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India’s electric bike rental startup Yulu inks strategic partnership with Bajaj Auto, raises $8M

Yulu, a Bangalore-based electric bike sharing platform that maintains a partnership with Uber, said today it has won the backing of one of the country’s largest automaker firms.

The two-year-old startup said it has entered into a strategic partnership with Bajaj Auto, which has also funded Yulu’s $8 million Series A financing round. As part of the partnership, Bajaj will co-design and manufacture future generation of Yulu two-wheelers, Amit Gupta, cofounder and chief executive of Yulu, told TechCrunch in an interview.

Yulu, which operates in Bengaluru and recently entered portions of New Delhi and Mumbai, has raised about $18.5 million to date, he said.

The startup maintains over 3,000 electric bikes on its platform. A customer can rent the bike through Yulu’s app for 14 cents, pay another 14 cents for each hour of usage and then park it at the nearest zone.

Gupta said Yulu plans to have 100,000 two-wheelers in its fleet by end of next year. And that’s where its partnership with Bajaj Auto would come in handy. The startup currently relies on its Chinese original design manufacturer partners to build its bikes. But Bajaj Auto, which has decades of building two-wheelers in the nation, will be taking care of the manufacturing from here, he said. “They clearly have much better understanding of Indian context than most,” he said.

In a statement, Rajiv Bajaj, Managing Director of Bajaj, said, “in Yulu we find an experienced and committed partner with robust achievement of success metrics in a very short time. And this is why we decided to partner with them in their journey of bringing Yulu service to every neighborhood of Urban India.”

Yulu is also expanding its presence quickly in the nation. In Delhi, it has been granted the permission to offer electric bikes at 250 subway stations. “We are already servicing in nine of those,” said Gupta, who also co-founded advertising tech giant InMobi.

“We work through clusters. So we deploy about 1000 vehicles, and set up 200 to 300 parking stations and 25 to 30 charging stations. We have been able to replicate this cluster model in many places,” he said.

These bikes can ride as fast as 35 kmph (21.7 mph), and cover 60 kms (37.2 miles) in one charging cycle. The startup works with neighborhood stores, individuals to expand its parking and charging stations. “It’s very economical,” Gupta said. Yulu also has an army of workers who swap the used battery with freshly charged one, he said.

More to follow…

Disney+ to launch in India, Southeast Asian markets next year

Disney plans to bring its on-demand video streaming service to India and some Southeast Asian markets as soon as the second half of next year, two sources familiar with the company’s plans told TechCrunch.

In India, the company plans to bring Disney+’s catalog to Hotstar, a popular video streaming service it owns, after the end of next year’s IPL cricket tournament in May, the people said.

Soon afterwards, the company plans to expand Hotstar with Disney+ catalog to Indonesia and Malaysia among other Southeast Asian nations, said those people on the condition of anonymity.

A spokesperson for Hotstar declined to comment.

Hotstar leads the Indian video streaming market. The service said it had more than 300 million monthly subscribers during the IPL cricket tournament and ICC World Cup earlier this year. More than 25 million users simultaneously streamed one of the matches, setting a new global record.

However, Hotstar’s monthly userbase plummets below 60 million in weeks following IPL tournament, according to people who have seen the internal analytics. The arrival of more originals from Disney on Hotstar, which already offers a number of Disney-owned titles in India, could help the service sustain users after cricket seasons.

The international expansion of Hotstar isn’t a surprise as it has entered the U.S., Canada, and the U.K. in recent years. In an interview with TechCrunch earlier this year, Ipsita Dasgupta, president of Hotstar’s international operations, said so far the platform’s international strategy has been to enter markets with “high density of Indians.”

In an earnings call for the quarter that ended in June this year, Disney CEO Robert Iger hinted that the company, which snagged Indian entertainment conglomerate Star India as part of its $71.3 billion deal with 21st Century Fox, would bring Star India-operated Hotstar to Southeast Asian markets, though he did not offer a timeline.

Disney+, currently available in the U.S, Canada and the Netherlands, will expand to Australia and New Zealand next week, and the U.K., Germany, Italy, France and Spain on March 31, the company announced last week.

Price hike

Disney, which debut its video streaming service in the U.S. this week and has already amassed over 10 million subscribers, plans to raise the monthly subscription fee of Hotstar in India, where the service currently costs $14 a year, one of the two aforementioned people said.

A screenshot of Hotstar’s homepage

The price hike will happen towards the end of the first quarter next year, just ahead of commencement of next IPL cricket tournament season, they said. The company has not decided exactly how much it intends to charge, but one of the people said that it could go as high as $30 a year.

In other Southeast Asian markets, the service is likely to cost above $30 a year as well, both of the sources said. The prices have yet to be finalized, however, they said.

Even at those suggested price points, Disney would be able to undercut rivals on price. Until recently, Netflix charged at least $7 a month in India and other Southeast Asian markets. But this year, the on-demand streaming pioneer introduced a $2.8 monthly tier in India and $4 in Malaysia.

Hotstar offers a large library of local movies and titles syndicated from international cable networks and studios Showtime, HBO, and ABC (also owned by Disney). In its current international markets, Hotstar’s catalog is limited to some local content and large library of Indian titles.

In recent quarters, Hotstar has also set up an office in Tsinghua Science Park in Beijing, China and hired over 60 engineers and researchers as it looks to expand its tech infrastructure to service more future users, according to job recruitment posts and other data sourced from LinkedIn.

Gradeup raises $7M to expand its online exam preparation platform to smaller Indian cities and towns

Gradeup, an edtech startup in India that operates an exam preparation platform for undergraduate and postgraduate level courses, has raised $7 million from Times Internet as it looks to expand its business in the country.

Times Internet, a conglomerate in India, invested $7 million in Series A and $3 million in Seed financing rounds of the four-year-old Noida-based startup, it said. Times Internet is the only external investor in Gradeup, they said.

Gradeup started as a community for students to discuss their upcoming exams, and help one another with solving questions, said Shobhit Bhatnagar, cofounder and CEO of Gradeup, in an interview with TechCrunch.

While those functionalities continue to be available on the platform, Gradeup has expanded to offer online courses from teachers to help students prepare for exams in last one year, he said. These courses, depending on their complexity and duration, cost anywhere between Rs 5,000 ($70) and Rs 35,000 ($500).

“These are live lectures that are designed to replicate the offline experience,” he said. The startup offers dozens of courses and runs multiple sessions in English and Hindi languages. As many as 200 students tune into a class simultaneously, he said.

Students can interact with the teacher through a chatroom. Each class also has a “student success rate” team assigned to it that follows up with each student to check if they had any difficulties in learning any concept and take their feedback. These extra efforts have helped Gradeup see more than 50% of its students finish their courses — an industry best, Bhatnagar said.

Each year in India, more than 30 million students appear for competitive exams. A significant number of these students enroll themselves to tuitions and other offline coaching centers.

“India has over 200 million students that spend over $90 billion on different educational services. These have primarily been served offline, where the challenge is maintaining high quality while expanding access,” said Satyan Gajwani, Vice Chairman of Times Internet.

In recent years, a number of edtech startups have emerged in the country to cater to larger audiences and make access to courses cheaper. Byju’s, backed by Naspers and valued at over $5.5 billion, offers a wide-ranging self-learning courses. Vedantu, a Bangalore-based startup that raised $42 million in late August, offers a mix of recorded and live and interactive courses.

Co-founders of Noida-based edtech startup Gradeup

But still, only a fraction of students take online courses today. One of the roadblocks in their growth has been access to mobile data, which until recent years was fairly expensive in the country. But arrival of Reliance Jio has solved that issue, said Bhatnagar. The other is acceptance from students and more importantly, their parents. Watching a course online on a smartphone or desktop is still a new concept for many parents in the country, he said. But this, too, is beginning to change.

“The first wave of online solutions were built around on-demand video content, either free or paid. Today, the next wave is online live courses like Gradeup, with teacher-student interactivity, personalisation, and adaptive learning strategies, deliver high-quality solutions that scale, which is particularly valuable in semi-urban and rural markets,” said Times Internet’s Gajwani.

“These match or better the experience quality of offline education, while being more cost-effective. This trend will keep growing in India, where online live education will grow very quickly for test prep, reskilling, and professional learning,” he added.

Gradeup has amassed over 15 million registered students who have enrolled to live lectures. The startup plans to use the fresh capital to expand its academic team to 100 faculty members (from 50 currently) and 200 subject matters and reach more users in smaller cities and towns in India.

“Students even in smaller cities and towns are paying a hefty amount of fee and are unable to get access to high-quality teachers,” Bhatnagar said. “This is exactly the void we can fill.”

Gojek founder and CEO Nadiem Makarim resigns to join Indonesian cabinet; Soelistyo and Aluwi to be new co-CEOs

Nadiem Makarim, founder and CEO of Gojek, said on Monday he has stepped down from his role at the ride-hailing startup to join Indonesia president Joko Widodo’s cabinet.

The announcement, which has taken many by surprise, comes a day after Widodo was sworn in for a second term. Widodo has previously said that he wants young business executives to join his cabinet.

In a statement, a Gojek spokesperson told TechCrunch that Andre Soelistyo, Gojek Group President and Kevin Aluwi, Gojek co-founder, are taking over as co-CEOs of the startup.

“We are very proud that our founder will play such a significant role in moving Indonesia onto the global stage. It is unprecedented for a passionate local founder’s vision to be recognized as a model that can be up-scaled to help the development of an entire country,” the spokesperson said.

“We have planned for this possibility and there will be no disruption to our business. We will make an announcement on what this news means for Gojek within the next few days. We respect the process set out by the President and will not make a further comment until there is an official announcement from the Palace,” the spokesperson added.

Makarim (pictured above) said he was honored that the president had asked him to join his cabinet as a minister. He did not reveal which position he would hold, but an announcement from Widodo is expected later this week. “I am very happy to be here today as it shows we are ready for innovation and to move forward,” he told reporters.

Makarim founded Gojek in 2010 as a two-wheeler hailing service. The startup has since expanded to include a range of services including mobile payments, food delivery, online shopping and most recently on-demand video streaming.

The startup has amassed more than 2 million driver partners and 400,000 merchants on its platform. Gojek was valued at almost $10 billion in its most recent financing round. The company, which operates in Singapore, Vietnam, and Thailand, clocked gross transaction worth $9 billion last year.

Makarim comes from a prominent Indonesian family: His parents are anti-corruption activist, while his grandfather is an independence hero.

India’s NoBroker raises $50M to help people buy and rent without real estate brokers

An Indian startup that is attempting to improve the way how millions of people in the nation lease or buy an apartment — by not paying any brokerage — just raised a significant amount of capital to further expand its business.

NoBroker said on Wednesday it has raised $50 million in a new financing round. The Series D round for the Bangalore-based real estate property operator was led by Tiger Global Management and included participation from existing investor General Atlantic. The five-year-old startup, which closed its previous financing round in June, has raised $121 million to date. The new round valued NoBroker at about $325 million, a person familiar with the matter told TechCrunch.

NoBroker operates in six cities in India: Bengaluru, Chennai, Gurgaon, Mumbai, Hyderabad and Pune. The startup has established itself as one of the largest players in the local real estate business. It operates over 3 million properties on its website and serves about 7 million users. It is adding more than 280,000 new users each month, Amit Kumar, cofounder and CEO of NoBroker, told TechCrunch in an interview.

Real estate brokers in India, as is true in other markets, help people find properties. But they can charge up to 10 months worth of rent (leasing) — or a single-digit percent of the apartment’s worth if someone is buying the property — in urban cities as their commission. NoBroker allows the owner of a property to directly connect with potential tenants to remove brokerage charges from the equation.

The startup makes money in three ways. First, it lets non-paying users get in touch with only nine property owners. Those who wish to contact more property owners are required to pay a fee. Second, property owners can opt to pay NoBroker to have its representatives deal with prospective buyers — in a move that ironically makes the startup serve as a broker.

NoBroker also offers end-to-end services such as rent agreements, home loans, and movers and packers, for which it also charges a fee. The startup says it uses machine learning to speed up the transactions and make it service low-cost.

The startup processes about $14 million in rent each month, Kumar said. This is increasing by 25%-30% each month, he said. NoBroker’s business in Bangalore and Mumbai, two of its largest cities, are already profitable, Kumar said.

The startup will use the fresh capital to expand its business and build more products. It recently launched a community and digital management app to keep a digital log of all the entries — say a Flipkart delivery personnel comes to your house — occurring in a society, and maintain a dialogue with other people in a vicinity. The app also allows users to exchange goods with one another and pay their utility bills, startup’s executives said.

The new financing round is oddly smaller than $51 million NoBroker had raised in June this year. Saurabh Garg, chief business officer of NoBroker, told TechCrunch in an interview that the founding team did not want to dilute their stake in the startup, hence they opted for a smaller round.

NoBroker is competing with a number of players including Proptiger, 99Acres, and heavily backed NestAway, which counts Goldman Sachs and Tiger Global among its investors. NestAway operates in eight Indian cities and has raised north of $100 million to date. Budget hotel startup Oyo, which has already become one of the largest hotel businesses in the world, also operates in NoBroker’s territory with Oyo Living.

But NoBroker’s Kumar said he does not see Oyo and other startups as competition. Instead, “these other players are some of our largest clients,” he said. India’s real estate industry is estimated to grow to $1 trillion in worth by 2030.

The business model of NoBroker has also created new local challenges for the startup. Brokers are unsurprisingly not happy with startups such as NoBroker and have grown hostile in recent years. In recent years, they have attacked and harassed NoBroker employees. So much so that the startup had to delist its address from Google Maps. But Kumar said the mindset of people is changing.

Honestbee owes almost $1 million in unpaid salary to employees, according to affidavit filed by its CEO

Honestbee, the Singapore-based grocery delivery startup that has been struggling with financial issues, owes 217 employees a total of almost USD $1 million in unpaid salary. The Strait Times reported that the figure was revealed in an affidavit filed in court on Sept. 20 by Honestbee CEO Ong Lay Ann as part of the startup’s debt moratorium application.

The Ministry of Manpower told the Strait Times that 44 employees have filed claims with the Tripartite Alliance for Dispute Management, with some of the employees settling mediation by agreeing to a payment schedule with Honestbee that will be monitored by the alliance.

In an emailed statement to TechCrunch, an Honestbee spokesperson said, “There is a communicated salary delay for Honestbee’s ex-employees and employees currently serving notice. While there are regular injections of working capital, the amount remains insufficient for all headcount. As a result, the company has made the difficult decision to prioritize existing staff in Singapore. The company has the full intention in meeting its obligations to staff and will be, if not already in active discussions with staff in relation to a feasible payment schedule.”

TechCrunch reported in April that Honestbee was running out of money and trying to find a buyer. The company, which used to operate in eight markets across Asia, has stopped operating in Hong Kong and Indonesia, temporarily halted services in Japan and the Philippines and suspended its food delivery service in Thailand.

The affidavit filed by Ong says Honestbee currently has 190 employees, down from 523 full-time employees and 77 part-time workers in January.

Ong also said that Honestbee chairman Brian Koo resigned from the board on on Sept. 12.

According to the affidavit, Koo and associates including investment vehicles he set up, are owed about $258 million, or about 90% of Honestbee’s debt. Koo, a founding managing partner of venture capital firm Formation Group, was one of Honestbee’s earliest investors and served as interim CEO from May to July after former chief executive Joel Sng stepped down.

Shipper, a platform for e-commerce logistics in Indonesia, raises $5 million

Indonesia has one of the fastest-growing e-commerce markets in the world, but the logistics industry there is still very fragmented, creating headaches for both vendors and customers. Shipper is a startup with the ambitious goal of giving online sellers access to “Amazon-level logistics.” The company has raised $5 million in seed funding from Lightspeed Ventures, Floodgate Ventures, Insignia Ventures Partners and Y Combinator (Shipper is part of the accelerator’s winter 2019 batch), which will be used for hiring and customer acquisition.

Shipper was launched in 2017 by co-founders Phil Opamuratawongse and Budi Handoko, and is now used by more than 25,000 online sellers. Indonesia’s e-commerce market is growing rapidly, but online sellers still face many logistical hurdles.

The country is large (Indonesia has more than 17,500 islands, of which 600 are inhabited) and unlike the United States, where Amazon dominates, e-commerce sellers often use multiple platforms, like Tokopedia, Shopee, Bukalapak and Lazada. Smaller vendors also sell through Facebook, Instagram, WhatsApp and other social media. Once an order has been placed, the challenge of making sure it gets to customers starts. There are more than 2,500 logistics providers in Indonesia, many of whom only cover a small area.

“It is really hard for any one provider to do nationwide themselves, so the big ones usually use local partners to fulfill locations where they don’t have infrastructure,” says Opamuratawongse.

The startup’s mission is to create a platform that makes the process of fulfilling and tracking orders much more efficient. In addition to a package pick-up service and fulfillment centers, Shipper also has a technology stack to help logistics providers manage shipments. It is used to predict the best shipping routes and consolidate packages headed in the same direction and also provides a multi-carrier API that allows sellers to manage orders, print shipping labels and get tracking information from multiple providers on their phones.

When it launched three years ago, Shipper began by focusing on the last-mile for smaller vendors, who Opamuratawongse says typically keep inventory in their homes and fulfill about five to 10 orders per day. Since many give customers a choice of several logistics providers, that meant they needed to visit multiple drop-off locations every morning.

Shipper offers pick-up service performed by couriers (who Opamuratawongse says are people like stay-at-home parents who want flexible, part-time work) who collect packages from several vendors in the same neighborhood and distribute them to different logistics providers, serving as micro-fulfillment hubs. Shipper signs up about 10 to 30 new couriers each week, keeping them at least 2.5 kilometers apart so they don’t compete against each other.

The company began setting up fulfillment centers to keep up with vendors whose businesses were growing and were turning to third-party warehouse services. Shipper has established 10 fulfillment centers so far across Indonesia, including Jakarta, with plans to open a new one about every two weeks until it covers all of Indonesia.

Opamuratawongse says he expects the logistics industry in Indonesia to remain fragmented for the next decade at least, and perhaps longer because of Indonesia’s size and geography. Shipper will focus on expanding in Indonesia first, with the goal of having 1,000 microhubs within the next year and 15 to 20 fulfillment centers. Then the company plans to tackle other Southeast Asian countries with rapidly-growing e-commerce markets, including Thailand, Vietnam and the Philippines.

Good Capital launches to close the funding gap for early-stage Indian startups

Rohan Malhotra and Arjun Malhotra left their jobs in London and Silicon Valley to explore opportunities in India in late 2013. A year later, the brothers launched Investopad to connect with local startup founders and product managers and built a community to exchange insight. Somewhere in the journey, they wrote early checks to social-commerce startup Meesho, which now counts Facebook as an investor, Autonomic, which got acquired by Ford, and HyperTrack, among others. Now the duo is ready to be full-time VCs.

