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SentinelOne raises $120M for its fully-autonomous, AI-based endpoint security solution

Endpoint security — the branch of cybersecurity that focuses on data coming in from laptops, phones, and other devices connected to a network — is an $8 billion dollar market that, due to the onslaught of network breaches, is growing fast. To underscore that demand, one of the bigger startups in the space is announcing a sizeable funding round.

SentinelOne, which provides real-time endpoint protection on laptops, phones, containers, cloud services and most recently IoT devices on a network through a completely autonomous, AI-based platform, has raised $120 million in a Series D round — money that it will be using to continue expanding its current business as well as forge into new areas such as building more tools to automatically detect and patch software running on those endpoints, to keep them as secure as possible.

The funding was led by Insight Partners, with Samsung Venture Investment Corporation, NextEquity participating, alongside all of the company’s existing investors, which include the likes of Third Point Ventures, Redpoint Ventures, Data Collective, Sound Ventures and Ashton Kutcher, Tiger Global, Granite Hill and more.

SentinelOne is not disclosing its valuation with this round, but CEO and co-founder Tomer Weingarten confirmed it was up compared to its previous funding events. SentinelOne has now raised just shy of $130 million, and PitchBook notes that in its last round, it was valued at $210 post-money.

That would imply that this round values SentinelOne at more than $330 million, likely significantly more: “We are one of the youngest companies working in endpoint security, but we also have well over 2,000 customers and 300% growth year-on-year,” Weingarten said. And working in the area of software-as-a-service with a fully-automated solution that doesn’t require humans to run any aspect of it, he added, “means we have high margins.”

The rise in cyberattacks resulting from malicious hackers exploiting human errors — such as clicking on phishing links; or bringing in and using devices from outside the network running software that might not have its security patches up to date — has resulted in a stronger focus on endpoint security and the companies that provide it.

Indeed, SentinelOne is not alone. Crowdstrike, another large startup in the same space as SentinelOne, is now looking at a market cap of at least $4 billion when it goes public. Carbon Black, which went public last year, is valued at just above $1 billion. Another competitor, Cylance, was snapped up by BlackBerry for $1.5 billion.

Weingarten — who cofounded the company with Almog Cohen (CTO) and Ehud Shamir (CSO) — says that SentinelOne differs from its competitors in the field because of its focus on being fully autonomous.

“We’re able to digest massive amounts of data and run machine learning to detect any type of anomaly in an automated manner,” he said, describing Crowdstrike as “tech augmented by services.” That’s not to say SentinelOne is completely without human options (options being the key word; they’re not required): it offers its own managed services under the brand name of Vigilance and works with system integrator partners to sell its products to enterprises.

There is another recurring issue with endpoint security solutions, which is that they are known to throw up a lot of false positives — items that are not recognized by the system that subsequently get blocked, which turn out actually to be safe. Weingarten admits that this is a by-product of all these systems, including SentinelOne’s.

“It’s a result of opting to use a heuristic rather than deterministic model,” he said, “but there is no other way to deal with anomalies and unknowns without heuristics, but yes with that comes false positives.” He pointed out that the company’s focus on machine learning as the basis of its platform helps it to more comprehensively ferret these out and make deductions on what might not otherwise have proper representation in its models. Working for a pilot period at each client also helps inform the algorithms to become more accurate ahead of a full rollout.

All this has helped bring down SentinelOne’s own false positive rate, which Weingarten said is around 0.04%, putting it in the bracket of lower mis-detectors in this breakdown of false positive rates by VirusTotal:

“Endpoint security is at a fascinating point of maturity, highlighting a massive market opportunity for SentinelOne’s technology and team,” said Teddie Wardi, Managing Director, Insight Partners, in a statement. “Attack methods grow more advanced by the day and customers demand innovative, autonomous technology to stay one step ahead. We recognize SentinelOne’s strong leadership team and vision to be unique in the market, as evidenced through the company’s explosive growth and highly differentiated business model from its peer cybersecurity companies.”

