Lilium, the developer of a new, electric, vertical take-off and landing vehicle for a novel flying taxi service, has poached some pretty big former executives from Airbus and Audi as it builds out its technology and gets ready to bring its service to market.
Mirko Reuter, the former head of automated driving at Audi, has come on board as the head of autonomous flight at Lilium. Jakob Waeschenbach, who worked as the head of equipment installation at Airbus, and Rochus Moenter, former vice president of Airbus’ finance and leasing group, have joined Lilium as head of aircraft assembly and general counsel and head of legal, respectively.
Co-founded in 2015 by Daniel Wiegand, Sebastian Born, Patrick Nathen and Matthias Meiner, Lilium’s vision is to create a network for its proprietary vertical take off and landing vehicles that will slash the costs of air travel and can ostensibly take a passenger from Paris to London in about an hour.
Reuter, a longtime head of automated driving at Audi will be responsible for leading and developing the process and technologies necessary to bring autonomous aircraft systems to market, the company said in a statement.
“I am deeply committed to our mission of creating a revolutionary service that enables effective and affordable transportation that is widely used among all sectors of society. At Lilium, we are building a new and revolutionary way of transport, and I am very excited to be a part of it,” said Reuter, in a statement.
Lilium’s bulking up its executive team as it prepares for a rollout of its first vehicles in 2019, according to news reports. In 2017, the company raised $90 million in fresh funding from investors including Tencent; LGT, the international private banking and asset management group; Atomico, Lilium’s Series A backer founded by Skype co-founder Niklas Zennström; and Obvious Ventures, the early-stage VC fund co-founded by Twitter’s Ev Williams.
The funding, and the executive hires, lend credence to Lilium’s business in an increasingly competitive industry (yes, the flying taxi industry is competitive).
German automaker Daimler joined a consortium of investors that backed Volocopter with roughly $28.5 million and the ride-hailing service Uber is working with Brazil’s Embraer and the Slovenian company, Pipistrel, to develop its own flying taxi. Indeed, the airplane manufacturer, Airbus, has its Vahana autonomous flying taxi, which it is hoping to bring to market in the coming years.
Global investment giant KKR is warming up to Southeast Asia after it made a third high-profile investment. The firm — which has nearly $150 billion in assets under management — has cut a SG$200 million (US$144 million) check for PropertyGuru, the region’s largest property listings group.
Founded in 2006, PropertyGuru operates rental and sale listing sites in Singapore, Malaysia, Indonesia and Thailand. Prior to today’s deal (its Series D), its most recent investment came in 2015, when it raised SG$175 million from backers including TPG and Australia’s Square Peg. This new financing takes it to SG$440 million (or around $320 million) thus far. You’d imagine that the deal values PropertyGuru at/above $1 billion — the much-vaunted unicorn milestone — but the company has declined to reveal its valuation at this point.
It isn’t talking about its valuation, but PropertyGuru CEO Hari V. Krishnan did say in a statement, however, that the company is profitable, cash flow positive and seeing revenue grow at 25 percent per year. The firm claims to have a dominant 55 percent market share in the countries it operates in and it is actively working to expand that reach in Southeast Asia, a region of over 600 million consumers which has more internet users than the population of the U.S.
Indeed, in tandem with the funding news, PropertyGuru said it has completed the buyout of Vietnam-based property portal Batdongsan.com.vn, which it claims is the country’s largest property portal with over four million unique visitors per month. The site will join PropertyGuru’s collection of business through the deal, which is undisclosed and follows a strategic investment back in 2016.
Singapore is one of five markets in Southeast Asia where PropertyGuru operates
In a statement, KKR’s head of Southeast Asia, Ashish Shastry, paid tribute to PropertyGuru which he said has “clearly established itself as the Southeast Asian champion in the online property space.”
PropertyGuru is not alone in digitizing real estate, and its rivals in Southeast Asia include iProperty, a business that’s listed on the ASX in Australia and Singapore-based startup 99.co — which counts Facebook co-founder Eduardo Saverin among its backers and had a litigation battle with PropertyGuru. There, of course, plenty of single-market businesses that operate across various Southeast Asian countries.
Naspers announced a $100 million Naspers Foundry fund to support South African tech startups. This is part of a $300 million (1.4 billion rand) commitment by the South African media and investment company to support South Africa’s tech sector overall. Naspers Foundry will launch in 2019.
The initiatives lend more weight to Naspers’ venture activities in Africa as the company has received greater attention for investments off the continent (namely Europe, India and China).
“Naspers Foundry will help talented and ambitious South African technology entrepreneurs to develop and grow their businesses,” said a company release.
“Technology innovation is transforming the world,” said Naspers chief executive Bob van Dijk. “The Naspers Foundry aims to both encourage and back South African entrepreneurs to create businesses which ensure South Africa benefits from this technology innovation.”
After the $100 million earmarked for the Foundry, Naspers will invest ≈ $200 million over the next three years to “the development of its existing technology businesses, including OLX, Takealot, and Mr D Food…” according to a release.
In context, the scale of this announcement is fairly massive for Africa. According to Crunchbase data recently summarized in this TechCrunch feature, the $100 million Naspers Foundry commitment dwarfs any known African corporate venture activity by roughly 95x, when compared to Safaricom’s Spark Venture Fund, Interswitch’s E-Growth Fund, and Standard Bank’s several million dollar commitment to Founder Factory.
Naspers is one of the largest companies in the world—85th by its $108 billion market cap, just after Nike—and one of the world’s largest tech investors.
