01 Oct

Zuckerberg misunderstands the huge threat of TikTok

“It’s almost like the Explore Tab that we have on Instagram” said Facebook CEO Mark Zuckerberg in leaked audio of him describing TikTok during an all-hands meeting. But it’s not. TikTok represents a new form of social entertainment that’s vastly different from the lifelogging of Instagram where you can just take a selfie, show something pretty, or pan around what you’re up to. TikToks are premeditated, storyboarded, and vastly different than the haphazard Stories on Insta.

That’s why Zuckerberg’s comments cast a dark shadow over the future of the Facebook family of apps. How can it beat what it doesn’t understand? He certainly can’t ignore it. Facebook’s copycat Lasso has been installed just 425,000 times since it launched in November, while TikTok has 640 million installs in the same period outside of China. Oh, and TikTok has 1.4 billion total installs beyond China to date.

TikTok Screenshots

TikTok

Casey Newton of The Verge today published two hours of audio and transcripts from two internal-only all-hands Q&As held by Zuckerberg at Facebook in July. His comments touch on the company’s plan to fight being broken up by regulators, especially if Elizabeth Warren becomes President. He thinks Facebook would win, but on resorting to suing the government, he says “does that still suck for us? Yeah.” Zuckerberg also describes how Facebook is working to launch a payments product in Mexico and elsewhere by year’s end as Libra deals with regulatory scrutiny.

But beyond his comments on regulation, it’s his pigeonholing of TikTok that’s most alarming. It foreshadows Facebook failing to win one of the core social feeds that its business depends on. Perhaps his perspective on the competitor is evolving, but the leak portrays him as thinking TikTok is just the next Snapchat Stories to destroy.

Zuckeberg’s Thoughts On TikTok

Here’s what Zuckerberg said about TikTok during the internal Q&A sessions, (emphasis mine):

So yeah. I mean, TikTok is doing well. One of the things that’s especially notable about TikTok is, for a while, the internet landscape was kind of a bunch of internet companies that were primarily American companies. And then there was this parallel universe of Chinese companies that pretty much only were offering their services in China. And we had Tencent who was trying to spread some of their services into Southeast Asia. Alibaba has spread a bunch of their payment services to Southeast Asia. Broadly, in terms of global expansion, that had been pretty limited, and TikTok, which is built by this company Beijing ByteDance, is really the first consumer internet product built by one of the Chinese tech giants that is doing quite well around the world. It’s starting to do well in the US, especially with young folks. It’s growing really quickly in India. I think it’s past Instagram now in India in terms of scale. So yeah, it’s a very interesting phenomenon.

And the way that we kind of think about it is: it’s married short-form, immersive video with browse. So it’s almost like the Explore Tab that we have on Instagram, which is today primarily about feed posts and highlighting different feed posts. I kind of think about TikTok as if it were Explore for stories, and that were the whole app. And then you had creators who were specifically working on making that stuff. So we have a number of approaches that we’re going to take towards this, and we have a product called Lasso that’s a standalone app that we’re working on, trying to get product-market fit in countries like Mexico, is I think one of the first initial ones. We’re trying to first see if we can get it to work in countries where TikTok is not already big before we go and compete with TikTok in countries where they are big.

We’re taking a number of approaches with Instagram, including making it so that Explore is more focused on stories, which is increasingly becoming the primary way that people consume content on Instagram, as well as a couple of other things there. But yeah, I think that it’s not only one of the more interesting new phenomena and products that are growing. But in terms of the geopolitical implications of what they’re doing, I think it is quite interesting. I think we have time to learn and understand and get ahead of the trend. It is growing, but they’re spending a huge amount of money promoting it. What we’ve found is that their retention is actually not that strong after they stop advertising. So the space is still fairly nascent, and there’s time for us to kind of figure out what we want to do here. But I think this is a real thing. It’s good.

To Zuckerberg’s credit, he’s not dismissing the threat. He knows TikTok is popular. He knows it’s growing in key international markets Facebook and Instagram depend on to keep user counts rising. And he knows his company needs to respond via its standalone clone Lasso and more.

Facebook Lasso Screenshots

Lasso

But while TikToks might look like Stories because they’re vertical videos, and TikTok might algorithmically recommend them to people like Instagram Explore, it’s a whole ‘nother beast of a product and one that may be harder than it seems to copy.

To crystallize why, let’s rewind to Snapchat. With the launch of Stories, it started to blow up with US teens. Facebook’s attempts to clone it in standalone apps like Poke and Slingshot never gained traction. In fact, none of Facebook’s standalone apps have succeeded unless they splintered off an already-popular piece of Facebook like chat and users were forced to download them like Messenger. It wasn’t until Zuckerberg stuck his clone of Stories front-and-center atop Instagram and Facebook that Snapchat’s user count went from growing 18% per quarter to shrinking. There, Facebook used the same strategy laid out in Zuckerberg’s comments — push its good-enough clone in countries where the original isn’t popular yet.