By virtue of digesting activity across millions of endpoints and billions of events among its customers, SentinelOne has an interesting vantage point when it comes to seeing the biggest problems of the moment.

Weingarten notes that one big trend is that the biggest attacks are now not always coming from state-sponsored entities.

“Right now we’re seeing how fast advanced techniques are funnelling down from government-sponsored attackers to any cyber criminal. Sophisticated malicious hacking can now come from anywhere,” he said.

When it comes to figuring out what is most commonly creating vulnerabilities at an organization, he said it was the challenge of keeping up to date with security patches. Unsurprisingly, it’s something that SentinelOne plans to tackle with a new product later this year — one reason for the large funding round this time around.

“Seamless patching is absolutely something that we are looking at,” he said. “We already do vulnerability assessments today and so we have the data to tell you what is out of date. The next logical step is to seamlessly track those apps and issue the patches automatically.”

Indeed it’s this longer term vision of how the platform will be developing, and how it’s moving in response to what the current threats are today, that attracted the backers. (Indeed the IoT element of the “endpoint” focus is a recent additions.

“SentinelOne’s combination of best-in-class EPP and EDR functionality is a magnet for engagement, but it’s the company’s ability to foresee the future of the endpoint market that attracted us as a technology partner,” a rep from Samsung Venture Investment Corporation said in a statement. “Extending tech stacks beyond EPP and EDR to include IoT is the clear next step, and we look forward to collaborating with SentinelOne on its groundbreaking work in this area.

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.

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.

Decade in review: Trends in seed- and early-stage funding

We’ve decided to step back from the breaking news for a minute to conduct a review of seed and early-stage funding trends over the last decade for U.S.-based companies.

I’m fairly certain we can all agree that the environment for startups has changed dramatically in the past 10 years, specifically in two major ways:

  1. The development of seed funding as its own class and;
  2. The expansion of growth stage investing.

What we’ve also seen are recent concerns raised about the decline in seed stage funding by Mark Suster, a partner at UpFront Ventures, as there has not been commensurate growth in early stage funding (Series A and B), to meet this growth in seed-financed companies. This is often expressed as the Series A crunch.

So with venture funding at an all-time high, along with increased growth in supergiant rounds, now seems like an appropriate time to conduct this kind of review.

Setting the stage

First, let’s set the stage for our analysis and explain where our data comes from with a few quick facts:

  • Rounds below $1 million can be the most difficult to capture adequately as many angel and pre-seed deals are not reported.
  • Luckily, Crunchbase has an “active founder community” that adds early stage financings.
  • By “active founder community” we are referring to many founders who are active on Crunchbase adding their company, themselves as founders, and their fundings.
  • Around 47 percent of fundings below $5 million in the U.S. are added by contributors, as distinct from our analyst teams who process the news, track Twitter, and work directly with our venture partners.
  • For this study, we bucket U.S. funding rounds by size to indicate stage.
  • Given the high percentage of self-reported seed financing, data added after the end of a quarter needs to be factored in.
  • For this reason we use projected data for many of the Crunchbase quarterly reports in order to more accurately reflect recent funding trends. For the charts below we are using actual data, with some provisions for the data lag when discussing the trends.

Now, let’s take a look at the trends.

Rounds below $1 million are slumping

Since 2014 we have seen mostly double-digit declines in less than $1 million rounds each year – a strong pivot from 2008-2014 when we saw double-digit growth.

In 2018 seed funding counts and amounts below $1 million were down from 2015 at 41 and 35 percent respectively. Given that data at this stage can be added long after the round took place, we assess there could be a 20 percentage-point relative increase in 2018 compared to 2017.

If we factor this in, 2018 seed funding counts and amounts below $1 million are down from 2015 at 30 and 23 percent respectively. In other words, seed below $1 million are closer to 2012 and 2017 levels.