Aside from operating notable internet, video, and entertainment platforms, the company has made significant investments in the Europe, India, Asia, and South America. In 2018 Naspers invested $775 million in Germany’s Delivery Hero, $124 million in Brazilian e-commerce company Movile, and added $100 million to its funding to Indian food delivery site Swiggy.
The South African media group has invested less in (and been less successful) in Africa, though that comparison comes largely by contrast to Naspers’ robust global activities.
The company recently added to around $70 million to its commitment to South African e-commerce site Takealot. And in perhaps a preview the company was shifting some focus back to Africa, Naspers made one of the largest acquisitions in Africa this September, buying South Africa’s Webuycars for $94 million.
The $300 million commitment to South Africa’s tech ecosystem signals a strong commitment by Naspers to its home market. Naspers wasn’t ready to comment on if or when it could extend this commitment outside of South Africa (TechCrunch did inquire).
If Naspers does increase its startup and ecosystem funding to wider Africa— given its size compared to others—that would be a primo development for the continent’s tech sector.
Snapchat needs a sugar daddy. Its cash reserves dwindling from giant quarterly losses. Poor morale from a battered share price and cost-cutting measures sap momentum. And intense competition from Facebook is preventing rapid growth. With just $1.4 billion in assets remaining at the end of a brutal Q3 2018 and analysts estimating it will lose $1.5 billion in 2019 alone, Snapchat could run out of money well before it’s projected to break even in 2020 or 2021.
So what are Snap’s options?
A long and lonely road
Snap’s big hope is to show a business turnaround story like Twitter, which saw its stock jump 14 percent this week despite losing monthly active users by deepening daily user engagement and producing profits. But without some change that massively increases daily time spent while reducing costs, it could take years for Snap to reach profitability. The company has already laid off 120 employees in March, or 7 percent of its workforce. And 40 percent of the remaining 3,000 employees plan to leave — up 11 percentage points from Q1 2018 according to internal survey data attained by Cheddar’s Alex Heath.
Snapchat is relying on the Project Mushroom engineering overhaul of its Android app to speed up performance, and thereby accelerate user growth and retention. Snap neglected the developing world’s Android market for years as it focused on iPhone-toting US teens. Given Snapchat is all about quick videos, slow load times made it nearly unusable, especially in markets with slower network connections and older phones.
Looking at the competitive landscape, WhatsApp’s Snapchat Stories clone Status has grown to 450 million daily users while Instagram Stories has reached 400 million dailies — much of that coming in the developing world, thereby blocking Snap’s growth abroad as I predicted when Insta Stories launched. Snap actually lost 3 million daily users in Q2 2018. Snap Map hasn’t become ubiquitous, Snap’s Original Shows still aren’t premium enough to drag in tons of new users, Discover is a clickbait-overloaded mess, and Instagram has already copied the best parts of its ephemeral messaging.
SAN FRANCISCO, CA – SEPTEMBER 09: Evan Spiegel of Snapchat attends TechCruch Disrupt SF 2013 at San Francisco Design Center on September 9, 2013 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)
As BTIG’s Rich Greenfield points out, CEO Evan Spiegel claims Snapchat is the fastest way to communicate, but it’s not for text messaging, and the default that chats disappear makes it unreliable of utilitarian chat. And if WhatsApp were to add an ephemeral messaging feature of its own, growth for Snapchat could get even tougher. Snap will have to hope it can hold on to its existing users and squeeze more cash out of them to keep reducing losses.
All those product missteps and and market neglect have metastasized into a serious growth problem for Snapchat. It lost another 2 million users this quarter, and expects to sink further in Q4. Even with the Android rebuild, Spiegel’s assurances for renewed user growth in 2019 seem spurious. That means it’s highly unlikely that Snapchat will achieve Speigel’s goal of hitting profitability in 2019. It needs either an investor or acquirer to come to its aid.
Snap could sell more equity to raise money. $500 million to $1 billion would probably give it the runway necessary to get into the black. But from where? With all the scrutiny on Saudi Arabia, Snap might avoid taking money from the kingdom. Saudi’s Prince Al-Waleed Talal already invested $250 million to buy 2.5 percent of Snap on the open market.
Snap’s best bet might be to take more money from Chinese internet giant Tencent. The massive corporation already spent around $2 billion to buy a 12 percent stake in Snap from the open market. The WeChat owner has plenty of synergies with Snapchat, especially since it runs a massive gaming business and Snap is planning to launch a third-party developer gaming platform.
Tencent could still be a potential acquirer for Snap, but given President Trump’s trade war with China, he might push regulators to block a sale. The state of American social networks like Twitter and Facebook that are under siege by foreign election interference, trolls, and hackers might make the US government understandably concerned about a Chinese giant owning one of the top teen apps.
Regardless of who would invest, they’d likely demand real voting rights — something Snap has denied investors through a governance structure. Spiegel and his co-founder Bobby Murphy both get 10 votes per share. That’s estimated to amount to 89 percent of the voting rights. Shares issued in the IPO came with zero voting rights.
Evan Spiegel and Bobby Murphy, developers of Snapchat (Photo by J. Emilio Flores/Corbis via Getty Images)
But that surely wouldn’t sit well with any investor willing to pour hundreds of millions of dollars into the beleaguered company. Spiegel has taken responsibility for pushing the disastrous redesign early this year that coincided with a significant drop in its download rank. It also inspired a tweet from mega-celebrity Kylie Jenner bashing the app that shaved $1.3 billion off the company’s market cap.