But Facebook was fortunate because Stories really wasn’t that dissimilar to the content users were already sharing on Instagram — tiny biographical snippets of their lives. Snapchat CEO Evan Spiegel had originally invented Stories as a vision of Facebook’s News Feed through the lens of an ephemeral camera. All users had to know was “I take the same videos, but shorter and sillier, posted more often, and then they disappear”. The concept of Instagram and Facebook didn’t have to change. They were still about telling friends what you were up to. Choking off TikTok’s growth will be much more complicated.

Why TikTok Is Tough To Clone

TikTok isn’t about you or what you’re doing. It’s about entertaining your audience. It’s not spontaneous chronicling of your real life. It’s about inventing characters, dressing up as someone else, and acting out jokes. It’s not about privacy and friends, but strutting on the world stage. And it’s not about originality — the heart of Instagram. TikTok is about remixing culture — taking the audio from someone else’s clip and reimagining the gag in a new context by layering it atop a video you record.

TikTok Remixes

That makes TikTok distinct enough that it will be very difficult to shoehorn into Instagram or Facebook, even if they add the remixing functionality. Most videos on those apps aren’t designed to be templates for memes like TikToks are. Insta and Facebook’s social graphs are rooted in friendship and augmented by the beautiful and famous, but don’t encompass the new wave of amateur performers TikTok elevates. And since each post to the app becomes fodder for someone else’s creativity, a competitor starting from scratch doesn’t offer much to remix.

That means a TikTok clone would have to be somewhat buried in Instagram or Facebook, rebuild a new social graph, and retrain users’ understanding of these apps’ purpose…at the risk of distracting from their core use cases. This leaves Facebook hoping to grow its standalone TikTok clone Lasso which TechCrunch scooped a year ago before it launched last November. But as we’ve seen, Facebook struggles growing brand new apps, and that effort is further hindered by its increasingly toxic brand and sheen of uncoolness. Nor does it help that Facebook must divert development resources to comply with all the new privacy and transparency obligations as part of its $5 billion FTC fine and settlement.

The Next Feed

Facebook’s best bet is to assess the future value of the ads it could run on a successful TikTok clone and apply some greater fraction of that grand sum to competing directly. It’s already made some smart additions to Lasso like tutorials for how to remix and the option to add GIFs as sections of your video. But it’s still failing to gain serious traction in the US. While typical videos on the TikTok homepage where I’m spending a few hours a week have hundreds of thousands of Likes, the top ones I saw in my Lasso feed today received 70 or fewer.

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TikTok trounces Facebook’s Lasso in the US iOS App Store charts

I had Sensor Tower run some analysis comparing TikTok with Lasso since its launch last November, and found that Lasso gets 6 downloads for every 1000 for TikTok in the US. Some more stats:

  • US Total Downloads Since November: Lasso – 250,000 // TikTok – 41.3 million
  • US Downloads Per Day Since November: Lasso – 760 // TikTok – 126,000
  • Average US Google Play Social App Chart Ranking: Lasso – #155 // TikTok – #2

Beyond the US, Lasso has only launched in one other market, Mexico in April, where it’s been faring better but could hardly even be considered a competitor to TikTok. Facebook needs to lean harder into Lasso:

  • Mexico Total Downloads Since April: Lasso – 175,000 // TikTok – 3.3 million
  • Mexico Downloads Per Day Since November: Lasso – 1,000 // TikTok – 19,000

Facebook Lasso Logo

Zuckerberg may need to find a coherent place for TikTok style features inside Instagram and potentially Facebook. That could be another horizontal row of previews like with Stories and/or a header on the Explore page dedicated to premeditated content. Certainly something more prominent than a single button like IGTV that still no one is asking for. One opportunity to best TikTok would be building a dedicated remix source browser into the Stories camera to help users find content to put their own spin on.

Facebook will also need to buy out top TikTok creators to make videos for it instead, and even quasi-hire some of the most prolific video meme or challenge inventors to give users trends to jump on rather than just one-off clips to watch. Its failure to offer IGTV stars monetization has led many to ignore that platform, and it can’t afford that again.

If Zuckerberg approaches TikTok as merely an algorithmic video recommender like Explore, Facebook will miss out on owning the social entertainment feed. If he doesn’t decisively move to challenge TikTok soon, its catalog of content to remix will grow insurmountable and it will own the whole concept of short form performative video. Snapchat’s insistence on ephemerality makes it incompatible with remixing, and YouTube isn’t nimble enough to reinvent itself.

If no American company can step up, we could see our interest data, faces, and attention forfeited to an app that while delightful to use, heralds Chinese political values at odds with our own. If only Twitter hadn’t killed Vine.


Source: TechCrunch – Startups

01 Oct

Unagi is the iPhone of scooters you actually buy

Can you never find a scooter to rent when you need one? Here’s a radical idea. Buy one. While Bird, Lime, Skip, Scoot, Uber, Lyft and more compete for on-demand micromobility, a new startup invented a vehicle worthy of ownership. The Unagi looks downright futuristic with its classy paint jobs, foldable body, LED screen and built-in lights. The ride feels sturdy, strong and responsive while being light enough at 24 lbs to lug up subway stairs or the flights to your home.