$1 million to $5 million rounds are flattening

Round from $1 million to $5 million also experienced growth from 2008 through 2015, more than threefold for counts and close to threefold for amounts. Upward growth stalled from 2015. However, we do not see a substantial downward trend in the last three years. Dollars invested are stable at $7.5 billion from 2015 through 2017. Counts and amounts are down in 2018 from the 2015 height by 12 percent for deal count and 6 percent for amounts.

At Crunchbase we are always cautious about reporting downward trends for the most recent year or quarter, as data does flow in after the close of the most recent time period. If the trend is over a greater time period, that is a stronger signal for change in the market. Based on data continuing to be added after the end of a year for the previous year, we assess around 10 percentage point increase relative to 2017. This would make 2018 roughly equivalent  to 2017 on rounds and slightly up on amounts.

Seed funds take bigger stakes

Why is seed flattening? Seed investors report putting more dollars into fewer deals. Or as they raise more substantial subsequent funds, they are putting more dollars into the same number of transactions. Seed funds need to get enough equity for a meaningful stake, should a startup survive to raise subsequent rounds. Seed funds are investing in fewer startups for more equity.

Larger venture funds taking a less active role in seed

UpFront Ventures’ Suster (referenced earlier) also talks about larger venture firms becoming less active in seed, as investing at the seed stage can limit their ability down the road to invest in competitive startups who emerge as growing contenders in a specific sector. The growth of more substantial funds in venture allows firms to see deals mature before investing, perhaps paying more to get the equity they want, and allowing startups not growing as quickly to fail or get acquired.

As Fred Wilson from Union Square Ventures notes, “In the first five years of this decade, we saw the seed portion of the market explode. In the last five years of this decade we saw the growth portion of the market explode. But over those last ten years, the middle part, the traditional venture capital market, has not changed much.”

The middle is growing

For the middle, Series A and B rounds (which used to be the first institutional money in), the market for $5 million to $10 million rounds has almost doubled, but it has taken from 2008 to 2018. In that same period, growth has been slower than round below $5 million. Growth has continued past 2015. Since 2015, rounds are down slightly for one year, and then continue to grow in 2017 and 2018. Counts are up from 2015 by 17 percent and dollars by 18 percent.

$10 to $25 million rounds are growing

Rounds of $10 million to $25 million have grown over 11 years by 73 percentage points for counts, and 78 percentage points for amounts. This is a slower pace than $5 million to $10 million rounds, but continuing to edge up year over year.

Seed is maturing

Seed is its own class that is here to stay. Indeed pre-seed, seed and seed extension all seem to have specific dynamics. Of the 600-plus active seed funds who have raised a fund below $100 million, close to half have raised more than one fund. In the last three years in the U.S. we have not seen a slowing of seed funds raised for $100 million and below.

Conclusion

When we take into account the data lag, dollars for below $5 million is projected to be $8.5 billion, close to the height in 2015 of $8.6 billion. Deal counts are down from the height by a fifth, which does mean less seed-funded startups in the U.S. Provided that capital allocation is greater than $5 million continues to grow, less seed funded startups will die before raising a Series A. More companies have a chance to succeed, which is good for seed funds, and ultimately for the whole ecosystem.

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.

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.

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.

China’s Tencent Music raises $1.1 billion in downsized US IPO

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

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

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

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

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

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

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

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

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

Korean AI startup Skelter Labs lands strategic investment to expand to Southeast Asia

Korean AI startup Skelter Labs is expanding to Southeast Asia after it pulled in undisclosed funding from Singapore-based VC firm Golden Gate Ventures.

Skelter Labs was founded in 2015 by founded by Ted Cho, the former engineering site director at Google Korea. It started out developing apps and services that made use of AI but then it pivoted to focus fully on AI tech, which it licenses out to companies and corporations that it works with. Now it is eying opportunities in  Japan and parts of Southeast Asia — which has a cumulative population of over 600 million — with Vietnam, Thailand and Malaysia specifically mentioned.