Between the redesign flop, stagnant product innovation, and Spiegel laughing off Facebook’s competition only to be crushed by it, the CEO no longer has the sterling reputation that allowed him to secure total voting control for the co-founders. That means investors will want assurance that if they inject a ton of cash, they’ll have some recourse if Spiegel mismanages it. He may need to swallow his pride, issue voting shares, and commit to milestones he’s required to hit to retain his role as chief executive.
A Soft Landing Somewhere Else
Snap could alternatively surrender as an independent company and be acquired by a deep-pocketed tech giant. Without having to worry about finances or short-term goals, Snap could invest in improving its features and app performance for the long-term. Social networks are tough to kill entirely, so despite competition, Snap could become lucrative if aided through this rough spot.
Combine that with the $637 million bonus Spiegel got for taking Snap public, and he has little financial incentive or shareholder pressure compelling him to sell. Even if the company was bleeding out much worse than it is already, Spiegel could ride it into the ground.
Again, the biggest barrier to this path is Spiegel. Combine totalitarian voting control with the $637 million bonus Spiegel got for taking Snap public, and he has little financial incentive or shareholder pressure compelling him to sell. Even if the company was bleeding out much worse than it is already, Spiegel could ride it into the ground. The only way to get a deal done might be to make Spiegel perceive it as a win.
Selling to Disney could be spun as a such. It hasn’t really figured out mobile amidst distraction from super heroes and Star Wars. Its core tween audience are addicted to YouTube and Snap even if they shouldn’t be on them. They’re both LA companies. And Disney already ponied up $350 million to buy kids desktop social networking game Club Penguin. Becoming head of mobile or something like that for the most iconic entertainment company ever could a vaulted-enough position to entice Spiegel. I could see him being a Disney CEO candidate one day.
What about walking in the footsteps of Steve Jobs? Apple isn’t social. It failed so badly with efforts like its Ping music listeners network that it’s basically abdicated the whole market. iMessage and its cutesy Animoji are its only stakes. Meanwhile, it’s getting tougher and tougher to differentiate with mobile hardware. Each new iPhone seems closer to the last. Apple has resorted to questionable decisions like ditching the oft-missed headphone jack and reliable TouchID to keep the industrial design in flux.
Increasingly, Apple must rely on its iOS software to compete for customers with Android headsets. But you know who’s great at making interesting software? Snapchat. You know who has a great relationship with the next generation of phone owners? Snapchat. And do you know whose CEO could probably smile earnestly beside Tim Cook announcing a brighter future for social media unlocked by two privacy-focused companies joining forces? Snapchat. Plus, think of all the fun Snapple jokes?
There’s a chance to take revenge on Facebook if Snapchat wanted to team up with Mark Zuckerberg’s old arch nemesis Google . After Zuck declared “Carthage must be destroyed”, Google+ flopped and its messaging apps became a fragmented mess. Alphabet has since leaned away from social networking. Of course it still has the juggernaut that is YouTube — a perennial teen favorite alongside Snapchat and Instagram. And it’s got the perfect complement to Snap’s ephemerality in the form of Google Photos, the best-in-class permanent photo archiving tool. With the consume side of Google+ shutting down after accidentally exposing user data, Google still lacks a traditional social network where being a friend comes before being a fan.
What Google does have is a reputation for delivering the future. From Waymo’s self-driving cars to Calico’s plan to make you live forever, Google is an inventive place where big ideas come to fruition. Spiegel could frame Google as aligned with its philosophy of creating new ways to organize and consume information that adapt to human behavior. He surely wouldn’t mind being lumped in with Internet visionaries like Larry Page and Sergei Brin. Google’s Android expertise could reinvigorate Snap in emerging markets. And together they could take a stronger swing at Facebook.
But there are problems with all of these options. Buying Snap would be a massive bet for Disney, and Snap’s lingering bad rap as a sexting app might dissuade Mickey Mouse’s overlords. Apple rarely buys such late-stage public companies. CEO Tim Cook has been able to take the moral high ground because Apple makes its money from hardware rather than off of personal info through ad targeting. If Apple owned Snap, it’d be in the data exploitation business just like everyone else.
And Google’s existing dominance in software might draw the attention of regulators. The prevailing sentiment is that it was a massive mistake to let Facebook acquire Instagram and WhatsApp, as it centralized power and created a social empire. With Google already owning YouTube, the government might see problems with it buying one of the other most popular teen apps.
That’s why I think Netflix could be a great acquirer for Snap. They’re both video entertainment companies at the vanguard of cultural relevance, yet have no overlap in products. Netflix already showed its appreciation for Snapchat’s innovation by adopting a Stories-like vertical video clip format for discovering and previewing what you could watch. The two could partner to promote Netflix Originals and subscriptions inside of Snapchat. Netflix could teach Snap how to win at exclusive content while gaining a place to distribute video that’s under 20 minutes long.
With a $130 billion market cap, Netflix could certainly afford it. Though since Netflix already has $6 billion in debt from financing Originals, it would have to either sell more debt or issue Netflix shares to Snapchat’s owners. But given Netflix’s high-flying performance, massive market share, and cultural primacy, the big question is whether Snap would drag it down.
So how much would it potentially cost? Snap’s market cap is hovering around $8.8 billion with a $6.28 share price. That’s around its all-time low and just over a quarter of its IPO pop share price high. Acquiring Snap would surely require paying a premium above the market cap. Remember, Google already reportedly offered to acquire Snap for $30 billion prior to its final funding round and IPO. But that was before Snap’s growth rate sunk and it started losing the Stories War to Facebook. A much smaller offer could look a lot prettier now.