On Monday, they announced Good Capital, a VC fund that would invest in early-stage startups. Through Good Capital’s maiden fund of $25 million, the brothers plan to invest in about half a dozen startups in a year and provide between $100,000 to $2 million in their Seed and Series A financing rounds, they told TechCrunch in an interview last week.

“Through Investopad, we helped startup founders raise money, provided guidance, and helped them find customers. We did a ton of events, and learned about the market,” said Arjun, who worked at Capricorn Investment Group and also acted in 2014 blockbuster Bollywood title “Highway.”

Investopad’s first fund portfolio stands at a gross IRR of 138.3% and nine of its 12 investments have realised returns, with every dollar invested already returned, the brothers said.

Good Capital will focus on investing in startups that are building solutions that address users who have come online in India for the first time in the last two years, they said.

“We don’t have laser-focus on a particular sector,” said Rohan, who previously worked as a sports agent in the talent management business. “Our primary focus is to help startups that are taking a bottom-up approach.”

One example of such startup is Meesho, a social-commerce startup that has amassed over 2 million users who are engaging with the platform to sell products across India.

In a statement, Vidit Aatrey, cofounder and CEO of Meesho, said, “Rohan and Arjun were our earliest investors. They have a phenomenal global network of entrepreneurs, operators and investors. They helped us early on with introductions to such people; who brought not only capital but, more importantly, valuable operational inputs which helped us learn quickly and find product-market fit faster. While we’ve grown from 2 people to over 1,000+ at Meesho, they remain close confidants!”

The VC fund has completed its first close of $12 million from Symphony International Holdings, a host of European family offices, and a number of other Silicon Valley entrepreneurs.

Sundeep Madra, CEO of Ford X, and Yogen Dalal, Partner Emeritus at the Mayfield Fund and founder of Glooko, and Dinesh Moorjani, Managing Director of Comcast Ventures and founder of Hatch Labs and Tinder, will serve as advisors to Good Capital.

“Rohan and Arjun have a unique ability to identify trends and bring together founders and investors to go after the unique problems that India needs to have solved. They operate with a sense of urgency and innovation which is a major key at the seed-stage.” said Madra, who has invested in companies such as Uber and Zenefits.

The fund has also set up an investment committee whose members are Sanjay Kapoor, former CEO of Airtel and now a senior advisor at BCG, Rahul Khanna, formerly a managing partner at Cannan Partners and now founder of Trifecta Capital, and Kashyap Deorah, a serial entrepreneur who is currently building HyperTrack.

Good Capital has also already made two investments: SimSim, a video-based e-commerce platform that is trying to replicate the experience consumers have in offline stores, and Spatial, a cross-reality platform that allows people to collaborate through augmented reality. Garrett Camp, a founder of Uber and Expa, and Samsung Next have also invested in Spatial.

The VC fund is also interested in funding business-to-business startups, though they say these startups would ideally be building solutions for overseas markets. “There we are generally targeting makers, developers and designers, rather than solving problems for heavy-duty sales businesses.”

The arrival of Good Capital should help the Indian startup community, which today has to rely on a handful of VC funds that invest in early stage startups. “Conventionally, funds have targeted the top of the pyramid by exploring visible opportunities and replicated US companies and models,” said Moorjani in a statement.

“In contrast, Good Capital’s first principles thinking applied to India’s larger economy, which is coming online at scale with a supporting ecosystem for the first time, has been refreshing to see. The team is beyond talented.,” he added.

Even as Indian tech startups raised a record $10.5 billion in 2018, early-stage startups saw a decline in the number of deals they participated in and the amount of capital they received.

Early-stage startups participated in 304 deals in 2018 and raised $916 million in funds last year, down from $988 million they raised from 380 rounds in 2017 and $1.096 billion they raised from 430 deals the year before, research firm Venture Intelligence told TechCrunch.

As for Investopad, the brothers said they have hired a number of people who will now continue its operation.

The Hong Kong Internet Service Providers Association warns that restricting online access would be ruinous for the region

After Hong Kong’s leader suggested she may invoke emergency powers that could potentially include limiting Internet access, one of city’s biggest industry groups warned that “any such restrictions, however slight originally, would start the end of the open Internet of Hong Kong.”

While talking to reporters on Tuesday, Hong Kong Chief Executive Carrie Lam suggested the government may use the Emergency Regulations Ordinance in response to ongoing anti-government demonstrations. The law, which has not been used in more than half a century, would give the government a sweeping array of powers, including the ability to restrict or censor publications and communications. In contrast to China’s “Great Firewall” and routine government censorship of internet services, Hong Kong’s internet is currently open and mostly unrestricted, with the exception of laws to prevent online crime, copyright infringements and the spread of obscene material like child pornography.

In an “urgent statement” addressed to Hong Kong’s Executive Council, the Hong Kong Internet Service Providers Association (HKISPA) said that because of technology like VPNs, the cloud and cryptographies, the only way to “effectively and meaningfully block any services” would entail putting all of Hong Kong’s internet behind a large-scale surveillance firewall. The association added that this would have huge economic and social consequences and deter international organizations from doing business in Hong Kong.

Furthermore, restricting the internet in Hong Kong would also have implications in the rest of the region, including in mainland China, the HKISPA added. There are currently 18 international cable systems that land, or will land, in Hong Kong, making it a major telecommunications hub. Blocking one application means users will move onto another application, creating a cascading effect that will continue until all of Hong Kong is behind a firewall, the association warned.

In its statement, the HKISPA wrote that “the lifeline of Hong Kong’s Internet industry relies in large part on the open network,” adding “Hong Kong is the largest core node of Asia’s optical fiber network and hosts the biggest Internet exchange in the region, and it is now home to 100+ data centers operated by local and international companies, and it transits 80%+ of traffic for mainland China.”

“All these successes rely on the openness of Hong Kong’s network,” the HKISPA continued. “Such restrictions imposed by executive orders would completely ruin the uniqueness and value of Hong Kong as a telecommunications hub, a pillar of success as an international financial centre.”

The HKISPA urged the government to consult the industry and “society at large” before placing any restrictions in place. “The HKISPA strongly opposes selective blocking of Internet Services without consensus of the community,” it said.

RedDoorz raises $70M to expand its budget hotel network in Southeast Asia

Singapore-based budget hotel booking startup RedDoorz is tiny in comparison to fast-growing giant Oyo. But it is holding its ground and winning the trust of an ever growing number of investors.

On Monday, the four-year-old startup announced it has raised $70 million in Series C financing round, less than five months after it closed its $45 million Series B. The new round, which is ongoing, was led by Asia Partners and saw participation from new investors Rakuten Capital and Mirae Asset-Naver Asia Growth Fund.

The startup, which has raised $140 million to date, has been seeing “tremendous interest from investors, so it is decided to do a back-to-back rounds,” said Amit Saberwal, founder and CEO of RedDoorz, in an interview with TechCrunch.

Regardless, the new funds will help RedDoorz fight SoftBank-backed Oyo, which is already aggressively expanding to new markets. Oyo currently operates in more than 80 nations.

Saberwal isn’t necessarily threatened by Oyo, on the contrary, he sees Oyo’s success as a testament that there is room for more players to be in the space. He is confident that RedDoorz is “on the right track to create the next tech unicorn in Southeast Asia,” and trade in public exchange in the next two to three years.

RedDoorz operates a marketplace of “two-star, three-star and below” budget hotels, selling access to rooms to people. Currently it has 1,400 hotels on its network, said Saberwal. By the end of the year, the startup aims to grow this number to 2,000.

The startup operates in 80 cities across Indonesia, Singapore, the Philippines and Vietnam, and plans to use the new capital to expand its network in its existing markets, said Saberwal. At least for the next one year, RedDoorz has no plans to expand beyond the four markets where it currently operates, he said.

“Anything in the accommodation is our playground. We have all kinds of properties. We have three-star hotels, some hostels, so we will continue to go deeper and wider moving forward,” Saberwal, a former top executive at India’s travel giant MakeMyTrip, said.

It’s a great combination: Making the ubiquity of typically unorganized local guesthouse-style rooms with the more organized and efficient — but pricier — hotel option.

Some of the new capital will also go into broadening RedDoorz’s tech infrastructure, building a second engineering hub in Vietnam. (RedDoorz’s current regional tech hub is based in India.)

China’s Transsion and Kenya’s Wapi Capital partner on Africa fund

Chinese mobile-phone and device maker Transsion is teaming up with Kenya’s Wapi Capital to source and fund early-stage African fintech startups.

Headquartered in Shenzhen, Transsion is a top-seller of smartphones in Africa that recently confirmed its imminent IPO.

Wapi Capital is the venture fund of Kenyan fintech startup Wapi Pay—a Nairobi based company that facilitates digital payments between African and Asia via mobile money or bank accounts.

Investments for the new partnership will come from Transsion’s Future Hub, an incubator and seed fund for African startups opened by Transsion in 2019.

Starting September 2019, Transsion will work with Wapi Capital to select early-stage African fintech companies for equity-based investments of up to $100,000, Transsion Future Hub Senior Investor Laura Li told TechCrunch via email.

Wapi Capital won’t contribute funds to Transsion’s Africa investments, but will help determine the viability and scale of the startups, including due diligence and deal flow, according to Wapi Pay co-founder Eddie Ndichu.

Wapi Pay and Transsion Future Hub will consider ventures from all 54 African countries and interested startups can reach out directly to either organization, Ndichu and Li confirmed.

The Wapi Capital fintech partnership is not Transsion’s sole VC focus in Africa. Though an exact fund size hasn’t been disclosed, the Transsion Future Hub will also make startup investments on the continent in adtech, fintech, e-commerce, logistics, and media and entertainment, according to Li.

Transsion Future Hub’s existing portfolio includes Africa focused browser company Phoenix, content aggregator Scoop, and music service Boomplay.

Wapi Capital adds to the list of African located and run venture funds—which have been growing in recent years—according to a 2018 study by TechCrunch and Crunchbase. Wapi Capital will also start making its own investments and is looking to raise $1 million this year and $10 million over the next three years, according to Ndichu, who co-founded the fund and Wapi Pay with his twin brother Paul.

Transsion’s commitment to African startup investments comes as the company is on the verge of listing on China’s new Nasdaq-style STAR Market tech exchange. Transsion confirmed to TechCrunch this month the IPO is in process and that it could raise up to 3 billion yuan (or $426 million).

Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.

Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also has a manufacturing facility in Ethiopia.

Transsion’s move into venture investing tracks greater influence from China in African tech.

China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities.

Transsion’s Wapi Pay partnership is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.

 

 

 

 

 

 

 

UrbanClap, India’s largest home services startup, raises $75M

UrbanClap, a marketplace for freelance labor in India and the UAE, has raised $75 million in a new financing round to expand its business.

The Series E round for the four-and-a-half-year old India-based startup was led Tiger Global. Existing investors Steadview Capital, which led the startup’s Series D in December last year, and Vy Capital also participated in the current round. The startup, which has raised about $185 million to date, said some early investors sold portions of their stake as part of the new round.

Through its platform, UrbanClap matches service people such as cleaners, repair staff and beauticians with customers across 10 cities in India and Dubai and Abu Dhabi. The startup supports 20,000 “micro-franchisees” (service professionals) with around 450,000 transactions taking place each month, cofounder and CEO Abhiraj Bhal told TechCrunch.

Bhal said that UrbanClap helps offline service workers, who have traditionally relied on getting work through middleman such as some store or word of mouth networks, to find more work. And they earn more, too. UrbanClap offers a more direct model, with workers keeping 80% of the cost of their jobs. That, Bhal said, means workers can earn multiples more and manage their own working hours.

“The UrbanClap model really allows them to become service entrepreneurs. Their earnings will shoot up two or three-fold, and it isn’t uncommon to see it rise as much as 8X — it’s a life-changing experience,” he said. Average value of a service is between $17 to $22, according to the company.

In recent years, UrbanClap has also started to offer training, credit, and basic banking services to better support the service workers on its platform. On its website, UrbanClap claims to offer 73 services — including kitchen cleaning, hairdressing, and yoga training. It says it has served 3 million customers.

Bhal said that around 20-25% of applicants are accepted into the platform, that’s a decision based on in-person meetings, background and criminal checks, as well as a “skills” test. Workers are encouraged to work exclusively — though it isn’t a requirement — and they wear UrbanClap outfits and represent the brand with customers.

Didi Chuxing and oil giant BP team up to build electric vehicle charging infrastructure in China

Ride-sharing and transportation platform Didi Chuxing announced today that it has formed a joint venture with BP, the British gas, oil and energy supermajor. to build electric vehicle charging infrastructure in China. The charging stations will be available to Didi and non-Didi drivers.

The news of Didi and BP’s joint venture comes one week after Didi announced that it had received funding totaling $600 million from Toyota Motor Corporation. As part of that deal, Didi and Toyota Motor set up a joint venture with GAC Toyota Motor to provide vehicle-related services to Didi drivers.

BP’s first charging site in Guangzhou has already been connected to XAS (Xiaoju Automobile Solutions), which Didi spun out in April 2018 to put all its vehicle-related services into one platform.

XAS is part of Didi Chuxing’s evolution from a ride-sharing company to a mobility services platform, with its services available to other car, transportation and logistics companies. In June, Didi also opened its ride-sharing platform to other companies, enabling its users to request rides from third-party providers in a bid to better compete with apps like Meituan Dianping and AutoNavi, which aggregate several ride-hailing services on their platforms.

Didi says it now offers ride-sharing, vehicle rental and delivery services to 550 million users and covers 1,000 cities through partnerships with Grab, Lyft, Ola, 99 and Bolt (Taxify). The company also claims to be the world’s largest electric vehicle operator with more than 600,000 EVs on its platform.

It also has partnerships with automakers and other car-related companies like Toyota, FAW, Dongfeng, GAC, Volkswagen and Renault-Nissan-Mitsubishi to collaborate on a platform that uses new energy, AI-based and mobility technologies.

In a press statement, Tufan Erginbilgic, the CEO of BP’s Downstream business, said “As the world’s largest EV market, China offers extraordinary opportunities to develop innovative new businesses at scale and we see this as the perfect partnership for such a fast-evolving environment. The lessons we learn here will help us further expand BP’s advanced mobility business worldwide, helping drive the energy transition and develop solutions for a low carbon world.”

Samsung posts 55.6% drop in second-quarter profit as it copes with weak demand and a trade dispute

As it forecast earlier this month, Samsung reported a steep drop in its second-quarter earnings due to lower market demand for chips and smartphones. The company said its second-quarter operating profit fell 55.6% year-over-year to 6.6 trillion won (about $5.6 billion), on consolidated revenue of 56.13 trillion won, slightly above the guidance it issued three weeks ago.

Last quarter, Samsung also reported that its operating profit had dropped by more than half. The same issues that hit its earnings during the first quarter of this year have continued, including lower memory prices as major datacenter customers adjust their inventory, meaning they are currently buying less chips (the weak market also impacted competing semiconductor maker SK Hynix’s quarterly earnings).

Samsung reported that its chip business saw second-quarter operating profit drop 71% year-over-year to 3.4 trillion won, on consolidated revenue of 16.09 trillion won. In the second half of the year, the company expects to continue dealing with market uncertainty, but says demand for chips will increase “on strong seasonality and adoption of higher-density products.”

Meanwhile, Samsung’s mobile business reported a 42% drop in operating profit from a year ago to 1.56 trillion won, on 25.86 trillion won in consolidated revenue. The company said its smartphone shipments increased quarter-over-quarter thanks to strong sales of its budget Galaxy A series. But sales of flagship models fell, due to “weak sales momentum for the Galaxy S10 and stagnant demand for premium products.”

Samsung expects the mobile market to remain lackluster, but it will continue adding to both its flagship and mass-market lineups. It is expected to unveil the Note 10 next month and a new release date for the delayed Galaxy Fold, along with new A series models in the second half of the year.

“The company will promptly respond to the changing business environment, and step up efforts to secure profitability by enhancing efficiency across development, manufacturing and marketing operations,” Samsung said in its earnings release.

It’s not just market demand that’s impacting Samsung’s earnings. Along with other tech companies, Samsung is steeling itself for the long-term impact of a trade dispute between Japan and South Korea. Last month, Japan announced that it is placing export restrictions on some materials used in chips and smartphones. Samsung said it still has stores of those materials, but it is also looking for alternatives since it is unclear how long the dispute between the two countries may last (and it could last for a long time).

Joy Capital closes $700M for early-stage investments in China

Joy Capital, the venture capital firm that’s backed Luckin, NIO, Mobike and other investor darlings in China, just raised $700 million for a new fund focusing on early-to-growth stage startups.

Launched in 2015 by a team of former investors at Legend Capital, the investment arm of PC maker Lenovo’s parent company, Joy Capital made the news official (in Chinese) on Monday. It didn’t identify the limited partners in this new corpus of funding but said they include “top” public pension funds and insurance companies. Its existing pool of investors counts those from sovereign wealth funds, education-focused endowment funds, family funds and parent funds.

The fresh money boosted Joy’s total tally to over 10 billion yuan ($1.45 billion) under management, with a focus on backing cutting edge technologies and companies involved in the digital upgrade of China’s traditional sectors, or what Joy’s founding partner Liu Erhai (pictured above) dubbed the “new infrastructure” in an op-ed for the China Securities Journal. Targets can include the likes of logistics companies, online car rental platforms or bike-sharing apps.

As a relatively young fund, Joy Capital has so far achieved a few large outcomes. One of its portfolio companies NIO became China’s first electric vehicle startup to go public in the U.S. as a rival to Tesla. It’s also funded Luckin, the Starbucks nemesis from China that floated in the U.S. only 18 months after inception. The fund’s other big wins include Mobike, the bike-sharing pioneer that was sold to Meituan Dianping for $2.7 billion and fast-growing house-sharing unicorn Danke Apartment.

Joy Capital’s new raise arrived at a time when Chinese venture investors are coping with a cash crunch amid a cooling economy exacerbated by the expansion of U.S. tariffs. We reported that private equity and venture capital firms in the country raised 30% less in the first six months of 2019 compared to a year earlier, and the number of investors that managed to attract fundings was down 52% in the same period.

SoftBank announces AI-focused second $108 billion Vision Fund with LPs including Microsoft, Apple and Foxconn

SoftBank Group announced today that it will launch its second Vision Fund with participation from Apple, Foxconn, Microsoft and other tech companies and investors. Called the Vision Fund 2, the fund will focus on AI-based technology. SoftBank said the fund’s capital has reached about $108 billion, based on memoranda of understandings. SoftBank Group’s own investment in the fund will be $38 billion.

It is worth noting that the second Vision Fund’s list of expected limited partners does not currently include any participants from the Saudi Arabia government (the first Vision Fund’s close ties to people, including Crown Prince Mohammed bin Salman, who have been implicated in the murder of journalist Jamal Khashoggi, has understandably been a major source of concern for investors, companies and human rights observers).

