experience officer. Shift will now form the basis of Infobip’s all-new Developer Experience department.
As Burazin said: “The vision was always to become one of the largest developer conferences in the world, and also to strengthen Croatia’s connection to the world of software developers. So now with the backing of a unicorn and the freedom to keep working on independently, the vision seems to have finally become possible.”
He says Shift won’t disappear, but will now expand globally, first to the U.S. and then to Latin America and southeast Asia, initially in remote events.
Infobip CEO Silvio Kutić said: “Infobip is on a growth trajectory to expand rapidly into the B2C vertical, or more specifically Business-to-Developer (B2D) space. Having Ivan on board with his experience as the founder of Codeanywhere, a B2D SaaS company, and creator of Shift, the largest developer conference in the region, will be an asset to us going forward.”
Meanwhile, a key startup and founder/investor-oriented conference “Tech Open Air Berlin” is also changing.
Tech Open Air (TOA), was known for its technology and startup festival, which attracted upwards of 20,000 people in Berlin every summer, but it has now pivoted into a new brand: TOA Klub. This will now be a “cohort-based learning and doing platform.” The four-six weeks of online programs will be aimed at helping professionals progress in the tech industry.
TOA Klub will offer Founders Klub (for founders learning to startup); Investors Klub (for newbie investors); Crypto Klub (a “crash course in the crypto field”); and Co-Creators Klub (for founders looking to pivot and grow).
The first confirmed mentors and speakers include Rolf Schrömgens (founder, Trivago), Dominik Richter (founder, HelloFresh) and Jeannette zu Fürstenberg (founding partner, La Famiglia VC).
Nikolas Woischnik, founder of TOA said: “The world will come out of this pandemic having digitally aged by decades, not years. The complexity of our business environment has greatly accelerated. At TOA this gives our long-time mission of “making people, organizations and the planet futureproof” ever more purpose. With the launch of Klub, it is time for us to leverage technology to deliver on our mission in a more impactful and accessible way.”
I for one am glad these greats brands have found new homes, because I know the brands and the founders both carry huge respect in the European startup scene.
Kavak, the Mexican startup that’s disrupted the used car market in Mexico and Argentina, today announced its Series D of $485 million, which now values the company at $4 billion. This round more than triples their previous valuation of $1.15 billion, which established them as a unicorn just a couple of months ago in October of 2020. Kavak is now one of the top five highest-valued startups in Latin America.
The round was led by D1 Capital Partners, Founders Fund, Ribbit and BOND, and brings Kavak’s total capital raised to date to more than $900 million. Kavak recently soft-launched in Brazil, and this new round of funding will be used to build out the Brazilian market and beyond, said Carlos García Ottati, Kavak’s CEO and co-founder. The company plans to do a full launch in Brazil in the next 60 days, García said, and we can expect to see Kavak in markets outside Latin America in the next 24 months, he added.
“We were built to solve emerging market problems,” García said.
Kavak, which was founded in 2016, is an online marketplace that aims to bring transparency, security and access to financing to the used car market. The company also offers its own financing through its fintech arm, Kavak Capital, and counts more than 2,500 employees and 20 logistics and reconditioning hubs in Mexico and Argentina.
“In Latin America, 90% of the [used car] transactions are informal, which leads to a 40% fraud rate,” said García, who experienced these challenges firsthand when he moved to Mexico from Colombia a couple of years ago and bought a used car.
“My budget allowed me to buy a used car, but there was no infrastructure around it. It took me six months to buy the car, and then the car had legal and mechanical issues and I lost most of my money,” he said. Kavak buys cars from individuals, refurbishes them and offers warranties to buyers.
“Instead of buying a new car, they can buy a better car that still has all the warranties. It’s a really aspirational process,” said García. The company, which really amounts to four companies in one given its areas of focus, was built to be comprehensive by design in order to meet the various gaps in the market, García said.
“When you’re building a business here [Latin America], you need to build several businesses because so many things are broken,” he said. That’s why the financing option, for example, has been a key to their success, according to García.
Financing has traditionally been hard to come by in Brazil, and as García said, the used car market lacks infrastructure there, too. That being said, Brazil is Latin America’s fintech hub, and the space has made leaps and bounds over the last 7-10 years with companies such as Nubank, PagSeguro, Creditas, PicPay, and others leading the way. As a result, credit cards and loans are more widely available today in the region, offering competition for Kavak Capital. While Kavak has localized some of its product for the Brazilian market — namely building out a Portuguese language version of the app and website — García said the markets are very similar.
