Category: UNCATEGORIZED

Alphabet’s X ‘Moonshot Factory’ subsidiary has a lot of cutting edge projects in development, so it’s always exciting when one of them gets ready for real-world deployment. On Tuesday, X announced that its ‘Project Taara’ high-speed optical wireless broadband endeavor is working with internet provider Econet and its subsidiaries to begin rolling out its tech across Sub-Saharan Africa.

This deployment follows a series of small pilots in Kenya specifically, but now Taara and Econet are ready to start adding high-speed wireless optical links to supplement and enhance Econet service reach more broadly, starting with Liquid Telecom customers in Kenya. Taara is yet another approach to extending the reach of broadband networks to parts of the Earth that have typically not had access or high-speed connections, due primarily to infrastructure challenges.

X’s Taara is essentially a fiber optic network cable without the cable – it uses a narrow, invisible beam of light to transmit data between two terminals that can span up to nearly 12.5 miles, while providing transfer speeds up to 20 Gbps, which means they can be used to connect thousands of customers or households while providing speeds high enough for streaming high quality video.

Taara’s technology can essentially be used to patch gaps in traditional fiber optic networks, spanning rivers or crossing terrain that would be hard or impossible to span using either under or aboveground cable. They do require unbroken line of sight, so X sets them atop tall structures to help ensure that’s achieved, and it also means they’re best suited to plugging holes in traditional networks, not necessarily building out entirely new ones. But contrasted to efforts like Alphabet’s Loon stratospheric balloons or SpaceX’s Starlink satellite-based network, it’s relatively easy and cheap to get this up and running and working with existing network infrastructure.

X has been piloting Taara in a number of deployments around the world, but this is a sign that it’s maturing towards a commercialization stage that could see it in service as a supplement to existing networks in a lot more places relatively soon.

The agency predicts that India and the European Union will also jump in and add an additional 10% of renewable capacity — marking the fastest period of growth for the industry since 2015.

Patreon and Acast are teaming up to make it easier for podcasters to publish episodes that are only available to the patrons financially supporting them on Patreon.

Most paywall solutions for podcasts are pretty clunky or limited. That’s why Acast launched technology last year that allows publishers to release paywalled episodes that listeners can access on any podcast app.

Patreon, meanwhile, already supports the creation of a patron-only RSS feed, and Brian Keller, the company’s director of creator success said that “exclusive content is the biggest and most effective benefit that [podcasters] can offer to their members.”

Still, he said that many of the podcasters on Patreon are asking for a better solution, which is where the Acast partnership comes in.

Through the integration, a podcaster can link to their Patreon account in their public podcast show notes. If someone clicks on the link and they aren’t already a patron, they can sign up. If they are a patron, their membership level will be authenticated and they’ll be directed to a listening experience allows them to subscribe, via the podcast app of their choice, to a feed that combines whatever patron-only content they should have access to, plus all the free content included in the public feed.

So from the patron/listener experience, you should only need to sign up once, then you’ll can get your premium episodes without any extra work. The podcaster, meanwhile, can manage their public and private feeds from a single dashboard, while also getting access to detailed listener data from Acast.

Leandro Saucedo, Acast’s chief strategy and business officer, noted that the companies aren’t forcing any Patreon creators to go down this route. They can still distribute their podcasts with whatever platform or tool they were using before.

“With this partnership in place, we hope that usage will be high as possible, but we’re not forcing anybody into it,” Saucedo said.

At the same time, he suggested that there should be a seamless migration process for any podcasters making the switch to Acast, without requiring any listeners to subscribe to a new feed.

Patreon and Acast have already been beta testing this integration with select podcasts, including  Sleep With Me and 90 Day Gays.

“I love the Acast integration!” said Sleep With Me’s Drew Ackerman in a statement. “The analytics let me know that patrons are listening to the content and give me clear insight into exactly what and how they’re consuming it. It’s secure and easy for patrons to get set up, and the fact that there is only one link to share makes it simple for listeners to find the content and brings new patrons to our membership!”

Berlin-based micro-mobility startup Tier has raised a significant Series C round of $250 million. SoftBank Vision Fund 2 is leading the round, which proves that the Vision Fund team is still focused on high-risk, high-potential bets.

As a reminder, SoftBank has invested in many late-stage funding rounds through its Vision Fund team. Portfolio companies include Nuro, Getaround, GetYourGuide, DoorDash, Grab and WeWork. But this is the first time the company is investing in a scooter-sharing startup.

