Year: 2018

Luckin, a startup that vows to topple Starbucks’ dominance in China, announced on Wednesday that it’s lifted its valuation to $2.2 billion after raising $200 million in a series B funding round.

That came only five months after the coffee upstart, which soft-launched in January, picked up $200 million in investment. Luckin has been on a spending spree to open shop and burnt through $150 million within the first six months in operation, its founder said in July when the company had a cash reserve of 2 billion yuan, or roughly $290 million.

Luckin currently operates across 21 major Chinese cities, totaling more than 1,700 shops. For comparison, Starbucks’s footprint spanned 3,300 stores in China as of May, though one has to take into account that the Seattle coffee chain entered China nearly 20 years ago.

Different from Starbucks, Luckin’s brick-and-mortar facilities are a mix of sit-down cafes and pickup booths, which double as delivery hubs, and take-out kitchens that are solely for delivery staff to pick up caffeine-infused orders and put them in customers’ hands within 30 minutes.

As a result, Luckin managed to build a dense network targeting office workers who may be drawn to the idea of coffee delivery because they can’t leave their desk. There’s at least one Luckin location within a 500-meter radius anywhere in downtown Shanghai and Beijing, the company claimed.

The light speed at which Luckin has expanded in less than a year probably got on the nerves of Starbucks, which went on to team up with Alibaba-owned food delivery giant Ele.me in August to bring coffee to people’s doorstep. The American company aims to expand its delivery services to 30 cities in China by the end of 2018.

Luckin’s co-founder and chief executive officer Qian Zhiya, who is the former chief operating officer at one of China’s largest auto rental firms CAR Inc, said her startup will continue to invest in products, technology and business development to improve user experience following the new round.

Luckin raised the fresh capital from existing investors Singapore sovereign wealth fund GIC, Chinese government-controlled China International Capital Corporation, Joy Capital and Dazheng Capital. Liu Erhai, founding and managing partner of Joy Capital, joined Luckin’s board of directors following the close of the round. Liu’s investment portfolio includes Car Inc, Facebook’s old Chinese rival Renren and Hong Kong-listed game publisher iDreamsky.

As companies compete for talent, a startup that has built a platform to help ensure that the talent — once it’s working for you — doesn’t get bogged down by IT frustration, has raised a significant round of funding.

Lausanne, Switzerland-based Nexthink has nailed down $85 million in funding led by Index Ventures (which has a base in Geneva), with participation also from Highland Europe, Forestay Capital, Galéo Capital and TOP Funds and Olivier Pomel (co-founder and CEO of Datadog).

Nexthink’s CEO Pedro Bados said in an interview that the company will be using this round to expand its business globally and specifically in the US.

It will be doing this from a healthy base. The company already has 900 enterprise customers, covering no less than 7 million endpoints, using its platform to improve employees’ interaction and satisfaction with the IT tools that they are required to use for work. Customers include Adobe, Advocate Healthcare, BlackRock, Commerzbank, Safran, Sega HARDlight, Tiffany & Co., Vitality, Wipro and Western Union.

Network monitoring is a big and established area in the world of IT, where tech companies provide a wide array of solutions to identify and potentially fix network glitches across on-premise, cloud and hybrid environments.

What is only becoming more apparent now to organizations is that problems with the dozens of apps and other software that employees need to use can be just as much, if not more, of an issue, when it comes to getting work done — for example, because something is not working in the app, the worker is unsure how to do something, or there is a configuration issue.

That is the issue that Nexthink is tackling. The company installs a widget — it calls it a Collector — on a worker’s phone, tablet, laptop, desktop computer, or whatever device is being used. That Collector in turn monitors hundreds of metrics around how you are using your device, ranging from performance issues and policy breaches through to examining what software is being used, and what is not.

Nexthink’s algorithms both identify and even can anticipate when a problem is happening, and either provide a quick suggestion to fix it, or provide the right data to the IT team to help solve the problem.

In the “marketplace” created in an IT network, you might think of Nexthink as solving problems at two ends: for the IT team, reduces the number of calls it gets by helping solve problems and providing useful information in cases where they will really be needed. For the employees, it gives them a quick and hopefully helpful response so that they can get on with their work.

“Not only are employees happy and more productive, but costs go down on support,” Bados says.

