31 Oct

Monzo, the U.K. challenger bank, raises £85M Series E at a £1B pre-money valuation

Monzo, the U.K. challenger bank that now boasts more than a million customers, has raised £85 million in Series E funding. The round is led by U.S. venture capital firm General Catalyst, and Accel. Existing backers Passion Capital, Goodwater, Thrive Capital, Orange Digital Ventures, and Stripe also participated.

The latest funding was at a pre-money valuation of £1 billion (~$1.27b), meaning that Monzo is now a bonafide member of the U.K. fintech unicorn club, joining recent entrant Revolut.

Meanwhile, the bank upstart is also planning to launch a large crowdfunding round later this year. Like a lot of other fintechs — and before it was fashionable — Monzo has historically opened up its fundraising to its passionate community and other armchair investors.

In a brief call earlier today with Monzo co-founder and CEO Tom Blomfield, he told me the new funding will be primarily used for increasing headcount to further develop the Monzo product line and to cover other operational costs now that the challenger bank has reached “contribution margin positive”.

In other words, on average each customer is generating more revenue than the cost of servicing their current account, which is undoubtedly evidence of how much progress Monzo has made over the last year. This includes bringing down costs, such as weaning customers off costly debit card “top ups” and imposing a cap on fee-free foreign ATM withdrawals — as well as starting to generate meaningful revenue.

On where that revenue is now coming from, Blomfield cited lending in the form of Monzo’s overdraft product, interest it earns on deposits (currently Monzo doesn’t share that interest with customers, even if it is very small in percentage terms), and interchange fees (the money Monzo makes any time you spend on your Monzo debit card).

Another revenue stream is the nascent Monzo marketplace, which he says will be the next focus going forward now that the Monzo current account, with the omission of savings accounts and cash deposits, is basically “done“.

That’s noteworthy given that Monzo embraced developers extremely early on in its existence, holding four very popular hackathons and conducting a few early partnership pilots, but has since mostly stalled on the roll out of marketplace banking and other partnership integrations, sometimes to the frustration of the wider U.K. fintech ecosystem and developers. The exception being the recent integration with TransferWise for sending money abroad.

Blomfield doesn’t dispute this framing but says it wasn’t that Monzo changed course on offering an open API or working on deeper integrations that will put partner products inside of the Monzo banking app, but that gaining a banking license and building out all of the features of the current account had to be the short-term priority. Now that heavy lifting is complete and armed with new operational capital, it is marketplace game on.

To that end, the Monzo CEO says headcount over the next year could double again, from around 450 now to 900. And in terms of customer growth, extrapolating stats from a recent Nationwide annual report (PDF link), the challenger bank says it now accounts for 15 percent of all new bank accounts opened each month in the U.K. It also says it has 800,000 monthly active users.

Account switching — that is customers ditching their existing bank — still makes up the bulk of customer acquisition, even if Monzo recently began targeting 16-18 year olds who would be opening their first ever bank account. Another key metric: the number of customers who deposit their salary each month with Monzo is now at around 26 percent, although I’m told that this isn’t as important for Monzo as it might be for traditional banks and isn’t the main correlation with engagement or those accessing a Monzo overdraft.

Asked what Monzo’s biggest challenge will be over the next year, its CEO doesn’t mince his words: “Increasing revenue,” he says. This means ensuring that its lending models are correct (ie avoiding too many defaults as it scales) and steadfastly growing the marketplace and third-party product partnerships that will bring in additional revenue.

I was also intrigued to see a U.S. venture capital firm once again back the U.K. challenger bank — many of its existing backers have a U.S. bent and Blomfield has made no secret of his ambitions to expand across the pond at some stage. In an email exchange a few hours before publication, General Catalyst’s Adam Valkin (who was previously at Accel in London where he invested in GoCardless, which Blomfield also co-founded), gave me the following statement:

We’re investing in Tom and his team because they are delivering a high-quality banking experience for consumers at scale that is sorely missing from the market. Today’s incumbent UK banks represent billions of market cap but suffer from low NPS scores, reflecting their inability to meet their customers’ needs. Monzo, in contrast, explicitly builds product and banking features in a community-driven approach based on customers’ feedback and requests. This has driven very high organic growth, strong retention and engagement, and unprecedented customer love for and trust in Monzo. Beyond this, Tom and the Monzo team have improved upon the traditional business model of banking, removing the traditional offline retail-based banking model in favor of a highly scalable and lower cost mobile-only experience. All of this creates the potential for Monzo to become a leading U.K. bank, launch a successful financial marketplace, and eventually expand internationally.