Social networks are hard to kill. If Snap can cut costs, fix its product, improve revenue per users, and score some outside investment, it could survive and slowly climb. If Twitter is any indication, aging social networks can reflower into lucrative businesses given enough time and product care. But if Snapchat wants to play in the big leagues and continue having a major influence on the mobile future, it may have to snap out of the idea that it can win on its own.
It’s been 20 years since Epic Games first released its Unreal game development engine in concert with its first person shooter, Unreal. Since then, the company has been releasing free-to-play games as a loss leader to show off what its powerful development toolkit can do.
Now, with the insane success of Fortnite, the company has flipped the script.
Since Fortnite became the thing that nearly every gamer in the world plays, the company has slashed prices on the Unreal game engine even as it keeps upgrading the technology.
And the company has been plowing that cash back into the community to support esports tournaments with a $100 million prize pool to support competitive Fortnite gamers.
The company’s game has become the kind of old-school cultural phenomenon that one rarely sees in the fractured age of internet silos. It’s inspired dance crazes, Halloween costumes, and even a Monopoly game and a Nerf gun.
And now it appears that the game has also inspired some of the biggest names in Silicon Valley’s venture capital investment scene to commit huge sums to continue its success.
The new investors are joining Tencent, Disney, and Endeavor as minority shareholders in the company — which amazingly still is controlled by its chief executive and founder, Tim Sweeney.
“Epic Games has fundamentally changed the model for interactive entertainment under the company’s visionary leadership,” said Ted Oberwager of KKR, in a statement.
Bullet Messenger, a fast-rising Chinese messaging upstart that’s gunning to take on local behemoth, WeChat, has been pulled from the iOS App Store owing to what its owners couch as a copyright complaint.
Reuters reported the development earlier, saying Bullet’s owner, Beijing-based Kuairu Technology, claimed in a social media posting that the app had been taken down from Apple’s app store because of a complaint related to image content provided by a partner.
“We are verifying the situation with the partner and will inform you as soon as possible when download capabilities are resumed,” it said in a statement on its official Weibo account.
The company did not specify which part of the app has been subject to a complaint.
We’ve reached out to Apple to ask if it can provide any more details.
According to checks by Reuters earlier today, the Bullet Messenger app was still available on China’s top Android app stores — including stores owned by WeChat owner Tencent, as well as Baidu and Xiaomi stores — which the news agency suggests makes it less likely the app has been pulled from iOS as a result of censorship by the state, saying apps targeted by regulators generally disappear from local app stores too.
Bullet Messenger only launched in August but quickly racked up four million users in just over a week, and also snagged $22M in funding.
By September it had claimed seven million users, and Chinese smartphone maker Smartisan — an investor in Bullet — said it planned to spend 1 billion yuan (~$146M) over the next six months in a bid to reach 100M users. Though in a battle with a competitive Goliath like WeChat (1BN+ active users) that would still be a relative minnow.
The upstart messenger has grabbed attention with its fast growth, apparently attracting users via its relatively minimal messaging interface and a feature that enables speech-to-text transcription text in real time.
Albeit the app has also raised eyebrows for allowing pornographic content to be passed around.
It’s possible that element of the app caught the attention of Chinese authorities which have been cracking down on Internet porn in recent years — even including non-visual content (such as ASMR) which local regulators have also judged to be obscene.
Although it’s equally possible Apple itself is responding to a porn complaint about Bullet’s iOS app.
Earlier this year the Telegram messaging app fell foul of the App Store rules and was temporarily pulled, as a result of what its founder described as “inappropriate content”.
Apple’s developer guidelines for iOS apps include a section on safety that proscribes “upsetting or offensive content” — including frowning on: “Apps with user-generated content or services that end up being used primarily for pornographic content.”
In Telegram’s case, the App Store banishment was soon resolved.
There’s nothing currently to suggest that Bullet’s app won’t also soon be restored.
Nubank, the Brazilian financial services company, has raised $180 million from the Chinese internet giant, Tencent.
Tencent has long been interested in financial services startups, and with its $90 million direct investment and another $90 million investment in the secondary market, the company now has access to what is arguably the largest digital banking company in the world.
With the $4 billion valuation, it also makes Nubank one of the most highly valued privately held startups in Latin America.
News of the investment was first reported by The Information, which included the $4 billion figure.
For Nubank co-founders David Velez and Cristina Junqueira, the investment from Tencent means the addition of a strategic partner whose financial services products and transaction platform is unmatched by anything in Western Europe or the U.S.
Velez stressed that Nubank, which had raised $150 million in a February financing round led by DST, did not need the additional capital. “We found so much value in partnering with Tencent,” Velez said. “Particularly everything there is to learn about the Chinese financial market.”
Velez hopes to take those lessons and apply them back to the market in Brazil. China is in the forefront of financial services globally because of its technology companies’ ability to offer multi-product platforms. “They have built the playbook of how to use mobile.”
Through the investment, Tencent will gain an understanding of how Nubank has managed to service 5 million credit card holders, and the game plan the company is deploying to develop its own savings accounts and other banking services.
“Over 20 million people have applied for the card,” said Velez. “There are active, engaged, customers that want to get everything from us.”
Junqueira estimates the company will soon be able to serve tens of millions of Brazilians with either a savings account, a checking account or credit.