Nexthink has actually been around for 14 years — Bados co-founded Patrick Hertzog andVincent Bieri not long after he finished his graduate research work in artificial intelligence at the polytechnic in Lausanne — and this latest round is larger than all the funding that the company had raised up to now, which had been $69 million. That in itself is a sign of how VCs and the industry are waking up to the opportunity to address the challenge of software usability and experience and how that might affect employee satisfaction and productivity.

“We’ve known the company for a while and have a lot of respect for Pedro as a CEO,” said Neil Rimer of Index Ventures in an interview. “Watching what they have been buildingn focusing on user experience and management, is an area that we find compelling.” Plus the customer caliber and loyalty helped, he said. “The retention and lack of churn are all very impressive.”

Unsurprisingly, there are a number of others also moving into the space, including Microsoft, VMware and Riverbed, as well as others like New Relic around the same neighborhood of services. For now, Bados says he sees these more as potential partners than rivals.

India has 22 official languages, which often presents a challenge for businesses that want to scale across the entire country. Video-sharing app Roposo, however, uses that to its advantage by offering content in several different regional languages. Based in Gurgaon, Roposo announced today that it has raised a $10 million Series C from returning investors Tiger Global and Bertelsmann, bring its total funding so far to $31 million. Roposo will use new funding for hiring, product development, and user acquisition.

Tiger Global first invested in Roposo’s Series A round and also returned for its Series B, according to Crunchbase. After an Indian startup funding spree, Tiger Global hit pause on new investments there for a couple of years before reportedly closing a $3.75 billion fund this year to focus on India, the U.S., and China. Roposo’s funding news comes a week after facility management company Facilio, another Indian startup, announced that it also received funding from Tiger Global.

Roposo originally launched as a fashion-based social network in 2013 before pivoting to videos in August 2017. It now claims 7.5 million monthly active users, 250,000 user-generated videos, and 160 million video views a day.

Co-founder and chief executive officer Mayank Bhangadia tells TechCrunch that Roposo’s pivot came from “a gradual evolution of the platform from a fashion social network into rebooting as a complete social video network to enter the next big level of game play.” Users still share videos about fashion, but now it is one of several topics, including music, comedy, spirituality, tech, travel, and current events (Roposo organizes videos into about 25 interest-based channels).

Roposo currently claims a total user base of 25 million. One obvious question is how the app plans to keep their attention as Facebook, Twitter, and Instagram each aggressively promote their live-streaming video features.

One of Roposo’s key advantages is its focus on multiple Indian languages (it offers content in 10 so far), which gives it an edge in smaller Indian cities and towns. Bhangadia says it also differentiates by creating a TV-like viewing experience and offering editing tools that make it easy for people to start broadcasting (about 30% of Roposo’s users have created content). Video creators can also make money based on how much user engagement their content generates.

Tencent Music, China’s largest streaming company, has raised $1.1 billion in a U.S. IPO after it priced its shares at $13 a piece ahead of a listing on the Nasdaq.

That makes it one of the largest tech listings of the year, but the pricing is at the bottom end of its $13-$15 range indicating that the much-anticipated IPO has felt the effects of an uncertain market. Indeed, the company is said to have paused the listing process, which it started in early October, for a time so choppy are the waters right now — and that’s not even mentioning a shareholder-led lawsuit that was filed last week.

Still, this listing gives TME — Tencent Music Entertainment, a spin-out of Tencent — an impressive $21.3 billion valuation which is just below the $30 billion that Spotify commanded when it went public earlier this year via an unconventional direct listing. TME was valued at $12 billion at the time of Spotify’s listing in Q1 of this year so this is also a big jump. (Meanwhile, Spotify’s present market cap is around $24 billion.)

The company operates a constellation of music streaming services in China which span orthodox Spotify-style streaming as well as karaoke and live-streaming services. Altogether, TME claims 800 million registered users — although there’s likely a little creative accounting or double counting across apps involved since the Chinese government itself says there are 800 million internet users in the entire country.

Notably, though, TME is profitable. The same can’t be said for Spotify and likely Apple Music — although we don’t have financials for the latter. That’s down to the unique business model that the Chinese firm operates, with subscription and virtual goods a major driver for its businesses, while Tencent’s ubiquitous WeChat messaging app helps it reach users and gain virality.