Tier’s existing investors Mubadala Capital, Northzone, Goodwater Capital, White Star Capital, Novator and RTP Global are also participating in today’s funding round. According to the Financial Times, the company is now valued just below $1 billion.

While Tier isn’t a well-known brand in the U.S., the company has been expanding rapidly across Europe. It now operates in 80 cities across ten countries. There are 60,000 electric scooters available in the app.

Like other e-scooter rentals startups, such as Lime, Bird and Dott, Tier lets you unlock a scooter using an app and lock it somewhere else. You get billed by the minute.

With the new influx of cash, the company plans to expand to more cities, deploy more vehicles and launch new products. The startup is also in the process of securing an important credit line to finance more vehicles.

Tier is also trying to differentiate itself from competitors. For instance, the company has been working on the fourth generation of its scooter with user-swappable batteries.

Most scooter startups already feature swappable batteries integrated in the deck. Micro-mobility companies roam around cities to replace those batteries. But Tier wants to expose those batteries so that users can swap those batteries themselves.

That’s why Tier wants to build energy networks in European cities. Small shops can choose to partner with Tier so that they can offer battery docks with four slots. Users can take a minute at the end of their ride to swap the battery and earn free credit. That battery network is reminiscent of Gogoro’s network of charging stations in Taiwan.

Tier, like Dott, sees itself as a logistics company, not a sharing-economy company. Instead of bringing costs down by relying on underpaid freelancing partners, the company tries to optimize its processes and relies on a centralized system.

As for other differentiating factors, Tier is starting to attach a box below the handlebar to store a foldable helmet for its users. When old scooter models are phased out, Tier sells refurbished scooters to German consumers on myTIER. The company also acquired electric mopeds in Berlin.

According to Business Insider, Tier has been profitable on an EBITDA basis for the third quarter of 2020. But the company reported some losses during the first half of the year. There is some seasonality with scooter rides as people are more likely to ride a scooter during the summer season.

It’s also hard to predict how the market will evolve due to the ongoing COVID-19 pandemic. But Tier now has enough cash to stick around for a while.

Debates over anti-competitive practices amongst China’s internet firms resurface every year in the lead up to Singles’ Day, a time when online retailers exhaust their resources and deploy sometimes sneaky tactics to attract vendors and shoppers. This year, just a day before the world’s largest shopping festival was scheduled to fall on November 11, China’s market regulator announced a set of draft rules that could rein in the monopolistic behavior of the country’s top internet firms.

Over the years, e-commerce leaders Alibaba, JD.com, Pinduoduo, food delivery platform Meituan, social giant Tencent and other major industry players have been accused of unfair competition to various extent. Behavior targeted by Beijing’s new proposal includes price discrimination among consumers, preferential treatment for merchants who sign exclusive agreements with platforms, and compulsory collection of user data.

Some of China’s largest tech companies saw their shares drop on Tuesday afternoon trading in Hong Kong: Alibaba by 5.1%, JD.com by 8.78%, Meituan by 10.5%, and Tencent by 4.42%.

Meituan, JD.com and Pinduoduo declined to comment on the draft rules. Tencent and Alibaba cannot be immediately reached.

The aim of the regulatory proposal is “to prevent and stop monopolistic practices in internet platforms’ economic activity, to lower compliance costs for law enforcers and business operators, to enhance and improve antitrust regulations on the platform economy, to protect market fairness, to ensure the interests of consumers and society, and to encourage the healthy and continuous development of the platform economy.”

In other words, China wants to restore order in its sprawling internet industry, which has given rise to some of the world’s most valuable companies today. Major laws it weighed in recent years targeting its tech darlings include the e-commerce law passed in 2018 and the data security draft law that was seeking comments earlier this year. Just a few days ago, Beijing abruptly called off Ant Group’s highly anticipated initial public offering, a sign of the authorities’ heightened oversight over the fintech industry.

Apple is organizing its third event in three months. The company today is holding a (virtual) keynote at 10 AM PT (1 PM in New York, 6 PM in London, 7 PM in Paris). And you’ll be able to watch the event right here as the company is streaming it live.

Apple has already announced at its developer conference that there would be a new Mac with an ARM-based processor this year. So today’s event seems like the perfect opportunity to introduce a new computer with Apple’s own processor.

Similarly, we’ll likely find out when macOS Big Sur is going to be released. The new major update is likely to ship with the new Apple computer. Apple could also use this opportunity for other, smaller announcements. Let’s see if the company has some new accessories to show off.