But SoftBank Group also said is still in discussions with other participants and that the total amount of the fund is expected to increase. The full list of participants who have signed MOUs so far are: “Apple, Foxconn Technology Group, Microsoft Corporation, Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, MUFG Bank, Ltd., The Dai-ichi Life Insurance Company, Limited, Sumitomo Mitsui Trust Bank, Limited, SMBC Nikko Securities Inc., Daiwa Securities Group Inc., National Investment Corporation of National Bank of Kazakhstan, Standard Chartered Bank, and major participants from Taiwan.”

SoftBank’s intention to launch Vision Fund 2 was first reported earlier this week by the Wall Street Journal. The new fund is expected to decrease SoftBank’s reliance on Saudi Arabian investment and also potentially change the relationship between startups, corporate giants like Microsoft and investors.

The second Vision Fund could help SoftBank extend its position as the most influential investor globally. Through its first $97 billion Vision Fund, the giant invested in dozens of high-profile growing companies, including ride hailing giants Didi Chuxing and Grab, and India-based grocery delivery startup Grofers, payments-firm Paytm, and budget lodging startup Oyo.

The maiden Vision Fund, which was announced in October 2016 and began investing in early 2017, has earned 62% returns to date, SoftBank said last month. SoftBank, known for consistently cutting checks of $100 million and of larger sizes, has invested in 24 of 377 unicorns globally (companies with valuation of $1 billion or more), according to research firm CB Insights.

Alibaba to help Salesforce localize and sell in China

Salesforce, the 20-year-old leader in customer relationship management (CRM) tools, is making a foray into Asia by working with one of the country’s largest tech firms, Alibaba.

Alibaba will be the exclusive provider of Salesforce to enterprise customers in mainland China, Hong Kong, Macau, and Taiwan, and Salesforce will become the exclusive enterprise CRM software suite sold by Alibaba, the companies announced on Thursday.

The Chinese internet has for years been dominated by consumer-facing services such as Tencent’s WeChat messenger and Alibaba’s Taobao marketplace, but enterprise software is starting to garner strong interest from businesses and investors. Workflow automation startup Laiye, for example, recently closed a $35 million funding round led by Cathay Innovation, a growth-stage fund that believes “enterprise software is about to grow rapidly” in China.

The partners have something to gain from each other. Alibaba does not have a Salesforce equivalent serving the raft of small-and-medium businesses selling through its e-commerce marketplaces or using its cloud computing services, so the alliance with the American cloud behemoth will fill that gap.

On the other hand, Salesforce will gain sales avenues in China through Alibaba, whose cloud infrastructure and data platform will help the American firm “offer localized solutions and better serve its multinational customers,” said Ken Shen, vice president of Alibaba Cloud Intelligence, in a statement.

“More and more of our multinational customers are asking us to support them wherever they do business around the world. That’s why today Salesforce announced a strategic partnership with Alibaba,” said Salesforce in a statement.

Overall, only about 10% of Salesforce revenues in the three months ended April 30 originated from Asia, compared to 20% from Europe and 70% from the Americas.

Besides gaining client acquisition channels, the tie-up also enables Salesforce to store its China-based data at Alibaba Cloud. China requires all overseas companies to work with a domestic firm in processing and storing data sourced from Chinese users.

“The partnership ensures that customers of Salesforce that have operations in the Greater China area will have exclusive access to a locally-hosted version of Salesforce from Alibaba Cloud, who understands local business, culture and regulations,” an Alibaba spokesperson told TechCrunch.

Cloud has been an important growth vertical at Alibaba and nabbing a heavyweight ally will only strengthen its foothold as China’s biggest cloud service provider. Salesforce made some headway in Asia last December when it set up a $100 million fund to invest in Japanese enterprise startups and the latest partnership with Alibaba will see the San Francisco-based firm actually go after customers in Asia.

China plans e-cigarette regulation as industry booms

China is taking steps to regulate its blossoming vaping market as health concerns over electronic cigarettes increase in recent times.

China’s National Health Commission has begun research into e-cigarettes and plans to issue legislation for the industry, said the head of the health authority Mao Qunan at a press conference this week. The attempt came as Chinese e-cigarette startups raised loads of venture capital over the past year in their fight to vie for attention in the world’s largest market of smokers.

Vaping suppliers in China range from little-known workshops that have come under legal attack from industry giant Juul, which is reportedly mulling a China entry itself, to venture-backed startups operating out of manufacturing hub Shenzhen. At least 20 e-cigarette companies in China have raised fundings since the beginning of 2019, according to data collected by Crunchbase.

These players are in effect up against state monopoly China Tobacco, which is the world’s biggest cigarette maker and provides the government with colossal tax revenues.

Some researchers support the use of vaping to help adults quit smoking while others have shown that e-cigarettes are just as addictive as traditional ones. The other major controversy is the growing use of e-cigarettes among teenagers, which has led to California’s plan to ban vaping product sales.

China is also applying more scrutiny to the new smoking technology. Research shows that the aerosol produced by heating up e-cigarettes can contain “a lot of harmful substances” and additives in e-cigarettes can “pose health risks,” said Mao. He also noted that equivocal labeling of nicotine level can misguide smokers and sloppy device standards can result in battery explosion and other safety incidents.

Like the U.S., China has seen a worryingly high vaping rate among young people, which is another reason that urges Beijing to hold the industry in check. The use of e-cigarettes by kids, teens and young adults has been proven unsafe because nicotine, which is highly addictive, can harm brain development.

In May, China drew up a set of standards (in Chinese) for e-cigarettes that specify the level of nicotine, the type of additives and other components and designs allowed in battery-powered cigarette devices.

Hellobike, survivor of China’s bike-sharing craze, goes electric

Just two years ago, investors were heavily pouring money into China’s dockless bike-sharing startups. Now that boom has busted with derelict bikes littering the streets of cities.

Meanwhile, a new race has started for two-wheelers with motors — and one of the main players is a survivor from the bike-sharing craze. Blessed with fundings from the world’s most valuable fintech company Ant Financial through its Series D to F funding rounds, Hellobike provides a range of mobility services such as shared e-bikes and rented electric scooters to its 230 million registered users.

Electric push

Hellobike first launched in 2016 by deploying shared bikes in smaller cities and towns — where Ofo and Mobike were largely absent early on — rather than large urban centers like Beijing and Shanghai. This allowed Hellobike to largely avoid the cash splurging competition against Ofo and Mobike.

Ofo is now battling a major financial crisis as it struggles to repay user deposits. Its archrival Mobike has slowed down expansion since it was sold to Hong Kong-listed local services giant Meituan. And Hellobike, which boasts about its operational efficiency, has begun an electric push.

“When the two major powers were at war, neither of them went after electric bikes. They were fighting over bicycles,” Hellobike’s chief financial officer Fischer Chen (pictured above) recently told TechCrunch at Rise conference in Hong Kong, referring to the feud between Mobike and Ofo. “As such, there was no price war for e-bikes from the outset. The competition is rational.”

Electric two-wheeled vehicles are in high demand in the country where nearly 1.4 billion people live. According to data collected by Hellobike, nearly 300 million rides are completed on analog bikes every day in China. What many don’t realize is that pedal-assist electric bikes and pedal-free scooters together more than double that number, generating 700 million rides per day.

As with bicycles, there are benefits to rent rather than buy an electric bike in China. For one, users don’t need to worry about getting their assets stolen. Second — and, this is specific to electric vehicles — finding a safe, convenient charging spot can be a challenge in China.

That’s why Hellobike put up charging stations as it went about offering shared ebikes in 2017. At these kiosks, riders swap their battery out for a new one without having to plug in and wait. They then have the option to pay with Alipay, Ant’s mobile wallet with a one-billion user base.

hellobike

Hellobike’s bike (left and middle) and e-bike (right) models / Photo: Hellobike via Weibo

Of all the monthly two-wheeler electric bikes activity in China, Hellobike has captured 80% of the market share, Chen claims. For bike-sharing, it accounts for 60-70%. It’s hard to verify the share by looking at data compiled by third-party app trackers, for they don’t usually break out the user number for individual features. The Hellobike app is a one-stop-shop for bicycles, e-bikes, e-scooters as well as carpooling, a service complementary to its main two-wheeler business intended to “capture price-sensitive small-town consumers” according to Chen.

Similarly, Mobike has been folded into Meituan’s all-in-one service app. What further complicates the inquiry is some of Hellobike’s rides are accessed directly on Alipay rather than its own app.

When it comes to competition in electric two-wheelers, Chen maintained that other challengers are “relatively small” and that acquiring online users has become “very difficult.” For Hellobike, getting existing customers to try out new features takes as much effort as “adding a new tab to its app,” Chen suggested.

But other internet giants have also set their sight on plugged-in micromobility. Both Mobike and ride-sharing leader Didi Chuxing have their own e-bike sharing programs. It won’t be an easy game, as all contenders need to cope with China’s increasingly strict rules for electric bicycles.

Scooter rental is next

What’s for certain is that Hellobike has big ambitions for electric micromobility. While shared bikes and e-bikes are meant for one-off uses, Hellobike plans to rent out e-scooters for longer swathes of time as many people might want the powered-up vehicles for their daily commute.

hellobike

Hellobike’s electric scooter. Caption: “App-enabled lock. Smart anti-theft. Real-time location tracking for checking the vehicle’s status.” / Photo: Hellobike homepage  

Hellobike founded a new joint venture last month to fulfill that demand. Joining forces with Ant — which is controlled by Alibaba founder Jack Ma — and China’s top battery manufacturer CATL, Hellobike is launching a rental marketplace for its 25 km/h e-scooters targeted at millions of migrant workers in Chinese cities.

“People might be able to afford an e-scooter that costs several thousand yuan [$1 = 6.88yuan], but they might be leaving the city after a year, so why would they buy it? So we come in as a third-party partner with a new rental model through which people pay about 200 yuan a month to use the scooter,” explained Chen. “By doing so, we convert people from buying vehicles to paying for services, renting the vehicles.”

The three shareholders will also work to install more battery-swapping stations nationwide that not only recharge Hellobike’s shared e-bikes but also its e-scooters, that will be made by manufacturing partners.

“We function as a platform and won’t compete with traditional scooter manufacturers,” suggested Chen. “They still get to use their own designs and SKUs [stock keeping units], but we will put smart hardware into their models… so users know where their vehicles are… and they can unlock the scooters with a QR code just like they do with a shared bike or e-bike.”

Hellboke has raised at least $1.8 billion to date, according to public data compiled by Crunchbase. Bloomberg reported in April that it was seeking to raise at least $500 million in a new funding round. The company declined to comment on its fundraising progress.

When it comes to financial metrics, Chen, a veteran investment banker, declined to disclose whether Hellobike overall is profitable but said the company “performs much better than its competitors” financially. The most profitable segment, according to the executive, is the electric bike business.

As for bicycles, Chen noted that China’s main bike-sharing companies are “no longer burning money” since they’ve raised prices in recent times. Hellobike’s bike unit has achieved cash-flow positive during the warmer, peak seasons, Chen added.

India reportedly wants to build its own WhatsApp for government communications

India may have plans to follow France’s footsteps in building a chat app and requiring government employees to use it for official communications.

The New Delhi government is said to be pondering about the need to have homegrown email and chat apps, local news outlet Economic Times reported on Thursday.

The rationale behind the move is to cut reliance on foreign entities, the report said, a concern that has somehow manifested amid U.S.’s ongoing tussle with Huawei and China.

“We need to make our communication insular,” an unnamed top government official was quoted as saying by the paper. The person suggested that by putting Chinese giant Huawei on the entity list, the U.S. has “set alarm bells ringing in New Delhi.”

India has its own ongoing trade tension with the U.S. Donald Trump earlier this month removed the South Asian nation from a special trade program after India did not assure him that it will “provide equitable and reasonable access to its markets.” India called the move “unfortunate”, and weeks later, increased tariffs on some U.S. exports.

The move to step away from foreign communication apps, if it comes to fruition, won’t be the first time a nation has attempted to cautiously restrict usage of popular messaging apps run by foreign players in government offices.

France launched an encrypted chat app — called Tchap — for use in government offices earlier this year. Only those employed by the French government offices can sign up to use the service, though the nation has open sourced the app’s code for the world to see and audit.

Of course, a security flaw in Tchap came into light within the first 24 hours of its release. Security is a real challenge that the government would have to tackle and it might not have the best resources — talent, budget, and expertise — to deal with it.

China, which has restricted many foreign companies from operating in the nation, also maintains customized versions of popular operating systems for use in government offices. So does North Korea.

It won’t be an unprecedented step for India, either. The nation has been trying to build and scale its own Linux-based desktop operating system called BOSS for several years with little success as most government agencies continue to use Microsoft’s Windows operating system.

Even as India has emerged as the third-largest startup hub in the world, the country has failed to build local alternatives for many popular services. Facebook’s WhatsApp has become ubiquitous for communication in India, while Google’s Android and Microsoft’s Windows power most smartphones and computers in the nation.

India’s largest video streaming service, owned by Disney, breaks Safari compatibility to fix security flaw

Hotstar, India’s largest video streaming service with more than 300 million users, disabled support for Apple’s Safari web browser on Friday to mitigate a security flaw that allowed unauthorized usage of its platform, two sources familiar with the matter told TechCrunch.

The incident comes at a time when the streaming service — operated by Star India, part of 20th Century Fox that Disney acquired — enjoys peak attention as millions of people watch the ongoing ICC World Cup cricket tournament on its platform.

As users began to complain about not being able to use Hotstar on Safari, the company’s official support account asserted that “technical limitations” on Apple’s part were the bottleneck. “These limitations have been from Safari; there is very little we can do on this,” the account tweeted Friday evening.

Sources at Hotstar told TechCrunch that this was not an accurate description of the event. Instead, company’s engineers had identified a security hole that was being exploited by unauthorized users to access Hotstar’s content, they said.

Hotstar intends to work on patching the flaw soon and then reinstate support for Safari, the sources said.

The security flaw can only be exploited through Safari’s desktop and mobile browsers. On its website, the company recommends users to try Chrome and Firefox, or its mobile apps, to access the service. Hotstar did not respond to requests for comment.

Hotstar, which rivals Netflix and Amazon Prime Video in India, maintains a strong lead in the local video streaming market (based on number of users and engagement). Last month, it claimed to set a new global record by drawing more than 18 million viewers to a live cricket match.

India’s largest video streaming service, owned by Disney, breaks Safari compatibility to fix security flaw

Hotstar, India’s largest video streaming service with more than 300 million users, disabled support for Apple’s Safari web browser on Friday to mitigate a security flaw that allowed unauthorized usage of its platform, two sources familiar with the matter told TechCrunch.

The incident comes at a time when the streaming service — operated by Star India, part of 20th Century Fox that Disney acquired — enjoys peak attention as millions of people watch the ongoing ICC World Cup cricket tournament on its platform.

As users began to complain about not being able to use Hotstar on Safari, the company’s official support account asserted that “technical limitations” on Apple’s part were the bottleneck. “These limitations have been from Safari; there is very little we can do on this,” the account tweeted Friday evening.

Sources at Hotstar told TechCrunch that this was not an accurate description of the event. Instead, company’s engineers had identified a security hole that was being exploited by unauthorized users to access Hotstar’s content, they said.

Hotstar intends to work on patching the flaw soon and then reinstate support for Safari, the sources said.

The security flaw can only be exploited through Safari’s desktop and mobile browsers. On its website, the company recommends users to try Chrome and Firefox, or its mobile apps, to access the service. Hotstar did not respond to requests for comment.

Hotstar, which rivals Netflix and Amazon Prime Video in India, maintains a strong lead in the local video streaming market (based on number of users and engagement). Last month, it claimed to set a new global record by drawing more than 18 million viewers to a live cricket match.

TikTok owner ByteDance’s long-awaited chat app is here

In WeChat -dominated China, there’s no shortage of challengers out there claiming to create an alternative social experience. The latest creation comes from ByteDance, the world’s most valuable startup and the operator behind TikTok, the video app that has consistently topped the iOS App Store over the last few quarters.

The new offer is called Feiliao (飞聊), or Flipchat in English, a hybrid of an instant messenger plus interest-based forums, and it’s currently available for both iOS and Android. It arrived only four months after Bytedance unveiled its video-focused chatting app Duoshan at a buzzy press event.

Screenshots of Feiliao / Image source: Feiliao

Some are already calling Feiliao a WeChat challenger, but a closer look shows it’s targeting a more niche need. WeChat, in its own right, is the go-to place for daily communication in addition to facilitating payments, car-hailing, food delivery and other forms of convenience.

Feiliao, which literally translates to ‘fly chat’, encourages users to create forums and chat groups centered around their penchants and hobbies. As its app description writes:

Feiliao is an interest-based social app. Here you will find the familiar [features of] chats and video calls. In addition, you will discover new friends and share what’s fun; as well as share your daily life on your feed and interact with close friends.

Feiliao “is an open social product,” said ByteDance in a statement provided to TechCrunch. “We hope Feiliao will connect people of the same interests, making people’s life more diverse and interesting.”

It’s unclear what Feiliao means by claiming to be ‘open’, but one door is already shut. As expected, there’s no direct way to transfer people’s WeChat profiles and friend connections to Feiliao, and there’s no option to log in via the Tencent app. As of Monday morning, links to Feiliao can’t be opened on WeChat, which recently crossed 1.1 billion monthly active users.

On the other side, Alibaba, Tencent’s long-time nemesis, is enabling Feiliao’s payments function through the Alipay digital wallet. Alibaba has also partnered with Bytedance elsewhere, most notably on TikTok’s Chinese version Douyin where certain users can sell goods via Taobao stores.

In all, Flipchat is more reminiscent of another blossoming social app — Tencent-backed Jike — than WeChat. Jike (pronounced ‘gee-keh’) lets people discover content and connect with each other based on various topics, making it one of the closest counterparts to Reddit in China.

Jike’s CEO Wa Nen has taken noticed of Feiliao, commenting with the 👌 emoji on his Jike feed, saying no more.

Screenshot of Jike CEO Wa Ren commenting on Feiliao

“I think [Feiliao] is a product anchored in ‘communities’, such as groups for hobbies, key opinion leaders/celebrities, people from the same city, and alumni,” a product manager for a Chinese enterprise software startup told TechCrunch after trying out the app.

Though Feiliao isn’t a direct take on WeChat, there’s little doubt that the fight between Bytedance and Tencent has heated up tremendously as the former’s army of apps captures more user attention.

According to a new report published by research firm Questmobile, ByteDance accounted for 11.3 percent of Chinese users’ total time spent on ‘giant apps’ — those that surpassed 100 million MAUs — in March, compared to 8.2 percent a year earlier. The percentage controlled by Tencent was 43.8 percent in March, down from 47.5 percent, while the remaining share, divided between Alibaba, Baidu and others, grew only slightly from 44.3 percent to 44.9 percent over the past year.

Chat app Line is adding Snap-style disappearing stories

Facebook cloning Snap to death may be old news, but others are only just following suit. Line, the Japanese messaging app that’s popular in Asia, just became the latest to clone Snap’s ephemeral story concept.