That’s why Unagi has become a hit with musicians like Kendrick Lamar, Chance the Rapper, Halsey, Steve Aoki and teen pop megastar Billie Eilish, who use the scooter to rip around the empty venues as they soundcheck before concerts. Paparazzi shots of those moments have spurred demand for the $990 dual-motor and $840 single-motor Unagis, with co-founder David Hyman telling me the startup can’t make them fast enough, but it’s ramping up production.

Unagi Scooter

To fuel the fervor for the scooter before it’s inevitably copied by cheap knock-offs, Unagi has raised a $3.15 million seed round led by Menlo Ventures . Building on its $750,000 in Kickstarter, angel and founder-contributed funding, the cash will go to building out a distribution network and developing its next-gen scooter with a smoother ride but no more pounds.

“We felt Unagi’s focus on light weight and substantial powering in a beautifully designed package was the right approach for ownership,” Menlo partner Shawn Carolan tells me. “This is what premium brands do — continue to reinvent the way we think about the world. This category of vehicle — personal, portable and electric — has enormous potential and we are still in the first inning of the game.”

https://www.youtube.com/embed/8YP8FjRdWsM?version=3&rel=1&fs=1&autohide=2&showsearch=0&showinfo=1&iv_load_policy=1&wmode=transparent

The magic of the Unagi Model One is how it balances speed, battery, weight, price and style so it works for most anything and everyone. That combination won it CNET‘s best all-around scooter award versus the hardcore but extremely heavy Boosted Rev, cheap but weak Swagtron, long-lasting but boring Ninebot and speedy but scary Mercane.

The Unagi’s biggest flaw is the smoothness of the ride due to its harder airless wheels and narrow handlebars that can make gravelly roads precarious. The high-pitched beeeeeep of its horn is also so annoying that people are more likely to cover their ears than get out of your way, but Hyman promises his 12-person team will fix that.

Unagi Handlebars

Where Unagi truly excels is in its looks. The lithe curves of its polished carbon fiber frame are accented with candy paint jobs in matte black, white, grey and blue. It ditches the bike handlebar vibe for something closer to Space Shuttle controls. And while many people scoff at scooter riders, I saw those smirks turn into curious awe as I flew by.

Unagi Scooter Weight 1Hyman got the idea for a premium scooter you own after a rental turned into a melty mess. He’d taken an on-demand scooter to the grocer on a hot day, picked up some ice cream, and emerged to find his ride snatched by another user. He hustled to another nearby but someone else got there first. He walked home dripping sugar everywhere wondering, “Why am I messing around with rentals, I just want to own one?”

He bought a generic scooter off Alibaba, and despite being janky straight out of the box, “it made me feel like I was a super hero with this magic carpet.” But he wanted something better.

Previously the CEO of audio fingerprinting giant Gracenote, and then Beats Music before it sold to Apple, Hyman is known for his obsession with hi-fi speaker systems. So after touring Chinese scooter factories and still being unsatisfied, he partnered with a group of inventors called QMY who’d prototyped a slick vehicle they called the Swan. Hyman funded it to production, brought the team in house, and now they’re selling Unagis as fast as they can.

Now the startup wants to double-down on selling to more petite riders who could never carry the 46-lb Boosted Rev out of a train station. But the clock is ticking before copycats with similar silhouettes but inferior insides spring up. Meanwhile, Unagi must keep safety top-of-mind to avoid any disastrous crashes hurting customers and its brand. There are plenty of better-funded mobility giants that could barge into the space if Unagi can’t build a lead. It also has to prove why the reliability of ownership is worth the price of renting a scooter hundreds of times.

Unagi Scooter Blue 5

Scooters are part of a powerful wave of new technologies that actually sell us back our time. When a 20-minute walk becomes a four-minute scoot, you gain something priceless. Urban landscapes unfold beneath their wheels as you explore new neighborhoods or parts of parks. I was once a diehard electric skateboarder until a crash on a Boosted Board shattered my ankle. Unagi is the first scooter that delivers that same gliding feeling of weightlessness and freedom but in a form-factor safe enough for most people to experience.


Source: TechCrunch – Funding and Exits

04 Sep

Elliptic banks $23M to shrink crypto risk, eyeing growth in Asia

Crypto means risk. To UK company Elliptic it also means business. The startup has just closed a $23M Series B to step up growth for a crypto risk-management play that involves selling tech and services to help others navigate the choppy darks of cryptocurrencies.

The round was led by financial services and asset management firm SBI Group, a Tokyo-based erstwhile subsidiary of SoftBank . Also joining as a new investor this round is London-based AlbionVC. Existing investors including SignalFire, Octopus Ventures and Santander Innoventures also participated. SBI Group’s Tomoyuki Nii and Ed Lascelles of AlbionVC are also joining Elliptic’s board.