Source: TechCrunch – Funding and Exits

03 Oct

Philippines SME lending startup First Circle raises $26M ahead of regional expansion

This year has been a breakout one for micro-financing startups in Southeast Asia, which are becoming among the most funded within the region’s fintech space. Next in line to raise capital is First Circle, an SME-lending service that’s based in the Philippines which has pulled in $26 million as it begins to consider regional expansion options.

The new financing is led by Venturra Capital with participation from Insignia Ventures Partners, Hong Kong’s Silverhorn Investment Advisors, and Tryb Group. First Circle has previously raised $2.5 million, including a $1.3 million seed round 18 months ago.

The company was founded by Irish duo CEO Patrick Lynch, formerly of CompareAsia Group and CTO Tony Ennis, previously with WebSummit, and the goal is to help small businesses scale by offering them short-term loans. The Philippines is an impact market since SMEs account for 99.6 percent of the country’s business, 65 percent of its workforce and a staggering 35 percent of national GDP. Yet, there’s no formal credit scoring system and existing loan coverage is patchy at best.

Most of First Circle’s loans are often transaction or working capital, such as financing to take on a new deal for a client with a guaranteed financial return that requires a fairly brutal wait of 90-120 days, Lynch told TechCrunch in an interview.

“A lack of access to capital is a problem that faces tens of thousands, if not hundreds of thousands, of businesses in the Philippines,” he explained. “Emerging markets are not capital developed, and our business model is quite different from the p2p lender model in that we do share risk with the investors.”

First Circle sources capital from third parties, including asset managers and family offices, who take half of the loan book. Unlike the P2P model, which is going through a spectacular crash in China, First Circle is invested in all deals and as such it does thorough due diligence before committing. However, after processing over $100 million in deals to “thousands” of businesses, Lynch said that the company has built up data on a number of suppliers and business partners to the point that a “significant” chunk of applications can be processed without human involvement.

For example, if a loan application is seeking financing in order to do a dealing with Multinational X, First Circle can move quickly if it has dealt with the application before or it has issued loans to other partners who have done business with Multinational X.

“Over time, as we acquire more customers, the degrees of separation are collapsing over time,” Lynch said.

First Circle’s executive team including co-founders Tony Ennis (third from left) and Patrick Lynch (middle)

The fact that there is little data available via a credit bureau makes things challenging. The need to built a solution from the ground up necessitates great time, cost and other resources but it can have major benefits, as First Circle is beginning to enjoy.

“Many new providers of financial services are rating customer for the first time. In 80 percent of the time in our case, it’s the first time our customer will have had a formal relationship” with a financial organization, Lynch explained. “That provides an opportunity, if done correctly, to provide a strong relationship and be a part of their future success for a long time.”

Indeed, the First Circle CEO said that, to date, customers will typically take a loan of around $10,000, but the average will balance is $30,000 — meaning that there are three loans active. That reflects the transactional nature of the loans the startup is issuing, but of course more business means more data, stronger relationships and a higher chance of word-of-mouth recommendations.

First Circle is staying focused on the Philippines for now, but Lynch revealed that there are plans to expand to other parts of Southeast Asia, the region of nearly 650 million consumers. This round may help the company “put a foot in a second market,” Lynch said, but it is likely to go out and raise more money to push its regional expansion plan next year.


