Month: September 2020

After raising their IPO price ranges, both JFrog and Snowflake priced above their refreshed intervals last night. At their final IPO prices, the two debuts are aggressively valued, showing continued optimism amongst public investors that cloud shares are an attractive bet, even if their growth is financed through a history of steep losses, as in the case of Snowflake .

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The JFrog IPO pricing is notable because it shows how much public investors are willing to pay for 50% growth and recent profits from a SaaS company. And Snowflake’s pricing is noteworthy for showing the value of huge growth and improving economics.

This morning we’ll explore the two companies’ final values, compare those results to their initial IPO price ranges and calculate their current revenue multiples based on last-quarter’s annual run rates. This is going to be fun.

Later today we’ll have updates on how they open to trade. For now, let’s get into the math and valuation nuance you and I both need to understand just where the public market is today as so many unicorns are either en route towards an IPO, or are standing just outside the pool with a single hoof dipped to check the temperature.

Price this, you filthy animal

JFrog priced its IPO at $44 per share, above its raised range of $39 to $41 per share and comically higher than its first price interval of $33 to $37 per share. Indeed, the company’s final IPO price was 33.3% higher than the lowend of its first proposed pricing range.

Though I doubt anyone expected the company to go for so little as $33 per share, JFrog’s pricing run shows strong demand even before it began to float.

If your sad-faced technology mantra is ‘we were promised flying cars and all we got were these shitty Internet trolls’ never fear, Berlin-based autonomous air mobility startup, Volocopter, wants to revive your sci-fi dreams.

It’s just kicked off presales for trips in its forthcoming electric air taxi service, VoloCity — albeit, there’s no date on when exactly (or where) the commercial service will fire up. But if you shell out for one of the 1,000 available pre-launch reservations — which it’s branding ‘VoloFirst’* — you’ll be able to look forward to a future flight of up to 15 minutes, within 12 months of the service’s commercial launch, whenever and wherever that will be.

“Services will start in 2-3 years,” a Volocopter spokeswoman told us. “Cities are not defined yet, as it is not clear which of the many cities we are in contact with for commercial start will make the race.”

The price for the limited edition joyride — which will include a video of your trip and a “limited edition, personalized certificate” — is €300 (~$355).

Volocopter notes that tickets can be reserved with a 10% deposit.

“Based on our public test flights and regulatory achievement record, we have paved the way to make electric flight in cities common in just a few years. With the start of reservations, we now invite our supporters and innovators around the world to join us and be amongst the first to experience this new and exciting form of mobility,” said Volocopter CEO Florian Reuter in a supporting statement.

“While the final certification for air taxis is still pending, we do have a detailed realistic timeline to launch commercial VoloCity flights in the next 2-3 years,” added Volocopter’s chief commercial officer, Christian Bauer, in another, further noting that VoloFirst ticket buyers will be able to get the latest updates on its progress and commercial launch plan.

Reservations for the VoloFirst flights are available via the Volocopter Reservation Platform.

The German startup undertook the first-ever manned flight of a purely electric multicopter back in 2011, and has gone on to demo numerous public flights with its full-scale aircraft — including public test flights at Singapore’s Marina Bay in October 2019 and the world’s first autonomous eVTOL flight in Dubai in 2017.

The company topped up its Series C funding round to $94M earlier this year, bringing its total raised to circa $132M.

It’s one of a number of flying taxi startups vying to get a commercial service off the ground. Others include EHang, Lilium and Airbus with its Vahana VTOL.

*Volocopter doesn’t guarantee ‘VoloFirst’ trip buyers will be the first public users of the air taxi service — rather it says these early birds will have “among the first” bragging rights

Pure Storage, the public enterprise data storage company, today announced that it has acquired Portworx, a well-funded startup that provides a cloud-native storage and data-management platform based on Kubernetes, for $370 million in cash. This marks Pure Storage’s largest acquisition to date and shows how important this market for multi-cloud data services has become.

Current Portworx enterprise customers include the likes of Carrefour, Comcast, GE Digital, Kroger, Lufthansa, and T-Mobile. At the core of the service is its ability to help users migrate their data and create backups. It creates a storage layer that allows developers to then access that data, no matter where it resides.

Pure Storage will use Portworx’s technology to expand its hybrid and multi-cloud services and provide Kubernetes -based data services across clouds.

