Razorpay said on Monday it has received a “strategic investment” from the venture arm of the American enterprise giant. The investment will help the startup “further strengthen its presence in the business banking space,” it said.
The two firms didn’t disclose the size of the investment, but Sequoia Capital India-backed startup said the deal will “make an impactful contribution to the industry and drive adoption and financial growth for underserved small businesses in the next twelve months.”
Razorpay accepts, processes and disburses money online for small businesses and enterprises — essentially everything Stripe does in the U.S. and several other developed markets. But the Indian startup’s offering goes much further than that: in recent years, Razorpay has launched a neobanking platform to issue corporate credit cards, and it also offers businesses working capital.
With the global giant Stripe still nowhere in the Indian picture, Razorpay has grown to become the clear market leader and has started to expand to the Southeast Asian market.
“At Razorpay, we want to make further strides on the idea of investing in India’s digital future and building an intelligent payment and banking infrastructure for the new- world. We are delighted to associate with Salesforce Ventures and Salesforce more broadly in India,” said Harshil Mathur, co-founder and chief executive of the fintech startup.
“I am certain that this investment, along with support from our existing investors will help build an ecosystem for a hassle-free, easy-to-integrate payments and banking experience. We also hope to expand, build new products and deliver this experience to businesses in South East Asian countries too.”
Monday’s deal is Salesforce Ventures’ second investment in the Indian startup ecosystem. The firm led a $15 million Series C financing round in Hyderabad-headquartered Darwinbox earlier this year.
“The journey towards a ‘less-cash’ economy has been accelerated with the pandemic. The rapid growth in digital payments over the last year has opened doors for technology innovation and Razorpay has been emerging as the company of choice for a lot of e-commerce businesses,” said Arundhati Bhattacharya, chairperson and chief executive of Salesforce India, in a statement.
“We are excited to support Razorpay in their journey to revolutionize digital finance not only in India, but globally as well,” added Bhattacharya, who joined the firm last year.
The Indian startup, which became a unicorn a year ago, said it has witnessed a 40-45% month-on-month growth in recent months. The startup is currently in the market to raise a new financing round and is negotiating a considerably larger valuation bump over the current value, according to a person familiar with the matter.
Scores of corporate giants including Google, Facebook, and Microsoft have started to chase strategic investments in the world’s second largest internet market. Microsoft inked a strategic deal with Indian budget hotel chain Oyo, they confirmed this month.
India has produced a record 27 unicorns this year so far, up from 11 last year as many high-profile global investors including Tiger Global, Falcon Edge Capital, Temasek, SoftBank Vision Fund 2, and Coatue Management increase the pace of their investments in the South Asian market. And the list continues to grow: A16z is in advanced stages to back Indian crypto startup CoinSwitch Kuber, TechCrunch reported last week.
Ascend on Wednesday announced a $5.5 million seed round to further its insurance payments platform that combines financing, collections and payables.
First Round Capital led the round and was joined by Susa Ventures, FirstMark Capital, Box Group and a group of angel investors, including Coalition CEO Joshua Motta, Newfront Insurance executives Spike Lipkin and Gordon Wintrob, Vouch Insurance CEO Sam Hodges, Layr Insurance CEO Phillip Hodges, Anzen Insurance CEO Max Bruner, Counterpart Insurance CEO Tanner Hackett, former Bunker Insurance CEO Chad Nitschke, SageSure executive Paul VanderMarck, Instacart co-founders Max Mullen and Brandon Leonardo and Houseparty co-founder Ben Rubin.
This is the first funding for the company that is live in 20 states. It developed payments APIs to automate end-to-end insurance payments and to offer a buy now, pay later financing option for distribution of commissions and carrier payables, something co-founder and co-CEO Andrew Wynn, said was rather unique to commercial insurance.
Wynn started the company in January 2021 with his co-founder Praveen Chekuri after working together at Instacart. They originally started Sheltr, which connected customers with trained maintenance professionals and was acquired by Hippo in 2019. While working with insurance companies they recognized how fast the insurance industry was modernizing, yet insurance sellers still struggled with customer experiences due to outdated payments processes. They started Ascend to solve that payments pain point.