Source: TechCrunch – Funding and Exits

07 Aug

Shell Ventures backs UK car repair marketplace WhoCanFixMyCar

WhoCanFixMyCar, the U.K. online car repair marketplace, has secured £4 million in new funding. Backing the startup is Shell Ventures — the corporate venture arm of Shell — in addition to chairman Sir Trevor Chinn (who previously chaired the boards ofAA, Kwik Fit and RAC), Active Partners, and Venrex Investment Management.

Launched in 2011 by former investment bankers Al Preston and Ian Griffiths, WhoCanFixMyCar.com claims to be the biggest online marketplace in the U.K. for matching car owners with repair garages. Specifically, the company, which has offices in Newcastle upon Tyne, London and Kiev, operates a local garage and mechanic online comparison service, allowing drivers to post jobs and receive quotes from local garages and mechanics.

The platform currently has 11,500 garages registered to the site, and says it has processed 1 million repair requests from U.K. drivers and receives circa 60,000 new job requests from drivers every month.

This, I’m told, has seen single site garages obtaining around 600 new customers per year on average through WhoCanFixMyCar, with top regional garage groups securing 3,000-4,000 bookings per year.

Furthermore, Shell’s investment via Shell Ventures follows the development of the Shell Helix Service Specialist Network, a recently launched scheme which allows independent workshops on the WhoCanFixMyCar.com site to be officially associated with Shell. In other words, strike this up as potentially quite a strategic investment for Shell.

Armed with a cash injection, Al Preston, co-founder of WhoCanFixMyCar.com, says that the plan it to keep scaling the startup’s activities and consolidate its position in the UK.” We are also focusing on new products and solutions that will further benefit our garage network and provide car owners with a better, richer experience when it comes to car maintenance and repairs,” he says.

On the surface, ClickMechanic can be considered a similar-sized competitor, although it operates a different model, more akin to ‘Uber for car mechanics,’ by offering instant quotes and then putting the job out to a curated network of garages and mechanics who can choose to accept or reject. In contrast, WhoCanFixMyCar is a two sided marketplace in the truest sense, letting you request quotes and compare reviews, with much more emphasis on lead generation from the garage’s point of view.

Article updated to clarify how WhoCanFixMyCar and ClickMechanic operated very different models, despite being competitors on the consumer-facing side.


Source: TechCrunch – Funding and Exits

11 Jul

Aspire Capital offers fast finance for SMEs in Southeast Asia

Southeast Asia’s digital economy is tipped to grow more than six-fold to reach more than $200 billion per year, according to a report co-authored by Google, with e-commerce accounting for the dominant share. The emergence of e-commerce platforms like Alibaba’s Lazada and U.S.-listed Shopee have enabled online entrepreneurship across the region, but still financial support for online sellers, who are basically SMEs, is lagging.

That’s where Singapore-based Aspire Capital, a six-month-old organization focused on speedy SME lending, is hoping to make a difference.

The company certainly has opportunity. With a cumulative population of over 600 million consumers and a rising middle class, Southeast Asia is increasingly an attractive market for businesses of all kind, and online companies in particular. Chinese giants Alibaba and Tencent have long devoted significant resources to the region where, like India, they see significant growth potential. E-commerce is the clear winner, in terms of size, with the e-Conomy SEA report — a joint research project between Google and Singapore sovereign fund Temasek — forecasting e-commerce revenue will hit $88 billion by 2025 from $10.9 billion in 2017.

Data from the e-Conomy SEA report

The crux of its problem is that online sellers who use Lazada, Shopee or other platforms that are forgoing profit in order to grow, are ironically less able to scale their business since there are few ‘e-commerce friendly’ financing options.

That problem became apparent to Aspire founder and CEO Andrea Baronchelli during a four-year stint with Lazada Singapore where, as CMO, he identified a financing disconnect for Lazada merchants.

“I saw the problem while trying to rally small businesses trying to grow in the digital economy,” Baronchelli told TechCrunch in an interview.

“The problem is really about providing working capital to small business owners. We started with online sellers, but we have expanded a bit as we see demand. There are 65 million small businesses in Southeast Asia, that’s ten times more than the U.S. so we see so much potential,” he added.