“I’m tremendously proud of what we’ve built at Portworx: an unparalleled data services platform for customers running mission-critical applications in hybrid and multi-cloud environments,” said Portworx CEO Murli Thirumale. “The traction and growth we see in our business daily shows that containers and Kubernetes are fundamental to the next-generation application architecture and thus competitiveness. We are excited for the accelerated growth and customer impact we will be able to achieve as a part of Pure.”

When the company raised its Series C round last year, Thirumale told me that Portworx had expanded its customer base by over 100 percent and its bookings increased by 376 from 2018 to 2019.

“As forward-thinking enterprises adopt cloud native strategies to advance their business, we are thrilled to have the Portworx team and their groundbreaking technology joining us at Pure to expand our success in delivering multi-cloud data services for Kubernetes,” said Charles Giancarlo, Chairman and CEO of Pure Storage. “This acquisition marks a significant milestone in expanding our Modern Data Experience to cover traditional and cloud native applications alike.”

E-bike startup VanMoof, has raised a $40 million investment from Norwest Venture Partners, Felix Capital and Balderton Capital. The Series B financing comes after a $13.5 million investment in May. The funding brings VanMoof’s total raised to $73 million and furthers the e-bike brand’s ultimate mission of getting the next billion on bikes.

The Series B funding will be used to meet the increased demand, shorten delivery times and build a suite of rider service solutions. It also aims to boost its share of the e-bike market in North America, Europe and Japan.

Partly driven by the switch of commuters away from public transport because of the COVID-19 pandemic, the e-bike craze is taking off.

Governments are now investing in cycling infrastructure and the e-bike market is set to surpass $46 billion in the next six years, according to reports.

Ties Carlier, co-founder VanMoof commented: “E-bike adoption was an inevitable global shift that was already taking place for many years now but COVID-19 put an absolute turbo on it to the point that we’re approaching a critical mass to transform cities for the better.”

VanMoof says it realized a 220% global revenue growth during the worldwide lockdown and sold more bikes in the first four months of 2020 than the previous two years combined.

Stew Campbell, Principal at Norwest said: “Taco, Ties and the VanMoof team have not only built an unparalleled brand and best-selling product, but they’re reshaping city mobility all over the world.”

Colin Hanna, Principal at Balderton: “As the COVID-19 crisis hit supply chains worldwide, VanMoof’s unique control over design and production was a key advantage that allowed the company to react nimbly and effectively. Moreover, VanMoof’s direct to consumer approach allows the company to build a close relationship to their riders, one that will be strengthened by new products and services in the years to come.”

VanMoof launched the new VanMoof S3 and X3 in April of this year. I reviewed the S3 here and checked out the earlier X2 version here.

There are some changes at the helm of Blade, the French startup behind Shadow. Mike Fischer is going to work for the company and become Chief Executive Officer. Jean-Baptiste Kempf is joining the company as Chief Technology Officer.

Shadow is a cloud computing service for gamers. For a monthly subscription fee, you can access a gaming PC in a data center near you. Compared to other cloud gaming services, such as GeForce Now or Google’s Stadia, Shadow provides a full Windows 10 instance. You can install anything you want — Steam, Photoshop or Word.

The company has been growing rapidly over the past few years and raised more than $100 million in total. Last year, the company announced ambitious plans with a wide-ranging partnership with OVHcloud and high-end configurations.

At the same time, co-founder Emmanuel Freund stepped aside as CEO with Jérôme Arnaud taking over. There have been multiple delays with the new product offering and the company is no longer working with OVHcloud. Freund left the company in April and, as INpact Hardware reported in July, Arnaud has been on the way out for a couple of months.

All of this leads us to today’s announcement. Mike Fischer, the company’s new CEO, has been quite active in the video game industry. In the past, he has worked at Sega, Bandai Namco, Microsoft and Epic Games. He was the president and CEO of Square Enix between 2010 and 2013.

Jean-Baptiste Kempf is a well-known figure in the open source community. For the past 14 years, he has been the president of VideoLAN, the organization behind popular media player VLC. VideoLAN has also contributed to widely used video encoding technologies. He also founded VideoLabs, a company that works on VLC-related integrations and support.

The company is still working on rolling out the new Ultra and Infinite configurations to European users who pre-ordered. It originally planned to start rolling out new tiers in the U.S. starting this summer but the company now says it expects to launch these new tiers by the end of the year.