The insurance industry is largely still operating on pen-and-paper — some 600 million paper checks are processed each year, Wynn said. He referred to insurance as a “spaghetti web of money movement” where payments can take up to 100 days to get to the insurance carrier from the customer as it makes its way through intermediaries. In addition, one of the only ways insurance companies can make a profit is by taking those hundreds of millions of dollars in payments and investing it.
Home and auto insurance can be broken up into payments, but the commercial side is not as customer friendly, Wynn said. Insurance is often paid in one lump sum annually, though, paying tens of thousands of dollars in one payment is not something every business customer can manage. Ascend is offering point-of-sale financing to enable insurance brokers to break up those commercial payments into monthly installments.
“Insurance carries continue to focus on annual payments because they don’t have a choice,” he added. “They want all of their money up front so they can invest it. Our platform not only reduces the friction with payments by enabling customers to pay how they want to pay, but also helps carriers sell more insurance.”
Startups like Ascend aiming to disrupt the insurance industry are also attracting venture capital, with recent examples including Vouch and Marshmallow, which raised close to $100 million, while Insurify raised $100 million.
Wynn sees other companies doing verticalized payment software for other industries, like healthcare insurance, which he says is a “good sign for where the market is going.” This is where Wynn believes Ascend is competing, though some incumbents are offering premium financing, but not in the digital way Ascend is.
He intends to deploy the new funds into product development, go-to-market initiatives and new hires for its locations in New York and Palo Alto. He said the raise attracted a group of angel investors in the industry, who were looking for a product like this to help them sell more insurance versus building it from scratch.
Having only been around eight months, it is a bit early for Ascend to have some growth to discuss, but Wynn said the company signed its first customer in July and six more in the past month. The customers are big digital insurance brokerages and represent, together, $2.5 billion in premiums. He also expects to get licensed to operate as a full payment in processors in all states so the company can be in all 50 states by the end of the year.
The ultimate goal of the company is not to replace brokers, but to offer them the technology to be more efficient with their operations, Wynn said.
“Brokers are here to stay,” he added. “What will happen is that brokers who are tech-enabled will be able to serve customers nationally and run their business, collect payments, finance premiums and reduce backend operation friction.”
Bill Trenchard, partner at First Round Capital, met Wynn while he was still with Sheltr. He believes insurtech and fintech are following a similar story arc where disruptive companies are going to market with lower friction and better products and, being digital-first, are able to meet customers where they are.
By moving digital payments over to insurance, Ascend and others will lead the market, which is so big that there will be many opportunities for companies to be successful. The global commercial insurance market was valued at $692.33 billion in 2020, and expected to top $1 trillion by 2028.
Like other firms, First Round looks for team, product and market when it evaluates a potential investment and Trenchard said Ascend checked off those boxes. Not only did he like how quickly the team was moving to create momentum around themselves in terms of securing early pilots with customers, but also getting well known digital-first companies on board.
“The magic is in how to automate the underwriting, how to create a data moat and be a first mover — if you can do all three, that is great,” Trenchard said. “Instant approvals and using data to do a better job than others is a key advantage and is going to change how insurance is bought and sold.”
Building credit history can be difficult if you are a consumer that is having trouble getting access to credit in the first place.
Enter TomoCredit, which has developed a credit card focused on building credit history for first-time borrowers. The San Francisco-based startup is announcing today that it has raised $10 million in a Series A funding round co-led by Kapor Capital and KB Investment Inc. (KBIC), a subsidiary of South Korea’s leading consumer bank. Lewis & Clark Ventures, AME Cloud Ventures, Knollwood Investment Advisory, WTI, Bronze and Square co-founder Sam Wen also participated in the Series A financing.
The new capital comes just over seven months after TomoCredit raised $7 million in seed funding, and brings its total raised this year to $17 million. The company also announced today it has appointed Ash Gupta, former CRO at American Express, to its board.
TomoCredit co-founder and CEO Kristy Kim came up with the concept for the company after being rejected multiple times for an auto loan while in her early 20s.
Kim, who immigrated to the U.S. from South Korea with her family as a child, was disappointed that her lack of credit history proved to be such an obstacle despite the fact she had a job “and positive cash flow.”