The startup raised a $9 million seed round earlier this year, and Golden Gate has added an additional check to that round which came from KakaoBrain — the AI unit of Korean messaging giant Kakao — Kakao’s K-Cute venture arm, Stonebridge Ventures and Lotte Homeshopping, the TV and internet shopping business owned by multi-billion dollar retail giant Lotte.

More specifically, Seoul-based Skelter Labs works on AI in the context of vision and speech, conversation, and context recognition, while it goes after customers in areas that include manufacturing, customer operations, device interaction, and consumer marketing.

The startup doesn’t disclose customers, but it previously told TechCrunch that its vision is to bring its machine learning technology to daily life and schedules. Possible examples of that might be could include “intelligent virtual assistant technology that can be widely applied to various areas including smart speakers, smartphones, home appliances, automobiles and wearable devices.”

Golden Gate is one of Southeast Asia’s longest running tech VC firms. This deal is part of its recently announced third fund, which is $100 million in size.

In a statement, Skelter Labs CEO Cho paid tribute to the VC’s strong footprint in Southeast Asia that he said could open doors for the company. Startups in Golden Gate’s portfolio that might be of particular interest could include mobile listings startup Carousell, auto portal Carro, fashion commerce site Grana and online furnishings seller Hipvan.

Note: The original version of this article has been corrected. Skelter Labs has announced an extension to its previous round not a new round. Apologies for any confusion caused.

Golden Gate Ventures closes new $100M fund for Southeast Asia

Singapore’s Golden Gate Ventures has announced the close of its newest (and third) fund for Southeast Asia at a total of $100 million.

The fund hit a first close in the summer, as TechCrunch reported at the time, and now it has reached full capacity. Seven-year-old Golden Gate said its LPs include existing backers Singapore sovereign fund Temasek, Korea’s Hanwha, Naver — the owner of messaging app Line — and EE Capital. Investors backing the firm for the first time through this fund include Mistletoe — the fund from Taizo Son, brother of SoftBank founder Masayoshi Son — Mitsui Fudosan, IDO Investments, CTBC Group, Korea Venture Investment Corporation (KVIC), and Ion Pacific.

Golden Gate was founded by former Silicon Valley-based trio Vinnie Lauria, Jeffrey Paine and Paul Bragiel . It has investments across five markets in Southeast Asia — with a particular focus on Indonesia and Singapore — and that portfolio includes Singapore’s Carousell, automotive marketplace Carro, P2P lending startup Funding Societies, payment enabler Omise and health tech startup AlodokterGolden Gate’s previous fund was $60 million and it closed in 2016.

Some of the firm’s exits so far include the sale of Redmart to Lazada (although not a blockbuster), Priceline’s acquisition of WoomooLine’s acquisition of Temanjalan and the sale of Mapan (formerly Ruma) to Go-Jek. It claims that its first two funds have had distributions of cash (DPI) of 1.56x and 0.13x, and IRRs of 48 percent and 29 percent, respectively.

“When I compare the tech ecosystem of Southeast Asia (SEA) to other markets, it’s really hit an inflection point — annual investment is now measured in the billions. That puts SEA on a global stage with the US, China, and India. Yet there is a youthfulness that reminds me of Silicon Valley circa 2005, shortly before social media and the iPhone took off,” Lauria said in a statement.

A report from Google and Temasek forecasts that Southeast Asia’s digital economy will grow from $50 billion in 2017 to over $200 billion by 2025 as internet penetration continues to grow across the region thanks to increased ownership of smartphones. That opportunity to reach a cumulative population of over 600 million consumers — more of whom are online today than the entire U.S. population — is feeding optimism around startups and tech companies.

Golden Gate isn’t alone in developing a fund to explore those possibilities, there’s plenty of VC activity in the region.