“In Brazil, you still have the same problems that you have in Mexico, but Brazil is a little more developed, especially in fintech, which is light years ahead of Mexico,” he said.
With the Brazilian product heading to the races, García said they already have plans for other regions, though he declined to name them.
“80% of people in emerging markets don’t have access to a car,” García said of the global market size. “We want to go into big markets where customers are facing similar problems and where Kavak can really change their lives,” he added.
Today, in a twist, New Jersey Governor Phil Murphy has announced a proposal for a $10 million allocation in the state budget to create a seed fund for Black and Latinx startups, TechCrunch has learned exclusively. The Black and Latinx Seed Fund will be administered by the New Economic Development Authority (NJEDA).
NJEDA CEO Tim Sullivan said based on research conducted by the state, that New Jersey is the first state in the nation to develop this type of fund.
He said the move is a “direct response to the systemic racial inequities in access to capital for Black and Brown entrepreneurs” and aimed at addressing “the racial wealth gap.”
“I think two of the centerpieces of Gov. Murphy’s strategy overall for the economy is to build a stronger and fairer New Jersey and a stronger and fairer economy,” Sullivan said, adding that the state is also focused on “reclaiming New Jersey’s heritage of leadership, innovation and entrepreneurship.”
It’s a known fact that the number of venture dollars flowing to Black and Latinx founders is dismally low.
As one evidence of that, last year Crunchbase found that as of Aug. 31, Black and Latinx founders had raised $2.3 billion in funding, representing just 2.6% of the total $87.3 billion in funding that had gone to all founders up until that point in 2020.
Also, Digitalundivided’s ProjectDiane 2020 report found that Black and Latinx women founders received just $1.7 billion of the total $276.7 billion venture dollars invested between 2018 and 2019.
Over the past several months — in the wake of the murder of George Floyd and the Black Lives Matter movement — we’ve seen an increasing number of venture funds announce initiatives toward funding a broader group of founders.
“Before there was a Silicon Valley, whether you’re talking about folks like Thomas Edison, Bell Labs or Sarnoff Labs, we were the place that perhaps more than any other place that fueled 20th century American entrepreneurial-led growth,” Sullivan told TechCrunch. “And the reality is that we lost a little bit of that. We’re still one of the top places for innovation and entrepreneurship, but other places –whether it’s out west or in places like Austin and Boston — have really upped their game and we want to recapture that unquestioned leadership position in innovation, entrepreneurship.”
Beyond that – under Gov. Murphy’s leadership – the state wants “to build the most diverse and inclusive innovation ecosystem in America.”
“That is a lot easier said than done, particularly because of not only centuries worth of systemic discrimination and racism, but some very specific manifestations of that systemic disenfranchisement and discrimination, particularly around venture capital funding and early stage seed funding,” added Sullivan, who once worked at Barclays Capital as chief of staff to the head of Global Investment Banking.
Zakiya Smith-Ellis, chief policy advisor to Gov. Murphy, said the initiative came after conversations with Black and Latinx business investors.
“This was developed with the input of folks who might be direct beneficiaries of this program and that community was directly impactful in designing and developing this proposal,” Smith-Ellis told TechCrunch. “We hear from them ‘we don’t have the family members, we don’t have the friends who are just going to write me a check at the very beginning, I think this is really instructive.’ ”
The legislature is set to vote on the proposal by July 1.
While it was difficult to find examples of governments doing similar things, there are a number of organizations out there that are committed to funding diverse founders.
In February, several national and Chicago-based organizations banded together to support early-stage Black and Latinx tech entrepreneurs through a new program dubbed TechRise. The nonprofit P33 launched the program in partnership with Verizon and 1871, a private business incubator and technology hub, among others, with the goals “of narrowing the wealth gap in Chicago, generating thousands of tech-related jobs and giving $5 million in grant funding to Black and Latino entrepreneurs,” according to the Chicago Sun Times. (Disclosure: Verizon is TechCrunch’s parent company).
And, Detroit-based ID Ventures says it invests in minority and women-led companies “at 4x the national average.”