You can watch the live stream directly on this page, as Apple is streaming its conference on YouTube.

If you have an Apple TV, you don’t need to download a new app. You can open the Apple TV app and find the Apple Events section. It lets you stream today’s event and rewatch old ones.

And if you don’t have an Apple TV and don’t want to use YouTube, the company also lets you live stream the event from the Apple Events section on its website. This video feed now works in all major browsers — Safari, Firefox, Microsoft Edge and Google Chrome.

Brynn Putnam has a lot to feel great about. A Harvard grad and former professional ballet dancer who opened the first of what have become three high-intensity fitness studios in New York, she then launched a second business in 2016 when — while pregnant with her son — she was exercising at home and couldn’t find a natural way watch a class on her laptop or phone. Her big idea: to install a mirrored screen in users’ homes that’s roughly eight square feet and through which they could exercise along to all manner of streamed and on-demand exercise classes through a subscription package costing just $39 per month.

If you’ve followed the home fitness craze, you may know already that idea, Mirror, quickly took off with celebrities, who gushed about the product on social media. The company also attracted roughly $75 million in venture funding across several fast rounds. Indeed, by the end of last year, people had bought  “tens of thousands” of Mirrors, according to Putnam, and she was beginning to envision Mirror’s as content portal that might feature fashion, enable doctor’s visits, and bring both kids classes and therapy into the home, among other things. As she told The Atlantic back in January, “We view ourselves as the third screen in people’s homes.”

Then, in June, the company sold for $500 million in cash — including a $50 million earn-out — to the athleisure company Lululemon. For Putnam, the deal was too compelling, allowing her to secure the future of her company, which continues to run as a subsidiary. Investors might have liked it, too, given that it meant a fast return on their investment, not to mention that Mirror had steep competition, including from Peloton, the biggest giant in the home fitness market.

Still, as the pandemic has raged on, it’s easy to wonder what the young company might have become, given the amount of time that people and their children are spending at home and in front of their screens. As it happens, that’s not something about which Putnam says she spends time worrying about, including as Lululemon begins to put more muscle behind Mirror — which Putnam is still running with a 125 employees.

Just today, for example, Lululemon announced that it is installing Mirrors in 18 of its now 506 U.S. locations, including in San Francisco, Washington, D.C., and Miami. Lulemon hasn’t start selling products directly through Mirror yet but “shoppable content” is “certainly on our radar,” says Putnam. And the company’s revenues, expected earlier this year to reach $100 million, and now on target to surpass $150 million revenue, she says.

We talked with Putnam late week about life at Lululemon, what could have been, and what will be in a chat that’s been edited lightly for length. (You can listen to the full conversation here.)

TC: People who follow the company know why you started Mirror, but how, exactly, did you start Mirror?

BP: In the case of Mirror, I had this concept for the product, and then really, the first step was buying a Raspberry Pi, a piece of one-way glass, and an Android tablet, and assembling it in my in my kitchen to see if this idea in my mind would be able to work and come to life.

TC: Did you take any coding classes? People might not imagine that a former ballet performer with a chain of fitness studios would put something together like that in her kitchen.

BP: No, I’ve been very fortunate to have a husband who has a bit of a development background. And so he helped me to put the first little bit of code into the Mirror and just really ensure that the concept I had in my mind could be brought to life. And then from there, obviously, over time, we hired a team.

TC: Are they manufactured in the States? In China? How did you start figuring out how to put those pieces together?

BP: I had heard a lot of hardware horror stories about teams working with design agencies to design these beautiful products and who, by the time they actually got to manufacturing, found out that something wasn’t feasible about their design when it came to commercialization or just running out of money in the process. So I actually went backwards. I drew a sketch on a napkin and did a small set of bullets of the things that I thought were really just crucial to make the product a success. And then I went to find factories in China that were familiar with digital signage, working with large pieces of glass, large mirrors, learned about their systems and processes, and then brought it back to the U.S. to a local manufacturer here on the East Coast to refine into a prototype. And then we eventually moved to Mexico when we were ready to scale.

TC: The mirror is about $1,500 dollars. How did you go about winning the trust of consumers that would lead them to make such a sizable investment?

BP: When you’re when you’re building an innovation product, you can’t really compete on specs and features like you do with phones or laptops. So you’re really building building a brand, which means that you’re telling stories. And in our case, we spent a lot of time, from the very early days, really imagining the life of our members and figuring out how to craft that story and tell that story.