For customers in the U.S., there are no pre-orders, there will simply be a button to upgrade in your account when it’s available. LG invested in the company earlier this year and the service will go live in South Korea later this year as well.

Suranga Chandratillake has (almost) seen it all. After being the early CTO for Autonomy, he went on to found the blinkx video search engine in 2004, long before many thought we’d even need one. He scaled the company to San Francisco and the US market, eventually IPO’ing blinkx for over $1 billion. On his return to Europe, he joined Balderton Capital, of Europe’s top-tier VCs, and has invested in many of Europe’s hottest startups. As part of TechCrunch Disrupt 2020, we caught up with him.

Last year Balderton raised a $400 million fund. But has the way that fund is being invested changed because of COVID-19?

“In many ways, nothing has changed,” he said. ”We have been a series a focused pan-European VC for 20 years… If anything, I think COVID-19 has demonstrated how tech can help us get through various challenges, and I mean all of the work from home stuff…It’s been really weird, not being able to spend time in person with [entrepreneurs] those people… But the overall strategy of investing in tech in Europe, it’s exactly the same as it was before.”

Although it’s not that simple. For instance, Balderton invested in car rental startup Virtuo to the tune of 20 million euros. And travel is not exactly a great sector right now.

Chandratillake admitted, “some industries we have had challenges this year.” However, he said they “had a difficult April and May, but they’ve actually had a booming August” as holidays came back.

“I would say that by and large, most [startups] have navigated fairly well.” He noted that European governments have put in place funds to support tech companies, and of course, other sectors of tech have boomed.

During the pandemic lockdown, many consumers jumped into virtual networking via apps like Zoom and Houseparty, but Balderton did a small investment into a stealth-mode startup called Riff, which, not unlike Clubhouse, is using audio in a new way. He hinted that this will be an enterprise-play on Audio.

“Funnily enough, the closest to it right now is probably Discord which obviously is already a large network, but really a very much a vertical app aimed at gamers… But I think there’s a there’s an opportunity to do something similar in enterprise in the same way that Slack, you know, arguably got a lot of its initial cues from consumer messaging [such as] from WhatsApp or Facebook Messenger. I think we’ll see a similar thing where the enterprise gets something that’s based a bit on what we’ve seen in consumer products.”

He said Riff solves the “classic cliche of the watercooler moment when you bump into someone in the office and have a chat, and it’s really hard to do that in this new reality.”

He also said there are interesting sub-markets following on in the coattails of Zoom “that also need to be worked out.” Balderton invested in a company called DemoDesk (a cloud-based screen sharing platform), which looks at, for example, “webinars and sales meetings and specific kinds of conversations like that, where the requirements are a bit different.”

Chandratillake is of the opinion that the world will have to live with COVID-19 for many years, but that new solutions will emerge to mitigate the downsides: “Anything that helps you stay more connected to your colleagues and your co-workers is going to be interesting from a VC point of view, right?”

In terms of the diversity issues thrown up by the Black Lives Matter movement, Balderton has backed initiatives such as Diversity VC in Europe.

“If you’ve got a more diverse venture capital industry, they will start to back more diverse founders doing more diverse things, and that will naturally propagate. That’s really important to me and that’s a big part of what we focused on….

“In the last three years, we’ve hired more women than we have men into the investment team. We recently hired our first female general partner directly into the firm… three more people of color in the partnership and so on. So it’s beginning to change to where it should be, but I think it’s one of these things where you have to battle on many fronts.”

Europe will propose its own digital tax early next year if there’s no agreement at a global level on how to update taxation rules for the Internet age, EU president Ursula von der Leyen said today, reiterating the bloc’s determination not to let tax reform slide in a ‘state of the union’ speech to the European Parliament.

“We will spare no effort to reach agreement in the framework of OECD and G20. But let there be no doubt: should an agreement fall short of a fair tax system that provides long-term sustainable revenues, Europe will come forward with a proposal early next year,” she told MEPs.

In the wide-ranging speech — which also called for the 2020s to be Europe’s “digital decade” — von der Leyen committed the bloc to spending a fifth (€150BN) of the €750BN coronavirus support fund announced earlier this year on digital investments.

“There has never been a better time to invest in European tech companies with new digital hubs growing everywhere from Sofia to Lisbon to Katowice,” she said. “We have the people, the ideas and the strength as a Union to succeed. And this is why we will invest 20% of NextGenerationEU on digital.”