The opportunity could be even bigger as Brazil’s central bank investigates the possibility of instant payments as well, looking to India’s experiment with demonetization as an example.
Both Junqueira and Velez said the opportunity for financial services startups to achieve significant scale was far higher in emerging markets like Brazil than in developed markets, because the barriers to banking are so much higher.
Financial services, Velez said, has been controlled by massive oligopolies that have erected unfair obstacles to wealth creation for the masses. Nubank and other companies like it are working to change that.
Now the company has the benefit of Tencent’s guidance as it continues to push the envelope.
China’s internet battle is rapidly reproducing itself in Southeast Asia. One new hotspot is the Philippines, where Tencent just agreed to invest in Voyager, a fintech business started by telecom firm PLDT.
The deal would bring Tencent into direct competition with arch-rival Alibaba, which entered the Philippines 18 months ago when its fintech affiliate Ant Financial invested in Mynt, a financial venture from Globe Telecom which is a competitor to Voyager.
Following a week of speculation, PLDT announced a deal today that sees Tencent and KKR pay up to $175 million for a minority stake in the Voyager business. There have been reports that PLDT is looking to sell its majority stake, for now that has been retained but the firm did say that it has options to add other investors via the creation of new shares that would reduce its total holdings to less than 50 percent. Still, it plans to retain its position as the largest shareholder whilst bringing in expertise and more capital for growth.
Fintech is rapidly becoming a key focus for startups and larger tech companies in Southeast Asia, where the internet and mobile phone ownership promises to increase digital inclusion and give the region’s collective population of more than 600 million people new ways to save and spend. Microloan startups have raised significant funds from investors this year — Philippines based SME lender First Circle just closed a $26 million investment this week, for example — and the bigger fish in the pond are eying key infrastructure plays such as mobile wallets and payment systems.
That’s where both Voyager and Mynt come into the picture.
Voyager offers a range of digital services which include a prepaid wallet, digital payment option for retails, a remittance network for sending money, a digital lending service and a loyalty and rewards program. Mynt is similar, offering payment, remittance and loans for consumers and businesses.
The Voyager deal is the biggest investment in a Philippines-based startup — though you can debate whether a telco spinout is really a “startup” — and it only goes to reiterate increased attention Southeast Asia is seeing from China, and how fintech is becoming one of the hottest verticals.
The Philippines is a particularly hot market for fintech for a number of reasons. The country’s large overseas worker base makes it the world’s third-largest remittance market — worth an estimated $28 billion — despite a sharp drop this year. While, as we wrote when covering First Circle’s news this week, SMEs account for 99.6 percent of the country’s business, 65 percent of its workforce and 35 percent of national GDP but there’s few credit options or limited data for assessment.
Fintech is seen as a key driver that enable Southeast Asia to massively increase its digital footprint and reap economic benefits. More broadly, the region’s internet economy to tipped to grow from $49.5 billion in 2017 to over $200 billion by 2025, according to a report from Google and Singapore sovereign fund Temasek.
Nigerian digital payments startup Paga is gearing up for international expansion with a $10 million round led by the Global Innovation Fund.
The company is exploring the release of its payments product in Ethiopia, Mexico, and the Philippines—CEO Tayo Oviosu told TechCrunch.
Paga looks to go head to head with regional and global payment players, such as PayPal, Alipay, and Safaricom according to Oviosu.
“We are not only in a position to compete with them, we’re going beyond them,” he said of Kenya’s MPesa mobile money product. “Our goal is to build a global payment ecosystem across many emerging markets.”
Launched in 2012, Paga has created a multi-channel network and platform to transfer money, pay bills, and buy things digitally 9 million customers in Nigeria—including 6000 businesses.
Since inception, the startup has processed 57 million transactions worth $3.6 billion, according to Oviosu. He joined Cellulant CEO Ken Njoroge and Helios Investment Partners’ Fope Adelowo at Disrupt San Francisco to discuss fintech and Africa’s tech ecosystem.
The new round takes Jumo to $90 million raised from investors and also saw participation from existing backers that include Proparco — which is attached to the French Development Agency — Finnfund, Vostok Emerging Finance, Gemcorp Capital, and LeapFrog Investments.
Launched in 2014, Jumo specializes in social impact financial products. That means loans and saving options for those who sit outside of the existing banking system, and particularly small businesses.
To date, it claims to have helped nine million consumers across its six markets in Africa and originated over $700 million in loans. The company, which has some 350 staff across 10 offices in Africa, Europe and Asia, was part of Google’s Launchpad accelerator last year. Jumo is led by CEO Andrew Watkins-Ball, who has close to two decades in finance and investing.
Lagos based Paystack raised an $8 million Series A round led by Stripe.
In Nigeria the company’s payment API integrates with tens of thousands of businesses, and in two years it has grown to process 15 percent of all online payments.
In 2016, Paystack became the first startup from Nigeria to enter Y Combinator, and the incubator is doing some follow-on investing in this round.
Other strategic investors in this Series A include Visa and the Chinese online giant Tencent, parent of WeChat and a plethora of other services. Tencent also invested in Paystack’s previous round: the startup has raised $10 million to date.
Paystack integrates a wide range of payment options (wire transfers, cards, and mobile) that Nigerians (and soon, those in other countries in Africa) use both to accept and make payments. There’s more about the company’s platform and strategy in this TechCrunch feature.
South African startup Yoco raised $16 million in a new round of funding to expand its payment management and audit services for small and medium-sized businesses as it angles to become one of Africa’s billion-dollar businesses.