The company announced today that it is adding stories that disappear after 24-hours to its timeline feature, a social network like feed that sits in its app, and user profiles. The update is rolling out to users now and the concept is very much identical to Snap, Instagram and others that have embraced time-limited content.

“As posts vanish after 24 hours, there is no need to worry about overposting or having posts remain in the feed,” Line, which is listed in the U.S. and Japan, wrote in an update. “Stories allows friends to discover real-time information on Timeline that is available only for that moment.”

Snap pioneered self-destructed content in its app, and the concept has now become present across most of the most popular internet services in the world.

In particular, Facebook added stories to across the board: to its core app, Messenger, Instagram and WhatsApp, the world’s most popular chat app with over 1.5 billion monthly users. Indeed, Facebook claims that WhatsApp stories are used by 500 million people, while the company has built Instagram into a service that has long had more users than Snap — currently over one billion.

The approach doesn’t always work, though — Facebook is shuttering its most brazen Snap copy, a camera app built around Instagram direct messages.

China’s top chat app WeChat added its own version earlier this year, and while it said in its earnings this week that users upload “hundreds of millions of videos each day” to its social platforms, it didn’t give numbers on its Snap-inspired feature.

Line doesn’t have anything like the reach of Facebook’s constellation of social apps or WeChat, but it is Japan’s dominant messaging platform and is popular in Thailand, Taiwan and Indonesia.

The Japanese company doesn’t give out global user numbers but it reported 164 million monthly users in its four key markets as of Q1 2019, that’s down one million year-on-year. Japan accounts for 80 million of that figure, ahead of Thailand (44 million), Taiwan (21 million) and Indonesia (19 million.)

While user growth has stagnated, Line has been able to extract increase revenue. In addition to a foray into services — in Japan its range covers ride-hailing, food delivery, music streaming and payments — it has increased advertising in the app’s timeline tab, and that is likely a big reason for the release of stories. The new feature may help timeline get more eyeballs, while the company could follow the lead of Snap and Instagram to monetize stories by allowing businesses in.

In Line’s case, that could work reasonably well — for advertising — since users can opt to follow business accounts already. It would make sense, then, to let companies push stories to users that opted in follow their account. But that’s a long way in the future and it will depend on how the new feature is received by users.

Tech stocks slide on US decision to blacklist Huawei and 70 affiliates

The United States has been lobbying for months to prevent its western allies from using Huawei equipment in their 5G deployment, and on Wednesday, Washington made it more difficult for the Chinese telecom titan to churn out those next-gen products.

The U.S. Department of Commerce announced that it will add Huawei and its 70 affiliates to the so-called ‘Entity List,’ a move that will prevent the telecom giant from buying parts and components from U.S. companies without approval from Washington. That confirms reports of the potential ban a day before.

Despite being the largest telecom equipment maker around the world, Huawei relies heavily on its American suppliers, giving the U.S. much leeway to hobble the Chinese firm’s production.

Following the dramatic move, shares of a gauge of Huawei affiliates slumped on Wednesday. Tatfook Technology, which sells to Huawei as well as Ericsson and Bosch, dropped 2.84 percent in Shenzhen in morning trading. New Sea Union Telecom, a supplier to China’s ‘big three’ telecom network operators and Huawei, slid 4.88 percent. Another Huawei key partner Chunxing Precision Mechanical dropped as much as 5.37 percent.

Huawei did not comment directly on the Commerce Department’s blacklist when reached out by TechCrunch, but said it’s “ready and willing to engage with the U.S. government and come up with effective measures to ensure product security.”

“Restricting Huawei from doing business in the U.S. will not make the U.S. more secure or stronger; instead, this will only serve to limit the U.S. to inferior yet more expensive alternatives, leaving the U.S. lagging behind in 5G deployment, and eventually harming the interests of U.S. companies and consumers,” Huawei hit back in the statement.

This view is congruent with some of the harshest criticisms of Washington’s backlash against Huawei. Scholars and industry observers warn that Chinese tech firms have become such an integral part to the global economy that severing ties with Huawei will do ham to 5G advancement worldwide.

In addition, the Chinese company said the U.S.’s “unreasonable restrictions will infringe upon Huawei’s rights and raise other serious legal issues,” though it did not spell out what those rights and legal concerns are.

The announcement dropped on the same day U.S. President Donald Trump declared “a national emergency” over technology supply chain threats from the country’s “foreign adversaries”.

The Commerce Department said it has a reasonable basis to conclude that “Huawei is engaged in activities that are contrary to U.S. national security or foreign policy interest.”

Some of the U.S’s allies including the U.K. are still investigating Huawei’s possible security threat and deciding how close a link they should keep with Huawei, but the Shenzhen-based company has already taken a bold step to give its potential clients some assurance.

Just this Tuesday, Huawei told reporters in London that it’s “willing to sign no-spy agreements with governments, including the U.K. government,” and commit itself to making its equipment “meet the no-spy, no-backdoors standard.”

The U.S.’s tit-for-tat with Huawei also includes the push to arrest the company’s CFO Meng Wanzhou on charges that Huawei did business in Iran in breach of U.S. sanctions.

Huawei launches AI-backed database to target enterprise customers

China’s Huawei is making a serious foray into the enterprise business market after it unveiled a new database management product on Wednesday, putting it in direct competition with entrenched vendors like IBM, Oracle and Microsoft.

The Shenzhen-based company, best known for making smartphones and telecom equipment, claims its newly minted database uses artificial intelligence capabilities to improve tuning performance, a process that traditionally involves human administrators, by over 60 percent.

Called the GaussDB, the database works both locally as well as on public and private clouds. When running on Huawei’s own cloud, GaussDB provides data warehouse services for customers across the board, from the financial, logistics, education to automotive industries.

The database launch was first reported by The Information on Tuesday citing sources saying it is designed by the company’s secretive database research group called Gauss and will initially focus on the Chinese market.

The announcement comes at a time when Huawei’s core telecom business is drawing scrutiny in the West over the company’s alleged ties to the Chinese government. That segment accounted for 40.8 percent of Huawei’s total revenues in 2018, according to financial details released by the privately-held firm.

Huawei’s consumer unit, which is driven by its fast-growing smartphone and device sales, made up almost a half of the company’s annual revenues. Enterprise businesses made up less than a quarter of earnings, but Huawei’s new push into database management is set to add new fuel to the segment.

Meanwhile, at Oracle, more than 900 employees, most of whom worked for its 1,600-staff research and development center in China, were recently let go amid a major company restructuring, multiple media outlets reported earlier this month.

Data provided to TechCrunch by Boss Zhipin offers clues to the layoff: The Chinese recruiting platform has recently seen a surge in newly registered users who work at Oracle China. But the door is still open for new candidates as the American giant is currently recruiting for more than 100 positions through Boss, including many related to cloud computing.

Singapore’s Grain, a profitable food delivery startup, pulls in $10M for expansion

Cloud kitchens are the big thing in food delivery, with ex-Uber CEO Travis Kalanick’s new business one contender in that space, with Asia, and particularly Southeast Asia, a major focus. Despite the newcomers, a more established startup from Singapore has raised a large bowl of cash to go after regional expansion.

Founded in 2014, Grain specializes in clean food while it takes a different approach to Kalanick’s CloudKitchens or food delivery services like Deliveroo, FoodPanda or GrabFood.

It adopted a cloud kitchen model — utilizing unwanted real estate as kitchens, with delivery services for output — but used it for its own operations. So while CloudKitchens and others rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team. A so-called ‘full stack’ model if you can stand the cliched tech phrase.

Finally, Grain is also profitable. The new round has it shooting for growth — more on that below — but the startup was profitable last year, CEO and co-founder Yi Sung Yong told TechCrunch.

Now it is reaping the rewards of a model that keeps it in control of its product, unlike others that are complicated by a chain that includes the restaurant and a delivery person.

We previously wrote about Grain when it raised a $1.7 million Series A back in 2016 and today it announced a $10 million Series B which is led by Thailand’s Singha Ventures, the VC arm of the beer brand. A bevy of other investors took part, including Genesis Alternative Ventures, Sass Corp, K2 Global — run by serial investor Ozi Amanat who has backed Impossible Foods, Spotify and Uber among others — FoodXervices and Majuven. Existing investors Openspace Ventures, Raging Bull — from Thai Express founder Ivan Lee — and Cento Ventures participated.

The round includes venture debt, as well as equity, and it is worth noting that the family office of the owners of The Coffee Bean & Tea Leaf — Sassoon Investment Corporation — was involved.

Grain covers individual food as well as buffets in Singapore

Three years is a long gap between the two deals — Openspace and Cento have even rebranded during the intervening period — and the ride has been an eventful one. During those years, Sung said the business had come close to running out of capital before it doubled down on the fundamentals before the precarious runway capital ran out.

In fact, he said, the company — which now has over 100 staff — was fully prepared to self-sustain.

“We didn’t think of raising a Series B,” he explained in an interview. “Instead, we focused on the business and getting profitable… we thought that we can’t depend entirely on investors.”

And, ladies and gentleman, the irony of that is that VCs very much like a business that can self-sustain — it shows a model is proven — and investing in a startup that doesn’t need capital can be attractive.

Ultimately, though, profitability is seen as sexy today — particularly in the meal space where countless U.S. startups has shuttered including Munchery and Sprig — but the focus meant that Grain had to shelve its expansion plans. It then went through soul-searching times in 2017 when a spoilt curry saw 20 customers get food poisoning.

Sung declined to comment directly on that incident, but he said that company today has developed the “infrastructure” to scale its business across the board, and that very much includes quality control.

Grain co-founder and CEO Yi Sung Yong [Image via LinkedIn]

Grain currently delivers “thousands” of meals per day in Singapore, its sole market, with eight-figures in sales per year, he said. Last year, growth was 200 percent, Sung continued, and now is the time to look overseas. With Singha, the Grain CEO said the company has “everything we need to launch in Bangkok.”

Thailand — which Malaysia-based rival Dahamakan picked for its first expansion — is the only new launch on the table, but Sung said that could change.

“If things move faster, we’ll expand to more cities, maybe one per year,” he said. “But we need to get our brand, our food and our service right first.”

One part of that may be securing better deals for raw ingredients and food from suppliers. Grain is expanding its ‘hub’ kitchens — outposts placed strategically around town to serve customers faster — and growing its fleet of trucks, which are retrofitted with warmers and chillers for deliveries to customers.

Grain’s journey is proof that startups in the region will go through trials and tribulations, but being able to bolt down the fundamentals and reduce burn rate is crucial in the event that things go awry. Just look to grocery startup Honestbee, also based in Singapore, for evidence of what happens when costs are allowed to pile up.

Once a major name in smartphones, LG Mobile is now irrelevant — and still losing money

LG was once a stalwart of the smartphone industry — remember its collaboration with Facebook back in the day? — but today the company is swiftly descending into irrelevance.

The latest proof is LG’s Q1 financials, released this week, which show that its mobile division grossed just KRW 1.51 trillion ($1.34 billion) in sales for the quarter. That’s down 30 percent year-on-year and the lowest income for LG Mobile for at least the last eight years. We searched back eight years to Q1 2011 — before that LG was hit and miss with releasing specific financial figures for its divisions.

To give an indication of its decline, LG shipped over 15 million phones in Q4 2015 when its revenue was 3.78 trillion RKW, or $3.26 billion. That 2.5 times higher than this recent Q1 2019 period.

Regular readers will be aware that LG mobile is a loss-making division. That’s the reason its activities — and consequently sales — have scaled down in recent years. But the losses are still coming.

LG put Brian Kwon, who leads its lucrative Home Entertainment business, in charge of its mobile division last November and his task remains ongoing, it appears.

LG Mobile recorded a loss of 203.5 billion KRW ($181.05 million) for Q1 which it described as “narrowed.”

It is true that LG Mobile’s Q1 loss is lower than the 322.3 billion KRW ($289.8 million) loss it carded in the previous quarter, but it is wider than one year previous. Indeed, the mobile division lost 136.1 billion KRW ($126.85 million) in Q1 2018.

LG said Mr Kwon is presiding over “a revised smartphone launch strategy” which is why the numbers are changing so drastically. Going forward, it said that the launch of its G7 ThinQ flagship phone and a new upgrade center — first announced last year — are in the immediate pipeline, but it is hard to see how any of this will reverse the downward trend.

LG Mobile is increasingly problematic because the parent company is seeing success in other areas, but that’s being countered by a poor performing smartphone business. Last quarter, mobile dragged LG to its first quarterly loss in two years, for example.

Just looking at the Q1 numbers, LG’s overall profit was 900.6 billion KRW ($801.25 million) thanks to its home appliance business ($647.3 million profit) and that home entertainment business, which had a profit of $308.27 million. Its automotive business — which is, among other things, focused on EVs — did bite into the profits, but that is at least a business that is going places.

Samsung sees Q1 profit plummet 60%

Samsung’s Q1 earnings are in and, as the company itself predicted, they don’t make for pretty reading.

The Korean giant saw revenue for the three-month period fall by 13 percent year-on-year to 52.4 trillion KRW, around $45 billion. Meanwhile, operating profit for Q1 2019 came in at 6.2 trillion KRW, that’s a whopping $5.33 billion but it represents a decline of huge 60 percent drop from the same period last year. Ouch.

Samsung’s Q1 last year was admittedly a blockbuster quarter, but these are massive declines.

What’s going on?

Samsung said that sales of its new Galaxy S10 smartphone were “solid” but it admitted that its memory chip and display businesses, so often the most lucrative units for the company, didn’t perform well and “weighed down” the company’s results overall. Despite those apparent S10 sales, the mobile division saw income drop “as competition intensified.” Meanwhile, the display business posted a loss “due to decreased demand for flexible displays and increasing market supplies for large displays.”

That’s all about on par with what analysts were expecting following that overly-optimistic Q1 earnings forecast made earlier this month.

The immediate future doesn’t look terribly rosy, too.

Samsung said the overall memory market will likely remain slow in Q2 although DRAM demand is expected to recover somewhat. It isn’t expecting too much to change for its display business, either, although “demand for flexible smartphone OLED panels is expected to rebound” which is where the company plans to place particular focus.

On the consumer side, where most readers know Samsung’s business better, Samsung expects to see improved sales in Q2, where buying is higher. It also teased a new Note, 5G devices — which will likely limited to Korea, we suspect — and that foldable phone.

The Galaxy Fold has been delayed after some journalists found issues with their review units — TechCrunch’s own Brian Heater was fine; he even enjoyed using it. There’s no specific mention in the quarterly report of a new launch date but it looks like the release will be mid-June, that’s assuming what AT&T is telling customers is accurate. But we’ll need to wait a few weeks for that to be confirmed, it seems.

Samsung says it will announce a revised launch date for the Galaxy Fold in the next few weeks.
Executives are speaking on a 1Q earnings conference call.

— Tim Culpan (@tculpan) April 30, 2019

U.S. slams Alibaba and its challenger Pinduoduo for selling fakes

China’s biggest ecommerce company Alibaba was again on the U.S. Trade Representative’s blacklist over suspected counterfeits sold on its popular Taobao marketplace that connects small merchants to consumers.

Nestling with Alibaba on the U.S.’s annual “notorious” list that reviews trading partners’ intellectual property practice is its fast-rising competitor Pinduoduo . Just this week, Pinduoduo founder Colin Huang, a former Google engineer, wrote in his first shareholder letter since listing the company that his startup is now China’s second-biggest ecommerce player by the number of “e-way bills”, or electronic records tracking the movement of goods. That officially unseats JD.com as the runner-up to Alibaba.

This is the third year in a row that Taobao has been called out by the U.S. government over IP theft, despite measures the company claims it has taken to root out fakes, including the arrest of 1,752 suspects and closure of 1,282 manufacturing and distribution centers.

“Although Alibaba has taken some steps to curb the offer and sale of infringing products, right holders, particularly SMEs, continue to report high volumes of infringing products and problems with using takedown procedures,” noted the USTR in its report.

In a statement provided to TechCrunch, Alibaba said it does “not agree with” the USTR’s decision. “Our results and practices have been acknowledged as best-in-class by leading industry associations, brands and SMEs in the United States and around the world. In fact, zero industry associations called for our inclusion in the report this year.”

Pinduoduo is a new addition to the annual blacklist. The Shanghai-based startup has over the course of three years rose to fame among China’s emerging online shoppers in smaller cities and rural regions, thanks to the flurry of super-cheap goods on its platform. While affluent consumers may disdain Pinduodou products’ low quality, price-sensitive users are hooked to bargains even when items are subpar.

“Many of these price-conscious shoppers are reportedly aware of the proliferation of counterfeit products on pinduoduo.com but are nevertheless attracted to the low-priced goods on the platform,” the USTR pointed out, adding that Pinduoduo’s measures to up the ante in anti-piracy technologies failed to fully address the issue.

Pinduoduo, too, rebutted the USTR’s decision. “We do not fully understand why we are listed on the USTR report, and we disagree with the report,” a Pinduoduo spokesperson told TechCrunch. “We will focus our energy to upgrade the e-shopping experience for our users. We have introduced strict penalties for counterfeit merchants, collaborated closely with law enforcement and employed technologies to proactively take down suspicious products.”

The attacks on two of China’s most promising ecommerce businesses came as China and the U.S. are embroiled in on-going trade negotiations, which have seen the Trump administration repeatedly accused China of IP theft. Tmall, which is Alibaba’s online retailer that brings branded goods to shoppers, was immune from the blacklist, and so was Tmall’s direct rival JD.com.

Taobao has spent over a decade trying to revive its old image of an online bazaar teeming with fakes and “shanzhai” items, which are not outright pirated goods but whose names or designs intimate those of legitimate brands. Pinduoduo is now asked to do the same after a few years of growth frenzy. On the one hand, listing publicly in the U.S. subjects the Chinese startup to more scrutiny. On the other, small-town users may soon demand higher quality as their purchasing power improves. And when the countryside market becomes saturated, Pinduoduo will need to more aggressively upgrade its product selection to court the more sophisticated consumers from Chinese megacities.

Douyu, China’s Twitch backed by Tencent, files for a $500M U.S. IPO

Douyu, a Chinese live streaming service focused on video games, has filed with the U.S. Securities and Exchange Commission as it prepares to raise up to $500 million on the NYSE less than a year after its archrival floated on the same stock market.

Wuhan-based Douyu, whose name translates as “fighting fish”, is the second Twitch -like service backed by Tencent to go public in the United States. Its direct competitor Huya, who has a similarly fierce name “tiger’s teeth” and also counts Tencent as a major investor, raised $180 million from its NYSE listing last May.

It’s not surprising for Tencent to hedge its bets in esports streaming, given the giant relies heavily on video games to make money. For example, Tencent can use some of its portfolio companies’ ad slots to get the word out about its new releases. Indeed, Douyu’s filing shows it received a hefty 27.48 million yuan ($4.09 million) in advertising fees from Tencent last year.