Flush with a sizeable injection of Series B capital, Elliptic is especially targeting business growth at Asia — with a plan to open new offices in Japan and Singapore. It says client revenues in the region have risen 11x over the past two years.

We last spoke to Elliptic back in 2016 when it had just raised a $5M Series A.

The 2013-founded startup began by testing the crypto waters with a storage product before zeroing in on financial compliance as a pain-point worth its time. It went on to develop machine learning tech that screens transactions to identify suspicious patterns and, via them, dubious transactors.

Now it offers an integrated suite of products and services for financial institutions and crypto businesses to screen volumes of crypto-flows that sum to billions of dollars in transactions per day — analyzing them for links to illicit activity such as money laundering, terrorist financing, sanctions evasion, and other financial crimes.

It’s focused on selling anti-money laundering compliance, crypto forensics and cryptocurrency investigation services to the private sector — though has also sold tools direct to law enforcement agencies in the past.

Billions of dollars in financial services terms is of course just a tiny drop in a massive ocean of money movements. And growth in the crypto risk-management space has clearly required more than a little patience, from a startup perspective.

Three years ago Elliptic’s first blockchain analytics product had 10-20 Bitcoin companies as customers. That’s now up to 100+ crypto businesses and financial institutions using its products to shrink their risk of financial crime when dealing with crypto-assets. But the more three than year gap between Elliptic’s Series A and B is notable.

“To date, we’ve focused on product development and assembling the right team as the market has matured. This new funding will help us expand in the right way, namely by making the push into Asia without diluting our focus on the US and EMEA,” says co-founder and CEO James Smith when asked about the gap between financing rounds.

He declines to comment on how far off Elliptic is from achieving breakeven or profitability yet.

“We provide best-in-class transaction monitoring products for crypto-assets, which are trusted by crypto exchanges and financial institutions worldwide,” he adds of its product suite. “Our products are used as key components of larger compliance processes that are designed to minimise money laundering risks.”

With the addition of SBI Group to its investor roster Elliptic gains a strategic partner in Asia to help push what it dubs “bank-grade risk data” at a new wave of established financial institutions it believes are eyeing crypto with growing appetite for risk as larger players wade in.

Larger players like Facebook . Elliptic’s PR name-drops the likes of Facebook’s Libra cryptocurrency, Line Corporation’s LINK and central bank digital currencies, as markers of a rise in mainstream attention on crypto assets. And it says Series B funds will be used to accelerate product development to support “an emerging class of asset-backed crypto-assets”.

Regulatory attention on crypto — which has been rising globally for years but looks set to zip up several gears now that Facebook has ripped the curtain off of an ambitious global digital currency plan which also has buy-in from a number of other household tech and fintech names — is another claimed feed in for Elliptic’s business. More crypto implies growing risk.

It also points to the intergovernmental Financial Action Task Force’s global regulatory framework for crypto-assets as an example of some of the wider risk-based requirements and now wrapped around those dealing in crypto.

The focus on Asia for business expansion is a measure of relative maturity of interest in opportunities around crypto-assets and localized attention to regulation, according to Smith.

“Revenue growth is certainly very strong in this region. We have been working with customers in Asia for a number of years and have seen first-hand how vibrant their crypto-asset ecosystems are. Countries such as Singapore and Japan have developed clear crypto-asset regulatory frameworks, and businesses based in these countries are serious about meeting their compliance obligations,” he says.

“We have also found that traditional financial institutions in Asia are particularly keen to engage with crypto-assets, and we will be working with them as they take their first steps into this new asset class.”

“We believe that crypto-assets will play an increasingly important role in our everyday lives and are shaping the future of banking. Our investment in Elliptic is a further commitment to this belief and to SBI Holding’s appetite to help build the digital asset-related ecosystem,” adds Yoshitaka Kitao, CEO of the SBI Group, in a supporting statement.

“Elliptic’s pioneering approach is enabling the transparency, integrity, and trust necessary for this vision to become reality. We are seeing a growing demand for their services across our portfolio of crypto-assets related companies and view Elliptic as best-placed to meet this considerable opportunity.”

While Elliptic’s business is focused on reducing the risk for other businesses of inadvertently transacting with criminals using crypto to launder money or otherwise shift assets under the legal radar, the proportion of transactions that such illicit activity represents in the Bitcoin space represents a tiny fraction of overall transactions.

“According to our analysis, approximately $1BN in Bitcoin has been spent on the dark web, so far in 2019, on items ranging from narcotics to stolen credit cards. This represents a very small share of all Bitcoin activity — less than 0.5% of Bitcoin payments over this period,” says Smith.

Not that that diminishes the regulatory risk. Nor, therefore, the business opportunity for Elliptic to sell support services to help others avoid touching the hot stuff.