And then we were fortunate early on to have members fall in love with the product. And then they started to tell our story for us. So once you have that customer flywheel that starts to kick in, your job becomes much easier.

TC: You had actors, celebrities, designers, and social media influencers talking about their Mirrors. Was it just a matter of sending it off to a few people who started getting online and sharing [their enthusiasm for the product] with their followers? Was it that simple?

BP: We knew that we wanted to make big bets early on to make the Mirror brand seem larger and more established than it was, because it’s a premium product in a new category. And we wanted people to trust in us and the brand. And so we did things like out-of-home advertisements quite early, we moved into television quite early, and we also did some very strategic early celebrity placements. But the way in which the celebrity placements grew and expanded was very much not intended and was just kind of a fascinating early example of the network effects of the product. One celebrity would get it and then another would see it in their home. Or they would see it in their stylist’s home or their agent’s home. And it spread through that community very, very quickly in one of the earliest examples of member love for us.

TC: How did you convince early adopters that your business had staying power, and were investors persuaded as quickly?

BP: Trying to assure customers that they wouldn’t invest in this Mirror, and then the company would go out of business in a few years and they would be they’d be left with a piece of hardware but no access to the content or the community that they’d fallen in love with was very important. It was one of the factors in deciding to partner with Lululemon and have the incredible brand stability and love of such a premium global brand.

In terms of fundraising, I think we were we were really fortunate to have a product that once you saw it, you got it and fell in love with it in a market that was clearly big and growing, with a really good competitive data point in Peloton.

TC: Who started that conversation with Lululemon? Were you talking to Peloton and other potential acquirers?

BP: I’ve been really fortunate to actually work with Lululemon for my entire fitness career. There was a team of Lululemon educators here in New York who were the very first clients of my studio business, and frankly, in many ways were responsible for helping that business to grow and thrive and to give me confidence as a first-time small business owner. Then we reconnected with Lululemon about a year before the acquisition as an investor; they made a small minority investment in the company. And we began to work together on various projects . . .From there, really, the partnership just grew. Mirror was not for sale. We were not looking for an acquirer. But it’s really your responsibility as a founder to always be weighing your vision, your responsibility to your team and your responsibility to your shareholders. And so when the opportunity presented itself — before COVID actually — it felt like really just too good an opportunity to pass up.

TC: But you also you had ambitions of turning this into a much broader content portal where you would maybe have doctor visits and other things, which I would think won’t happen now.

BP: The vision for Mirror very much remains the same and we’re excited to continue to expand the types of content that we offer via the Mirror platform, really with an eye toward any type of immersive experience that makes you a better version of yourself. So I think you will see a broader range of content from us in the coming years.

TC: You’ve mention in the past as a selling point that Mirror is a product that’s used by families. Is there children’s programming or is that coming soon?

BP I think one of the things that surprised us but delighted us about Mirror has been the number of households that have over two members. More than 65% of our households have over two members, which means that you’re often getting younger members of the household involved. I do think that is a function of both the versatility of the platform and the fact that multiple people can participate in more content. At the same time, we’ve actually seen the number of users under 20 grow about 5x during the COVID months as young adults have returned home to be with their their families or teenagers have started doing remote schooling. So we’ve leaned into that with what we call “family fun” content that’s designed to be performed by the whole family together.

TC: Do you see a secondary market for refurbished Mirrors in the future? Will there be a second version, if there isn’t already?

BP: We’ll obviously continue to to refine the hardware over time, but the real focus of the business is through improving the content, community and experience, and so for us — unlike Apple, where the goal is to really release a new model every year and continue to have folks upgrade the hardware — we focus on providing updates via the software and the content, so that we’re continuing to add value onto the baseline experience.

TC: What can people look forward to on this front?

BP: We’re taking a major step toward  building a connected community through our community feature set launching this holiday, including a community feature that enables members to see and communicate with each other and their instructor; face offs that allow members to compete head-to-head against another member of the community and earn points as you hit your target heart rate zones; and friending, so you can find and follow your friends in the Mirror community to share your favorite workouts, join programs together and cheer each other on.

TC: Are you still selling Mirrors to hotels and business outside of Lululemon?

BP: We do have b2b relationships. You can find mirrors in hotels, small gyms, buildings, residences, and then obviously direct-to-consumer through the Mirror website, the Lululemon website, and both of our stores

TC: When you look at Peloton now and how its stock has completely exploded this year,  do you think ever that you should have hung on a little longer? Do you ever think ‘maybe I sold too soon?’