So she teamed up with Dmitry Kashlev, a Russian immigrant, in January of 2019 to create a solution for other foreign-born individuals and young adults facing similar credit challenges. That fall, the startup (short for Tomorrow’s Credit) was accepted into the Barclays Accelerator, powered by Techstars.
The fintech offers a credit card aimed at helping first-time borrowers build credit history, based on their cash flow, rather than on their FICO or credit report ratings. Its biggest differentiator, believes Kim, is that it has no fees, no APR and no credit pull. Traditional credit products rely heavily on fees and APR, she said, while TomoCredit makes money through merchant fees.
Image Credits: TomoCredit
TomoCredit is powered by Finicity (which was acquired by Mastercard last year), and leverages that company’s data network and open banking technology so that it can “securely” access applicants’ bank accounts to obtain financial data for underwriting purposes.
Once approved, applicants receive the TomoCredit Mastercard. The goal is to bring “millions of individuals that lack a credit score into the financial system, allowing a diverse group of consumers the opportunity to better position themselves as qualified candidates for mortgages, auto loans, or other major life purchases,” the company said.
TomoCredit has already pre-approved more than 300,000 customers and expects to issue a total of 500,000 cards by year’s end, according to Kim.
“We’ve grown 10x this year from the beginning of 2021,” Kim said. “Still, this round came together earlier than expected.”
Something that has been surprising to Kim is the interest from a variety of types of consumers.
“In the beginning, we thought international students and immigrants would be most interested in our product,” she told TechCrunch. “But after launching, we’ve realized that so many people can benefit — from gig economy workers to YouTubers to any young person who hasn’t had a chance to build credit yet. The market is way bigger than we even realized.”
In early 2022, the company plans to roll out the Tomo Black card, a product for some of its existing customers that “are showing good performance.” It’s currently testing it with some of its existing user base.
“This is a premium product that can grow with our customers, who we want to retain over the next 10 to 20 years,” Kim said. “We don’t want our product to be a stop-gap solution.”
Image Credits: TomoCredit
The startup plans to use its new capital to do more hiring and enhance features such as weekly autopay and high credit limits in an effort to “boost credit scores faster,” she added. Currently, TomoCredit has about 30 employees, up from 10 at the time of its last raise in February.
“My main focus is recruiting top talent,” Kim said, noting that the company had already hired “some senior people from Wells Fargo.”
“When we recruit and hire, we care about diversity,” she added. “We’re building products for people who have been traditionally underserved by major banks. I think to align with our mission, we should embody that in building our team. More than 50% of our execs are female. The entire risk team is female. We are diverse in terms of gender, age and ethnicity because we want to truly understand our customers and build a product that is inclusive.”
Brian Dixon, partner at Kapor Capital, points out that there are about 45 million people in the U.S. who should have credit scores, but cannot take out a loan, get a credit card, or apply for a mortgage. And that number is only increasing.
“When we learned that Kristy experienced these issues firsthand when she moved to the United States and thoughtfully figured out a way to circumvent the predatory and broken credit card system, it deepened our conviction in her and the product itself,” he wrote via email.
Dixon believes that TomoCredit’s model of not charging the user makes it a “safe and affordable alternative” to what is in the market.
“Their mission aligns with our thesis of closing gaps of access and opportunity in the credit space at large as well,” he added.
Cross-border commerce company Zonos raised $69 million in a Series A, led by Silversmith Capital Partners, to continue building its APIs that auto classify goods and calculate an accurate total landed cost on international transactions.
St. George, Utah-based Zonos is classifying the round as a minority investment that also included individual investors Eric Rea, CEO of Podium, and Aaron Skonnard, co-founder and CEO of Pluralsight. The Series A is the first outside capital Zonos has raised since it was founded in 2009, Clint Reid, founder and CEO, told TechCrunch.
As Reid explained it, “total landed cost” refers to the duties, taxes, import and shipping fees someone from another country might pay when purchasing items from the U.S. However, it is often difficult for businesses to figure out the exact cost of those fees.
Global cross-border e-commerce was estimated to be over $400 billion in 2018, but is growing at twice the rate of domestic e-commerce. This is where Zonos comes in: The company’s APIs, apps and plugins simplify cross-border sales by providing an accurate final price a consumer pays for an item on an international purchase. Businesses can choose which one or multiple shipping carriers they want to work with and even enable customers to choose at the time of purchase.