“We are reaching the limits of the things we can do in an analogue way. And this great acceleration is just beginning. We must make this Europe’s Digital Decade,” von der Leyen added.

“We need a common plan for digital Europe with clearly defined goals for 2030, such as for connectivity, skills and digital public services. And we need to follow clear principles: the right to privacy and connectivity, freedom of speech, free flow of data and cybersecurity.

“But Europe must now lead the way on digital – or it will have to follow the way of others, who are setting these standards for us. This is why we must move fast.”

Beneath the rousing ‘digital sovereignty’ rhetoric, the speech didn’t offer much new on the tech policy front — but the EU president confirmed that updates to Europe’s competition rules and regulation on the use of AI are coming next year.

The Commission is currently consulting on whether a new competition tool is needed to respond to digital network effects that can lead to tipping markets, as well as more widely around a forthcoming Digital Services Act (which didn’t get any direct mentions in the speech).

“On personalized data — business to consumer — Europe has been too slow and is now dependent on others,” she said. “This cannot happen with industrial data. And here the good news is that Europe is in the lead — we have the technology, and crucially we have the industry.”

“We presented our new industry strategy in March to ensure industry could lead the twin green and digital transition. The last six months have only accelerated that transformation — at a time when the global competitive landscape is fundamentally changing. This is why we will update our industry strategy in the first half of next year and adapt our competition framework which should also keep pace,” she said.

Tech investment priorities

Priorities for digital investment she highlighted are the plan to build a European cloud — which will be based on the GaiaX federated data infrastructure that’s developing common requirements for pan-EU data sharing. (This is part of a major Commission push around industrial data reuse, announced earlier this year.)

The second area of investment focus named was artificial intelligence — with the EU president citing the tech’s potential to deliver innovations such as “precision farming in agriculture, more accurate medical diagnosis and safe autonomous driving”. However she also emphasized the importance of having rules in place to wrap around the tech, reiterating EU lawmakers’ conviction that a framework is needed to ensure what they dub ‘human-centric’ AI.

Earlier this year the EU put out a white paper — setting out proposals for regulating ‘high risk’ applications of artificial intelligence. Though the final shape of the proposal will have to wait for 2021.

von der Leyen also suggested lawmakers are looking for ways to give consumers more control over how their data is used in the big data-powered AI era.

“We want a set of rules that puts people at the centre. Algorithms must not be a black box and there must be clear rules if something goes wrong. The Commission will propose a law to this effect next year,” she said today.

“This includes control over our personal data which [we] still have far too rarely today. Every time an App or website asks us to create a new digital identity or to easily log on via a big platform, we have no idea what happens to our data in reality.”

To this end, she said the Commission wants to develop “a secure European e-identity” that EU citizens could use anywhere in the bloc — “to do anything from paying your taxes to renting a bicycle”. It would be “a technology where we can control ourselves what data and how data is used”, she added, riffing on her digital sovereignty theme.

The Commission is reviewing existing regulations around eID, including running a consultation that’s due to end next month — where it says it’s looking at barriers to uptake of eID and trusted services, and considering how to evolve the framework towards an “EU digital identity”.

It now sounds like lawmakers have concrete plans to overhaul eID — with the aim of promoting a proprietary digital authentication mechanism that can help drive the wider strategy around digitization and data reuse.

The third focus for ‘COVID-19 relief’ digital spending is infrastructure, with a push planned around broadband access.

“The investment boost through NextGenerationEU is a unique chance to drive [broadband] expansion to every village. This is why we want to focus our investments on secure connectivity, on the expansion of 5G, 6G and fiber,” said von der Leyen, adding: “NextGenerationEU is also a unique opportunity to develop a more coherent European approach to connectivity and digital infrastructure deployment.”

Her speech also highlighted a planned €8BN investment in developing next-gen supercomputers. And reiterated calls for European industry to develop its own next-generation chips — “that will allow us to use the increasing data volumes energy-efficient and securely”.

“None of this is an end in itself — it is about Europe’s digital sovereignty, on a small and large scale,” she added.

Green Deal

von der Leyen also spend a fair amount of time on the environment and the risks attached to climate change.