“Crypto money launderers are continually developing new techniques to cover their tracks — from the use of mixers to transacting in privacy coins such as monero,” Smith adds. “We are also constantly innovating to keep pace with this and help our clients to detect money laundering. For example our work with researchers from MIT and IBM demonstrated the application of deep learning techniques to the identification of illicit crypto-asset transactions.”


Source: TechCrunch – Funding and Exits

04 Sep

Loog launches a trio of new educational guitars

Educational guitar maker Loog returned to Kickstarter this week, some eight years after it first hitting the crowdfunding site. This fourth campaign from the company features a trio of instruments aimed at helping accelerating the learning process.

There are three models, each aimed at a different age group: the Loog Mini (ages 3+), Loog Pro (ages 8+) and Loog Pro VI (ages 12+). The latter of which is the company’s first guitar to sport the standard six strings (versus the three it usually offers).

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All have a built-n speaker and amp, reducing the need for additional accessories for a kid’s first instrument. They’re also designed to work with the company’s app, which now utilizes augmented reality (guitAR, if you will), to overlay instructions when using the front facing camera on a mobile device. The are flash cards (for chords), videos and games on-board, as well.

The app also has a song book, featuring a wide variety of popular artists, ranging from The Beatles to Taylor Swift. Kids can slow down and mute tracks to play along karaoke-style, while recording themselves in the process.

Kickstarter prices start at $99 for the Mini, versus $150 at retail. The company keeps going back to the crowdfunding well, but the model has worked pretty well so far. Loog’s started to gain some traction in the music education world and, as evidence by its Kickstarter video, landed in the hands of a couple of actual rockstars in the process.


Source: TechCrunch – Startups

07 Aug

Gogoro announces Yamaha, Aeon and PGO are the first manufacturers that will use its swappable batteries in their own scooters

Gogoro, the Taiwanese electric vehicle company, has announced its first manufacturing partners. Yamaha, Aeon Motor and PGO will all launch new scooters this summer that run on Gogoro’s swappable batteries and charging infrastructure.

This means consumers who like Gogoro’s battery system will have a choice between buying Gogoro’s own scooters or scooters from its three partners. All scooters that use Gogoro’s energy network can exchange batteries at the 1,300 GoStations currently in Taiwan.

Beyond its own electric scooters, Gogoro sees its technology, most of which is developed in-house, as an open platform for electric vehicles, with the goal of reducing pollution in cities with heavy traffic. It recently launched a ride-sharing platform that can be used as a white-label solution by companies that want to launch their own electric scooter sharing program (Gogoro’s scooters are already use by Coup, the European ride-sharing startup).

For a deeper look into the company’s origins and plans, Extra Crunch subscribers can read a recently published interview with Gogoro co-founder and CEO Horace Luke.


Source: TechCrunch – Startups

06 Aug

DeepCode gets $4M to feed its AI-powered code review tool

DeepCode, a Swiss startup that’s using machine learning to automate code reviews, has closed a $4M seed round, led by European VC firm Earlybird, with participation from 3VC and existing investor btov Partners.

The founders described the platform as a sort of ‘Grammarly for coders’ when we chatted to them early last year. At the they were bootstapping. Now they’ve bagged their first venture capital to dial their efforts up.

DeepCode, which is spun-out of Swiss technical university ETH Zurich, says its code review AI is different because it doesn’t just pick up syntax mistakes but is able to determine the intent of the code because it processes millions of commits — giving it an overview that allows it to identify many more critical bugs and vulnerabilities than other tools.

“All of the static analysis and lint tools out there (there are hundreds of those) are providing similar code analysis services but without the deeper understanding of code, and mostly focusing on one language or specific languages,” says CEO and co-founder, Boris Paskalev, going on to name-check the likes of CA Technologies, Micro Focus (Fortify), Cast Software, and SonarSource as the main competitors DeepCode is targeting.

Its bot is free for enterprise teams of up to 30 developers, for open source software, and for educational use.

To use it developers connect DeepCode with their GitHub or Bitbucket accounts, with no configuration required. The bot will then immediately start reviewing each commit — picking up issues “in seconds”.  (You can see a demo of the code review tool here.)

“We do not disclose developer information but the number of Open Source Repositories that are using DeepCode have hundreds of thousands of total contributors,” Paskalev tells us when asked how many developers are using the tool now.

“We do not count rules per se as our AI Platform combines thousands of programming concepts, which if combined in individual rules will result in millions of separate rules,” he adds.

The seed funding will go on supporting additional integrations and more programming languages than the three currently supported (namely: Java, JavaScript, and Python); on improving the scope of code recommendations, and on expanding the team internationally.

Commenting in a statement, Christian Nagel, partner and co-founder of Earlybird, said: “For all industries and almost every business model, the performance and quality of coding has become key. DeepCode provides a platform that enhances the development capabilities of programmers. The team has a deep scientific understanding of code optimization and uses artificial intelligence to deliver the next breakthrough in software development.”