“Businesses can’t know all of a country’s laws,” Reid added. “Our mission is to create trust in global trade. If you are transparent, you bring trust. This was traditionally thought to be a shipping problem, but it is really a technology problem.”
As part of the investment Todd MacLean, managing partner at Silversmith Capital Partners, joined the Zonos board of directors. One of the things that attracted MacLean to the company was that Reid was building a company outside of Silicon Valley and disrupting global trade far from any port.
He says while looking into international commerce, he found people wound up being charged additional fees after they have already purchased the item, leading to bad customer experiences, especially when a merchant is trying to build brand loyalty.
Even if someone chooses not to purchase the item due to the fees being too high, MacLean believes the purchasing experience will be different because the pricing and shipping information was provided up front.
“Our diligence said Zonos is the only player to take the data that exists out there and make sense of it,” MacLean said. “Customers love it — we got the most impressive customer references because this demand is already out there, and they are seeing more revenue and their customers have more loyalty because it just works.”
In fact, it is common for companies to see 25% to 30% year over year increase in sales, Reid added. He went on to say that due to fees associated with shipping, it doesn’t always mean an increase in revenue for companies. There may be a small decrease, but a longer lifetime value with customers.
Going after venture capital at this time was important to Reid, who saw global trade becoming more complex as countries added new tax laws and stopped using other trade regulations. However, it was not just about getting the funding, but finding the right partner that recognizes that this problem won’t be solved in the next five years, but will need to be in it for the long haul, which Reid said he saw in Silversmith.
The new investment provides fuel for Zonos to grow in product development and go-to-market while also expanding its worldwide team into Europe and Asia Pacific. Eighteen months ago, the company had 30 employees, and now there are over 100. It also has more than 1,500 customers around the world and provides them with millions of landed cost quotes every day.
“Right now, we are the leader for APIs in cross-border e-commerce, but we need to also be the technology leader regardless of the industry,” Reid added. “We can’t just accept that we are good enough, we need to be better at doing this. We are looking at expanding into additional markets because it is more than just servicing U.S. companies, but need to be where our customers are.”
Groww, an Indian startup that is helping millennials invest in mutual funds and stocks, is in advanced stages of talks to raise a new financing round at a $3 billion valuation, according to six people familiar with the matter.
The Bangalore-based startup is negotiating to close a $250 million round, the people said, requesting anonymity as the matter is private. The round could close within weeks, they said.
Usual caveats apply: The terms of the deal may change. The startup has received several termsheets — with similar terms — in recent days. Tiger Global, Coatue, and TCV have held conversations to lead or co-lead the round, people said. And many including Insight Partners have also explored investment, the people said.
A spokesperson for Coatue declined to comment. Groww chief executive did not respond to a request for comment. Indian news outlet CapTable first reported about Groww’s upcoming financing round.
Groww is tapping into a huge market. More than 200 million people in India transact money digitally, but fewer than 30 million invest in mutual funds and stocks. The startup allows users to invest in mutual funds, including systematic investment planning (SIP) and equity-linked savings, gold, as well as stocks, including those listed at U.S. exchanges. The app offers every fund that is currently available in India.
Investors’ growing push to back — or double down on — Groww follows several months of strong growth. The Indian startup is currently on track to clock about $35 million in ARR, two people briefed on the figure said. Groww, which counts Tiger Global and Sequoia Capital India among its existing investors, was valued at $1 billion in April this year and $250 million last September.
The startup is also internally exploring expansion into the crypto space, but hasn’t made a firm decision on when it plans to offer such trading, one person said.
SellersFunding secured $166.5 million in a combination of Series A equity funding and a credit facility to continue developing its technology and payments platforms for e-commerce businesses.
Northzone led the round and was joined by Endeavor Catalyst and Fasanara. SellersFunding CEO Ricardo Pero did not disclose the funding breakdown, but did say the company previously raised two seed rounds for a total of $40 million in equity and more than $100 million in credit facilities, including one that the company was expanding to $200 million.
SellersFunding, with offices in Florida, New York and London, created a digital platform that delivers financial tools and resources to streamline global commerce for thousands of marketplaces, including working capital, cross-border cash management, tax solutions and business valuation.