As Douyu warns in its prospectus, its alliance with Tencent can be tenuous.

“Tencent may devote resources or attention to the other companies it has an interest in, including our direct or indirect competitors. As a result, we may not fully realize the benefits we expect from the strategic cooperation with Tencent. Failure to realize the intended benefits from the strategic cooperation with Tencent, or potential restrictions on our collaboration with other parties, could materially and adversely affect our business and results of operations.”

But there are nuances in the giant’s ties to China’s top two live streaming services that could mean more affinity between Tencent and Douyu. The social media and gaming behemoth is currently Douyu’s largest shareholder with a 40.1 percent stake owned through its wholly-owned subsidiary Nectarine. Over at Huya, Tencent is the second-largest stakeholder behind YY, the pioneer in China’s live streaming sector that had spun off Huya.

When it comes to the financial terms, the rivaling pair is in a head-on race. In 2018, Douyu doubled its net revenues to $531.5 million. Huya held an edge as it earned $678.3 million in the same period, also doubling the amount from a year ago.

Huya may have learned a few things about monetizing live streaming from 14-year-old YY as it managed to pull in more revenues despite owning a smaller user base. While Douyu claimed 153.5 million monthly active users in the fourth quarter, Huya had 116.6 million.

How the two make money also diverge slightly. In the fourth quarter, 86 percent of Douyu’s revenues originated from virtual items that users tipped to their favorite streaming hosts, with the remaining earnings derived from advertising and more. By contrast, Huya relied almost exclusively on live streaming gifts, which made up 95.3 percent of total revenues.

douyu

Screenshot of a Douyu live streaming session 

As Douyu grows its coffers to spend on content as well as technologies following the impending IPO, competition in China’s live streaming landscape is set to heat up. Just earlier this month, Huya raised $327 million in a secondary offering to invest in content and R&D. Like many other businesses anchored in content, Huya and Douyu depend tremendously on quality creators to keep users loyal. Both have offered sizable checks to live streaming hosts, promising to grow the internet celebrities into bigger stars.

And they’ve extended the battlefield outside China as emerging media forms, most exemplified by short video services Douyin (TikTok’s China version) and Kuaishou, threaten to steal people’s eyeball time away. Both bite-size video apps now enjoy a much bigger user base than their live streaming counterparts.

“We intend to further explore overseas markets to expand our user base through both organic expansion and selective investments,” noted Douyu in its IPO filing.

In a similar move, Huya’s overseas expansion is also well underway. “In addition to our vigorous domestic growth, we have successfully leveraged our unique business model to enter new overseas markets. We believe we are delivering long-term value through strategic investments in overseas markets in 2019 and beyond,” said Huya chief executive Rongjie Dong in the company’s Q4 earnings report.

Uber may have left Southeast Asia but its APAC HQ remains in Singapore

Uber exited Southeast Asia last year after it sold its local business to Grab but it continues to remain in Singapore, where it has now opened a new regional HQ for Asia Pacific and is hiring for staff.

The company — which is headed for IPO imminently — won’t be restarting its service, however, which puts it in a rather interesting position in Singapore.

The writing has been on the wall for some time, though. TechCrunch reported last August that Uber was on a hiring spree in Singapore, and now that has come to fruition with the opening with a new 2,000 sq meter office near the Central Business District in Singapore. That’ll function as the management center for the nine markets that Uber operates in across Asia Pacific, which include Japan, Korea and Australia. India, Uber’s second largest market, is managed separately to the rest of the continent.

Uber’s Southeast Asia sale — which saw it take a tactical 27.5 percent stake in its Singapore-based rival — gave Grab first refusal on a lot of Uber’s operational talent, but most of Uber’s core management team remained with the company in Singapore. For example, Brooks Entwistle, who was hired as chief business officer for Asia Pacific in 2017, remains stationed there as Uber’s international chief business officer.

Big day for ⁦@Uber⁩ in Asia as we open our new APAC HQ in Singapore. Our awesome team is growing as we deepen our commitment to this city-state and its outstanding tech talent and focus. We are hiring! #Uber #UberEATS #JUMP #Onward #Asia #Singapore https://t.co/BOnOn2GblE

— Brooks Entwistle (@BrooksEntwistle) April 2, 2019

Straits Times reports that Uber’s Singapore headcount is at least 165 with some 17 vacancies open right now. As we reported last year, the company was aiming to hire at least 75 roles to take its Singapore-based team to over “well over” 100 — it seems that it did that and then some.

PicsArt hits 130 million MAUs as Chinese flock to its photo editing app

If you’re like me, who isn’t big on social media, you’d think that the image filters that come inside most apps will do the job. But for many others, especially the younger crowd, making their photos stand out is a huge deal.

The demand is big enough that PicsArt, a rival to filtering companies VSCO and Snapseed, recently hit 130 million monthly active users worldwide, roughly a year after it amassed 100 million MAUs. Like VSCO, PicsArt now offers video overlays though images are still its focus.

Nearly 80 percent of PicsArt’s users are under the age of 35 and those under 18 are driving most of its growth. The “Gen Z” (the generation after millennials) users aren’t obsessed with the next big, big thing. Rather, they pride themselves on having niche interests, be it K-pop, celebrities, anime, sci-fi or space science, topics that come in the form of filters, effects, stickers and GIFs in PicsArt’s content library.

“PicsArt is helping to drive a trend I call visual storytelling. There’s a generation of young people who communicate through memes, short-form videos, images and stickers, and they rarely use words,” Tammy Nam, who joined PicsArt as its chief operating officer in July, told TechCrunch in an interview.

PicsArt has so far raised $45 million, according to data collected by Crunchbase. It picked up $20 million from a Series B round in 2016 to grow its Asia focus and told TechCrunch that it’s “actively considering fundraising to fuel [its] rapid growth even more.”

picsart

PicsArt wants to help users stand out on social media, for instance, by virtually applying this rainbow makeup look on them. / Image: PicsArt via Weibo

The app doubles as a social platform, although the use case is much smaller compared to the size of Instagram, Facebook and other mainstream social media products. About 40 percent of PicsArt’s users post on the app, putting it in a unique position where it competes with the social media juggernauts on one hand, and serving as a platform-agnostic app to facilitate content creation for its rivals on the other.

What separates PicsArt from the giants, according to Nam, is that people who do share there tend to be content creators rather than passive consumers.

“On TikTok and Instagram, the majority of the people there are consumers. Almost 100 percent of the people on PicsArt are creating or editing something. For many users, coming on PicsArt is a built-in habit. They come in every week, and find the editing process Zen-like and peaceful.”

Trending in China

Most of PicsArt’s users live in the United States, but the app owes much of its recent success to China, its fastest growing market with more than 15 million MAUs. The regional growth, which has been 10-30 percent month-over-month recently, appears more remarkable when factoring in PicsArt’s zero user acquisition expense in a crowded market where pay-to-play is a norm for emerging startups.

“Many larger companies [in China] are spending a lot of money on advertising to gain market share. PicsArt has done zero paid marketing in China,” noted Nam.

Screenshot: TikTok-related stickers from PicsArt’s library

When people catch sight of an impressive image filtering effect online, many will inquire about the toolset behind it. Chinese users find out about the Armenian startup from photos and videos hashtagged #PicsArt, not different from how VSCO gets discovered from #vscocam on Instagram. It’s through such word of mouth that PicsArt broke into China, where users flocked to its Avengers-inspired disappearing superhero effect last May when the film was screening. China is now the company’s second largest market by revenue after the U.S.

Screenshot: PicsArts lets users easily apply the Avengers dispersion effect to their own photos

A hurdle that all media apps see in China is the country’s opaque guidelines on digital content. Companies in the business of disseminating information, from WeChat to TikTok, hire armies of content moderators to root out what the government deems inappropriate or illegal. PicsArt says it uses artificial intelligence to sterilize content and keeps a global moderator team that also keeps an eye on its China content.

Despite being headquartered in Silicon Valley, PicsArt has placed its research and development center in Armenia, home to founder Hovhannes Avoyan. This gives the startup access to much cheaper engineering talents in the country and neighboring Russia compared to what it can hire in the U.S. To date, 70 percent of the company’s 360 employees are working in engineering and product development (50 percent of whom are female), an investment it believes helps keep its creative tools up to date.

Most of PicsArt’s features are free to use, but the firm has also looked into getting paid. It rolled out a premium program last March that gives users more sophisticated functions and exclusive content. This segment has already leapfrogged advertising to be PicsArt’s largest revenue source, although in China, its budding market, paid subscriptions have been slow to come.

picsart 1

PicsArt lets users do all sorts of creative work, including virtually posing with their idol. / Image: PicsArt via Weibo

“In China, people don’t want to pay because they don’t believe in the products. But if they understand your value, they are willing to pay, for example, they pay a lot for mobile games,” said Jennifer Liu, PicsArt China’s country manager.

And Nam is positive that Chinese users will come to appreciate the app’s value. “In order for this new generation to create really differentiated content, become influencers, or be more relevant on social media, they have to do edit their content. It’s just a natural way for them to do that.”

Grab launches SME loans and micro-insurance in Southeast Asia

In its latest move beyond ride-hailing, Southeast Asia’s Grab has started to offer financing to SMEs and micro-insurance to its drivers.

The launch comes just weeks after Grab raised $1.5 billion from the Vision Fund as part of a larger $5 billion Series H funding round that’ll be used to battle rival Go-Jek, which is vying with Grab to become the top on-demand app for Southeast Asia’s 600 million-plus consumers.

Grab acquired Uber’s Southeast Asia business in 2018 and it has spent the past year or so pushing a ‘super app’ strategy. That’s essentially an effort to become a daily app for Southeast Asia and, beyond rides, it entails food delivery, payments and other services on demand. Financial services are also a significant chunk of that focus, and now Grab is switching on loans and micro-insurance for the first time.

Initially, the first market is Singapore, but the plan is to expand to Southeast Asia’s five other major markets, Reuben Lai,  who is senior managing director and co-head of Grab Financial, told TechCrunch on the sidelines of the Money20/20 conference in Singapore. Lai declined to provide a timeframe for the expansion.

The company announced its launch into financial services last year and that, Lai confirmed, was a purely offline effort. Now the new financial products announced today will be available from within the Grab app itself.

Grab is also planning to develop a ‘marketplace’ of financial products that will allow other financial organizations to promote services to its 130 million registered users. Grab doesn’t provide figures for its active user base.

Grab announced a platform play last summer that allows selected partners to develop services that sit within its app. Some services have included grocery delivers from Happy Fresh, video streaming service Hooq, and health services from China’s Ping An.

The Khashoggi murder isn’t stopping SoftBank’s Vision Fund

Money talks in the startup community, especially when SoftBank comes knocking with the megabucks of its Vision Fund.

Despite the public outcry around the firm’s dependence on money from Saudi Arabia in the wake of that country’s assassination of Washington Post journalist Jamal Khashoggi, deal flow for Softbank’s Vision Fund appears to be back to normal.

The $100 billion megafund has done 21 deals over the last two quarters, that’s as more than in the other quarters of the previous year combined, according to data from Crunchbase, thanks to an uptick from Asia. Since the October 2 murder, there have been 11 investments in U.S. companies, seven in Asia, two in Europe and one in Latin America. Just this week, the fund completed a near $1.5 billion investment in Southeast Asia-based ride-hailing company Grab.

While U.S. and European firms have more options, and therefore, perhaps deserve more scrutiny, Softbank’s cash is increasingly the only game in town for startups in Asia, where there are fewer alternatives for later stage capital outside of large Chinese private equity firms or tech giants — which come with their own risks.

The Vision Fund is seen by some critics as tainted money for its links to the Saudi Royal family. Saudi Arabia’s Public Investment Fund (PIF) is the fund’s anchor investor and it is controlled by Crown Prince Mohammed bin Salman, who has been strongly linked with the murder of Saudi journalist Jamal Khashoggi, an outspoken critic of the regime.

Khashoggi, a Washington Post columnist, was murdered on October 2 after he entered the Saudi consulate in Istanbul. His visit was part of an effort to obtain divorce documents in order to marry his fiancée, but it ended with his apparently gruesome death. Audio clips suggest he was beheaded, dismembered, and had his fingers severed before his body was dissolved in acid, although new reports suggest it may have been burned.

Jamal Khashoggi — pictured in 2014 — was murdered in the Saudi consulate in Istanbul last year [Photographer: Ohammed Al-Shaikh/AFP/Getty Images]

The Vision Fund is designed to finance ‘global winners’ which, like all investment funds, is set up to provide ‘unfair advantages’ to help its companies grow into hugely important businesses. On the financial end, as is the norm, it is built to provide handsome returns to the LPs, thus directly boosting the coffers of the PIF, the Saudi kingdom, and by extension the Saudi prince himself.

An investigation is going, but there’s already plenty of evidence to suggest that the murder happened at the request of the prince.

Sources within the U.S. State Department have reportedly said it is “blindingly obvious” that the Crown Prince ordered the killing — he reportedly threatened to shoot Khashoggi one year before. But, now that the apparent period of outrage is over, SoftBank has reverted back to writing checks and companies are taking them in spite of the links to Saudi Arabia.

For startups, the money flow means that a major source of capital for growth or subsidies for customers comes from the Saudi royal family’s pockets — a regime that would reportedly not hesitate to murder a critical voice.

SoftBank’s Vision Fund has ramped up its deals over the past six months, according to data from Crunchbase

What are the companies saying?

SoftBank itself said it has a commitment to “the people” of Saudi Arabia that will see it deploy its capital unchanged, although Chairman Masayoshi Son did concede that he will wait on the findings of the investigation into the murder before deciding on whether PIF will be involved in a second Vision Fund.

The founders taking the capital have been more cautious. When questioned, executives talk about the specifics of their deal and their growth plans, most defer issues on the management of LPs, like PIF, to SoftBank. While offering words in support of the ongoing murder investigation, they manage to say little about the ethics of taking money from the Saudi regime.

Bom Kim, CEO of Korean e-commerce company Coupang — which raised $2 billion from the Vision Fund — told TechCrunch in November that the allegations around the murder “don’t represent us and don’t represent [Vision Fund] companies.”

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tokopedia CEO William Tanuwijaya told TechCrunch in December after the Vision Fund co-led a $1.1 billion round.

William Tanuwijaya is the co-founder and CEO of Tokopedia [Photographer: Jason Alden/Bloomberg]

OYO, the budget hotel network based out of India, did not respond to a request comment sent the day before this story was published. The startup raised $1 billion led by the Vision Fund in September.

TechCrunch was also unable to get a response to questions sent to Chehaoduo, the Vision Fund’s first China-based startup which raised $1.5 billion in February. The company is notable for being the only one of this group that didn’t count SoftBank as an existing investor prior to its Vision Fund deal.

The latest addition to the collection is Grab, the ride-hailing company in Southeast Asia that’s led by CEO Anthony Tan, who is very publicly a devout Christian. In a statement sent to TechCrunch this week, Grab defended its relationship with SoftBank, which first invested in Grab back in 2014:

What happened to Jamal Khashoggi was obviously horrible. We hope whoever is responsible is held accountable. We are not in a position to comment on behalf of SoftBank but from our perspective Son-san and the entire SoftBank team have brought so much value to the table for Grab – beyond just financing. They have brought advice, mentorship and potential business opportunities. The Vision Fund is about investing for the next 100 or 200 years and investing in trends that will move the needle for humanity in positive ways. This is a lofty and ultimately positive goal.

Anthony Tan is the co-founder and chief executive officer of Grab [Photographer: Ore Huiying/Bloomberg/Getty Images]

The Vision Fund is just getting started in Asia, however, with rumors suggesting it is planning to open offices in China and India. Singapore is presumably on that list, too, while the fund has been busy hiring a general team that will operate globally out of the U.S.

To date, the fund’s focus in Asia has been on some of the region’s largest (highest-valued) companies, but as it develops a local presence it is likely to seek out less obvious deals to grow its portfolio. That’s going to mean this question of ethics and conscience around the Vision Fund’s capital will present itself to more founders in Asia. Going on what we’ve seen so far, most will have no problem taking the money and issuing platitudinous statements.

Privately, VCs in the region who I have canvassed have told me that founders have little choice but to take the Vision Fund’s money. They explain that nobody else can offer billion-dollar-sized checks, while SoftBank is an existing investor in many of them already which gives it additional leverage. The fund also takes the aggressive approach of threatening to back rival companies if it doesn’t get the deals it wants, as we saw when Son said he’d consider a deal with Lyft when its Uber investment was uncertain.

That reality may be true — finding an alternative to a hypothetical $1 billion Vision Fund check is a daunting challenge — but we’ve reached a very sad time and place when the sheer size of an investment overrides important concerns about where that money came from.

Sea is raising up to $1.5B for its Shopee e-commerce business in Southeast Asia

Alibaba is about to get a jolt from its largest rival in Southeast Asia. Sea, the Nasdaq-listed business, is raising as much as $1.5 billion from a new share offering that’s sure to be funneled into its Shopee e-commerce business.

Singapore-based Sea said in a filing that it plans to offer 60 million American Depositary Shares (ADS) at a price of $22.50 each. That could raise $1.35 billion, but that number could increase by a further $202 million if underwriters take up the full allotment of 9 million additional shares that are open to them. If that were to happen, the grand total raised would pass $1.5 billion. (Shopee raised $500 million in a sale last year.)

Sea said it would use the capital for “business expansion and other general corporate purposes.” That’s a pretty general statement and its business span gaming (Garena) and payments (AirPay), but you would imagine that Shopee, its primary focus these days, would be the main benefactor.

The $22.50 price represents a discount on Sea’s current share price — $24.06 at the time of writing — and the timing sees Sea take advantage of a recent share price rally. The company announced its end of year financials for 2018 last month, but which included positive progress for Shopee and Garena.

Whilst it remains unprofitable, Shopee saw annual GMV — total e-commerce transactions, an indicator of business health — cross $10 billion for the first time, growing 117 percent in the fourth quarter alone.

Those green shoots were met with enthusiasm by investors, as trading drove the stock price to a record high since its October 2017 IPO. That, in turn, made founder Forrest Li a billionaire on paper and gave Sea a market cap of over $8 billion.

Shopee shares have rallied after its 2018 financial report showed signs of promising growth for its Shopee e-commerce business

The capital is very much needed, however, as Shopee is some way from profitability and that is dragging down Sea’s overall business.

While adjusted revenue for Shopee increased by over 1,500 percent last year, it represented just over one-quarter of Sea’s overall $1 billion income in 2018 and contributed heavily to the parent company’s net loss of $961 million. Shopee alone posted a $893 million net loss in 2018.

Shopee is up against some tough competitors in Southeast Asia, most of which have strong links to Alibaba. Those include Alibaba’s own AliExpress service, Lazada — the e-commerce service it acquired — and Tokopedia, the $7 billion-valued Indonesian company that counts Alibaba and SoftBank’s Vision Fund among its backers.