Tidy though the numbers are, its revenues are dwarfed by those of Spotify, which grossed €1.4 billion ($1.59 billion) in sales in its last quarter. For comparison, TME did RMB 8.6 billion ($1.3 billion) in revenue for the first six months of this year.

TME executives are taking that as a sign that there’s ample scope to grow their business, although it seems unlikely that will ever be as global as Spotify. The two companies might yet collaborate in the future though, since they are both mutual shareholders via a share swap deal that concluded one year ago.

You can read more about TME in our deep dive below.

We also wrote about the lessons Western services like Spotify and Apple Music can learn from TME.

Indonesia-based e-commerce firm Tokopedia is the latest startup to enter the Vision Fund after it raised $1.1 billion led by the SoftBank megafund and Alibaba.

SoftBank and Alibaba are existing investors in the business — the Chinese e-commerce giant led a $1.1 billion round last year, while SoftBank recently transitioned its shareholding in Tokopedia to the Vision Fund. That latter detail is what held up this deal which had been agreed in principle back in October, TechCrunch understands.

Tokopedia didn’t comment on its valuation, but TechCrunch understands from a source that the deal values the company at $7 billion. SoftBank Ventures Korea and other investors — including Sequoia India — also took part in the deal.

Founded nine years ago, Tokopedia is often compared to Taobao, Alibaba’s hugely successful e-commerce marketplace in China, and the company recently hit four million merchants. Despite this new round, CEO and co-founder William Tanuwijaya told TechCrunch that there are no plans to expand beyond Indonesia, which is Southeast Asia’s largest economy and the world’s fourth most populous country with a population of over 260 million.

“We do not have plans to expand beyond Indonesia at this moment. We will double down on the Indonesia market to reach every corner of our beautiful 17,000-island archipelago,” Tanuwijaya said via an emailed response to questions. (Tokopedia declined a request for an interview over the phone.)

In recent times, Tokopedia has moved into payments, including mobile top-up, and financial services, and Tanuwijaya hinted that it will continue its strategy to become a ‘super app.’

“We will go deeper and serve Indonesians better – from the moment they wake up in the morning until they fall asleep at night; from the moment a person is born, until she or he grows old. We will invest and build technology infrastructure-as-a-services, in logistics and fulfillment, payments and financial services, to empower businesses both online and offline,” Tanuwijaya added.

But, with the Vision Fund comes controversy.

A recent CIA report concluded that Saudi Crown Prince Mohammed bin Salman ordered the murder of journalist Jamal Khashoggi. The prince manages Saudi Arabia’s PIF sovereign fund, the gargantuan investment vehicle that anchored the Vision Fund through a $45 billion investment.

SoftBank chairman Masayoshi Son has condemned the killing as an “act against humanity” but, in an analyst presentation, he added that SoftBank has a “responsibility” to Saudi Arabia to deploy the capital and continue the Vision Fund.

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tanuwijaya told us via email, although it remains unclear exactly what Tokopedia could (or would) do even in the worst case scenario. Given that the Trump administration seems focused on continuing the status quo, the situation remains in flux although there’s been plenty of discussion around whether the Saudi link makes the Vision Fund tainted money for founders.

Son himself said he hadn’t heard of any cases of startups refusing an investment from the Vision Fund, but he did admit that there “may be some impact” in the future.

Tanuwijaya didn’t directly address our question on whether he anticipates a backlash from this investment. The Vision Fund’s recent deal with Coupang, Korea’s leading e-commerce firm, doesn’t appear to have generated a negative reaction.

Even the involvement of Alibaba throws up other ethical questions, given that it owns Lazada — which is arguably Southeast Asia’s most prominent e-commerce service.

Unlike Tokopedia, Lazada covers six markets in Southeast Asia and it maintains close links to Alibaba’s Taobao service, giving merchants a channel to reach into the region. According to sources who spoke to TechCrunch earlier this year, Tokopedia’s management was keen to take money from Alibaba’s rival Tencent, but the intervention from SoftBank forced it to bring Alibaba on instead.

Tanuwijaya somewhat diplomatically played down the rivalry and any rift, insisting that there is no impact on its business.

“Tokopedia is an independent company with a diversified cap table,” he said via email. “No single shareholder owns the majority of the company. We work closely with our shareholders’ portfolio companies and tap into available synergies.”