Pero got the idea for the company after spending 20 years in the financial industry. He left JP Morgan in 2016 with a drive to start his own company. He was consulting for a friend selling on Amazon who asked him to help make sense of Amazon’s fees and to review the next year’s budget because the friend was struggling to keep up with growth.
“I helped him address the fees issue, but when I went to talk to traditional lenders, I found that they have no clue about e-commerce and the needs of SMEs,” he said.
In addition to being a lending source for businesses selling on these marketplaces, SellersFunding leverages sales data provided by the marketplaces and e-commerce platforms to create sales and cash flow estimates based on the credit limits given to clients so that owners can better understand the fees they are paying and make more informed decisions.
He founded the company in 2017, and today has over 30,000 registered users and is approaching $10 billion in sales volume that is feeding data into SellersFunding’s daily models. The company makes money as both a lender and on fees it charges for payments collected by its customers. Merchants can collect money from marketplaces and pay their suppliers in local or foreign currency.
SellersFunding has consistently grown 300% year over year, Pero said. As such, he intends to use the new funding to scale globally, expand the team, create a marketing budget and look for two small acquisitions in the U.S. and Europe.
The company will continue to invest on the payments side and to promote cross-border payments.
“When I look at the payments landscape, companies are competing on pricing and I don’t think we will ever have a focus there, but instead will compete on customer experience,” Pero added. “Our core business will always be lending and our core investments will be payments and technology, but then we will extend to other services that our clients want.”
With an eye on expanding internationally, it fit to bring on Northzone as a partner, he added. The venture firm is based in Europe and was of a similar vision for thinking globally.
Jeppe Zink, general partner at Northzone, said via email that Pero and his team “are the most experienced in this category” and are building a category leader that is “more experienced and understanding of the lending side than its competitors.”
“We have seen this massive rise in e-shopping, most of the new ones coming from marketplaces like Amazon and Shopify, and if you look at the sellers, thousands are small businesses sourcing their goods which means that they are very important customers,” Zink added. “Normal banks like Barclay can’t check credit. SellersFinding is helping small businesses get this credit, and rightly so. In the same way we thought neobanks won with accounts created when it comes to delivering credit and banking products, they are nowhere to be found yet.”
India and Singapore are working to link their digital payments systems to enable “instant, low-cost fund transfers,” in a major push to disrupt cross-border transactions, the central banks of the two nations said on Tuesday.
The project to link India’s Unified Payments Interface (UPI) and Singapore’s PayNow is targeted for operationalization by July 2022, Reserve Bank of India said. Users on either of the systems will be able to make transactions to one another without having to sign up to the second platform, the banks said.
“When implemented, fund transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses (VPA). The experience of making a PayNow transfer to a UPI VPA will be similar to that of a domestic transfer to a PayNow VPA,” said Monetary Authority of Singapore in a press statement.
UPI, a payments infrastructure developed by a coalition of retail banks, has become the most popular digital payments method in India. The railroads, adopted by scores of local and global firms including Google and Facebook, is now processing over 3 billion transactions each month. Like UPI, Singapore’s PayNow also brings interoperability between banks and payments apps, allowing user from one payment app to make transaction to those on other apps.
“The UPI-PayNow linkage is a significant milestone in the development of infrastructure for cross-border payments between India and Singapore, and closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments,” India’s central bank said in a statement.
“The linkage builds upon the earlier efforts of NPCI International Private Limited (NIPL) and Network for Electronic Transfers (NETS) to foster cross-border interoperability of payments using cards and QR codes, between India and Singapore and will further anchor trade, travel and remittance flows between the two countries. This initiative is also in line with RBI’s vision of reviewing corridors and charges for inbound cross-border remittances outlined in the Payment Systems Vision Document 2019-21.”
Last year at this time, SpotOn was on the brink of announcing a $60 million Series C funding round at a $625 million valuation.
Fast forward to almost exactly one year later, and a lot has changed for the payments and software startup.
Today, SpotOn said it has closed on $300 million in Series E financing that values the company at $3.15 billion — more than 5x of its valuation at the time of its Series C round, and significantly higher than its $1.875 billion valuation in May (yes, just three and a half months ago) when it raised $125 million in a Series D funding event.