Sea claims to be the largest e-commerce firm in “Greater Southeast Asia” — a classification that includes Taiwan alongside Southeast Asia — although direct comparisons are not possible since Alibaba doesn’t provide detailed information on its e-commerce businesses outside of China.

Alibaba said its international e-commerce businesses — which include many other services beyond Lazada — made $849 million in revenue during its most recent quarter, an annual increase of 23 percent. Lazada is in the midst of a transition — it appointed a new CEO in December — that has included a move away from direct sales. Alibaba said that impacted growth, with GMV rates slowing, but it pledged to continue its focus, having invested a fresh $2 billion into the business last year.

“We continue to invest resources to integrate Lazada’s business and technology operations into Alibaba with the aim of building a strong foundation for us to extend our offerings in Southeast Asia,” it said.

5G phones are here but there’s no rush to upgrade

This year’s Mobile World Congress — the CES for Android device makers — was awash with 5G handsets.

The world’s No.1 smartphone seller by marketshare, Samsung, got out ahead with a standalone launch event in San Francisco, showing off two 5G devices, just before fast-following Android rivals popped out their own 5G phones at launch events across Barcelona this week.

We’ve rounded up all these 5G handset launches here. Prices range from an eye-popping $2,600 for Huawei’s foldable phabet-to-tablet Mate X — and an equally eye-watering $1,980 for Samsung’s Galaxy Fold; another 5G handset that bends — to a rather more reasonable $680 for Xiaomi’s Mi Mix 3 5G, albeit the device is otherwise mid-tier. Other prices for 5G phones announced this week remain tbc.

Android OEMs are clearly hoping the hype around next-gen mobile networks can work a little marketing magic and kick-start stalled smartphone growth. Especially with reports suggesting Apple won’t launch a 5G iPhone until at least next year. So 5G is a space Android OEMs alone get to own for a while.

Chipmaker Qualcomm, which is embroiled in a bitter patent battle with Apple, was also on stage in Barcelona to support Xiaomi’s 5G phone launch — loudly claiming the next-gen tech is coming fast and will enhance “everything”.

“We like to work with companies like Xiaomi to take risks,” lavished Qualcomm’s president Cristiano Amon upon his hosts, using 5G uptake to jibe at Apple by implication. “When we look at the opportunity ahead of us for 5G we see an opportunity to create winners.”

Despite the heavy hype, Xiaomi’s on stage demo — which it claimed was the first live 5G video call outside China — seemed oddly staged and was not exactly lacking in latency.

“Real 5G — not fake 5G!” finished Donovan Sung, the Chinese OEM’s director of product management. As a 5G sales pitch it was all very underwhelming. Much more ‘so what’ than ‘must have’.

Whether 5G marketing hype alone will convince consumers it’s past time to upgrade seems highly unlikely.

Phones sell on features rather than connectivity per se, and — whatever Qualcomm claims — 5G is being soft-launched into the market by cash-constrained carriers whose boom times lie behind them, i.e. before over-the-top players had gobbled their messaging revenues and monopolized consumer eyeballs.

All of which makes 5G an incremental consumer upgrade proposition in the near to medium term.

Use-cases for the next-gen network tech, which is touted as able to support speeds up to 100x faster than LTE and deliver latency of just a few milliseconds (as well as connecting many more devices per cell site), are also still being formulated, let alone apps and services created to leverage 5G.

But selling a network upgrade to consumers by claiming the killer apps are going to be amazing but you just can’t show them any yet is as tough as trying to make theatre out of a marginally less janky video call.

“5G could potentially help [spark smartphone growth] in a couple of years as price points lower, and availability expands, but even that might not see growth rates similar to the transition to 3G and 4G,” suggests Carolina Milanesi, principal analyst at Creative Strategies, writing in a blog post discussing Samsung’s strategy with its latest device launches.

“This is not because 5G is not important, but because it is incremental when it comes to phones and it will be other devices that will deliver on experiences, we did not even think were possible. Consumers might end up, therefore, sharing their budget more than they did during the rise of smartphones.”

The ‘problem’ for 5G — if we can call it that — is that 4G/LTE networks are capably delivering all the stuff consumers love right now: Games, apps and video. Which means that for the vast majority of consumers there’s simply no reason to rush to shell out for a ‘5G-ready’ handset. Not if 5G is all the innovation it’s got going for it.

LG V50 ThinQ 5G with a dual screen accessory for gaming

Use cases such as better AR/VR are also a tough sell given how weak consumer demand has generally been on those fronts (with the odd branded exception).

The barebones reality is that commercial 5G networks are as rare as hen’s teeth right now, outside a few limited geographical locations in the U.S. and Asia. And 5G will remain a very patchy patchwork for the foreseeable future.

Indeed, it may take a very long time indeed to achieve nationwide coverage in many countries, if 5G even ends up stretching right to all those edges. (Alternative technologies do also exist which could help fill in gaps where the ROI just isn’t there for 5G.)

So again consumers buying phones with the puffed up idea of being able to tap into 5G right here, right now (Qualcomm claimed 2019 is going to be “the year of 5G!”) will find themselves limited to just a handful of urban locations around the world.

Analysts are clear that 5G rollouts, while coming, are going to be measured and targeted as carriers approach what’s touted as a multi-industry-transforming wireless technology cautiously, with an eye on their capex and while simultaneously trying to figure out how best to restructure their businesses to engage with all the partners they’ll need to forge business relations with, across industries, in order to successfully sell 5G’s transformative potential to all sorts of enterprises — and lock onto “the sweep spot where 5G makes sense”.

Enterprise rollouts therefore look likely to be prioritized over consumer 5G — as was the case for 5G launches in South Korea at the back end of last year.

“4G was a lot more driven by the consumer side and there was an understanding that you were going for national coverage that was never really a question and you were delivering on the data promise that 3G never really delivered… so there was a gap of technology that needed to be filled. With 5G it’s much less clear,” says Gartner’s Sylvain Fabre, discussing the tech’s hype and the reality with TechCrunch ahead of MWC.

“4G’s very good, you have multiple networks that are Gbps or more and that’s continuing to increase on the downlink with multiple carrier aggregation… and other densification schemes. So 5G doesn’t… have as gap as big to fill. It’s great but again it’s applicability of where it’s uniquely positioned is kind of like a very narrow niche at the moment.”

“It’s such a step change that the real power of 5G is actually in creating new business models using network slicing — allocation of particular aspects of the network to a particular use-case,” Forrester analyst Dan Bieler also tells us. “All of this requires some rethinking of what connectivity means for an enterprise customer or for the consumer.

“And telco sales people, the telco go-to-market approach is not based on selling use-cases, mostly — it’s selling technologies. So this is a significant shift for the average telco distribution channel to go through. And I would believe this will hold back a lot of the 5G ambitions for the medium term.”

To be clear, carriers are now actively kicking the tyres of 5G, after years of lead-in hype, and grappling with technical challenges around how best to upgrade their existing networks to add in and build out 5G.

Many are running pilots and testing what works and what doesn’t, such as where to place antennas to get the most reliable signal and so on. And a few have put a toe in the water with commercial launches (globally there are 23 networks with “some form of live 5G in their commercial networks” at this point, according to Fabre.)

But at the same time 5G network standards are yet to be fully finalized so the core technology is not 100% fully baked. And with it being early days “there’s still a long way to go before we have a real significant impact of 5G type of services”, as Bieler puts it. 

There’s also spectrum availability to factor in and the cost of acquiring the necessary spectrum. As well as the time required to clear and prepare it for commercial use. (On spectrum, government policy is critical to making things happen quickly (or not). So that’s yet another factor moderating how quickly 5G networks can be built out.)

And despite some wishful thinking industry noises at MWC this week — calling for governments to ‘support digitization at scale’ by handing out spectrum for free (uhhhh, yeah right) — that’s really just whistling into the wind.

Rolling out 5G networks is undoubtedly going to be very expensive, at a time when carriers’ businesses are already faced with rising costs (from increasing data consumption) and subdued revenue growth forecasts.

“The world now works on data” and telcos are “at core of this change”, as one carrier CEO — Singtel’s Chua Sock Koong — put it in an MWC keynote in which she delved into the opportunities and challenges for operators “as we go from traditional connectivity to a new age of intelligent connectivity”.

Chua argued it will be difficult for carriers to compete “on the basis of connectivity alone” — suggesting operators will have to pivot their businesses to build out standalone business offerings selling all sorts of b2b services to support the digital transformations of other industries as part of the 5G promise — and that’s clearly going to suck up a lot of their time and mind for the foreseeable future.

In Europe alone estimates for the cost of rolling out 5G range between €300BN and €500BN (~$340BN-$570BN), according to Bieler. Figures that underline why 5G is going to grow slowly, and networks be built out thoughtfully; in the b2b space this means essentially on a case-by-case basis.

Simply put carriers must make the economics stack up. Which means no “huge enormous gambles with 5G”. And omnipresent ROI pressure pushing them to try to eke out a premium.

“A lot of the network equipment vendors have turned down the hype quite a bit,” Bieler continues. “If you compare this to the hype around 3G many years ago or 4G a couple of years ago 5G definitely comes across as a soft launch. Sort of an evolutionary type of technology. I have not come across a network equipment vendors these days who will say there will be a complete change in everything by 2020.”

On the consumer pricing front, carriers have also only just started to grapple with 5G business models. One early example is TC parent Verizon’s 5G home service — which positions the next-gen wireless tech as an alternative to fixed line broadband with discounts if you opt for a wireless smartphone data plan as well as 5G broadband.

From the consumer point of view, the carrier 5G business model conundrum boils down to: What is my carrier going to charge me for 5G? And early adopters of any technology tend to get stung on that front.

Although, in mobile, price premiums rarely stick around for long as carriers inexorably find they must ditch premiums to unlock scale — via consumer-friendly ‘all you can eat’ price plans.

Still, in the short term, carriers look likely to experiment with 5G pricing and bundles — basically seeing what they can make early adopters pay. But it’s still far from clear that people will pay a premium for better connectivity alone. And that again necessitates caution. 

5G bundled with exclusive content might be one way carriers try to extract a premium from consumers. But without huge and/or compelling branded content inventory that risks being a too niche proposition too. And the more carriers split their 5G offers the more consumers might feel they don’t need to bother, and end up sticking with 4G for longer.

It’ll also clearly take time for a 5G ‘killer app’ to emerge in the consumer space. And such an app would likely need to still be able to fallback on 4G, again to ensure scale. So the 5G experience will really need to be compellingly different in order for the tech to sell itself.

On the handset side, 5G chipset hardware is also still in its first wave. At MWC this week Qualcomm announced a next-gen 5G modem, stepping up from last year’s Snapdragon 855 chipset — which it heavily touted as architected for 5G (though it doesn’t natively support 5G).

If you’re intending to buy and hold on to a 5G handset for a few years there’s thus a risk of early adopter burn at the chipset level — i.e. if you end up with a device with a suckier battery life vs later iterations of 5G hardware where more performance kinks have been ironed out.

Intel has warned its 5G modems won’t be in phones until next year — so, again, that suggests no 5G iPhones before 2020. And Apple is of course a great bellwether for mainstream consumer tech; the company only jumps in when it believes a technology is ready for prime time, rarely sooner. And if Cupertino feels 5G can wait, that’s going to be equally true for most consumers.

Zooming out, the specter of network security (and potential regulation) now looms very large indeed where 5G is concerned, thanks to East-West trade tensions injecting a strange new world of geopolitical uncertainty into an industry that’s never really had to grapple with this kind of business risk before.

Chinese kit maker Huawei’s rotating chairman, Guo Ping, used the opportunity of an MWC keynote to defend the company and its 5G solutions against U.S. claims its network tech could be repurposed by the Chinese state as a high tech conduit to spy on the West — literally telling delegates: “We don’t do bad things” and appealing to them to plainly to: “Please choose Huawei!”

Huawei rotating resident, Guo Ping, defends the security of its network kit on stage at MWC 2019

When established technology vendors are having to use a high profile industry conference to plead for trust it’s strange and uncertain times indeed.

In Europe it’s possible carriers’ 5G network kit choices could soon be regulated as a result of security concerns attached to Chinese suppliers. The European Commission suggested as much this week, saying in another MWC keynote that it’s preparing to step in try to prevent security concerns at the EU Member State level from fragmenting 5G rollouts across the bloc.

In an on stage Q&A Orange’s chairman and CEO, Stéphane Richard, couched the risk of destabilization of the 5G global supply chain as a “big concern”, adding: “It’s the first time we have such an important risk in our industry.”

Geopolitical security is thus another issue carriers are having to factor in as they make decisions about how quickly to make the leap to 5G. And holding off on upgrades, while regulators and other standards bodies try to figure out a trusted way forward, might seem the more sensible thing to do — potentially stalling 5G upgrades in the meanwhile.

Given all the uncertainties there’s certainly no reason for consumers to rush in.

Smartphone upgrade cycles have slowed globally for a reason. Mobile hardware is mature because it’s serving consumers very well. Handsets are both powerful and capable enough to last for years.

And while there’s no doubt 5G will change things radically in future, including for consumers — enabling many more devices to be connected and feeding back data, with the potential to deliver on the (much hyped but also still pretty nascent) ‘smart home’ concept — the early 5G sales pitch for consumers essentially boils down to more of the same.

“Over the next ten years 4G will phase out. The question is how fast that happens in the meantime and again I think that will happen slower than in early times because [with 5G] you don’t come into a vacuum, you don’t fill a big gap,” suggests Gartner’s Fabre. “4G’s great, it’s getting better, wi’fi’s getting better… The story of let’s build a big national network to do 5G at scale [for all] that’s just not happening.”

“I think we’ll start very, very simple,” he adds of the 5G consumer proposition. “Things like caching data or simply doing more broadband faster. So more of the same.

“It’ll be great though. But you’ll still be watching Netflix and maybe there’ll be a couple of apps that come up… Maybe some more interactive collaboration or what have you. But we know these things are being used today by enterprises and consumers and they’ll continue to be used.”

So — in sum — the 5G mantra for the sensible consumer is really ‘wait and see’.

India’s Ola spins out a dedicated EV business — and it just raised $56M from investors

Ola, Uber’s key rival in India, is doubling down on electric vehicles after it span out a dedicated business, which has pulled in $56 million in early funding.

The unit is named Ola Electric Mobility and it is described as being an independent business that’s backed by Ola. TechCrunch understands Ola provided founding capital, and it has now been joined by a series of investors who have pumped Rs. 400 crore ($56 million) into Ola Electric. Notably, those backers include Tiger Global and Matrix India — two firms that were early investors in Ola itself.

While automotive companies and ride-hailing services in the U.S. are focused on bringing autonomous vehicles to the streets, India — like other parts of Asia — is more challenging thanks to diverse geographies, more sparse mapping and other factors. In India, companies have instead flocked to electric. The government had previously voiced its intention to make 30 percent of vehicles electric by 2030, but it has not formally introduced a policy to guide that initiative.

Ola has taken steps to electrify its fleet — it pledged last year to add 10,000 electric rickshaws to its fleet and has conducted other pilots with the goal of offering one million EVs by 2022 — but the challenge is such that it has spun out Ola Electric to go deeper into EVs.

That means that Ola Electric won’t just be concerned with vehicles, it has a far wider remit.

The new company has pledged to focus on areas that include charging solutions, EV batteries, and developing viable infrastructure that allows commercial EVs to operate at scale, according to an announcement. In other words, the challenge of developing electric vehicles goes beyond being a ‘ride-hailing problem’ and that is why Ola Electric has been formed and is being capitalized independently of Ola.

An electric rickshaw from Ola

Its leadership is also wholly separate.

Ola Electric is led by Ola executives Anand Shah and Ankit Jain — who led Ola’s connected car platform strategy — and the team includes former executives from carmakers such as BMW.

Already, it said it has partnered with “several” OEMs and battery makers and it “intends to work closely with the automotive industry to create seamless solutions for electric vehicle operations.” Indeed, that connected car play — Ola Play — likely already gives it warm leads to chase.

“At Ola Electric, our mission is to enable sustainable mobility for everyone. India can leapfrog problems of pollution and energy security by moving to electric mobility, create millions of new jobs and economic opportunity, and lead the world,” Ola CEO and co-founder Bhavish Aggarwal said in a statement.

“The first problem to solve in electric mobility is charging: users need a dependable, convenient, and affordable replacement for the petrol pump. By making electric easy for commercial vehicles that deliver a disproportionate share of kilometers traveled, we can jumpstart the electric vehicle revolution,” added Anand Shah, whose job title is listed as head of Ola Electric Mobility.

The new business spinout comes as Ola continues to raise new capital from investors.

Last month, Flipkart co-founder Sachin Bansal invested $92 million into the ongoing Series J round that is likely to exceed $1 billion and would value Ola at around $6 billion. Existing backer Steadview Capital earlier committed $75 million but there’s plenty more in development.

A filing — first noted by paper.vc — shows that India’s Competition Commission approved a request for a Temasek-affiliated investment vehicle’s proposed acquisition of seven percent of Ola. In addition, SoftBank offered a term sheet for a prospective $1 billion investment last month, TechCrunch understands from an industry source.

Ola is backed by the likes of SoftBank, Tencent, Sequoia India, Matrix, DST Global and Didi Chuxing. It has raised some $3.5 billion to date, according to data from Crunchbase.

Go-Jek’s Get app officially launches in Thailand as Southeast Asia expansion continues

Go-Jek is extending its reach in Southeast Asia after its Thailand-based unit made its official launch, which included the addition of a new food delivery service.

Get, which is the name for Go-Jek business in Thailand, started out last year offering motorbike taxi on-demand services to a limited part of Thai capital city Bangkok, now the company said it has expanded the bikes across the city and added food and delivery options. Get’s management team is composed of former Uber staffers while CEO Pinya Nittayakasetwat was recruited from chat app Line’s food delivery business.

Over the last two months, Get claims to have completed two million trips in the past two months. There’s no word on when Get will add four-wheeled transport options, however. On the food side, Get is claiming to have 20,000 merchants on its platform but there are some issues. Rumming through the app, I found a number of listed restaurants that didn’t include menus. In those instances, customers have to input their dish and price which makes it pretty hard to use.

Go-Jek’s Get app in Thailand doesn’t include menus for a number of restaurants, making it nearly impossible to order

Grab is the dominant player in Thailand, where it offers taxis, private cars, motorbikes, delivery and food across eight markets in Southeast Asia. Go-Jek rose to success in its native Indonesia, where it began offering motorbikes on demand but has expanded to cover taxi, cars, food, general services on-demand and fintech. Its investors include Google, Tencent, Meituan and Sequoia India.

That’s the same playbook Grab is using, but Go-Jek is taking its time with its market expansions. Thailand represents its third new market beyond Indonesia, following launches in Vietnam and Singapore. The Philippines is another market where Go-Jek has voiced a desire to be present — it has even made an acquisition there — but regulatory issues are holding up a launch.