“For example, Tokopedia works closely with both Grab — a SoftBank portfolio — and Gojek — a Sequoia portfolio. We see Lazada having a different business model than us: Lazada is a hybrid of retail and marketplace model, whereas Tokopedia is a pure marketplace. Lazada is [a] regional player, we are a national player in Indonesia,” he added.

More to follow, please refresh for updates

A building in Facebook’s Menlo Park campus was evacuated after a bomb threat early Tuesday evening. Around 5PM, the Menlo Park police department warned people to avoid the area around the 200 block of Jefferson Drive as they investigated a bomb threat. Then they said 200 Jefferson Drive, the address of Facebook Building 24 and Instagram’s headquarters, has been evacuated and a bomb unit is on the scene.

Police activity in the 200 block of Jefferson Drive/Constitution Drive in Menlo Park due to a bomb threat. Avoid the area. https://t.co/9LgfA9ulgR

— Menlo Park PD (@MenloParkPD) December 12, 2018

Update to bomb threat at 200 Jefferson Drive: The building has been evacuated and the bomb unit is on scene. https://t.co/a8FwUhkwFz

— Menlo Park PD (@MenloParkPD) December 12, 2018

According to NBC Bay Area, a tip about a threat to the Facebook campus came from the New York Police Department’s Crimestopper Unit, which notified the Menlo Park Police.

#UPDATE: Tip about threat to Facebook campus came from NYPD’s Crimestopper Unit, which in turn notified Menlo Park Police.
LIVE VIDEO: https://t.co/Xfi07wxCWy pic.twitter.com/FvATOPBksR

— NBC Bay Area (@nbcbayarea) December 12, 2018

This is a developing story and will be updated as more information is available.

Two years ago, a couple of VCs from Shea Ventures, a 50-year-old, L.A. -based investment firm, banded together to create a Pasadena, Ca.-based early stage venture firm called Calibrate Ventures.

Investors clearly like what they’re building. Firm founders Kevin Dunlap and Jason Schoettler are today announcing that they have closed their debut effort with $80 million in capital commitments, including from Shea Ventures itself and from Foundry Group, the Boulder, Co.-based venture outfit that began dedicated a portion of its own capital to investing in other early-stage venture funds in 2016. (Both Foundry and the Bay Area-based venture firm True Ventures have been frequent syndicate partners of Dunlap and Schoettler, including during the 15 years the two spent with Shea.)

So what is Calibrate funding, exactly? Well, it has five portfolio companies so far. Three of these are bets on robotics companies, including the Bedford, Ma.-based flexible robot company Soft Robotics. It has also written checks to two software startups, including Broadly, an Oakland, Ca.-based mobile-first chat platform for local businesses. Dunlap says both fit into the firm’s mission of funding companies that augment today’s labor markets, or that enhance human productivity, or that simply offer cheaper, better services, like Dollar Shave Club, which he had backed while at Shea, or the home security company Ring, on whose board Dunlap had sat until the company sold for $1 billion to Amazon earlier this year.

As for the company’s obvious interest in robotics companies specifically, Dunlap says it’s far from a new area of fascination. In fact, Dunlap spent a year as an engineer with Nasa’s Jet Propulsion Lab in Pasadena. He and Schoettler have also been making related bets for years, including investing in Sphero (in their capacity as investors at Shea) and, more recently, under the Calibrate banner, funding Built Robotics, which retrofits construction equipment with the same sensor technology used in autonomous vehicles. As for what types of robotics companies interest them specifically, Dunlap says a company has to have a “subscription or service component to it. We don’t want to be investing in toy robot or a single-use robot and hoping that someone will want to buy version two or three later on.”

Either way, don’t expect to see the firm write too many checks. As Dunlap explains it, the firm, which is investing across the U.S., only plans to make 15 investments altogether with this new fund, investing between $3 million and $6 million into companies that are already seeing early revenue and that might be raising Series A rounds of between $10 million and $20 million.

“It’s important that the two of us do the work and spend time with all the times, and it’s important for us to do the work afterward, too,” Dunlap says, including referring Calibrate’s portfolio companies to potential future investors.