Source: TechCrunch – Funding and Exits

10 Jul

Remitly raises $220M to expand from money transfers to financial services, now at $900M+ valuation

When it comes to financial services in emerging markets, remittances — people sending money to each other across international borders, often not to established bank accounts — continues to be one of the biggest, with the World Bank estimating that $529 billion was sent in and out of lower-income countries in 2018, up 9% over 2017. And today, Remitly, one of the bigger startups providing these services, is announcing that it has raised $220 million in funding to ride that wave.

CEO and founder Matt Oppenheimer said in an interview that the startup will use the money both to help it continue to keep growing that money transfer business, and to catch new opportunities as they appear, in the form of new financial services for the immigrants and migrants that make up the majority of its customer base.

The money is coming in the form of equity and debt, specifically a $135 million Series E led by Generation Investment Management, and $85 million in debt from Barclays, Bridge Bank, Goldman Sachs, and Silicon Valley Bank. Owl Rock Capital, Princeville Global, Prudential Financial, Schroder & Co Bank AG, and Top Tier Capital Partners; and previous investors DN Capital, Naspers’ PayU, and Stripes Group all also participated in the equity round.

Oppenheimer said the equity will both be used to expand its remittance business but mainly to invest in that new wave of services it’s eyeing up. The debt, meanwhile, is to fuel the growth of its “express” fast-send option. “Today we can post funds, but we can also pre-fund for express transfers, and we wanted to have the capacity and the line of credit to be able to fund the pre-funding part, which is growing rapidly,” he said of the debt portion of the financing.

With the equity portion, Remitly’s valuation is now at around $900 million, sources close to the company say. As a point of comparison, that puts Remitly on par with World Remit, another big player in remittances for emerging markets that raised $175 million in June also at around a $900 million valuation. (Transferwise, which focuses on ‘banked’ accounts and mostly mature markets, earlier this year closed funding that valued it at $3.5 billion.)

It’s the biggest round of funding yet for the startup, and for some context, it was valued at just $230 million when it last disclosed the number. (Remitly did not disclose valuation in its most recent funding before this one, a $115 million round led by Naspers that finally closed in the beginning of 2018.)

Today, Remitly’s services cover 16 “send” (originating) and 44 “receive” countries, covering a total of some 700 “corridors” where the company specialises in providing an easy way — either online or by phone — for individuals to send money, with the service localised on the receiving end to come in formats that are most popular in each specific market.

The company said that average annual revenue growth has been at around 100% each year for the past three. Oppenheimer — who coincidentally used to be an executive for one of its new backers, Barclays — wouldn’t break out which markets were growing faster than the others, but that figure includes both Remitly’s more mature corridors as well as those that it’s added in recent years.

The plan for diversification is not surprising. The remittance market is extremely fragmented and — with the rise of smartphones that have untethered users from physical retail locations — getting even more so, with incumbents like Western Union accounting for less than 20 percent of the market today, bigger startups like TransferWise also looking like it’s also increasingly eyeing emerging markets as well, and completely new concepts like using the blockchain to transfer money also potentially disrupting the disruptors.

That means pricing on money transfers for a section of that market that is already price-sensitive — immigrants and migrants — is very competitive, which in turn means a hit on remittance companies’ margins. Remitly itself has varying rates for different markets based on demand: sending money for example to Kenya from the UK currently costs nothing if you’re using MPESA accounts (other corridors obviously have higher costs than this).

Oppenheimer wouldn’t specify what kinds of other financial services it’s considering until they are closer to getting launched.

“We’re still working on that, but you can imagine the immigrant or migrant journey and the challenges that they face as they move to a new country,” he said. “It can have a painful impact not having a credit history: how do you get a loan, or set up a bank account? That is the strategic angle… The idea is to transform the lives of immigrants and their families.”

That mindset has been what helped Remitly raise this recent round. Generation — the investment firm co-founded by Al Gore — has made it a mission to put its money into sustainability. In its case, this means not only planet health but people health, in the form of services that improving the lives. Financial services for emerging markets is an important area for it in that regard.

Lucia Rigo, a director in growth equity at Generation who is joining Remitly’s board with this round, said that Generation had been looking at the remittance market for a while and had honed in on Remitly as a key company within it that ticked all the right boxes in terms of its mission, its journey so far, its numbers, and most importantly its prospects.

“Foreign-born or foreign-resident populations in developed markets is a segment that is just not catered for well,” she said in an interview. “There are a lot of digital means for sending money today, which is definitely driving down the cost of doing so, but we also think that digital penetration is just at its early stages, and new markets will drive differentiation and that will expand the customer base, and Remitly’s services.”


Source: TechCrunch – Startups

09 Jul

AppLovin acquires SafeDK to improve brand safety

Mobile marketing company AppLovin is announcing that it has acquired SafeDK.

While AppLovin started out as a mobile ad business, it now bills itself as “a comprehensive mobile gaming platform,” offering tools for game developers around user acquisition, monetization, analytics and (through Lion Studios, launched last year) publishing. SafeDK, meanwhile, allows developers to manage all the different SDKs on which their apps rely.