Regional expansion doesn’t come cheap and Go-Jek is in the midst of raising $2 billion to finance these moves. It recently closed $1 billion from existing investors, and Deal Street Asia reports that it could raise as much as $3 billion for the entire Series F round. That’s likely in response to Grab’s own fundraising plans. The Singapore-based company closed $2 billion last year, but it is looking to increase that total to $5 billion with a major injection from SoftBank’s Vision Fund a key piece of that puzzle.

Korean conglomerate SK leads $600M round for Chinese chipmaker Horizon Robotics

Horizon Robotics, a three-year-old Chinese startup backed by Intel Capital, just raised a mega-round of fundings from domestic and overseas backers as it competes for global supremacy in developing AI solutions and chips aimed at autonomous vehicles, smart retail stores, surveillance equipment and other devices for everyday scenarios.

The Beijing-based company announced Wednesday in a statement that it’s hauled in $600 million in a Series B funding round led by SK China, the China subsidiary of South Korean conglomerate SK Group; SK Hynix, SK’s semiconductor unit; and a number of undisclosed Chinese automakers along with their funds.

The fresh capital drove Horizon’s valuation to at least $3 billion, the company claims. The Financial Times previously reported that the chipmaker was raising up to $1 billion in a funding round that could value it at as much as $4 billion. Such a price tag could perhaps be justified by the vast amount of resources China has poured into the red-hot sector as part of a national push to shed dependency on imported chips and work towards what analysts call “semiconductor sovereignty.”

Horizon did not specify how the proceeds will be used. The company could not be immediately reached for comments.

In 2015, Yu Kai left Baidu as the Chinese search engine giant’s deep learning executive and founded Horizon to make the “brains” for a broad spectrum of connected devices. In doing so Yu essentially set himself up for a race against industry veterans like Intel and Nvidia. To date, the startup has managed to make a dent by securing government contracts, which provide a stable source of income for China’s AI upstarts including SenseTime, and several big-name clients like SK’s telecommunication unit, which is already leveraging Horizon’s algorithms to develop smart retail solutions. Like many of its peers who are at the forefront of the AI race, Horizon has set up an office in Silicon Valley and hiring local talents for its lab.

Other investors who joined the round included several of Horizon’s returning investors such as Hillhouse Capital and Morningside Venture Capital . There were also some heavyweight new backers, such as a fund run by conglomerate China Oceanwide Holdings as well as the CSOBOR Fund, a private equity entity set up by China’s state-owned CITIC to back projects pertaining to China’s ambitious “One Belt, One Road” modern Silk Road initiative.

Xiaomi-backed electric toothbrush Soocas raises $30 million Series C

China’s Soocas continues to jostle with global toothbrush giants as it raises 200 million yuan ($30 million) in a series C funding round. The Shenzhen-based oral care manufacturer has secured the new capital from lead investor Vision Knight Capital, with Kinzon Capital, Greenwoods Investment, Yunmu Capital and Cathay Capital also participating in the round.

The new proceeds arrived less than a year after Soocas, one of Xiaomi’s home appliance portfolio startups, snapped up close to 100 million yuan in a Series B round last March. Best known for its budget smartphones, Xiaomi has a grand plan to construct an Internet of Things empire that encompasses smart TVs to electric toothbrushes, and it has been gearing up by shelling out strategic investments for consumer goods makers such as Soocas.

Founded in 2015, Soocas’s rise reflects a growing demand for personal care accessories as people’s disposable income increases. Electric toothbrushes are a relatively new concept to most Chinese consumers but the category is picking up steam fast. According to data compiled by Alibaba’s advertising service Alimama, gross merchandise volume sales of electric toothbrushes grew 97 percent between 2015 and 2017. Multinational brands still dominate the oral care space in China, with Procter & Gamble, Colgate and Hawley & Hazel Chemical occupying the top three spots as of 2017, a report from Euromonitor International shows, but local players are rapidly catching up.

Soocas faces some serious competition from its Chinese peers Usmile and Roaman. Like Soocas, the two rivals have also placed their offices in southern China for proximity to the region’s robust supply chain resources. Part of Soocas’s strength comes from its tie-up with Xiaomi, which gives its portfolio companies access to a massive online and offline distribution network worldwide. That comes at a cost, however, as Xiaomi is known to impose razor-thin margins on the companies it backs and controls.

According to a statement from Soocas’s founder Meng Fandi, the company has achieved profitability since its launch and has seen its margin increase over the years. It plans to spend its fresh proceeds on marketing in a race to lure China’s increasingly sophisticated young consumers with toothbrushes and its new lines of hair dryers, nasal trimmers and other tools that make you squeaky-clean.

Musiio raises $1M to let digital music services use AI for curation

Musiio, a Singapore-based startup that uses AI to help digital music companies with discovery and creation, has pulled in a $1 million seed round.

The capital comes from Singapore’s Wavemaker Partners, U.S. investor Exponential Creativity Ventures and undisclosed angels. The deal represents the first outside round for Musiio, which was founded at the Entrepreneur First program in Singapore where CEO Hazel Savage, a former streaming exec, met CEO Aron Pettersson. It also makes Musiio the first venture capital-backed music AI startup in Southeast Asia and one of the most notable EF graduates from its Asian cohorts.

We first wrote about Musiio last April when it had raised SG$75,000 ($57,000) as part of its involvement in EF, the London-based accelerator that has big ambitions in Asia. Since then, it has increased its team to seven full-time staff.

The company is focused on reducing inefficiencies for music curation using artificial intelligence by augmenting the important work of human curators. In short, it aims to give those without the spending power of Spotify the opportunity to automate or partially automate a lot of the heavy lifting when it comes to scouring through music.

“Musiio won’t replace the need to have people listening to music,” Savage told TechCrunch last year. “But we can delete the inefficiencies.”

The Musiio team at its office in Singapore

The company’s first public client is Free Music Archive (FMA), a Creative Commons-like free music site developed by independent U.S. radio station WFMU. Musiio developed a curated playlist which raised the profile of a number of songs that had become ‘lost’ in the catalog. In particular, it helped one track double the number of plays it had received over eight years within just two days.

The FMA deal was really a proof of concept for Musiio, and Savage said that the company is getting close to announcing deals.

“Over the next month or two, there will be two or three commercial announcements,” Savage said this week. “We’re working with streaming companies and sync companies.”

Singapore’s Credit Culture raises $29.5M for its soon-to-launch digital loan business

Singapore’s digital fintech companies are attracting investor attention and dollars in 2019. Fresh from Singapore Life — a digital-only insurer — raising $33 million across two recently closed rounds, so Credit Culture, a digital loan specialist — has banked SG$40 million ($29.5 million) ahead of its imminent launch.

Credit Culture has raised its capital from Malaysia’s RCE Capital Berhad in a deal that allows the investor to potentially take a stake of up 30 percent in the startup. Its investment is via five-year bonds that are secured with the loan receivables from Credit Culture and include granted call options for taking that stake — in other words: this isn’t your regular startup deal.

RCE Capital Berhad said in a filing that Credit Culture has already raised SG$4 million ($2.9 million) via a seed investment, and it appears that it is financially set ahead of its launch.

“We are currently well-positioned with the recent injection of funds. That being said, we are always open to exploring various options to grow especially for regional expansion,” Credit Culture a representative told TechCrunch in an emailed response.

Founded by former bankers, Credit Culture is set to become one of Singapore’s first digital financial service startups after its parent company, DEY, secured approval to operate a moneylending business as part of a pilot to test online fintech services.

Since it hasn’t launched yet, there’s not a huge amount to say about the business, but its goal is to offer personal loans to Singapore-based customers using digital channels, so its website and mobile apps. The company plans to vet applicants using a mixture of existing platforms for data, including government initiative like MyInfo, and its own credit-scoring engine for creditworthiness assessment. It will also require face-to-face verification for loans to be granted, it confirmed.

Like Singapore Life and other digital-only ventures, including Hong Kong’s Bowtie, the objective is to pass on cost savings from being a purely online player — i.e. not operating branches and other physical consumer-facing outlets — and make prices fully transparent to applicants.

As you’d expect, Singapore is the initial focus for the company but it is already eying potential market expansions.

“We do have plans to expand to other Southeast Asian countries like the Philippines and Indonesia,” a spokesperson told TechCrunch. “There is a large potential given the need for personal financing and the large unbanked population segments.”

VCs give us their predictions for startups and tech in Southeast Asia in 2019

The new year is well underway and, before January is out, we polled VCs in Southeast Asia to get their thoughts on what to expect in 2019.

The number of VCs in the region has increased massively in recent years, in no small part due to forecasts of growth in the tech space as internet access continues to shoot up among Southeast Asia’s cumulative population of more than 600 million consumers.

There are other factors, including economic growth and emerging middle classes, but with more than 3.8 million people becoming first-time internet users each month — thanks to smartphones — Southeast Asia’s ‘digital economy’ is tipped to more than triple to reach $240 billion by 2025. That leaves plenty of opportunity for tech and online businesses and, by extension, venture capitalists.

With a VC corpus that now numbers dozens of investment firms, TechCrunch asked the people who write the checks what is on the horizon for 2019.

The only rule was no more than three predictions — below, in no particular order, is what they told us.


Albert Shyy, Burda

Funds will continue to invest aggressively in Southeast Asia in the first half of this year but capital will tighten up by Q4 as funds and companies prepare for a possible recession. I think we will see a lot of companies opportunistically go out to fundraise in Q1/Q2 to take advantage of a bull market.

We will see two to three newly-minted unicorns from the region this year, after a relative lull last year.

This will (finally) be the year that we start to see some consolidation in the e-commerce scene


Dmitry Levit, Cento

A significant portion of capital returned by upcoming U.S. IPOs to institutional investors will be directed to growth markets outside of China, with India and Southeast Asia being the likeliest beneficiaries. Alternative assets such as venture and subsets of private equity in emerging markets will enter their golden age.

The withdrawal of Chinese strategic players held back by weakened domestic economy, prudent M&A by local strategics and ongoing caution among Japanese, Korean and global corporates, combined with ongoing valuations exuberance by late-stage investors allocating funds to Southeast Asia, will continue holding back large liquidity events. Save perhaps for a roll-up of a local champion or two into a global IPO. Fundraising will get more troublesome for some of Southeast Asia’s larger unprofitable market leaders. Lack of marquee liquidity events and curtailed access to late-stage capital for some will lead to a few visible failures (our money is on the subsidy-heavy wallets!) and a temporary burst of short-term skepticism around Southeast Asia as an investment destination towards the end of 2019.

The trend towards the emergence of value-chain specific funds and fund managers will continue, as digitalization is reaching ever further into numerous industry sectors and as Southeast Asia hosts an increasing portion of global supply chains. We foresee at least dozen new venture firms and vehicles emerging in 2019 with clear sector-led investment thesis around the place of Southeast Asian economies in the global value chains of fashion industry, agriculture and food; labour, healthcare services; manufacturing, construction tech and so on, with investment teams that have the necessary expertise to unravel this increasing complexity.


Willson Cuaca, East Ventures

Jakarta becomes Southeast Asia’s startup capital surpassing Singapore in terms of the number of deals and investment amount.

As Indonesia’s startup scene heats up, regional seed and series A funds move away from Indonesia and target Vietnam, Malaysia, Thailand and the Philippines (in market priority order).

Southeast gets two new unicorns.


Rachel Lau, RHL Ventures

North Asian companies will provide well-needed liquidity as they withdraw capital from developed American and European markets due to the Federal Reserve’s actions. The FED raised interest rates and reduced the size of its balance sheet (by not replacing the bonds that were maturing at a rate of $50 billion a month). This has been seen in the recent fundraising exercise by Southeast Asian unicorns. Grab has recently seen an impressive list of North Asian investors such as Mirae, Toyota and Yamaha . A recent stat stated that 85 percent of the funding of Southeast Asia startups have gone to billion dollar unicorn such as Grab and Gojek, bypassing the early stage startups that are more in need for funding, this trend is expected to continue. Therefore, we will see early-stage companies and venture capitalists becoming more focused on generating cash flow from operating operations instead as fundraising activities become more difficult.

A growth in urbanization in Southeast will create new job opportunities in small/medium businesses, as evident in China. Currently, only 12 percent of Asia’s urban population live in megacities, while four percent live in towns of fewer than 300,000 inhabitants. New companies will see the blurred lines between brick and mortar businesses vs pure online businesses. In the past year or so, we have seen more and more offline businesses going online and more online businesses going offline.

Fertility rates in the Philippines, Laos, Cambodia, Indonesia and Vietnam exceed 2.1 births per woman — the level that sustains a population — but rates below 1.5 in Singapore and Thailand mean their populations will decline without immigration. As we see more startup activities coming to Southeast Asian countries, we expect to see more qualified foreign talent moving to the region vs staying in low growth American and European countries.


Kay-Mok Ku, Gobi Ventures

First Chinese “Seaward” Unicorn in Southeast Asia. In recent years, a growing number of Chinese startups are targeting overseas markets from the get go (known as Chuhai 出海 or “Seaward”). These Chinese entrepreneurs typically bring with them best practices in consumer marketing and product development honed by a hyper-competitive home market, supported by strong, dedicated technical team based out of China and increasingly capitalized by Chinese VCs which have raised billion-dollar funds.

Consolidation among ASEAN Unicorns. While ASEAN now boasts 10 unicorns, they are duplicative in the sense that more than one exists in a particular category, which is unsustainable for winner-takes-all markets. For example, in the ASEAN ride-hailing space, while one unicorn is busy with regional geographic expansion, the other simply co-exists by staying focused on scope expansion within its home market. This will never happen in a single country market like China but now that the ASEAN ride hailing unicorns are finally locking horns, the stage may be set for a Didi-Kuadi like scenario to unfold.

ASEAN jumps on Chinese 5G bandwagon. The tech world in the future will likely bifurcate into American and Chinese-led platforms. As it is, emerging markets are adopting Chinese business models based on bite-sized payment and have embraced Chinese mobile apps often bundled with cheap Chinese smartphones. Looking ahead, 5G will be a game changer as its impact goes beyond smartphones to generic IoT devices, having strategic implications for industries such as autonomous driving. As a result, the US-China Trade War will likely evolve into a Tech War and ASEAN will be forced to choose side.


Daren Tan, Golden Equator Capital

We are excited by growth in the AI and deep tech sectors. The focus has generally been on consumer-focused tech in Southeast Asia as an emerging market, but we are starting to see proprietary solutions emerge for industries such as medtech and fintech. AI also has great applicability across a wide range of consumer sectors in reducing reliance on manpower and creating cost savings.

Data analytics to uncover organizational efficiencies and customer trends will continue to be even more widely used, but there will also be greater emphasis on securing such data especially confidential information in light of multiple high-profile data breaches in 2018. Tools enabling the collection, storage, safe-keeping and analysis of data will be essential.

We are seeing the emergence of more institutional funds from North Asia. So far it has predominantly been Chinese tech giants like Tencent and Alibaba, now we are starting to see Korean and Japanese institutions placing greater emphasis on investment in the Southeast Asian region.


Vinnie Lauria, Golden Gate Ventures

Even more capital flowing from U.S. and China into Southeast Asia, with VCs from both locations soon to open offices in the region

A fresh wave of Series A investments into Vietnam.

Ten exits over $100 million.

 


Amit Anand, Jungle Ventures

The emergence of a financial services super app, think the Meituan or WeChat but only for financial services: The Southeast Asian millennial is one of the most underserved customer from a financial services perspective whether it is payments, consumer goods loans, personal loans, personal finance management, investments or other financial services. We will see the emergence of digital platforms that will aggregate all these related services and provide a one stop financial services shop for this digitally native consumer.

Digitisation of SMEs will be new fintech: Southeast Asia is home to over 100 million SMEs that are at the cusp of digital transformation. Generational change in ownership, local governments push for digitization and increased globalization have created a perfect storm for these SMEs to adopt cloud and other digital technologies at neck-breaking pace. Startups focussing on this segment will get mainstream attention from the venture community over the next few years as they look for new industries that are getting enabled or disrupted by technology.


Kuo-Yi Lim and Peng Ong, Monk’s Hill Ventures

Lyft and Uber go public and show the path to profitability for other rideshare businesses. This has positive effect for the regional rideshare players but also puts pressure on them to demonstrate the same economics in ridesharing. Regional rideshare players double down on super-app positioning instead, to demonstrate value in other ways as rideshare business alone may not reach profitability — ever.

The trade war between China and the US reaches a truce, but a general sense of uncertainty lingers. This is now the new norm — things are less certain and companies have to plan for more adverse scenarios. In the short term, Southeast Asia benefits. Companies — Chinese, American etc — see Southeast Asia as the neutral ground. Investment pours in, creating jobs across industries. Acquisition of local champions intensifies as foreign players jostle for the lead positions.

“Solve the problem” – tech companies will become more prominent… tech companies that are real-estate brokers, recruiters, healthcare providers, food suppliers, logistics… why: many industries are very inefficient.


Hian Goh, Openspace Ventures

Fight to quality will happen. Fundraising across all stages from seed to Series C and beyond will be challenging if you don’t have the metrics. Investors will want to see a path to profitability, or an ability to turn profitable if the environment becomes worse. This will mean Saas companies with stable cash flows, vertical e-commerce with strong metrics will be attractive investment opportunities.

Investor selection will become critical, as investors take a wait and see approach. Existing or new investors into companies will be judged upon their dry powder in their funds and their ability to fund further rounds

The regulatory risk for fintech lenders will be higher this year, rising compliance cost and uncertainty on licensing, which would lead to consolidation in the market.


Heang Chhor, Qualgro

Southeast Asia: an intensifying battlefield for tech investments

There has never been so much VC money in Southeast Asia chasing interesting startups, at all life cycle stages. The 10 most active local and regional VCs have raised their second or third funds recently, amassing at least two times more money than a few years ago, probably reaching a total amount close to $1 billion. In addition, international VCs have also doubled down on their allocation into the region, while top Chinese VCs have visibly stated their intent not to miss the dynamic momentum. Several growth funds have recently built a local presence in order to target Southeast Asia tech companies at Series C and beyond. Not counting the amount going to the unicorns, there might be now more than $3-4 billion available for seed to growth stages, which may be 3-4 times the amount of three years ago. There are, of course, many more good startups coming up to invest into. But the most promising startups will be in a very favorable position to negotiate higher valuation and better terms. However, they should not forget that, eventually, what creates value is how they make a difference with their tech capabilities or their business model, how they acquire and retain the best talent, with the funds raised, not only how much money they will be able to raise. Most local and regional corporate VCs are likely to lose in this more intense investment game.

Significant VC money investing into so-called ‘AI-based startups’, but are there really much (deep) Artificial Intelligence capabilities around?