Andreessen Horowitz (a16z) led both the Series D and E rounds for the company, which says it has seen 100% growth year over year and a tripling in revenue over the past 18 months. Existing investors DST Global, 01 Advisors, Dragoneer Investment Group, FranklinTempleton and Mubadala Investment Company too doubled down on their investments in SpotOn, joining new backers Wellington Management and CoatueManagement. Advisors Douglas Merritt, CEO of Splunk, and Mike Scarpelli, CFO of Snowflake, also made individualinvestments as angels. With the new capital, SpotOn has raised $628 million since its inception.
The latest investment is being used to finance the acquisition of another company in the space — Appetize, a digital and mobile commerce payments platform for enterprises such as sports and entertainment venues, theme parks and zoos. SpotOn is paying $415 million in cash and stock for the Los Angeles-based company.
Since its 2017 inception, SpotOn has been focused on providing software and payments technology to SMBs with an emphasis on restaurants and retail businesses. The acquisition of Appetize extends SpotOn’s reach to the enterprise space in a major way. Appetize will go to market as SpotOn and will work to grow its client base, which already includes an impressive list of companies and organizations including Live Nation, LSU, Dodger Stadium and Urban Air.
In fact, Appetize currently covers 65% of all major league sports stadiums, specializing in contactless payments, mobile ordering and menu management. So for example, when you’re ordering food at a game or concert, Appetize’s technology makes it easier to pay in a variety of contactless ways through point of sale (POS) devices, self-service kiosks, handheld devices, online ordering, mobile web and API integrations.
Image Credits: SpotOn
SpotOn is taking on the likes of Square in the payments space. But the company says its offering extends beyond traditional payment processing and point-of-sale software. Its platform aims to give SMBs the ability to run their businesses “from building a brand to taking payments and everything in between.” SpotOn’s goal is to be a “one-stop shop” by incorporating tools that include things such as custom website development, scheduling software, marketing, appointment scheduling, review management, analytics and digital loyalty.
The combined company will have 1,600 employees — 1,300 from SpotOn and 300 from Appetize. SpotOn will now have over 500 employees on its product and technology team, according to co-founder and co-CEO Zach Hyman. It will also have clients in the tens of thousands, a number that SpotOn says is growing by “thousands more every month.”
The acquisition is not the first for SpotOn, which also acquired SeatNinja earlier this year.
But in Appetize it saw a company that was complementary both in its go-to-market and tech stacks, and a “natural fit.”
SMEs are going to benefit from the scalable tech that can go with them, including things like kiosks and offline modes, and for the enterprise clients of Appetize, they’re going to be able to leverage products like sophisticated loyalty programs and extended marketing capabilities,” Hyman told TechCrunch.
SpotOn was not necessarily planning to raise another round so soon, Hyman added, but the opportunity came up to acquire Appetize.
“We spent a lot of time together, and it was too compelling to pass up,” he told TechCrunch.
For its part, Appetize — which has raised over $77 million over its lifetime, according to Crunchbase — too saw the combination as a logical one.
“It was important to us to retain a stake in the business. We were not looking to cash out,” said Appetize CEO Max Roper. “We are deeply invested in growing the business together. It’s a big win for our team and our clients over the long term. This is a rocketship that we are excited to be on.”
No doubt that the COVID-19 pandemic only emphasized the need for more digital offerings from small businesses to enterprises alike.
“There has been a high demand for our services and now as businesses are faced with a Covid resurgence, no one is closing down,” Hyman said. “So they see a responsibility to install the necessary technology to properly run their business.”
One of the moves SpotOn has made, for example, is launching a vaccination alert system in its reservation management software platform to make it easier for consumers to confirm they are vaccinated for cities and states that have those requirements.
Clearly, a16z General Partner David George too was bullish on the idea of a combined company.
He told TechCrunch that the two companies fit together “extremely nicely.”
“It felt like a no-brainer for us to want to lead the round, and continue to support them,” George said.
Since first investing in SpotOn in May, the startup’s growth has “exceeded” a16z’s expectations, he added.
“When companies are growing as fast as it is organically, they don’t need to rely on acquisitions to fuel growth,” he said. “But the strategic rationale here is so strong, that the acquisition will only turbocharge what is already high growth.”