I’ve woken up every day really for my entire career kind of focused on the same mission but trying to solve the problem and achieve my vision and in different ways. Which is: I really believe that confidence in your own skin is the foundation of a good and happy life. And fitness is an incredible tool for building that confidence that carries over into your personal relationships, your work performance, your friendships. And so for me, that’s always really been the North Star, which is, ‘How do we get more Mirrors into more homes and provide more access to to that self confidence?’ So I spend very little time comparing to competitors and much more time focused on our members’ needs and how to meet them.

Based in Hong Kong, Coherent helps insurance providers go digital. With their services more relevant than ever during the COVID-19 pandemic, the startup announced it has raised $14 million in new funding. The Series A round, led by Cathay Innovation with participation from Franklin Templeton, will be used to grow Coherent’s client base in Asia, including insurers who want to add more digital services to their usual sales processes because of the pandemic.

Founded in 2018, Coherent’s platform, called Product Factory, allows insurance providers to digitize their backend operations by uploading Excel pricing models, which means their IT departments don’t need to write new code or re-haul their IT infrastructure.

The company also offers three tools for working with customers. Coherent Connect is a social media marketing campaign manager; Coherent Explainer is a sales tool for breaking down quotes; and Coherent Flow allows agents to sell policies to customers remotely with features like video chat and electronic signatures.

While Coherent’s remote tools are a key selling point now, outdated legacy systems have long been a pain point for insurance providers, slowing down backend operations and sales while increasing the cost of premiums.

John Brisco, co-founder and chief executive officer of Coherent, told TechCrunch that the startup has worked with more than 30 insurers in 10 global markets during 2020.

Global premiums initially shrank, but research by Swiss Re predicts the insurance industry will recover by next year, led by demand in China.

Coherent will focus on China and emerging markets in Asia. The startup, which currently has about 120 employees, plans to increase the number of its tech and actuarial talent in Hong Kong, Singapore, Shanghai and Manila, and build new teams for Japan, the United States and Thailand.

Bill Zhang lowered himself into lunges on a squishy mat as he explained to me the benefits of the full-body training suit he was wearing. We were in his small, modest office in Xili, a university area in Shenzhen that’s also home to many hardware makers. The connected muscle stimulator attached to the suit, called Balanx, is designed to bring so-called electronic muscle stimulation, which is said to help improve metabolism and burn fat.

“We are not really aiming at Chinese consumers at this point,” said Zhang, who started Balanx in 2014. “The suit is for the more savvy consumers in the West.”

Prospects for hardware makers were looking bright until two years ago when the Trump administration began setting trade barriers on China. Relations between the two countries have been deteriorating over a series of flashpoint events, from Beijing’s policy on Hong Kong to the coronavirus pandemic.

Chinese entrepreneurs don’t expect relationships between the countries to warm up anytime soon, but many do believe the new office will make “less erratic” and “more rational” policy decisions, according to conversations TechCrunch had with seven Chinese hardware startups. Chinese tech businesses, big or small, are adapting swiftly in the new era of U.S.-China competition as they continue to woo overseas customers.

Designed in China

Zhang is just one of the many entrepreneurs looking to bring state-of-the-art Chinese hardware to the world. This generation of founders no longer hawk cheap electronic copycats, the image attached to the old “Made in China” regime. Decades of knowledge transfer, product development, manufacturing, export practice and policy support have made China a powerhouse for producing new technologies that are both edgy and still widely affordable.

Anker’s power banks, Roborock’s vacuums and Huami’s fitness trackers are just a few items that have gained loyal followings in several overseas markets, not to mention global household names like Huawei, Xiaomi, Oppo and DJI.

Consumer sentiment is also changing. Europeans’ perception of “Made in China” quality and innovation has “improved significantly” over the last 10 to 15 years, said Frank Wang who oversees marketing at Xiaomi -backed Dreame which makes premium home appliances including cheaper alternatives to Dyson hairdryers and vacuums.

The new players are eager to replicate the success of their predecessors. They seek media attention and retail partners at international trade fairs like CES, teach themselves Facebook and Google campaigns, and court gadget lovers on crowdfunding platforms. Investors ranging from GGV Capital to Xiaomi rush to back scrappy startups that are already shipping millions of units around the globe.

For Donny Zhang, a Shenzhen-based electronics parts supplier to hardware companies, businesses have been shrinking as soon as the trade war began. “My clients are taking the brunt because the costs of procurement have increased,” he said of those who directly or indirectly deal with American firms.