To get there the company that “builds tools and services to help SMEs get paid and manage their business” plans to tap $20 billion in commercial activity that the company’s co-founder and chief executive, Katlego Maphai estimates is waiting to move from cash payments to digital offerings.
Yoco offers a point of sale card reader that links to its proprietary payment and performance software at an entry cost of just over $100.
With this kit, cash-based businesses can start accepting cards and tracking metrics such as top-selling products, peak sales periods, and inventory flows.
Yoco has positioned itself as a missing link to “solving an access problem” for SMEs. Though South Africa has POS and business enterprise providers — and relatively high card (75 percent) and mobile penetration (68 percent) — the company estimates only 7 percent of South African businesses accept cards.
Yoco says it is already processing $280 million in annualized payment volume for just under 30,000 businesses.
The startup generates revenue through margins on hardware and software sales and fees of 2.95 percent per transaction on its POS devices.
Yoco will use the $16 million round on product and platform development, growing its distribution channels, and acquiring new talent.
Emerging markets credit startup Mines.io closed a $13 million Series A round led by The Rise Fund, and looks to expand in South America and Asia.
Mines provides business to consumer (B2C) “credit-as-a-service” products to large firms.
“We’re a technology company that facilitates local institutions — banks, mobile operators, retailers — to offer credit to their customers,” Mines CEO and co-founder Ekechi Nwokah told TechCrunch.
Most of Mines’ partnerships entail white-label lending products offered on mobile phones, including non-smart USSD devices.
With offices in San Mateo and Lagos, Mines uses big-data (extracted primarily from mobile users) and proprietary risk algorithms “to enable lending decisions,” Nwokah explained.
Mines started operations in Nigeria and counts payment processor Interswitch and mobile operator Airtel as current partners. In addition to talent acquisition, the startup plans to use the Series A to expand its credit-as-a-service products into new markets in South America and Southeast Asia “in the next few months,” according to its CEO.
Nwokah wouldn’t name specific countries for the startup’s pending South America and Southeast Asia expansion, but believes “this technology is scalable across geographies.”
As part of the Series A, Yemi Lalude from TPG Growth (founder of The Rise Fund) will join Mines’ board of directors.
Digital infrastructure company Liquid Telecom is betting big on African startups by rolling out multiple sponsorships and free internet across key access points to the continent’s tech entrepreneurs.
The Econet Wireless subsidiary is also partnering with local and global players like Afrilabs and Microsoft to create a cross-border commercial network for the continent’s startup community.
“We believe startups will be key employers in Africa’s future economy. They’re also our future customers,” Liquid Telecom’s Head of Innovation Partnerships Oswald Jumira told TechCrunch.
With 13 offices on the continent, Liquid Telecom’s core business is building the infrastructure for all things digital in Africa.
The company provides voice, high-speed internet, and IP services at the carrier, enterprise, and retail level across Eastern, Central, and Southern Africa. It operates data centers in Nairobi and Johannesburg with 6,800 square meters of rack space.
Liquid Telecom has built a 50,000 kilometer fiber network, from Cape Town to Nairobi and this year switched on the Cape to Cairo initiative—a land-based fiber link from South Africa to Egypt.
Though startups don’t provide an immediate revenue windfall, the company is betting they will as future enterprise clients.
“Step one…in supporting startups has been….supporting co-working spaces and events with sponsorships and free internet,” Liquid Telecom CTO Ben Roberts told TechCrunch. “Step two is helping startups to adopt…business services.”
Liquid Telecom provides free internet to 30 hubs in seven countries and is active sponsoring startup related events.
On the infrastructure side, it’s developing commercial services for startups to plug into.
“At the early stage and middle stage, we’re offering startups connectivity, skills development, and access to capital through the hubs,” said Liquid Telecom’s Oswald Jumira.
“When they reach the more mature level, we’re focused on how we can scale them up…and be a go to market partner for them. To do that they’ll need to leverage…cloud services.”
Microsoft and Liquid Telecom announced a partnership in 2017 to offer cloud services such as Microsoft’s Azure, Dynamics 365, and Office 365 to select startups through free credits—and connected to comp packages of Liquid Telecom product offerings.
On the venture side, Liquid Telecom doesn’t have a fund but that could be in the cards.
“We haven’t yet started investing in startups, but I’d like to see that we do,” said chief technology officer Ben Roberts. “That can be the next move onwards… from having successful business partnerships.”
And finally, tickets are now available here for Startup Battlefield Africa in Lagos this December. The first two speakers were also announced, TLcom Capital senior partner and former minister of communication technology for Nigeria Omobola Johnson and Singularity Investment’s Lexi Novitske will discuss keys to investing across Africa’s startup landscape.
This year has seen a number of tech companies that are majority or substantially owned by Chinese giant going public in the U.S. Baidu’s iQiyi service, Xiaomi-backed Huami and Viomi are a few examples, and now Tencent Music — the music division of Tencent, as you can guess — is making its run after plenty of speculation.
Hardly a startup, TME is a spunout subsidiary that houses four Tencent music streaming services, Q Music, Kugou Music, Kuwo Music and WeSing. Those include orthodox streaming services, karaoke apps and live-streaming services. They are generally recognized to be China’s top four music apps and together they claim over 800 million monthly users.
Unlike Apple Music, Spotify or Pandora, TME is a profitable business, but its gross revenue and the way it makes money is quite different to its Western brethren. Spotify and co rely on subscriptions and ad-supported free tiers, Tencent Music draws the majority of its revenue from social activities, advertising and song sales.