The European Green Deal is set to account for a larger chunk of COVID-19 relief spending than digital projects — although there could, presumably, be some overlap, with von der Leyen talking about “a world where we use digital technologies to build a healthier, greener society”.

She said 37% (€277BN) of the NextGenerationEU fund to be spent directly on Green Deal objectives.

This spending looks set to give a major boost to electric cars via investment in charging infrastructure. Other areas of focus she mentioned are hydrogen replacing coal for industrial production; and adapting the construction industry to make it more sustainable and less polluting, including by the use of AI and smart technologies.

“NextGenerationEU should invest in lighthouse European projects with the biggest impact: hydrogen, renovation and 1 million electric charging points,” she said. “I want NextGenerationEU to create new European Hydrogen Valleys to modernise our industries, power our vehicles and bring new life to rural areas.”

“Our buildings generate 40% of our emissions. They need to become less wasteful, less expensive and more sustainable,” she added. “And we know that the construction sector can even be turned from a carbon source into a carbon sink, if organic building materials like wood and smart technologies like AI are applied.”

The systemic change needed to support a wholesale shift to a circular economy was dubbed”a new cultural project for Europe”.

“Every movement has its own look and feel. And we need to give our systemic change its own distinct aesthetic – to match style with sustainability,” she said, announcing a plan to set up “a new European Bauhaus” — aka “a co-creation space where architects, artists, students, engineers, designers work together to make that happen”.

Outfunnel, a startup that has built software to help companies “bridge the gap between marketing and sales functions,” has quietly raised €1.1 million in funding.

The pre-seed round was led by Paua Ventures and byFounders, with participation from Lemonade Stand, Omnisend and various angel investors. The latter includes Bolt co-founders Markus and Martin Villig, Matterport CMO Robin Daniels, Pipedrive co-founder Ragnar Sass, and long-time Skype exec Sten Tamkivi, amongst others.

Formed in 2017, Outfunnel’s founders are marketing veteran Andrus Purde (previously of Skype and Pipedrive), Andris Reinman (creator of open-source email projects like Nodemailer and WildDuck) and Markus Leming. The startup has developed what it dubs a “revenue marketing automation tool” that is designed to enable sales and marketing functions to work together to drive revenue.

“SMBs still struggle to unite sales and marketing data,” Purde tells me. “Money and time is wasted setting up workflows, connecting databases with digital duct tape and manually pulling reports… This [also] means that everyone misses opportunities, as well as revenue goals”.

Furthermore, salespeople have no context for sales conversations and don’t know which leads are ready to buy, and the leadership don’t easily have “big picture” visibility into the effectiveness of campaigns. “Last but not least, all of us receive lots of ‘spam’ instead of relevant messages,” he says.

To solve this, Outfunnel’s secret sauce sees it integrate deeply with CRMs (currently Pipedrive, Copper, and Hubspo, with more to follow) coupled with various features such as automated emails in sync with CRM data, reporting, and precise targeting. The startup has already won over more than 400 paying customers, with North America being its biggest market, followed by larger European countries and Australia.

“Our typical customer is a small to medium-sized business that needs both sales and marketing and where sales cycles are longer, not transactional,” adds Purde. “That’s roughly 25% of all SMBs according to our estimations e.g. businesses selling professional services, consulting, real estate, healthcare… That said, we have some better-known scale-ups as customers, too, such as Bolt”.

Norwegian company Kahoot originally made its name with a platform the lets educators and students create and share game-based online learning lessons, in the process building up a huge public catalogue of gamified lessons created by its community. Today the startup — now valued at over $2 billion — is announcing an acquisition to give a boost to another segment of its business: corporate customers.

Kahoot has acquired Danish startup Actimo, which provides a platform for businesses to train and engage with employees. Kahoot said that the purchase is being made with a combination of cash and shares, and works to to a total enterprise value of between $26 million and $33 million for the smaller company, with the sale expected to be completed in October 2020.

It may sound like a modest sum in a tech market where companies are currently and regularly seeing paper valuations in the hundreds of millions at Series A stage, but it also presents a different kind of trajectory both for founders and their investors.

This is actually a strong exit for Actimo, which had raised less than $500,000, according to data from PitchBook. And it puts Actimo under the wing of a company that has been scaling globally fast, finding — like others in the areas of online education and remote working — that the current state of social distancing due to Covid-19 is resulting in a boost to its business.