While many export-led hardware businesses loathe decreasing profitability, some learn to adapt and look for a silver lining. That has unexpectedly spurred new directions for factory owners in China. Indiegogo, one of the world’s largest crowd-funding platforms, saw the changes first hand.

“Once tariffs increase, there’s not much profit margin left for manufacturers because the middlemen already eat up the bulk of their profit,” Lu Li, general manager for Indiegogo’s global strategy, told TechCrunch.

“A good solution is for factories to skip the middlemen and sell directly to consumers with their own brands. Once the goal of brand building is clear, they often come to us because they need marketing help as a first step to establish themselves as a global consumer brand.”

The trend, dubbed “direct-to-consumers” or D2C, also plays into China’s national plan to encourage manufacturing upgrade and homegrown innovations to compete globally, an initiative that began to take shape around 2015. The development naturally makes China Indiegogo’s fastest-growing region in the last two years: in the first three quarters of 2020, businesses coming from China jumped 50% year-over-year, according to Li.

Localize

Having an appealing product and brand is just the prerequisite. Ever-changing trade policies and geopolitics have forced many Chinese businesses to localize seriously, whether that means setting up a foreign entity or building a local team.

For Tuya, which provides IoT solutions to device makers around the world, the trade war’s effect has been “minimal” since it has operated a U.S. entity since 2015, which employs its local sales and technical support staff. Most of its research and development, however, still lies in the hands of its engineers in India and China, the latter of which can be a potential contention point, as shown by TikTok’s recent backlash in the U.S.

“The key is compliance. We have a dedicated team of security experts to work on compliance issues. For instance, we were one of the first to get GDPR certified in Europe,” said the company’s chief marketing office Eva Na.

The company’s readiness is prompted by practical needs though. Many of its clients are large Western corporations that demand strict legal compliance in vendors, so Tuya began collecting the needed certificates early on. Connecting 200,000 SKUs today, Tuya’s footprint is found in over 190 overseas countries, which account for over 60% of its business.

Well-funded Tuya may have the financial and operational capacity to sustain an overseas team; but for smaller startups, localization can be a costly and tedious learning curve. Many opted to set up a Hong Kong entity to tap the city’s status as a global financial hub and evade trade restrictions on China, an advantage of the territory that began to crumble following Beijing’s implementation of the national security law.

Balanx, the smart training suit maker, has a Hong Kong entity like many of its export-facing hardware peers. To cope with new global headwinds, it registered a virtual company in Nevada but quickly realized the entity is of little use unless it has an on-the-ground operation in the U.S.

“Many local banks would ask for utility bills and etc. if I want to open an account, which we don’t have. We realized we must have a local team,” asserted the founder.

Hope

Zhang is positive that small companies like his own will remain under the radar in spite of U.S. sanctions. “Just avoid having any government connection,” he said.

Indeed, some of the more “benign” and niche products are continuing to thrive in their global push. PopuMusic, a Xiaomi-backed startup making smart instruments like ukulele and guitar to teach beginners, is one. “We aren’t affected by the trade war. We are in a business that’s neither threatening nor aggressive,” said Zhang Bohan, founder of PopuMusic, which counts the U.S. as one of its biggest overseas markets.

Chinese brands are also seeing their edge as the coronavirus sweeps across the globe and confines millions at home. Hardware makers like Balanx, Dreame and PopuMusic have long learned to master e-commerce and logistics in a country where online shopping is ubiquitous.

“Consumers in Europe and the U.S. are growing more accustomed to e-commerce, a bit like those in China five to eight years ago,” said Wang of Dreame.

Rather than rethinking the U.S., PopuMusic is forging further ahead by launching a new connected guitar via an Indiegogo campaign. Global expansion is at the core of the startup’s vision, the founder said. “We are global from day one. We had an English name before even coming up with a Chinese one.”

In the process of making big bucks, hardware makers may have to downplay their “Made in China” or “Designed in China” brand, said Li of Indiegogo. This could help them avoid unnecessary geopolitical complications and attention in their international push. But one has to wonder how this new generation of entrepreneurs is reckoning with their national pride. How do they deal with the mission passed down by Beijing to promote Chinese innovation in the global marketplace? It’s a line that Chinese entrepreneurs have to tread carefully in their global journey in the years to come.

As Ant Group seizes the world’s attention with its record initial public offering, which was abruptly called off by Beijing, investors and analysts are revisiting Tencent’s fintech interests, recognized as Ant’s archrival in China.