Aspire founder and CEO Andrea Baronchelli pictured while at Lazada

Today, Aspire Capital covers Singapore where it has expanded beyond e-commerce merchants to cover other things of SMEs who seek loans, primarily for working capital as Baronchelli explains. So far, he added, it has served loans to over 100 businesses. Typically, its spread goes from as low as SG$5,000 to up to SG$100,000, that’s around $3,600-$73,500 in U.S. terms.

The company was founded in early 2018 and already it has done plenty. It was part of the Y Combinator Winter 2018 cohort and it has closed a $9 million seed round to kick its business off with the working capital that it needs itself.

That round included a range of investors such as Europe-based Hummingbird, New York’s Mark II Capital, ex-Sequoia partner Yinglan Tan’s Insignia Ventures Partners and Y Combinator.

The principle behind the business is to make business financing quick and simple, Baronchelli said.

So rather than stacks of paperwork, SME owners fill out online forms and get a response the same day. Large parts of the application and review process are automated using a proprietary risk assessment engine, but Baronchelli said that ultimately a human makes the final call on whether to accept the application or not.

“We want to really be fast,” Baronchelli explained. “SMEs need quick decisions, they cannot wait three months for a bank. They need super quick, fast and no paperwork.”

The application process for companies seeking loans from Aspire Capital

He paints an example of online merchants who typically buy inventory from China which is sold customers within three to six months. If the business has a track record, it can take a loan to increase its stock and grow its revenues and profit, he explained.

Singapore may be a key market in Southeast Asia, but with a population of just over five million expansion is top of mind for Aspire. Baronchelli said he is doing due diligence on the first market expansion which he expects will happen before the end of this year. He expects that the business will raise further capital, perhaps towards the tail end of this year, which would be used to expand more aggressively across Southeast Asia in 2019.

He is also occupied building out the team. Right now, Aspire has ten people but he is keen to bring in ten to fifteen more staff, particularly on the tech side of the business.


Source: TechCrunch – Funding and Exits

13 Jun

Southeast Asia’s Grab lands $1B from Toyota at a $10B valuation

Grab, the ride-hailing firm that acquired Uber’s Southeast Asia business earlier this year, is raising a new round of funding and it just announced that it will be led by Toyota, which is committing $1 billion in capital. The deal values Grab at over $10 billion, a source close to the company told TechCrunch.

In return for its capital, Toyota will also get a board seat and the opportunity to place an executive within Grab’s team. Grab said it plans to work with its new investor “to create a more efficient transport network that will ease traffic congestion in Southeast Asia’s megacities” and help its drivers increase their income. In particular, that will involve close collaboration with the Toyota Mobility Service Platform (MSPF), which is working on areas such as user-based insurance, new types of financial packages and predictive car maintenance.

“Going forward, together with Grab, we will develop services that are more attractive, safe and secure for our customers in Southeast Asia,” said Toyota executive vice president Shigeki Tomoyama in a statement.

Toyota put money into Grab via its Next Technology Fund last year, but this time around the capital comes directly from the parent company. Hyundai is another automotive firm that has backed Grab.

The new round follows a $2.5 billion investment that was jointly led by SoftBank and China’s Didi, two long-time investors put an initial $2 billion up for the round last year. That round quietly closed at the start of 2018, Grab has confirmed but so far it hasn’t said who put up the additional money.

The company’s valuation had been $6 billion but, unsurprisingly since the Uber deal, it has jumped by a further $4 billion based on Toyota’s investment.

Grab now claims over 100 million downloads of its app across eight countries in Asia, including Singapore, Indonesia, Vietnam, Thailand and more. The firm said its annual revenue run rate has now surpassed $1 billion, although it declined to provide profit or loss numbers.

While it did remove Uber from the region by acquiring its business — although the deal didn’t go as smoothly as had planned — that exit prompted new entrants to jump into the region with Indonesia’s Go-Jek, in particular, looking like the key foe. Go-Jek, which is valued at some $4.5 billion, recently announced plans to expand to four new markets having itself raised a significant $1.5 billion round.