“By providing opportunities to underrepresented entrepreneurs, we can ensure representation, respect our state’s diversity, and create a start-up community unlike any other,” the organization’s website says.
Also in Austin, DivInc is a nonprofit pre-accelerator that holds 12-week programs for underrepresented tech founders. Founded in 2016 by former Dell executive Preston James, the organization aims to “empower people of color and women entrepreneurs and help them build successful high growth businesses by providing them with access to education, mentorship, and vital networks.”
For this morning’s column, Alex Wilhelm looked back on the last few months, “a busy season for technology exits” that followed a hot Q4 2020.
We’re seeing signs of an IPO market that may be cooling, but even so, “there are sufficient SPACs to take the entire recent Y Combinator class public,” he notes.
Once we factor in private equity firms with pockets full of money, it’s evident that late-stage companies have three solid choices for leveling up.
Seeking more insight into these liquidity options, Alex interviewed:
After recapping their deals, each executive explains how their company determined which flashing red “EXIT” sign to follow. As Alex observed, “choosing which option is best from a buffet’s worth of possibilities is an interesting task.”
Thanks very much for reading Extra Crunch! Have a great weekend.
Senior Editor, TechCrunch
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Image Credits: Nigel Sussman
On Tuesday, we published a four-part series on Tonal, a home fitness startup that has raised $200 million since it launched in 2018. The company’s patented hardware combines digital weights, coaching and AI in a wall-mounted system that sells for $2,995.
By any measure, it is poised for success — sales increased 800% between December 2019 and 2020, and by the end of this year, the company will have 60 retail locations. On Wednesday, Tonal reported a $250 million Series E that valued the company at $1.6 billion.
Our deep dive examines Tonal’s origins, product development timeline, its go-to-market strategy and other aspects that combined to spark investor interest and customer delight.
We call this format the “EC-1,” since these stories are as comprehensive and illuminating as the S-1 forms startups must file with the SEC before going public.
Here’s how the Tonal EC-1 breaks down:
We have more EC-1s in the works about other late-stage startups that are doing big things well and making news in the process.
Why did Deliveroo struggle when it began to trade? Is it suffering from cultural dissonance between its high-growth model and more conservative European investors?
Let’s peek at the numbers and find out.
The Exchange doubts many folks expected the IPO climate to get so chilly without warning. But we could be in for a Q2 pause in the formerly scorching climate for tech debuts.
A $65 million Series B is remarkable, even by 2021 standards. But the fact that a16z is pouring more capital into the alt-media space is not a surprise.
Substack is a place where publications have bled some well-known talent, shifting the center of gravity in media. Let’s take a look at Substack’s historical growth.
Image Credits: Visual Generation / Getty Images
Robotic process automation came to the fore during the pandemic as companies took steps to digitally transform. When employees couldn’t be in the same office together, it became crucial to cobble together more automated workflows that required fewer people in the loop.
RPA has enabled executives to provide a level of automation that essentially buys them time to update systems to more modern approaches while reducing the large number of mundane manual tasks that are part of every industry’s workflow.
Image Credits: Javier Zayas Photography (opens in a new window) / Getty Images
This year is all about the roll-ups, the aggregation of smaller companies into larger firms, creating a potentially compelling path for equity value. The interest in creating value through e-commerce brands is particularly striking.
Just a year ago, digitally native brands had fallen out of favor with venture capitalists after so many failed to create venture-scale returns. So what’s the roll-up hype about?
Image Credits: TarikVision (opens in a new window) / Getty Images
The cyber world has entered a new era in which attacks are becoming more frequent and happening on a larger scale than ever before. Massive hacks affecting thousands of high-level American companies and agencies have dominated the news recently. Chief among these are the December SolarWinds/FireEye breach and the more recent Microsoft Exchange server breach.
Everyone wants to know: If you’ve been hit with the Exchange breach, what should you do?
Image Credits: David Malan (opens in a new window) / Getty Images
Machine learning has become the foundation of business and growth acceleration because of the incredible pace of change and development in this space.
But for engineering and team leaders without an ML background, this can also feel overwhelming and intimidating.
Here are best practices and must-know components broken down into five practical and easily applicable lessons.
Image Credits: Busakorn Pongparnit / Getty Images
Embedded procurement is the natural evolution of embedded fintech.