It’s somewhat complicated to do this, not least because they are sprawled across a number of Tencent properties and, unlike Ant, don’t go by a single brand or operational structure — at least, not one that is obvious to the outside world.

However, when you tease out Tencent’s fintech activity across its wider footprint — from direct operations like WeChat Pay through to its sizeable strategic investments and third-party marketplaces — you have something comparable in size to Ant, and in some services even bigger.

Hidden business

Ant refuted the comparison with Tencent or anyone else. In a reply to China’s securities regulator in September, the Jack Ma-controlled, Alibaba-backed fintech giant said it is “not comparable” to WeChat Pay, the fintech tool inside WeChat, Tencent’s flagship messenger.

“In the space of digital payments and merchant service, there are many players around the world, including Tencent’s WeChat Pay. But the payments services offered by these companies are different from our digital payments and merchant services. They are not comparable. In terms of digital finance, our way of working with and serving financial institutions, as well as our revenue model, are novel and do not have a counterpart,” the company noted in a somewhat hubristic reply.

There’s no denying that Ant is a pioneer in expanding financial inclusion in China, where millions remain outside the formal banking system. But Tencent has played catch-up in digital finance and made major headway, especially in electronic payments.

Both companies ventured into fintech by first offering consumers a way to pay digitally, though the brands “Alipay” and “WeChat Pay” fail to reflect the breadth of services touted by the platforms today. Alipay, Ant’s flagship app, is now a comprehensive marketplace selling Ant’s in-house products and myriad third-party ones like micro-loans and insurance. The app, like WeChat Pay, also facilitates a growing list of public services, letting users see their taxes, pay utility bills, book a hospital visit and more.

Tencent, on the other hand, embeds its financial services inside the payment features of WeChat (WeChat Pay) and the giant’s other popular chat app, QQ. It has thus been historically difficult to make out how much Tencent earns from fintech, something the giant doesn’t disclose in its earnings reports. This is reflective of Tencent’s “horse racing” internal competition, in which departments and teams often rival fiercely against each other rather than actively collaborate.

As such, we have pulled together estimates of Tencent’s fintech businesses ourselves using a mix of quarterly reports and third-party research — a mark of how un-transparent some of this really is — but it begs some interesting questions. Will (should?) Tencent at some point follow in Alibaba’s footsteps to bring its own fintech operations under one umbrella?

User number

In terms of user size, the rivals are going neck and neck.

The Alipay app recorded 711 monthly active users and 80 million monthly merchants in June. Among its 1 billion annual users, 729 million had transacted in at least one “financial service” through the platform. As in the PayPal-eBay relationship, Alipay benefits tremendously by being the default payments processor for Alibaba marketplaces like Taobao.

As of 2019, more than 800 million users and 50 million merchants used WeChat to pay monthly, a big chunk of the 1.2 billion active user base of the messenger. It’s unclear how many people tried Tencent’s other fintech products, though the firm did say about 200 million people used its wealth management service in 2019.

Revenue

Ant reported a total of 121 billion yuan or $17 billion in revenue last year, nearly doubling its sum from 2017 and putting it on par with PayPal at $17.8 billion.

In 2019, Tencent generated 101 billion yuan of revenue from its “fintech and business services. The segment mainly consisted of fintech and cloud products, industry analysts told TechCrunch. With its cloud unit finishing the year at 17 billion yuan in revenue, we can venture to estimate that Tencent’s fintech products earned roughly or no more than 84 billion yuan ($12 billion), from the period — paled by Ant’s figure, but not bad for a relative latecomer.

The sheer size of the fintech giants has made them highly attractive targets of regulation. Increasingly, Ant is downplaying its “financial” angle and billing itself as a “technology” ally for traditional institutions rather than a challenger. These days, Alipay relies less on selling proprietary financial products and bills itself as an intermediary helping state banks, wealth managers and insurers to reach customers. In return for facilitating the process, Ant charges administrative fees from transactions on the platform.

Now, let’s turn to the rivals’ four main business focuses: payments, microloans, wealth management and insurance.

Digital payments

In the year ended June, Alipay processed a whopping 118 trillion yuan in payment transactions in China. That’s about $17 trillion and dwarfs the $172 billion that PayPal handled in 2019.

Tencent doesn’t disclose its payments transaction volume, but data from third-party research firms offer a hint of its scale. The industry consensus is that the two collectively control over 90% of China’s trillion-dollar electronic payments market where Alipay enjoys a slight lead.