Some of those include Openspace, which was formerly known as NSI Ventures and just closed a $135 million fund, Qualgro, which is raising a $100 million vehicle and Golden Equator, which paired up with Korea Investment Partners on a joint $88 million fund. Temasek-affiliated Vertex closed a $210 million fund last year and that remains a record for Southeast Asia.

Golden Gate also has a dedicated crypto fund, LuneX, which is in the process of raising $10 million.

Blockchain media project Civil turns to Asia with fund to kickstart 100 new media ventures

Civil, the blockchain-based journalism organization, is casting its eye to Asia after it set up a $1 million fund that’s aimed at seeding 100 new media projects across the continent over the next three years. The organization has teamed up with Splice, a Singapore-based media startup which will manage the fund, according to an announcement.

There’s been a lot of attention lavished on Civil for its promise to make media work more efficiently using blockchain technology and its upcoming crypto token, CVL. The organization has raised $5 million in financing from ConsenSys, the blockchain corporation led by Ethereum co-creator Joe Lubin, and its ICO takes place next month with the goal of raising around $32 million to launch its network and actively onboard new media companies worldwide.

But the company is waiting around. Civil has already actively jumped into the media space — providing financial backing to the newly-formed The Colorado Sun — but the scope of the project in Asia is different in trying to kickstart a wave of new media organizations by giving them money to get off the ground.

Alan Soon, co-founder and CEO of Splice, told TechCrunch that it hasn’t been decided whether the financing will be in the form of grants or equity-based investments. Despite that, he said deals will be “pre-seed, micro-investments to help entrepreneurs take their ideas to prototype stage.”

Soon said that all kinds of media are in play, ranging from the more obvious suspects such as publishers, reporting websites and podcasts to behind-the-scenes tech like automation, bots and adtech.

Notably, though, he clarified that the beneficiaries of the fund will be under no obligation to adopt Civil’s protocol, the technology that will be funded by the upcoming ICO. Splice itself, however, has committed to doing so which will mean it gains access to the network’s content, licensing opportunities and more.

“I’m with Civil because I really believe in their values,” Soon added. “They want to do the right thing for this space.”

SessionM customer loyalty data aggregator snags $23.8 M investment

SessionM announced a $23.8 million Series E investment led by Salesforce Ventures. A bushel of existing investors including Causeway Media Partners, CRV, General Atlantic, Highland Capital and Kleiner Perkins Caufield & Byers also contributed to the round. The company has now raised over $97 million.

At its core, SessionM aggregates loyalty data for brands to help them understand their customer better, says company co-founder and CEO Lars Albright. “We are a customer data and engagement platform that helps companies build more loyal and profitable relationships with their consumers,” he explained.

Essentially that means, they are pulling data from a variety of sources and helping brands offer customers more targeted incentives, offers and product recommendations “We give [our users] a holistic view of that customer and what motivates them,” he said.

Screenshot: SessionM (cropped)

To achieve this, SessionM takes advantage of machine learning to analyze the data stream and integrates with partner platforms like Salesforce, Adobe and others. This certainly fits in with Adobe’s goal to build a customer service experience system of record and Salesforce’s acquisition of Mulesoft in March to integrate data from across an organization, all in the interest of better understanding the customer.

When it comes to using data like this, especially with the advent of GDPR in the EU in May, Albright recognizes that companies need to be more careful with data, and that it has really enhanced the sensitivity around stewardship for all data-driven businesses like his.

“We’ve been at the forefront of adopting the right product requirements and features that allow our clients and businesses to give their consumers the necessary control to be sure we’re complying with all the GDPR regulations,” he explained.

The company was not discussing valuation or revenue. Their most recent round prior to today’s announcement, was a Series D in 2016 for $35 million also led by Salesforce Ventures.

SessionM, which was founded in 2011, has around 200 employees with headquarters in downtown Boston. Customers include Coca-Cola, L’Oreal and Barney’s.