Thankfully, he says, unlike in years long past, that’s not the problem it once was for an L.A.-based firm. “Things have really matured here over the last five or six years,” he says. “Talent has been more of an issue in recent years than funding.” And nature seems to be solving for this, too. “You’re definitely starting to see more people moving here for the better weather and the cost of living. You’re also starting to see people leaving Dollar Shave Club and Snap and Honest Company and, over time, Ring.”

The duo area also bringing plenty of lessons learned to the table, they say, including the importance of “alignment, ad not just with founders but with other investment partners,” says Dunlap. It helps startups navigate around having “too much structure” involved in their financing rounds. It also keeps valuations “appropriate,” he says.

By the way, asked if he is seeing valuations soften at all with the zigs and zags of the public market, Dunlap says he isn’t, not in his part of the world, anyway. “When you’re talking about seed rounds around a concept or an idea, valuations can creep up, and those valuations may be coming down a bit right now.” When you’re instead “having a discussion with a company that has early revenue and metrics that you can point to, I’m not seeing any difference at all.”

Pictured, left to right: Kevin Dunlap and Jason Schoettler. Courtesy of Calibrate Ventures.

The Canadian government has granted bail to Meng Wanzhou, Huawei’s chief financial officer, 10 days after her arrest in Vancouver. The decision concludes a three-day court hearing in which the judge and the public prosecutor debated whether Wanzhou would breach her bail conditions.

Wanzhou, the daughter of Huawei founder Ren Zhengfei, has been accused of fraud with a maximum penalty of 30 years in prison. She was arrested by Canadian officials at the request of the U.S. government on December 1 while changing planes on her way to Mexico. As part of her bail conditions, the court has ordered her to pay C$10 million — about $7.5 million — and await U.S. extradition from her Vancouver home. According to reports, Wanzhou must relinquish her passport, wear an ankle bracelet and remain at home between the hours of 11 p.m. and 6 a.m.

The U.S. Department of Justice alleges Wanzhou misled American financial institutions and allowed an unofficial Huawei subsidiary, called SkyCom, to do business in Iran despite U.S. sanctions.

Huawei didn’t immediately respond to a request for comment.

Wix is taking a big step beyond website building today with the launch of a suite of products called Ascend.

PR Manager Matt Rosenberg explained that just as Wix was founded with the aim of “demystifying and democratizing how you get online,” Ascend has a similar mission: “You don’t have to be a developer and designer to bring the same thing to business management and marketing.”

Other website builders like Squarespace and Weebly (now owned by Square) have also introduced marketing tools, but Ascend seems like a particularly ambitious expansion, encompassing 20 products in areas like chat, memberships, email marketing and search engine optimization (in some cases, these are existing Wix products being brought under the Ascend umbrella).

For example, Nitzan Achsaf, the company’s vice president and general manager of customer experience, demonstrated how a (fictional) tennis instructor could use the various Ascend products to answer questions from and offer discounts to one customer interested in purchasing a tennis racket, while also interacting with and providing official price quotes to someone else looking to book a birthday party for their child.

“What we’re proud of is, there’s no juggling of vendors or of third-party platforms,” Rosenberg added.

In fact, all of a business’ interactions with a customer, regardless of channel, are routed into a single inbox, which can be accessed on any device — in the case of the tennis instructor, Achsaf said, “The whole conversation is [conducted via mobile phone] on the court, probably in-between sessions.”

Wix is also developing a workflow editor, so that a business’ website and other channels can respond automatically depending on how customers behave.

Ascend by Wix is available as a separate subscription, with pricing ranging from $9 to $45 per month. Technically, you could use it even if you don’t have a Wix subscription, but Achsaf said, “The tight integration into a Wix website is a very big advantage for our users.”

Right now, most participants in U.S. private placements must be “accredited” investors, meaning $200,000 annual income over multiple years or $1 million in net worth, not including your primary residence. These numbers have not changed since 1982, though inflation in the intervening decades has more than halved the real wealth they represent.

This means your mother, who owns a vacation home on Cape Cod, may be getting phone calls from boiler room broker-dealers. The wealth standard means your mother is considered qualified to evaluate such offers; a more sophisticated, but less wealthy individual is not.