Alipay processed 55.4% of China’s third-party payments transactions in the first quarter of 2020, according to market research firm iResearch, while another researcher Analysys said the firm’s share was 48.44% in the period. In comparison, Tenpay (the brand assigned to the company-wide infrastructure that powers WeChat Pay and the less-significant QQ Wallet, yet another name to confuse people) trailed behind at 38.8%, per iResearch data, and 34% according to Analysys.

At the end of the day, the two services have distinct user scenarios. The fact that WeChat Pay lies inside a messenger makes it a tool for social, often small, payments, such as splitting bills and exchanging lucky money, a custom in China. Alipay, on the other hand, is associated with online shopping.

That’s changing as Tencent tries to increase its ticket size through alliances. It’s tied WeChat Pay to portfolio e-commerce companies like JD.com, Pinduoduo and Meituan — all Alibaba’s competitors.

Third-party payments were once an incredibly profitable business. Platforms used to be able to hold customer reserve funds from which they generated handsome interests. That lucrative scheme came to a stop when Chinese regulators demanded non-bank payments providers to place 100% of customer deposit funds under a centralized, interest-free account last year. What’s left for payment processors to earn are limited fees charged from merchants.

Payments still account for the bulk of Ant’s revenues — 43%, or a total of 51.9 billion yuan ($7.6 billion) in 2019, but the percentage was down from 55% in 2017, a sign of the giant’s diversifying business.

Microlending

Ant has become the go-to lender for shoppers and small businesses in a country where millions aren’t qualified for bank-issued credit cards. The firm had worked with about 100 banks, doling out 1.7 trillion yuan ($250 billion) of consumer loans and 400 billion yuan ($58 billion) of small business loans in the year ended June. That amounted to 41.9 billion yuan or 34.7% of Ant’s annual revenue.

The size of Tencent’s loan business is harder to gauge. What we do know is that Weilidai, the microloan product sold through WeChat, had issued an aggregate of 3.7 trillion yuan ($540 billion) to 28 million customers between its launch in 2015 and 2019, according to a report from WeBank, the Tencent-backed private bank that provides the WeChat-based loan.

Wealth management

As of June, Ant had 4.1 trillion yuan ($600 billion) assets under management, making it one of the world’s biggest money-market funds. Working with 170 partner asset managers, the segment brought in about 17 billion yuan or 14% of total revenue in 2019.

Tencent said its wealth management platform accumulated assets of over 600 billion yuan in 2018 and grew by 50% year-over-year in 2019. That should put its AUM in 2019 at around 900 billion yuan ($131 billion).

Insurance

Last but not least, both giants have made big pushes into consumer insurance. Besides featuring third-party plans, Alipay introduced a new way to insure customers: mutual aid. The novel scheme, which is not regulated as an insurance product in China, is free to sign up and does not charge any premium or upfront payment. Users pay small monthly fees that are pooled to pay for claims of critical illnesses.

Insurance premiums and mutual aid contributions on Ant’s platform reached 52 billion yuan, or $7.6 billion, in the year ended June. Working with about 90 partner insurers in China, the segment contributed nearly 9 billion yuan, or 7.4%, of the firm’s annual revenue. More than 570 million Alipay users participated in at least one insurance program in the year ended June.

Tencent, on the other hand, taps partners in its relatively uncharted territory. Its insurance strategy includes in-house platform WeSure that works like a middleman between insurers and consumers, and Tencent-backed Waterdrop, which provides both traditional insurances and a rival to Ant’s mutual aid product Xianghubao.

In the first half of 2020, WeSure, Tencent’s main insurance operation that sells through WeChat, paid out a total of 290 million yuan ($42.4 million), it announced. The unit does not disclose its amount of premiums or revenues, but we can find clues in other figures. Twenty-five million people used WeShare services in 2019 and the average premium amount per user was over 1,000 yuan ($151). That is, WeShare generated no more than 25 billion yuan, or $3.78 billion, in premium that year because the user figure also accounts for a good number of premium-free users.

*

Moving forward, it remains unclear whether Tencent will restructure its fintech operations in a more cohesive and collaborative way. As they expand, will investors and regulators demand that? And what opportunities are there for others to compete in a space dominated by two huge players?

One thing is for sure: Tencent will need to tread more carefully on regulatory issues. Ant’s achievement is a win for entrepreneurs looking to “disrupt” China’s financial sector, but its halted IPO, which is tied to regulatory issues and reportedly Jack Ma’s hubris, also sounds an alarm to contenders that policymaking in China can be capricious.