Aspire Capital offers fast finance for SMEs in Southeast Asia

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

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

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

Data from the e-Conomy SEA report

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

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

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

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

Aspire founder and CEO Andrea Baronchelli pictured while at Lazada

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

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

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

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

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

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

The application process for companies seeking loans from Aspire Capital

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

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

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

Alibaba’s Ant Financial fintech affiliate raises $14 billion to continue its global expansion

Ant Financial, the financial services affiliate connected to Alibaba which operates the Alipay mobile payment service, has confirmed that it has closed a Series C funding round that totals an enormous $14 billion.

The rumors have been flying about this huge financing deal for the past month or so, with multiple publications reporting that Ant — which has been strongly linked with an IPO — was in the market to raise at least $9 billion at a valuation of upwards of $100 billion. That turned out to be just the tip of the iceberg here.

The money comes via a tranche of U.S. dollar financing and Chinese RMB from local investors. Those names include Singapore-based sovereign funds GIC and Temasek, Malaysian sovereign fund Khazanah Nasional Berhad, Warburg Pincus, Canada Pension Plan Investment Board, Silver Lake and General Atlantic.

Ant said that the money will go towards extending its global expansion (and deepening its presence in non-China markets it has already entered), developing technology and hiring.

“We are pleased to welcome these investors as partners, who share our vision and mission, to embark on our journey to further promote inclusive finance globally and bring equal opportunities to the world. We are proud of, and inspired by, the transformation we have affected in the lives of ordinary people and small businesses over the past 14 years,” Ant Financial CEO and executive chairman Eric Jing said in a statement.

Alibaba itself doesn’t invest in Ant, which it span off shortly before its mega-IPO in the U.S. in 2014, but the company did recently take up an option to own 33 percent of Ant’s shares.

Ant has long been tipped to go public. Back in 2016 when it raised a then blockbuster $4.5 billionlittle did we know it would pull in many multiples more — the company has been reportedly considering a public listing, but it instead opted to raise new capital at a valuation of $60 billion.

It looks like the same again, but with higher stakes. This new Series C round pushes that valuation up to $100 billion, according to Bloomberg. (Ant didn’t comment on its valuation.) So what has Ant done over the past two years to justify that jump?

It has long been a key fintech company in China, where it claims to serve offer 500 million consumers and offers Alipay, digital banking and investment services, but it has begun to replicate that business overseas in recent years. In particular, it has made investments and set up joint-ventures and new businesses in a slew of Asian countries that include India, Thailand, Korea, Indonesia, Hong Kong, Malaysia, the Philippines, Pakistan and Bangladesh.

The company was, however, unsuccessful in its effort to buy MoneyGram after the U.S. government blocked the $1.2 billion deal.

On the business-side, Ant is said to have posted a $1.4 billion profit over the last year, suggesting it is more than ready to make the leap to being a public firm.

Despite that U.S. deal setback, Ant said today that its global footprint extends to 870 million consumers. I’d take that with a pinch of salt at this point since its business outside of China is in its early stages, but there seems little doubt that it is on the road to replicating its scale in its homeland in many parts of Asia. Raising this huge round only solidifies those plans by providing the kind of capital infusion that tops most of the world’s IPOs in one fell swoop.

Tribe combines arcade games with group video chat

Sick of chatting but want to stay connected? Tribe‘s app lets you play clones of Space Invaders, Flappy Bird, Fruit Ninja, Name That Tune and more while video chatting with up to seven friends or strangers. Originally a video messaging app, Tribe failed to gain traction in the face of Snapchat and Facebook Messenger. But thanks to a $3 million funding round led by Kleiner Perkins in June, Tribe had the runway to pivot into video chat gaming that could prove popular, even if not in its app.

“As we all know, Messaging is a super-crowded area,” says Tribe co-founder Cyril Paglino. “If you look closely, very few communication products have been blowing up in the past three years.” Now, he says “we’re building a ‘Social Game Boy.’”