Palo Alto-headquartered AppLovin says that by incorporating SafeDK technology, it will help its publishers ensure GDPR compliance and brand safety.

It also says SafeDK will continue to support existing customers, while its headquarters in Herzliya, Israel will become AppLovin’s first office in Israel. Co-founders Orly Shoavi and Ronnie Sternberg will remain on-board as the heads of SafeDK and general managers of AppLovin Israel.

The companies are not disclosing the financial terms of the deal, except to say that it was all-cash. According to Crunchbase, SafeDK has raised a total of $5.8 million from investors, including Samsung Next Tel Aviv, Marius Nacht, StageOne Ventures and Kaedan Capital.

“We are delighted to be working with the AppLovin team to help mobile game publishers grow their businesses,” Shoavi said in a statement. “AppLovin has been a trusted partner for the biggest mobile game studios around the world and SafeDK’s technology will strengthen that trust.”


Source: TechCrunch – Funding and Exits

12 Jun

Modern Fertility raises $15 million to sell its hormone tests — and gather more fertility data from its users

Modern Fertility is a San Francisco-based company that sells fertility tests directly to consumers, but increasingly, those customers will be educating the company, too. Indeed, the two-year-old startup now plans to develop a database of anonymized data about its largely younger demographic.

A fresh $15 million in funding led by Forerunner Ventures should help. Forerunner founder Kirsten Green, who takes a board seat as part of the round, is known for countless savvy bets on a wide number of consumer brands that have taken off with users, from Dollar Shave Club to Bonobos to Glossier. With Forerunner’s help, Modern Fertility may well become a breakout hit, too, though potential customers should also understand its limitations before they click the “buy” button.

First, let’s back up. We’d originally written about Modern Fertility last year, when it began selling a kit from its website that’s sent to women’s doorsteps and allows them to gauge their levels of eight different reproductive hormones by using a finger prick. More specifically, the startup sends off its customers’ panels to CLIA-certified labs, where the tests are conducted, and most prominently, those tests are looking at the women’s level of AMH, or anti-mullerian hormone.

Why that’s relevant: every egg inside a woman’s ovaries sits within a fluid-filled sac full of cells that support egg maturation and produce hormones, including AMH. A woman’s AMH levels can provide one clue about how many of these sacs — or follicles — she has. That in turn provides a clue as to how many eggs she can release, or her ovarian reserve.

The point, says Modern Fertility’s cofounder and CEO, Afton Vechery, is to enable women to learn more about their bodies without having to shell out $1,500 to gain access to a similar picture by turning to a reproductive endocrinologist, of which there are relatively few.  According to the Centers for Disease Control and Prevention, there are roughly 500 infertility clinics in the U.S., and 2,000 reproductive endocrinologists.

Mixed feelings in medical community . . .

It’s a compelling pitch, especially given that women are putting off children longer for a variety of reasons, including to secure their financial future. In 2017, for the first time, U.S. women in their early 30s eclipsed younger moms to become the group with the highest birth rate, according to CDC data.

But there is room for pushback. The reality is that AMH and other tests can be conducted elsewhere, including by competing startups, for roughly the same cost that Modern Fertility is charging its customers. (Its kits originally sold from its website for $199; today, they sell for $159.)

Fertility testing is also generally is covered by health insurance plans because fertility problems can be linked to or caused by other health problems like endometriosis. (Not covered, typically: actual infertility treatments.)

A far bigger concern to some doctors is the unnecessary alarm that AMH screening may create for women who haven’t been diagnosed with infertility and who are less than 35 years old.

As Zev Rosenwaks, director of the Center for Reproductive Medicine at Weill Cornell Medicine and NewYork-Presbyterian, told the New York Times a couple of years ago, “All it takes is one egg each cycle . . . AMH is not a marker of whether you can or cannot become pregnant.”

Esther Eisenberg, the program director of the Reproductive Medicine and Infertility Program at the National Institutes of Health, has also said that AMH doesn’t dictate a woman’s reproductive potential. In fact, the NIH funded research in 2017 that found a “non-statistical difference” between low and normal AMH levels in a time-to-pregnancy study of women who were between the 30 to 44 years and who did not have a history of infertility.

Asked about such findings, Vechery, who was most recently a former product manager at the genetic testing company 23andMe, is clearly aware of them. She readily acknowledges that AMH is “not an indicator of your ability to get pregnant right now in this moment,” adding that “it has so many other helpful benefits in thinking about your reproductive health in a much broader sense.”

Vechery also notes the company’s team of PhDs. She points to a clinical study that was published in The Green Journal (the official publication from The American College of Obstetricians and Gynecologists). She also speaks of Modern Fertility’s medical advisory board, which includes dedicated five medical doctors, including reproductive endocrinologists Nataki Douglas, a former associate professor at Columbia University Medical Center, and Scott Nelson, a professor at the University of Glasgow.

All are important pieces to building Modern Fertility, but it’s nevertheless worth mentioning that the company employs just two full-time PhDs currently.