A good portion of the SEA startups claim they have ‘something-AI’. Investors are overwhelmed, if not confused, by the ‘AI claim’ that they find in most startup pitches. While there is no doubt that Southeast Asia will grow its own strong AI-competence pool in the future, unfortunately today most ‘AI-based’ business models from the region would still be just ‘good algorithms or machine learning’ that can process some amount of data to come up with good-enough outcomes, that do not always generate substantial business value to users/customers. The significant budget that some of the very-well-funded Southeast Asia unicorns are putting into their ‘AI-based apps’ or ‘AI platform’ is unlikely to make a real difference for the consumers, for lack of deep AI competences in the region. 2019 may be another year of AI-promise, not realized. Hopefully, public and private research labs, universities and startups will continue to be (much more) strongly supported (especially by governments) to significantly build bigger AI talent pool, which means growing and attracting AI talent into the region.

Bigger Series A and Series B rounds to fuel more convincing growth trajectory, towards growth-stage fundraising.

Although situations vary a lot: typical Series A in Southeast Asia used to be around $5 million, and Series B around $10-15 million. Investors tended to accept that normally companies would raise money after 18 months or so, between A and B, and between B and C. There has been an increasing number of larger raises at A and B recently, and very likely this trend will accelerate. The fact that VCs now have much more money to deploy into each investment will contribute to this trend. However, the required milestones for raising Series C have become much more around: minimum scale and very solid growth (and profit) drivers. Therefore, entrepreneurs will have to look for getting as much funding reserve as possible, irrespective of time between raises, to build growth engines that take their companies past the milestones of the next Series, be it B or C. In the future, we will see more Series A of $10 million and more Series B of well-above $20 million. Compelling businesses will not have too much difficulties for doing so, but most Southeast Asia entrepreneurs would be wise to learn to more effectively master fundraising skills for capturing much bigger amounts than in the past. Of course, this assumes that their businesses are compelling enough in the eyes of investors.


Vicknesh R Pillay, TNB Aura

Out-sized valuations will be less commonplace in 2019 as Southeast Asian investors learn from experience and become more sophisticated. Therefore, we do see opportunities at Series A/B for undervalued deals due to lack of early-stage funding while we expect to continue to see the trend of the majority of venture capital investments going into later stage companies (Series C and beyond) due to lower risk appetite and ‘herd’ mentality.

2018 has also seen the rapid emergence of many corporate venture capital funds and innovation programs. But, 2019 will see large corporations cutting back on their allocation towards startup investing which would be the easiest option for them in case of adverse news to the jittery public markets in 2019.

With the growth of AI, the need for API connections and increased thought leadership to embrace tech, Southeast Asia is going to see an upsurge in SaaS startups and existing startups moving to a Saas business model. Hence, we expect increased investments into Saas companies focused on IoT and cybersecurity as hardware data and software are moved onto the cloud.


Chua Kee Lock, Vertex Ventures

Southeast Asia VC investment pace has grown steadily and significantly since 2010 where it started from less than $100 million in VC investment in the region. For the first eight months of 2018, the region’s VC investment was over $5.4 billion. For the whole of 2018, it will likely end around $8 billion. For 2019, we expect the VC investment pace to surpass 2018 level and record between $9-10 billion. Southeast Asia will continue to attract more VC investments because:

(1) Governments in Southeast Asia, especially ASEAN, continue their support policy to encourage startups.

(2) young demographics and the fast technology adoption in Southeast Asia give rise to more innovative and disruptive ideas.

(3) global investors looking for a better return and will naturally focus on growing emerging market like Southeast Asia.

The trend towards gig economy will begin to have an impact in the region. In developed economies like the U.S, gig economy is expected to reach over 40 percent by 2020. The young population will look for more freelance opportunities as a way to increase income levels while still maintaining flexibility. This will include white-collar work like computer programming, accounting, customer service, etc. and also blue-collar work like delivery services, ride-sharing, home services, etc. We believe that the gig economy will grow to over 15 percent in Southeast Asia by 2019.

AI-heavy or -driven startups will begin to make inroads into Southeast Asia.


Victor Chua, Vynn Capital

The BIG convergence — there will more integration between industries and sectors. Traveloka went into car rental, Blibli went into travel business and these are only some examples. There is a lot of synergistic value between travel startups and food startups or between property startups and automotive startups. Imagine a future where you travel to a city where you stay in an apartment you rented through a marketplace (like Travelio, my portfolio company), and when you need to book a restaurant you can make the reservation through a platform that is integrated with the property manager, and when you need to move around you go down to the car park to drive a car you rent from an automotive marketplace. There is clear synergy between selective industries and this leads to an overall convergence between companies, between industries.

More channels to raise Series B/C, early-stage companies find fundraising more challenging — We have seen a number of VC funds raising or already raised growth funds, this means that there are now more channels for Series A or B companies to raise growth rounds. As the market matures, there will be more competition for investments amongst growth funds as there is considerably more growth in the number of growth funds than companies that are raising at growth-stage. On the flip side, the feel is that there is a consistent growth in the number of early-stage companies, yet the amount of capital in early-stage funds is not growing as much as more VCs prefer bigger and later stages, due to the maturity of their existing portfolio companies.

Newcomers gaining weight — there will be at least 10 companies that will hit a valuation of at least $100 million. These valuations will not be based on a single market exposure. Companies that raise larger rounds will need to show that they are regional.


Thanks to all the VCs who took part, I certainly felt like the class teacher collecting assignments.

Tesla to recall 14,000 Model S cars in China over faulty Takata airbags

China’s top market regulator said on Friday that Tesla will recall a total of 14,123 imported Model S vehicles in the country over potentially deadly airbags.

The recall is part of an industry-wide crackdown on Takata-made front passenger airbags, which involves roughly 37 million vehicles including more mainstream brands such as Toyota and Ford, as noted by the United States Department of Transportation. These defective airbags use a propellant that might rupture the airbag and cause serious injuries, or even deaths.

Tesla has begun a worldwide recall of its sedans that use Takata airbags, the firm said on its Support blog. It noted that the airbags only become defective based on certain factors, such as age. The recall does not affect later Model S vehicles, Roadster, Model X, or its more affordable Model 3.

The China recall involves Model S cars manufactured between February 2014 to December 2016, shows a notice posted on the website of China’s State Administration for Market Regulation. TechCrunch has reached out to Tesla for comments and will update the article once more information is available.

The setback comes as Tesla is making a big push into the world’s largest auto market and tapping on Beijing’s effort to phase out fossil-fuel cars for China. The company recently reached an agreement with the Shanghai government to build its first Gigafactory outside the US, which will focus on making Model 3 cars for Chinese consumers. There is no target date for the factory to become fully operational yet.

Despite being an alluring market, China has been a major source of Tesla’s concerns over the past months due to escalating trade tensions and the rollback of government subsidies for green vehicles. Tesla responded by slashing its Model 3 price by 7.6 percent for China to neutralize heavy tariffs on imported cars.

The Palo Alto-based company previously recalled 8,898 Model S vehicles in China over corroding bolts, which it claimed at the time had not led to any accidents or injuries.

Grab moves to offer digital insurance services in Southeast Asia

Grab is Southeast Asia’s top ride-hailing firm, thanks in no small part to its acquisition of Uber’s local business last year, but the company also houses an ambitious fintech arm, too. That just added another vertical to its business after Grab announced it is teaming up with China’s ZhongAn to introduce insurance.

Grab and ZhongAn International, the international arm of the Chinese insurance giant, said today they will create a joint venture that will provide digital insurance services across Southeast Asia. Grab said the new business will partner with insurance companies to offer the services via its mobile app. Chubb — a company that already works with Grab to offer micro-loans to its drivers — is the first partner to commit, it’ll offer insurance for Grab drivers starting in Singapore.

ZhongAn is widely-lauded for being China’s first digital-only insurance platform. It’s backed by traditional insurance giant PingAn and Chinese internet giants Tencent and Alibaba.

Grab’s move into digital insurance comes a day after Singapore Life, an online insurer in Singapore, closed the second part of a $33 million funding round aimed at expanding its business in Southeast Asia.

This ZhongAn partnership adds another layer to Grab’s services and fintech business, which already includes payments — both offline and online — and is scheduled to move into cross-border remittance and online healthcare, the latter being a deal with ZhongAn sibling PingAn Good Doctor.

The push is also part of a wider strategy from Grab, which was last valued at over $11 billion and is aiming to turn its app from merely ride-hailing to an everyday needs app, in the style of Chinese ‘super apps’ like Meituan and WeChat.

Indeed, Grab President Ming Ma referenced that very ambitious calling the insurance products “part of our commitment to becoming the leading everyday super app in the region.”

Last summer, Grab opened its platform to third-parties which can lean on its considerable userbase — currently at 130 million downloads — to reach consumers in Southeast Asia, where the fast-growing ‘digital economy’ is tipped to triple to reach $240 billion by 2025. Grab’s platform has welcomed services like e-grocer HappyFresh, deals from travel giant Booking and more.

Grab has also made efforts to develop the local ecosystem with its own accelerator program — called ‘Velocity’ — which, rather than providing equity, helps young companies to leverage its platform. It has also made investments, including a deal with budget hotel brand OYO in India, a fellow SoftBank portfolio company that has designs on expansion in Southeast Asia.

Grab itself operates across eight markets in Southeast Asia, where it claims to have completed more than two billion rides to date. The company is currently raising a massive Series H fund which has already passed $3 billion in capital raised but has a loftier goal of reaching $5 billion, as we reported recently.

Go-Jek, Grab’s chief rival, is expanding its business outside of Indonesia after launching in Vietnam, Thailand and Vietnam. Like Grab, it, too, offers services beyond ride-hailing and the company — which is backed by the likes of Meituan, Google and Tencent — is close to finalizing a new $2 billion funding round for its battle with Grab.

Singapore activist found guilty of hosting ‘illegal assembly’ via Skype

An ongoing case in Singapore is testing the legal boundaries of virtual conferences. A court in the Southeast Asian city-state this week convicted human rights activist Jolovan Wham of organizing a public assembly via Skype without a permit and refusing to sign his statement when ordered by the police.

Wham will be sentenced on January 23 and faces a fine of up to S$5,000 or a jail term of up to three years. The judge in charge of the case, however, has not provided grounds of his decision, Wham wrote on Twitter.

I’ve been found guilty ‘beyond reasonable doubt’. But the grounds of decision are not available yet. The judge also did not explain his decision in court. https://t.co/1DjXMUV0tN

— Jolovan Wham (@jolovanwham) January 3, 2019

Wham, 39, is a social worker at Community Action Network Singapore consisting of a group of activists, social workers and journalists advocating civil and political rights. He previously served as executive director of migrant worker advocacy group Humanitarian Organisation for Migration Economics.

On November 26, 2016, Wham organized an indoor forum called “Civil Disobedience and Social Movements” at a small event space inside a shopping mall in Singapore. The event featured prominent Hong Kong student activist Joshua Wong who addressed the audience remotely via a Skype video call.

The event’s Facebook Page indicates that 355 people were interested and 121 went. The Skype discussion, which lasted around two hours, was also live streamed on Facebook by The Online Citizen SG, a social media platform focused on political activism, and garnered 5,700 views.

Despite being advised by the police prior to the event to obtain a permit, Wham proceeded without said consent, according to a statement by the Singapore Police Force. Wham faced similar charges of organizing public assemblies without police permits and refusing to sign statements under the Penal Code.

In Singapore, it is a criminal offence under the Public Order Act to organize or participate in a public assembly without a police permit. The Police described Wham’s act as “recalcitrant” in regard to organizing and participating in illegal public assemblies.

Commenting on the charge against Wham, a joint statement from Joshua Wong and members of CAN Singapore argued that the event was “closed-door”.

“Skype conversations that take place within the confines of a private space are private matters that should logically, not require permits before they can be carried out,” raged the statement. “Wham’s discussion with Wong ended peacefully and would not have drawn any further attention if authorities hadn’t decided to act.”

“It was a discussion about civil disobedience and social movements,” Wham pointed out in another Twitter post. “The law says that any event which is open to the public, and is ’cause related’, requires a permit when a foreigner speaks. What is considered ’cause related’ isn’t clear.”

Tencent left out as China approves the release of 80 new video games

Chinese internet giant Tencent has been excluded from the first batch of video game license approvals issued by the state-run government since March.

China regulators approved Saturday the released of 80 online video games after a months-long freeze, Reuters first reported. None of the approved titles listed on the approval list were from Tencent Holdings, the world’s largest gaming company.

Licenses are usually granted on a first come, first serve basis in order of when studios file their applications, several game developers told TechCrunch. There are at least 7,000 titles in the waiting list, among which only 3,000 may receive the official licenses in 2019, China’s 21st Century Business Herald reported citing experts. Given the small chance of making it to the first batch, it’s unsurprising the country’s two largest game publishers Tencent and NetEase were absent.

The controlled and gradual unfreezing process is in line with a senior official’s announcement on December 21. While the Chinese gaming regulator is trying its best to greenlight titles as soon as possible, there is a huge number of applications in the pipeline, the official said. Without licenses, studios cannot legally monetize their titles in China. The hiatus in approval has slashed earnings in the world’s largest gaming market, which posted a 5.4 percent year-over-year growth in the first half of 2018, the slowest rate in the last ten years according to a report by Beijing-based research firm GPC and China’s official gaming association CNG.

Tencent is best known as the company behind WeChat, a popular messaging platform in China. But much of its revenue comes from gaming. Even with a recent decline in gaming revenue, the company has a thriving business that is majority owner of several companies including Activision, Grinding Gears Games, Riot and Supercell. In 2012, the company took a 40 percent stake in Epic Games, maker of Fortnite. Tencent also has alliances or publishing deals with other video gaming companies such as Square Enix, makers of Tomb Raider. 

The ban on new video game titles in China has affected Tencent’s bottom line. The company reported revenue from gaming fell 4 percent in the third quarter due to the prolonged freeze on licenses. At the time, Tencent claimed it had 15 games with monetization approval in its pipeline. To combat pressure in its consumer-facing gaming business, the Chinese giant launched a major reorganization in October to focus more on enterprise-related initiatives such as cloud services and maps. Founder and CEO Pony Ma said at the time the strategic repositioning would prepare Tencent for the next 20 years of operation.

“In the second stage, we aspire to enable our partners in different industries to better connect with consumers via an expanding, open and connected ecosystem,” stated Ma.

China tightened restrictions in 2018 to combat games that are deemed illegal, immoral, low-quality or have a negative social impact such as those that make children addicted or near-sighted. This means studios, regardless of size, need to weigh new guidelines in their production and user interaction. Tencent placed its own restrictions on gaming in what appeared to be an attempt to assuage regulators. The company has expanded its age verification system, an effort aimed at curbing use of young players, and placed limits on daily play.

Update (December 30, 10:00 am, GMT+8): Adds context on China’s gaming industry and Tencent.

Alibaba-backed Hellobike bags new funds as it marches into ride-hailing

2018 has been a rough year for China’s bike-sharing giants. Alibaba-backed Ofo pulled out of dozens of international cities as it fought with a severe cash crunch. Tencent-backed Mobike puts a brake on expansion after it was sold to neighborhood services provider Meituan Dianping. But one newcomer is pedaling against the wind.

Hellobike, currently the country’s third-largest bike-sharing app according to Analysys data, announced this week that it raised “billions of yuan” ($1 = 6.88 yuan) in a new round. The company declined to reveal details on the funding amount and use of the proceeds when inquired by TechCrunch.

Leading the round were Ant Financial, the financial affiliate of Alibaba and maker behind digital wallet Alipay, and Primavera Capital, a Chinese investment firm that’s backed other mobility startups including electric automaker Xpeng and car trading platform Souche. The fledgling startup also got SoftBank interested in shelling out an investment, The Information reported in November. The fresh capital arrived about a year after it secured $350 million from investors including Ant Financial.

As China’s bicycle giants burn through billions of dollars to tout subsidized rides, they’ve gotten caught up in financial troubles. Ten months after Ofo raised $866 million, the startup is reportedly mulling bankruptcy. Meanwhile, Mobike is downsizing its fleet to “avoid an oversupply,” a Meituan executive recently said.

It’s interesting to note that while both Ofo and Hellobike fall under the Alibaba camp, they began with different geographic targets. By May, only 5 percent of Hellobike’s users were in China’s Tier 1 cities, while that ratio was over 30 percent for both Mobike and Ofo, a report by Trustdata shows.

This small-town strategy gives Hellobike an edge. As the bike-sharing markets in China’s major cities become crowded, operators began turning to lower-tier cities in 2017, a report from the China Academy of Information and Communications Technology points out.

The new contender is still dwarfed by its larger competitors in terms of user number. Ofo and Mobike command 43 million and 38 million unique monthly mobile installs, respectively, while Hellobike stands at 8 million, accroding to iResearch.

Hellobike’s ambition doesn’t stop at two-wheelers. In September, it rebranded its Chinese name to HelloTransTech to signify an extension into other transportation means. Aside from bikes, the startup also offers shared electric bikes, ride-hailing and carpooling, a category that became much contested following high-profile passenger murders on Didi Chuxing .

In May and August, two female customers were killed separately when they used the Hitch service on Didi, China’s biggest ride-hailing platform that took over Uber’s China business. The incidents sparked a huge public and regulatory backlash, forcing Didi to suspend its carpooling service up to this day. But this week, its newly minted rival Hellobike decides to forge ahead with a campaign to recruit carpooling drivers. Time will tell whether the latecomer can grapple with heightened security measures and fading customer confidence in riding with strangers.

Indonesia unblocks Tumblr following its ban on adult content

Indonesia, the world’s fourth largest country by population, has unblocked Tumblr nine months after it blocked the social networking site over pornographic content.

Tumblr — which, disclaimer, is owned by Oath Verizon Media Group just like TechCrunch — announced earlier this month that it would remove all “adult content” from its platform. That decision, which angered many in the adult entertainment industry who valued the platform as an increasingly rare outlet that supported erotica, was a response to Apple removing Tumblr’s app from the iOS Store after child pornography was found within the service.

This impact of this new policy has made its way to Indonesia where KrAsia reports that the service was unblocked earlier this week. The service had been blocked in March after falling foul of the country’s anti-pornography laws.

“Tumblr sent an official statement regarding the commitment to clean the platform from pornographic content,” Ferdinandus Setu, Acting Head of the Ministry of Communication and Informatics Bureau, is reported to have said in a press statement.

Messaging apps WhatsApp and Line are among the other services that have been forced to comply with the government’s ban on ‘unsuitable’ content in order to keep their services open in the country. Telegram, meanwhile, removed suspected terrorist content last year after its service was partially blocked.

While perhaps not widely acknowledged in the West, Indonesia is a huge market with a population of over 260 million people. The world’s largest Muslim country, it is the largest economy in Southeast Asia and its growth is tipped to help tripled the region’s digital economy to $240 billion by 2025.

In other words, Indonesia is a huge market for internet companies.

The country’s anti-porn laws have been used to block as many as 800,000 websites as of 2017so potentially over a million by now — but they have also been used to take aim at gay dating apps, some of which have been removed from the Google Play Store. As Vice notes, “while homosexuality is not illegal in Indonesia, it’s no secret that the country has become a hostile place for the LGBTQ community.”