In this next wave, businesses will buy things they need through vertical B2B apps, rather than through sales reps, distributors or an individual merchant’s website.
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There’s a persistent fallacy swirling around that any startup growing pain or scaling problem can be solved with business development.
That’s frankly not true.
Image Credits: Bryce Durbin/TechCrunch
I’m a founder of a startup on an E-2 investor visa and just got engaged! My soon-to-be spouse will sponsor me for a green card.
Are there any minimum salary requirements for her to sponsor me? Is there anything I should keep in mind before starting the green card process?
— Betrothed in Belmont
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Many organizations perceive data management as being akin to data governance, where responsibilities are centered around establishing controls and audit procedures, and things are viewed from a defensive lens.
That defensiveness is admittedly justified, particularly given the potential financial and reputational damages caused by data mismanagement and leakage.
Nonetheless, there’s an element of myopia here, and being excessively cautious can prevent organizations from realizing the benefits of data-driven collaboration, particularly when it comes to software and product development.
Image Credits: Jetta Productions Inc (opens in a new window) / Getty Images
Cyber strategy and company strategy are inextricably linked. Consequently, chief information security officers in the C-Suite will be just as common and influential as CFOs in maximizing shareholder value.
Image Credits: Tetra Images (opens in a new window) / Getty Images
Edtech unicorns have boatloads of cash to spend following the capital boost to the sector in 2020. As a result, edtech M&A activity has continued to swell.
The idea of a well-capitalized startup buying competitors to complement its core business is nothing new, but exits in this sector are notable because the money used to buy startups can be seen as an effect of the pandemic’s impact on remote education.
But in the past week, the consolidation environment made a clear statement: Pandemic-proven startups are scooping up talent — and fast.
Image Credits: Orbon Alija (opens in a new window)/ Getty Images
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
Because of similar market conditions, Asian tech giants are directly expanding into Mexico and other LatAm countries.
Image Credits: Steven Puetzer (opens in a new window) / Getty Images
There’s certainly no shortage of SaaS performance metrics leaders focus on, but NRR (net revenue retention) is without question the most underrated metric out there.
NRR is simply total revenue minus any revenue churn plus any revenue expansion from upgrades, cross-sells or upsells. The greater the NRR, the quicker companies can scale.
Image Credits: SOPA Images (opens in a new window) / Getty Images
Even the most experienced and talented game designers from the mobile F2P business usually fail to understand what features matter to Robloxians.
For those just starting their journey in Roblox game development, these are the most common mistakes gaming professionals make on Roblox.
“Lead with love, and the money comes.” It’s one of the cornerstone values at Poshmark. On the latest episode of Extra Crunch Live, Chandra and Chaddha sat down with us and walked us through their original Series A pitch deck.
Image Credits: hopsalka (opens in a new window) / Getty Images
Cities are bustling hubs where people live, work and play. When the pandemic hit, some people fled major metropolitan markets for smaller towns — raising questions about the future validity of cities.
But those who predicted that COVID-19 would destroy major urban communities might want to stop shorting the resilience of these municipalities and start going long on what the post-pandemic future looks like.
Image Credits: Gearstd (opens in a new window) / Getty Images
There’s plenty of uncertainty surrounding copyright issues, fraud and adult content, and legal implications are the crux of the NFT trend.
Whether a court would protect the receipt-holder’s ownership over a given file depends on a variety of factors. All of these concerns mean artists may need to lawyer up.
It’s a reasonable question: Why would anyone pay that much for Cazoo today if Carvana is more profitable and whatnot? Well, growth. That’s the argument anyway.
Cross-border payments startup dLocal has raised $150 million at a $5 billion valuation, less than seven months after securing $200 million at a $1.2 billion valuation.
This means that the five-year-old Uruguayan company has effectively quadrupled its valuation in a matter of months.
Alkeon Capital led the latest round, which also included participation from BOND, D1 Capital Partners, and Tiger Global. General Atlantic led its previous round, which closed last September and made dLocal Uruguay’s first unicorn and one of Latin American’s highest-valued startups.