Further, the company’s medical advisory members, including Nelson, are paid consultants.

As for the study, which Modern Fertility sponsored, it doesn’t actually prove anything about the power of AMH testing, though it does underscore that AMH, along with the seven other hormones the company measures on behalf of its customers, can be tested just as effectively with “fingerstick sampling” as a traditional blood draw.

The teacher becomes the student . . .

Those curious about Modern Fertility — often younger women eager to get a jump on any later reproductive issues they may face — may well decide that information about their hormone levels is enough to part with the cost of a kit, the results of which are reviewed by a physician and that comes with a one-on-one phone consultation with a nurse.

Interestingly, when they do, they’ll increasingly be asked to opt-in to questions about their health, lifestyles, and more. They may be asked repeatedly, too, as the company recommends that customers re-take the test yearly to track their hormones over time. Indeed, because so many of Modern Fertility’s customers do not have fertility issues, the company hopes to aggregate as much pertinent information from them as possible in order to complement the vast amounts of research that has been conducted on infertility.

“The fertility space needs to catch up, and a huge part of what we’re focused on is moving fertility science forward,” says Vechery. “So much research is primarily done on these women who are having issues; Modern Fertility is interested in flipping that around.”

It’s a strange state of affairs, but we’ve talked with several customers of the company in the past, and one can imagine them supporting it however they can, thanks in part to the sense of community that Modern Fertility has also been fostering. Among other things, for example, the company hosts get-togethers for customers in San Francisco so they can share their thoughts, their fears, and, presumably, their results.

As for whether Modern Fertility is also interested in selling that anonymized data as has happened at genetic testing outfits like Ancestry and Vechery’s former employer, 23andMe, Vechery insists that it will not, that the information will instead be used to inform the company’s product development.

Fertility startups have generally been on a fundraising tear, and little wonder. According to one estimate, the  global fertility services market is expected to exceed $21 billion by 2020. In fact, while venture capital has poured into everything from period-tracking apps to sperm storage startups, Modern Fertility has its own direct competitors, excluding obstetricians. Among these is KindBody, a New York-based startup that raised $15 million two months ago, and three-year-old, Austin-based Everlywell, which has garnered $55 million from VCs so far.

Notably, Modern Fertility represents Forerunner’s first foray into the so-called femtech space. Asked about Green’s involvement, Vechery notes she was particularly “excited about the community,” which Phil Barnes of First Round Capital, has also cited as the reason he wrote Modern Fertility an early check.

Ultimately, though, says Vechery, “Our business model is information, and I think for Kirsten, seeing what that trusted brand could do in women’s health and the conversations it could spark” was what she found most compelling about the company.

We understand why. We also can’t help but wonder if those conversations will drive some women to see — unnecessarily — the very specialists that Modern Fertility wants to free them of visiting.

Modern Fertility has now raised $22 million to date. Among its other backers are Maveron and Union Square Ventures as investors.

Pictured above: Modern Fertility cofounders Afton Vechery and Carly Leahy. Vechery is CEO; Leahy is the company’s chief creative officer.


Source: TechCrunch – Startups

11 Jun

Foodles raises another $10 million for its cloud canteen

French startup Foodles is raising a $10 million funding round (€9 million). The company provides canteen-like services using connected fridges and daily deliveries.

Creadev, DN capital and Adelie are participating in today’s round. This isn’t just fresh capital as existing shareholder Elior is selling its shares in the company. Elior is a large catering and foodservice company — in some way, Elior and Foodles are competitors at a very different scale.

Foodles solves a specific issue for the French market. French companies have to subsidize lunch for their employees. They have two options — they can either open a canteen in the office or hand out meal vouchers to financially contribute to everyone’s lunch.

While big public companies usually work with a foodservice company, such as Elior, the upfront investment is too important for most small companies. Foodles addresses small companies with its full-stack solution.

When you sign up to Foodles, the company delivers connected fridges to your office. Every day, Foodles comes to your office to deliver 20 to 200 meals at once. By default, you get a handful of options.

Employees can then unlock the fridge by scanning a card, grab something and eat. They’re then charged automatically. It usually costs way less than ordering something on Deliveroo for instance.

If you want something different, you can also order a specific meal in the Foodles app. You can top up your account from the app as well.

With today’s funding round, the startup plans to double the size of the team and expand beyond the Paris area. And it’s also worth noting that Foodles is currently profitable thanks to positive unit economics — one delivery represents dozens of meals after all.

Recently, there have been many scandals about riders for food startups, such as Deliveroo, Uber Eats, Glovo and Frichti. They are underpaid, overworked and have to take many risks in order to generate a decent wage. Foodles knows that this is a key issue and promises that delivery people are full-time employees.

So far, the company has managed to convince 50 companies to switch to Foodles. The startup delivers around 5,000 meals per day. Foodles says that it plans to have a more aggressive sales strategy to sign more customers in the coming months.


Source: TechCrunch – Funding and Exits