Tencent Music’s 2017 revenue was $1.7 billion (RMB 11 billion) with a $199 million (RMB 1.3 billion) profit. Already the first half of 2018 has seen it clock $1.3 billion (RMB 8.6 billion) in revenue with a $263 million (RMB 1.7 billion) profit. Subscriptions accounted for just 30 percent of those sales, with the remainder gathered from virtual gifts that are sent to live streamers and premium memberships.
A large part of that success is its connection to Tencent services — in particularly WeChat, which counts one billion users, and QQ but also Tencent Video — which give Tencent Music’s services an avenue to reach users and spread across friend graphs and networks. That’s helped keep marketing expenses down and ultimately make the company profitable. Tencent Music’s cost of revenue is 60 percent, versus nearly 75-85 percent for Spotify which has to do a lot more work to bring users in.
Interestingly, Tencent Music notes in its prospectus that it expects revenue from subscriptions to increase over time.
“We had a paying ratio of 3.6 percent in the second quarter of 2018, which is still very low compared to the paying ratios of online games and video services in China and other online music services globally as quoted by iResearch, which indicates significant growth potential,” the company wrote.
That’s not a given though when you consider how rife privacy is in China. Those in the industry claim it is changing, it’s in their own interests to say that, but it is unclear whether the alternative ‘social’ monetization models that Tencent Music taps cannibalize potential subscription-based revenue.
Either way, the company might be able to learn from the West, too. Spotify holds a 9.1 percent stake in the business courtesy of a share swap last year — Tencent owns 7.5 percent of Spotify — which could yet lead to synergies between both sides, although Spotify competes with Tencent-owned Joox (not part of TME) in markets like Southeast Asia.
For now, the main takeaway is that Tencent Music is China’s top streaming dog and it is leaning on WeChat, the country’s dominant messaging platform. That bodes well, but, as repeated numerous times in its prospectus, monetizing music is still a new concept in China so there are few parallels to look at for guidance.
Still, this is a rare example of Chinese tech IPO that isn’t hemorrhaging cash — for example, Nio — which, coupled with the Tencent connection, is likely to make it a popular one.
Chinese internet giant Tencent is reorganizing its business to place more emphasis on enterprise as it prepares for the future of technology and looks to alleviate the pressure on its under-fire consumer business.
Gaming is where the firm is strongest — Honour of Kings over 200 million monthly players and is one of the top-grossing games ever, while Tencent has stakes in current blockbusters Fornite and PUBG — but a change in government regulation has prevented any new titles being released in China for months. Titles already in the market have also been affected. Under pressure from the government, Tencent was forced to acknowledge that some gamers are addicted and it has introduced systems to combat that — which now include a facial recognition pilot.
This structural change seems to be targeted at helping Tencent grow revenue beyond the consumer space, where it has seen tremendous success with WeChat, China’s top messaging app, perhaps its most successful product.
The change will see Tencent retain four units — ‘Corporate & Development,’ ‘Interactive Entertainment,’ ‘Technology Engineering’ and ‘Weixin’ (its WeChat business) — but add two new ones. Those will include ‘Platform & Content’ which will unite its digital services beyond WeChat, that includes its social networks, online media and content divisions.
The other new addition is ‘Cloud & Smart Industries,’ as the name implies that caters to cloud services, maps, security and other enterprise-led initiatives from the company. In addition, the firm’s advertising operations will be united in a single division which will sit under the corporate and development department.
Finally, Tencent is also putting a renewed focus on upcoming technology with a newly created ‘Technology Committee’ that’ll be tasked with looking at “cutting-edge technologies,” including AI, robotics, quantum research and more.
Chairman and CEO Pony Ma said in a statement that the changes mark “a new beginning” that’ll prepare Tencent for the next 20 years of operations:
It is a very important strategic upgrade as we step into the second stage of the Internet, the Industrial Internet era. In the first stage, we connected users to high quality services. In the second stage, we aspire to enable our partners in different industries to better connect with consumers via an expanding, open and connected ecosystem. As an Internet-based company focused on innovation, communications, and content, Tencent views technology as our core infrastructure. With the emergence of AI and 5G, we will use technology as our innovation engine, and to explore new connections between social networks and content. We need to not only focus on our existing businesses, but even more so seek to position ourselves for the long-term future. Together with this strategic upgrade, we will reinforce our investment in cutting-edge technologies.
In the two years since Indian social media app ShareChat raised $4 million in funding from Lightspeed Ventures the converging trends of increasing smartphone use, wireless internet connectivity, and cashless banking have combined to create a new social media juggernaut.
Now Lightspeed has confirmed that the company has raised an additional $100 million in financing at roughly a half billion dollar valuation alongside investment partners including India Quotient, Jesmond Holdings, Morningside, SAIF Partners, Shunwei Ventures, Venture Highway and Xiaomi.
In the years since that first Lightspeed investment, ShareChat has gone from a company with 1 million monthly active users to 25 million monthly active users — and while the company lags behind the messaging giant WhatsApp (whose app is used by more than 200 million people in India) its growth in India is remarkable.
“ShareChat is really looking to tap into the next billion users in India,” says Ravi Mhatre, a partner at Lightspeed, whose investment dollars helped architect the ShareChat rise.
What’s giving this startup the ability to connect to those next billion users is one strategy of a 9-year-old plan to develop what’s been called the “India Stack” — an entirely new digital infrastructure for a country with a population of 1.32 billion spread across an area of nearly 1.3 million square miles.