DLocal connects global enterprise merchants with “billions” of emerging market consumers in 29 countries across Asia-Pacific, the Middle East, Latin America and Africa. More than 325 global merchants, including e-commerce retailers, SaaS companies, online travel providers and marketplaces use dLocal to accept over 600 local payment methods. They also use its platform to issue payments to their contractors, agents, and sellers. Some of dLocal’s customers include Amazon, Booking.com, Dropbox, GoDaddy, MailChimp, Microsoft, Spotify, TripAdvisor, Uber and Zara.
In conjunction with this latest round, dLocal has named Sumita Pandit to the role of COO. Pandit is former global head of fintech and managing director for JP Morgan, who also had experience at Goldman Sachs.
“Sumita is a highly respected and accomplished fintech investment banker, and she’s played a pivotal role advising some of the world’s most successful fintech companies as they’ve scaled to become global leaders,” said dLocal CEO Sebastián Kanovich in a written statement.
Meanwhile, former COO Jacobo Singer has been promoted to president of dLocal.
The company plans to use its new capital to enhance its technology and continue to expand geographically.
Alkeon General Partner Deepak Ravichandran believes that emerging markets represent some of the fastest growth opportunities in digital payments.
“However, as global merchants look to access these markets, they are often faced with a complex web of local payment methods, cross-border regulations, and other operational roadblocks,” he said in a written statement. “dLocal’s unique platform empowers merchants with a single integrated payment solution, to reach billions of customers, accept payments, send payouts, and settle funds globally.”
Mexico has been known as an up-and-coming tech hub and a gateway to the Latin American market. As an investor focused on developer-centered products, open-source startups and infrastructure technology companies with a particular interest in emerging market innovation, I have been wanting to do some firsthand learning there.
So, despite the ongoing pandemic, I took all the necessary precautions and spent roughly seven weeks in Mexico from January to March. I spent most of my time meeting founders to get a handle on what they are building, why they are pursuing those ideas, and how the entire ecosystem is evolving to support their ambitions.
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
One fascinating, though not surprising, observation was how much LatAm entrepreneurs look to Asian tech giants for product inspiration and growth strategies. Companies like Tencent, DiDi and Grab are household names among founders. This makes sense because the market conditions in Mexico and other parts of LatAm resemble China, India and Southeast Asia more than the U.S.
What often happens is entrepreneurs first look to successful startups in the U.S. to emulate and localize. As they find product-market fit, they start to look to Asian tech companies for inspiration while morphing them to suit local needs.
One good example is Rappi, an app that started out as a grocery delivery service. Its future ambition is squarely to become the superapp of LatAm: It is expanding aggressively both geographically and productwise into delivery for restaurant orders, pharmacy and even COVID tests. It’s also introducing new payment, banking and financial-service products. Rappi Pay launched in Mexico just a few weeks ago, while I was still in the country.
Rappi now looks more like Meituan and Grab than any of its U.S. counterparts, and that’s not an accident. SoftBank, whose portfolio contains many of these Asian tech giants, invested heavily in Rappi’s previous two rounds and now has a $5 billion fund dedicated to the LatAm region. The knowledge and experience accumulated from Asian tech in the last 10 years is transferring to like-minded firms like Rappi, right under Silicon Valley’s proverbial nose.
Knowledge transfer is not the only trend flowing in the U.S.-Asia-LatAm nexus. Competition is afoot as well.
Because of similar market conditions, Asian tech giants are directly expanding into Mexico and other LatAm countries. The one I witnessed up close during my visit was DiDi.
DiDi’s foray into LatAm started in January 2018 with its acquisition of 99, a Brazilian ride-sharing company. In April 2018, DiDi entered Mexico with its bread-and-butter ride-sharing service. It wasn’t until April 2019 that DiDi launched its food delivery service, DiDi Food, in Monterrey and Guadalajara — two of the largest cities in Mexico. Its expansion hasn’t slowed down since, with a 10% extra earnings incentive to lure delivery drivers.
Image Credits: Kevin Xu
My Airbnb in Mexico City happened to be two blocks away from the large WeWork building where DiDi’s local office was located. Every day, I saw a long line of people responding to the earning incentives — waiting outside to get hired as DiDi delivery workers.
Meanwhile, the Uber office that’s literally one block away had hardly any foot traffic. As Uber and Rappi fight for more wealthy consumers, DiDi is working to attract lower-income users to grab market share, hoping that one day some of these people will reach the middle class and become profitable customers.