Aside from competition, Singapore-based Grab has kept its busy in recent years expanding its services from point-to-point taxis and private car hailing to include mobile payments, food delivery and dock-less bicycles. Earlier this month it officially unveiled Grab Ventures, a unit focused on helping building out an ecosystem through investment and mentoring.

Grab Ventures is not a VC arm, but it does plan to make 8-10 investments over the next two years while it will also open an accelerator program for “growth-stage” startups — although that doesn’t include equity investments for cash. The division will also focus on incubating new business ideas, which include its recently launched Grab Cycles product which aggregates on-demand bikes from a range of companies.


Source: TechCrunch – Funding and Exits

16 May

Mercari, Japan’s first unicorn, files to raise $1.1B in Tokyo IPO

Mercari, the eBay-like service that is Japanese first tech startup unicorn, has filed to go public in an IPO that could raise as much as $1.1 billion.

The company is scheduled to list on the Toyko Stock Exchange’s Mothers Market — a board for high-growth companies — on June 19.

The company reached the symbolic $1 billion valuation mark in 2016 when it raised a $75 million Series D. In doing so it became the first Japanese tech startup to become a pre-IPO unicorn. Earlier this year, that valuation jumped to $2 billion following a $47 million investment.

The five-year-old company operates an online ‘flea market’ that lets consumers sell unwanted goods with a focus on mobile.

Japan is its core market, but the company expanded into the U.S. in 2014 and last year it entered Europe, initially via the UK. It boosted its overseas strategy in June 2017 when it hired former Facebook executive John Lagerling as its first chief business officer to guide its global strategy.

The business passed 100 million downloads worldwide at the end of 2017. Mercari said that over 30 million downloads are in the U.S., with more than 60 million in Japan. Speaking earlier this year, CEO Shintaro Yamada — who sold his previous startup Unoh to gaming firm Zynga in 2010 — said success in the U.S. is essential if Mercari is to become an international player.

Reuters reports that Mercari’s forecasted share price of 2,200-2,700 JPY per share would see the company raise up to 117.6 billion JPY ($1.1 billion) at a total market cap of 365.4 billion JPY, $3.3 billion.

It’s common for Japanese startups to go public, but it traditionally tends to happen much earlier than in the U.S or other parts of the world. That’s often times down to investors — who seek to reduce the risk of their money not returning — and a relative lack of capital for startups, but Mercari has held out longer than most and that might set an example for future companies.

For another thing, the return on investment is impressive for many of Mercari’s backers, according to data from 500 Startups partner Yohei Sawayama — who tweeted out USD estimates for potential returns.

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Source: TechCrunch – Funding and Exits

21 Mar

Kyklo is bringing the billion-dollar electromechanical industry into digital sales

The electromechanical industry may not be the kind of sexy tech that you’ll regularly read about in TechCrunch, but we like solutions to problems, and that is why I am about to write about a company in the aforementioned industry. Add in that the startup is based in Asia — Thailand, to be precise — and we have the recipe for a young company to keep an eye on.

Kyklo is the company and it is aimed at bringing the electromechanical space, which is worth over $1 trillion per year across 100,000s of distributors and retailers worldwide, into the digital era. The company operates a service that brings sales channels, inventory and networks online to replace the existing system, which is largely offline.

As of now, for example, if an OEM is selling air conditioning units for a new building development — the industry touches 5-20 percent of every new building via electrical equipment — the process will typically be handled by a reseller who presents a paper-based inventory to the buyer. Kyklo is proposing to take things online by allowing OEMs to lay out their inventory in a web-based shop — like Shopify — which can then be used by the reseller to solicit sales.

The idea may seem elementary, but the benefits go beyond ease of use — a website obviously has plenty of benefits over a physical sales catalog — including increased visibility to the OEM, who previously relied on the reseller for sales data. Resellers themselves also have a more dynamic catalog of products to share with prospective sales leads, which is also designed to feature highly in search engine rankings to help bring in inbound sales leads.

Kyklo began as a Shopify-like solution when it was founded in 2015 by two former employees of Schneider Electric, the $50-billion electric and energy company that is listed in Paris, France. Over the past year, however, the startup refocused into a sales lead and management tool for both OEMs and resellers.