To give you an idea of the scale and growth of Kahoot, the company says that currently it has over 1 billion active users, on top of some 4.4 billion users in aggregate since first launching the platform in 2013. In the last 12 months, some 200 games have been played on its platform. In June, when Kahoot announced that it had raised $28 million in funding, it told us that 100 million games had been played.

In light of its growth and the future opportunity — even putting aside the progression of the coronavirus, it looks like remote work and remote learning will at the least become a lot more common as a longer-term option — the company has also seen a rise in its valuation. With some of its shares traded on the Merkur Market in Norway, the company currently has a market cap of 18.716 billion Norwegian Krone, which at today’s rates is about $2.08 billion. That figure was $1.4 billion in June.

Kahoot’s targeting of the corporate sector is not new. The company has been building a business in this space for years. It says that in the last 12 months, it logged 2 million sessions across 20 million participating “players” of its corporate training “games”, with some 97% of the Fortune 500 among those users. Customers include the likes of Facebook (for sales training), Oyo (hospitality training and onboarding) and Qualys (for taking polls during a conference), among others.

Critically, while a lot of Kahoot’s audience is in education, its corporate most of the revenues come in, one reason why it’s keen to grow that segment with more services and users.

The aim with Actimo, Kahoot says, is to build out a product set aimed at helping organisations with company culture — which, with many organisations now going on eight months and counting of entire teams working regularly outside of their physical offices, has grown as a priority.

Keeping a team feeling like a team, and an individual feeling more than a transactional regard for an employer, is not a simple thing in the best of times. Now, as we continue to work physically away from each other, it will take even more tools and efforts to get the balance right.

In that context, Actimo’s solution is just one aspect, but potentially an interesting one: it has built a platform where employees can track the training that they have done or need to do, engage with other co-workers, and provide feedback, and employers can use it to generally track and encourage how employees are engaging across the company and its various efforts. It counts some 200 enterprises, including Circle K, Hi3G, and Compass Group, among its customers, and has current ARR of $5 million.

For comparison, Kahoot, in its Q2 financials published in August, reported ARR of $25 million, with invoiced revenue for the quarter at $9.6 million, growing some 317% on the same quarter a year before. The company has also raised some $110 million in private funding from the likes of Microsoft and Disney.

As Kahoot looks to find more than just a transient place in a company’s IT and software fabric — transience of attention always being a risk with anything gaming-based — it makes a lot of sense to pick up Actimo and work on ways of coupling the platform with its other corporate work. You can also imagine a time when it might create a similar kind of dashboard for the educational sector.

“We are excited to welcome the Actimo team to be part of the fast-growing Kahoot! family,” said Kahoot! CEO, Eilert Hanoa, in a statement. “This acquisition will further extend Kahoot!’s corporate learning offerings, by providing solutions tailored for the frontline segment, as well as to solidify company culture and engagement among remote and distributed teams in companies of all types and sizes. This continues our expressed ambition to also grow through M&A by adding strategic capabilities that we can leverage across our global platform.”

“We are thrilled to join forces with Kahoot! in our mission to develop next-level solutions that connect remote employees and boost employee engagement and productivity,” said Eske Gunge, CEO at Actimo, in a statement. “Being part of Kahoot! and with our experience from working with innovative and ambitious enterprises across industries, we can together set a new standard for corporate learning and engagement.”

At the beginning of the previous decade, Facebook had a tiny presence in India. It had just started to slowly expand its team in the country and was inking deals with telecom operators to make access to its service free to users and even offer incentives such as free voice credit.

India’s internet population, now the second largest with more than 500 million connected users, itself was very small. In early 2011, the country had fewer than 100 million internet users.

But Facebook ended up playing a crucial role in the last decade. So much so that by the end of it, the social juggernaut was reaching nearly every internet user in the country. WhatsApp alone reaches more than 400 million internet users in India, more than any other app in the country, according to mobile insight firm App Annie.

This reach of Facebook in India didn’t go unnoticed. Politicians in the country today heavily rely on Facebook services, including WhatsApp, to get their message out. But it has also complicated things.

Rumors have spread on WhatsApp that cost lives, and politicians from both the large political parties in India in recent weeks have accused the company of showing favoritism to the other side.

To address these issues, and the role Facebook wishes to play in India, Ajit Mohan, the head of the company’s business in the country, joined us at Disrupt 2020. Following are some of the highlights.