Pending legislation addresses that. The Fair Investment Opportunities for Professional Experts Act is a revision to the 2014 JOBS Act. If you have a financial services license or are determined by the Securities and Exchange Commission (SEC) to have qualifying education or experience, it would allow you to invest, regardless of your wealth.

Proof of use versus proof of knowledge

The proof of knowledge approach is problematic. The advantage of the wealth-based standard for accreditation is it’s clear and straightforward.  A knowledge-based standard is more subjective, leading to potential disputes. Such a subjective standard may or may not open investment opportunities for people otherwise excluded by the wealth-based standard, but it’s sure to bring more revenue for lawyers.

Instead of a standard based on education or experience, the SEC ought to adopt a standard based on use — i.e. their contributions of time and talent that precede the investment. Call it “proof of use.”

The early growth of Facebook and internet protocols like HTML are analogies often used in crowdfunding and in crypto assets. If the volunteer developers who built the open-source internet protocols had been able to invest in them, they would be today’s internet moguls, alongside Jeff Bezos and Mark Zuckerberg. Meanwhile, early adopters, sellers and evangelists contributed tremendous value to Facebook and Amazon. If they had been able to invest, they’d have participated materially, too.

So-called “gig economy” platforms Airbnb and Uber have made similar recommendations to the SEC. Airbnb did so in a September letter to the SEC, advocating an update to rules governing equity-based employee compensation, which would allow them to distribute stock to hosts that use its platform without running up against the public-reporting limit of 1,999 shareholders. Uber had conversations in 2017 with the regulator, advocating similar changes for granting stock to its drivers. (In other venues, Uber has successfully argued its drivers are nothing like employees.)

I’m suggesting something a little different. If we are going to re-imagine a next generation of Facebooks that grow without information silos and monopolistic ambitions, network users must be able to contribute capital. Regulators could make this possible if they open the door for users who have been active with a product for a significant period of time to actually buy its stock.

Long-term, active use is a more objective standard than knowledge. Picking stocks based on individual experience as a professional or a consumer is also a time-honored principle, going back to one of Peter Lynch’s often-repeated mantras: “Invest in what you know.”

Civil’s failure

I’m not the first to suggest this. A journalism project called Civil used “proof of use” to describe how it would quiz would-be investors about journalism and their project, before allowing a purchase of the CVL token offered in an initial coin offering that sought to raise $24 million in a two-week crowdsale. The quiz and the other steps involved did not make it easy, even for veteran journalists.

Before selling any of their stock, Civil’s crowd-investors would have to take some action using the token. Voting on funding for a journalism project was one example offered (though this probably makes Civil’s token more like a security, not less). In this way, Civil hoped to be perhaps the first token crowdsale to legitimately demonstrate a so-called “utility token” exclusion from potentially applicable securities laws.

Civil’s crowdsale didn’t fail because of its self-imposed sophistication standard, or because the idea of a “utility token” is naïve in any business other than Chuck E. Cheese’s. It failed because it was trying to raise $24 million in two weeks for a community journalism project. It did raise $350,000, which to this former journalist sounds like a smashing success.

Real proof of use would be putting Civil’s $5 million seed round to work, demonstrating user traction — then opening its offering to its crowd of passionate users.

Proof of use = proof of users

Proof of use would have the added benefit of limiting the crowdfunding option only to companies that can actually attract users. Proof of that traction would be financed by wealthy investors who can bear the risk; for the growing company, proof of use would open a new financing option and a better path to reward its early adopters.

Right now, there is so much private money chasing deals, the best have no need to resort to crowdfunding. Broadening the accreditation standard only creates opportunities for bottom-tier deals or much less knowledgeable investors, or allows venture capitalists to front-run the entire crowd. This they already often do in crypto issuance, allowing their name on the deal to pump interest among retail investors who don’t realize they’re buying the opportunity at a higher price.

Proof of use would provide an additional fundraising avenue for products and services that are showing traction with users — one that would carry the added benefit of motivating the user base, besides the capital it brings. Right now, despite the billions raised by ICOs, users are scarce — only about 24,000 are active daily, across more than 2,000 decentralized applications, or Dapps.

I can think of three projects that have approached us at New Alchemy that would benefit from a reform like this. It would be a miracle if U.S. legislators and regulators were able to pull it through in time for their fundraises — which means they will likely exclude U.S. investors, again. I hope there will be better options for the next few that come along.