The push began in 2009 with the launch of Aadhaar, India’s (recently amended) national biometric recording scheme. Seven years later it took a huge leap forward with the implementation of the nation’s massive demonetization plan and the near-simultaneous rollout of a 4G high speed mobile network across the country.
While the demonetization strategy ate into growth rates across the country, and likely didn’t reduce the amount of money in circulation, according to Indian financial publication LiveMint, the 4G rollout was a huge success.
Since Jio, the telecommunications arm of the giant industrial conglomerate Reliance Group, launched its 4G service in September 2016, adoption rates across the country have skyrocketed.
According to a report from the telecommunications analysis firm, OpenSignal, Jio’s contribution to networking India has been massive.
During the quarter ending June 2017, total data usage stood at over 4.2 million terabytes, out of which 4G data accounted for 3.9 million TBs, according to TRAI. The growth is most visible when checking the numbers from a year ago, when 4G data usage stood at a mere 8,050 TBs; that’s a 500-fold increase… [And] LTE availability in India is remarkable: users were able to connect to an LTE signal over 84% of the time, a rise of over 10 percentage points from a year earlier. This places India ahead of more established countries in the 4G landscape such as Sweden, Taiwan, Switzerland or the U.K.
Disrupt telco Reliance Jio laid the foundation for India’s phone owners to switch to using mobile data packages (Photo by Arun Sharma/Hindustan Times via Getty Images)
For a startup like ShareChat that means tens of millions of daily active users, according to Mhatre.
Those users are drawn to ShareChat’s broadcast chat feature, which allows users on mobile phones to broadcast conversations and commentary about any topic they wish. “It’s a platform where content that is relevant to you is surfaced to you and you engage with it,” Mhatre says.
The company was founded by three Bangalore-based developers. Farid Ahsan, 26, Ankush Sachdeva, 25, and Bhanu Pratap Singh, also 26 — all graduates from India’s famous IIT Kanpur University — had worked up 17 different prototypes for a product before they finally settled on the version that would become ShareChat.
The company’s founders are also taking a page from the popular Chinese app WeChat and hope to turn their broadcast chat service into a platform for micropayments, education, and other types of entertainment.
What started as a niche site for people to communicate in their local dialects could now become the first true domestic social media giant in India.
There are other Chinese corollaries to ShareChat’s business that may be informative. Toutiao, the news aggregation service owned by Bytedance, is perhaps the closest in kind to ShareChat at the moment, but even that is only accurate to a point.
China’s infrastructure is still somewhat based on personal computers and landlines, whereas India’s is wholly mobile-first. For Mhatre, it’s the first country to make the leap to a digital economy based entirely on mobile computing.
At Lightspeed the opportunity that presents is similar to the mid-90s birth of the Internet in the U.S. and the late 2000 technology boom that created billions of dollars in value for companies like Alibaba, Baidu, and Tencent.
ShareChat is built to support India’s plethora of local languages, as opposed to English-first services like WhatsApp
What makes this feat even more impressive was that until two or three years ago, it looked like India wouldn’t be living up to the expectations that had been set for it and emerging market countries like Russia and Brazil that comprise three-fourths of the BRICs that were supposed to be the foundational building blocks of the 21st century global economy.
“If you look at China — the GDP in China is $12 to $13 trillion… India is about $2.5 trillion [but] infrastructure got developed there earlier than in India,” Mhatre said. India is at the same inflection point now, where the infrastructure boom is contributing to the development of new business models.
The constraints of that infrastructure have also informed the business ShareChat has built as well. Because while digital penetration rates in the country are high, the download speeds are exceptionally low (due in part to overwhelming demand).
While LTE availability saw a meteoric rise, the same cannot be said of 4G speeds. In our latest State of LTE report, India occupied the lowest spot among the 77 countries we examined, with average download speeds of 6.1 Mbps, over 10 Mbps lower than the global average.
ShareChat’s focus on messaging and sharing data light images is a platform that’s suited to the current strengths and limitations of India’s infrastructure. “You have half a billion people with a high speed internet terminal in their hand and they want to do things with it,” Mhatre said. And ShareChat isn’t just localized in its tech stack. The company also is localized by language.
As the investors at Lightspeed noted in their thoughts on the deal.
The “next billion” users in India speak 22 different languages and are spread out over an area the size of Europe. ShareChat’s foundersAnkush,Bhanu andFarid blew us away with their insight into this new user base. Their first brush with this user base came in 2015 when they noticed that sharing of photos, videos, poetry, jokes and even good morning messages was at epidemic levels on WhatsApp. Yet there was no easy one-stop shop for finding this content. ShareChat was born to solve this problem. As they developed the idea, they also saw that this audience hungered for connection and content about their cities and villages of origin. They noticed emergent behavior around users wanting to “look cool” to their friends by finding the best content, solving for loneliness by finding friends in their own language, and even wanting to drive fame and celebrity in their own geographies.
Again, the biggest barrier to this path is Spiegel. Combine totalitarian voting control with the 
Increasingly, Apple must rely on its iOS software to compete for customers with Android headsets. But you know who’s great at making interesting software? Snapchat. You know who has a great relationship with the next generation of phone owners? Snapchat. And do you know whose CEO could probably smile earnestly beside Tim Cook announcing a brighter future for social media unlocked by two privacy-focused companies joining forces? Snapchat. Plus, think of all the fun Snapple jokes?
South African startup 