A former breakdancer, Paglino formed his team in France before renting a “hacker house” and moving to San Francisco. They saw traction in late 2016, hitting 500,000 downloads. Tribe’s most innovative feature was speech recognition that could turn a mention of “coffee” into a pre-made calendar request, a celebrity’s name into a link to their social media accounts, locations into maps and even offer Spotify links to songs playing in the background.

The promise of being the next hit teen app secured Tribe a $500,000 pre-seed from Kima and Ludlow Ventures in 2015, a $2.5 million seed in 2016 led by prestigious fund Sequoia Capital and then the June 2017 $3 million bridge from KPCB and others. But that $6 million couldn’t change the fact that people didn’t want to sign up for a new chat app when their friends were already established on others.

Luckily, Tribe saw a new trend emerging. Between HQ Trivia’s rise, the Apple App Store adding a Gaming tab, celebrities like Drake streaming their gameplay and Snapchat acquiring 3D gaming engine PlayCanvas, the Tribe team believed there was demand for a new way to play.

Tribe’s rebuilt iOS and Android apps let you rally a crew of friends or join in with strangers to play one of its old-school games. You’ll hear their voices and see their faces in the corner of the screen as everyone in your squad vies for first place. It’s like Houseparty’s group video chat, but with something to do. Facebook Messenger has its own gaming platform, but the games are largely asynchronous. That means you play separately and merely compare scores. That’s a lot less fun than laughing it up together as one of your buddies runs their race car off the road or gets attacked by an alien.

The only problem is that since your friends probably aren’t on Tribe already, the app is vulnerable to cloning by its bigger competitors. Paglino cited technical challenges his team has overcome, its young demographic and lessons learned from 18 months of iterations as what could keep Tribe from being easily co-opted. But as even public companies like Snapchat have learned, it can be tough to stay ahead of tech giants like Facebook with huge development teams, plenty of cash and apps that are already popular.
Tribe’s games are legitimately fun, and the video chat makes them feel a lot more like hanging out with friends and less like a waste of time. Even if Tribe isn’t the one to make mobile group video chat gaming ubiquitous, it could see its idea entertain millions… just in someone else’s app.

LimeBike raises $12 million to roll out bike sharing without kiosks in the US

 A startup called LimeBike has raised $12 million in venture funding to make Chinese-style bike sharing mainstream in the US. Andreessen Horowitz led the round joined by IDG Ventures, DCM Ventures and other investors who declined to be named. In China, companies like MoBike and Ofo have raised massive amounts of venture capital and distributed tens of thousands of their GPS-enabled bikes in… Read More

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Crunch Report | Tesla and Rollercoasters

Waymo is suing Otto and Uber for allegedly stealing its trade secrets, Layer gets more funding and acquires Cola, a major Cloudflare bug leaked sensitive data from customers’ websites and Elon Musk addresses unionization concerns at Tesla. All this on Crunch Report. Read More

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Here's why those tech billionaires are throwing millions at ethical AI

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Worried about a dystopian future in which AI rule the world and humans are enslaved to autonomous technology? You’re not alone. So are billionaires (kind of).

First it was the Partnership on AI formed by Google, Amazon, Microsoft, Facebook and IBM. 

Then came Elon Musk and Peter Thiel’s recent investment in $1 billion research body, OpenAI. 

Now, a new batch of tech founders are throwing money at ethical artificial intelligence (AI) and autonomous systems (AS). And experts say it couldn’t come sooner. 

LinkedIn founder, Reid Hoffman, and eBay founder, Pierre Omidyar (through his philanthropic investment fund) donated a combined $20 million to the Ethics and Governance of Artificial Intelligence Fund on Jan. 11 — helping ensure the future’s more “man and machine, not man versus machine,” as IBM CEO Ginny Rometty put it to WSJ Thursday. Read more…

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