On controversy

A recent report in WSJ claimed that Ankhi Das, one of Facebook’s top executives in India, decided against taking down a post from a politician from the ruling party. She did so, the report claimed, because she feared it could hurt the company’s business prospects in India.

In Mohan’s first interview since the controversy broke, he refuted the claims that any executive in the country holds power to influence how Facebook enforces its content policy.

“We believe that it’s important for us to be open and neutral and non-partisan,” he said. “We have deep belief and conviction that our enabling role is as a neutral party that allows speech of all kinds, that allows expression of all kinds, including political expression, and a lot of the guidelines that we have developed are to make sure that we really enable our diversity of expression and opinion so long as we’re able to make sure that the safety and security of people are protected.”

Mohan said the internal processes and systems inside Facebook are designed to ensure that any opinion and preference of an employee or a group of employees is “quite separate from the company and the company’s objective enforcement of its own policies.”

He said individuals can offer input on decisions, but nobody — including Ankhi Das — can unilaterally influence the decision Facebook takes on content enforcement.

“We do allow free expression inside the company as well. We don’t have any constraints on people expressing their point of view, but we see that separate from the enforcement of our content policy. […] The content policy itself, in the context of India, is a team that stands separate from the public policy team that is led by Ankhi,” he added.

On India and monetization

Even as Facebook has amassed hundreds of millions of users in India, the world’s second largest market contributes little to its bottom line. So why does Facebook care so much about the country?

“India is in the middle of a very exciting economic and social transformation where digital has a massive role to play. In just the last four years, more than 500 million users have come online. The pace of this transformation probably has no parallel in either human history or even in the digital transformation happening in countries around the world,” he said.

“For a company like ours, if you look at the family of apps across WhatsApp and Instagram, we believe we have a useful role to play in fueling this transformation,” he said.

Even as Facebook does not generate a lot of revenue from India, Mohan said the company has established itself as one of the most trusted platforms for marketers. “They look to us as a material partner in their marketing agenda,” he said.

He said the company is hopeful that advertising as a GDP will go up in India. “Therefore ad-revenue will become substantial over time,” he said.

For Facebook, India is also crucial because it allows the company to build some unique products that solve issues for India but could be replicated in other markets. The company is currently testing an integration of WhatsApp, which currently does not have a business model despite having over 2 billion users, with new Indian e-commerce JioMart, to allow users to easily track their orders.

“We think there is opportunity to build India-first models, experiment at scale, and in a world where we succeed, we see huge opportunity in taking some of these models global,” he said.

Facebook as a VC

Facebook does not usually invest in startups. But in India, the company has invested in social-commerce firm Meesho, online learning platform Unacademy — it even participated in its follow-up round — and it wrote a $5.7 billion check to Jio Platforms earlier this year. So why is Facebook taking this investment route in India?

“We wanted to create a program for taking minority investments in early-stage startups to figure out how we could be helpful to startup founders and the ecosystem as a whole. The starting point was backing teams that were building models that in some ways were unique to India and could go global. Since we made an investment in Meesho, they have made a strong thrust in Indonesia. These are the kind of companies where we feel we can add value as well as we can learn from these startups,” he said.

The partnership with Jio Platforms follows a different rationale. “The transformation we talked about in India in the last few years, Jio triggered it,” he said. Other than that, Facebook is exploring ways to work with Jio, such as with its partnership with Jio’s venture JioMart. “It can really fuel the small and medium business that is good for the Indian economy,” he said.

Mohan said the company continues to explore more opportunities in Indian startups, especially with those where the teams think Facebook can add value, but he said there is no mandate of any kind that Facebook has to invest in, say dozens of startups in three to four years. “It’s not a volume play,” he said.

During the Q&A part of the interview, Mohan was asked if Reliance Industries, which operates Jio Platforms and Reliance Retail, will receive any special access on Facebook’s services. What if Amazon, BigBasket, Grofers, or Flipkart want to integrate with WhatsApp, too? Mohan said Facebook platform is open for every firm and everyone will receive the same level of access and opportunities.

In the interview, Mohan, who ran the Disney-run Hotstar on-demand streaming service in India, also talked about the growing usage of video in India, the state of WhatsApp Pay’s rollout in the country, what Facebook thinks of India’s ban on Chinese apps, and much more. You can watch the full interview below.