CEO Remi Ducrocq — who started Kyklo with fellow co-founder and CTO Fabien Legouic — told TechCrunch that there was an expectation that simply by launching a store sales leads would land. While Kyklo does optimize search ranking, it works best as an aid for teams by helping coordinate sales leads, giving greater transparency on data — for future sales predictions — making it easy to add new products quickly, and automating much of the process for repeat customers.

Kyklo CEO Remi Ducrocq and CTO Fabien Legouic (left and right) both formerly worked for Schneider Electric

Rather than spending time requests from existing customers with phone calls and emails, resellers can simply provide a link to the catalog and enable customers to handle the re-purchasing process by themselves. That frees up resources to chase new sales and more.

“When we pitch distributors on why they should digitize their sales operations, it is first about how you get your existing customers online. So you shift your business from offline to online and by doing so you’ll get better satisfaction and you’ll be able to saturate your customer base,” Ducrocq said, pointing out that the service has helped some customers add 20 percent more sales from existing customers.

“Considering a distributor has 10 sales guys covering 1,000 customers, the truth is they only spend time with 50 guys who do 80 percent of the orders,” Ducrocq added. “On existing customers, a lot of the work is really admin [so] that’s something you can take off by making it digital.”

Kyklo’s customer base includes Schneider Electric and Thailand-based Interlink, the latter of which told TechCrunch in a statement that it grew revenue from its online business five-fold “in a matter of months” after coming on the Kyklo platform.

The benefit for OEMs is obvious, but initially some resellers were initially unsure of allowing a third-party into the relationship with their supplier (OEM). Kyklo CEO Ducrocq said his company has no interest in entering the reseller space. In fact, it has field agents who accompany resellers to meetings with their major buyers to help them come aboard while it jointly works on data and statistics to help reseller teams target new sales opportunities.

While it is sticking firmly to its position in the sales cycle, the startup does, however, have designs on international expansion. Right now, has customers in seven markets in Asia — Ducrocq is half-French, half-Thai hence the initial location in Bangkok — but already it is casting eyes on the European and North American markets.

U.S.-based Handshake, a B2B sales platform that has raised over $20 million from investors, is perhaps one of the most notable competitors it would come up against, but Kyklo believes its focus on the electromechanical space can help it conquer its niche. The startup is also looking to expand its relationship with existing global customers who it services in Asia to cover new markets that will give it a rolling start to its expansions.

“Right now we’re looking at which two countries we will do in Europe, and where we will go in the U.S.,” Ducrocq said.

In order to aid that expansion, Kyklo has raised funding from investors that include Singapore-based duo SeedPlus and Wavemaker Partners. Ducrocq declined to provide financial details of the round, while he also declined to give financial details on Kyklo’s business.

The company currently has 40 staff in its Bangkok HQ, with a number of remote business development and sales executives. While it plans to increase the number of staff it has outside of Thailand, there is no plan to relocate its main office from Bangkok.

The Kyklo office in Bangkok


Source: TechCrunch – Funding and Exits

23 Dec

Theranos gets $100 million in debt financing to carry it through 2018, with some caveats

 Theranos has secured $100 million in debt financing. Yes, someone gave the blood testing company known for handing out questionable test results money.
First reported by Business Insider, the company reportedly told investors it had secured the money from Fortress Investment Group, a New York-based private equity firm that was acquired by Softbank earlier this year.
Of course, this is debt… Read More
Source: TechCrunch – Funding and Exits

31 Oct

Gaming accessories firm Razer to raise up to $550M in Hong Kong IPO

 Razer, the U.S.-Singapore firm that produces PCs and peripherals for gamers, is set to raise as much as $550 million from its Hong Kong IPO after it revealed its price range. The company first filed to go public in July, and today it confirmed that it plans to offer 1,063,600,000 shares at a range of HK$2.93-HK$4.00, that’s around $0.38-$0.51. If the full allocation sells at that top… Read More
Source: TechCrunch – Funding and Exits