While the Series E capital is primarily funding the acquisition, SpotOn continues to double down on its product and technology.
“This is our time to shine and invest in the future with forward thinking technology,” Hyman told TechCrunch. “We’re thinking about things like how are consumers going to be ordering their beer at a Dodgers game in three years? Are they going to be standing in line for 25 minutes or are they going to be interacting and buying merchandise in other unique ways? Those are the things we’re looking to solve for.”
When Anik Khan graduated from college, his first job was working on credit cards and business expenses at Accenture. There, he found that someone could bring in a couple of thousand dollars just by having the right credit cards and following the rewards and promotions.
It was back in 2017 when he and David Gao got the idea for his company MaxRewards, a digital wallet app that manages credit cards and automatically activates benefits like rewards, cashback offers and monthly credits. It also makes recommendations at the point of purchase on which card would yield the best reward for that purchase.
Going after the some 83% of Americans that have a credit card, the app version was officially launched in 2019, and now the Atlanta-based company is announcing a $3 million seed round co-led by Dundee Venture Capital and Calano Ventures. Also backing the company are Techstars, Fintech Ventures Fund, Service Provider Capital and Fleetcor president Nick Izquierdo.
Tracking his own credit cards manually prior to MaxRewards, Khan recalled in one year, getting $16,000 in rewards. However, utilizing those benefits was time-consuming and difficult, because the rewards and savings aren’t always made evident by the credit card companies.
“Other companies have tried to do something similar, but the issue is you don’t have the reward information or the offers,” Khan told TechCrunch. “If you were to aggregate this information, you still would have to activate all of these things and use them before they expired.”
Users connect their accounts and when they make a purchase, their location is cross-referenced with the merchant and an algorithm is applied to tell the user which card to use. The average app user has six credit cards.
MaxRewards is free to download and use, and the majority of the app’s functionalities are free. Users who want additional features, like the auto activation or rewards, can join MaxRewards Gold and are given the opportunity to choose their own monthly price — the average is over $25 per month — based on the value they expect to gain, Khan said.
MaxRewards offers and benefits. Image Credits: MaxRewards
Ron Watson, partner at Dundee, said his firm invests in seed-stage companies between the coasts and is interested in consumer and e-commerce companies. Watson said he was impressed with what MaxRewards has been able to do with a team of three. He also relates to the company’s mission, having grown up in a lower, middle-class family that did not frequently go on vacations.
When he got his first job and was suddenly flying everywhere, he recalls building up so many rewards to the point where he was able to go on a vacation to Hawaii and only spend maybe $100, he said.
“I used to put my points into a spreadsheet, but as I got older and had kids, I realized how hard it was for the average person to do that and how important it is to have automation,” Watson said. “I downloaded the app, and on the first day, saved $20.”
The company is often compared to NerdWallet or Mint, but in terms of functionality, Khan said he feels MaxRewards is unique due to its credit card system connectors. Rather than rely on third-party aggregators to discover the rewards, MaxRewards leverages its own proprietary connectors to card systems.
There are hundreds of thousands of offers to be discovered, and consumers are asking for even more features, so Khan decided it was time to go after seed funding. He had raised a small seed, about $200,000, from his time at Techstars, but the new funding will enable him to add to his team of three people. He expects to be at 20 by the end of the year. Khan also wants to accelerate its user acquisition, product improvement and compliance.
Next up, the company is going to automate rewards and savings across additional platforms like debit cards, payment apps and cashback apps, as well as create browser extensions and a web app. Khan also wants to do more on the education side with regard to using credit cards in a smart manner.
Arron Solano, managing partner at Calano, met Khan through Techstars and said he is an advocate for using credit cards in the right way. His firm was looking for a company like MaxRewards.
“During our first call, I remember telling my partner that Anik was a bulldog who knew what he was talking about, especially at that stage,” Solano added. “He had strong team members, his vision lined up well and that checked off a massive box for us. He energized us and showed he could find a market with insanely high ‘super users.’ ”
Gig and independent workers have different needs when it comes to financial products than salaried employees at a company.
It’s a challenge that Tilak Joshi, founder of Lean, became acutely aware of during his tenure as head of Mint and years as a product exec at American Express and PayPal.
While the U.S. has seen a major shift in more independent workers in recent years, traditional financial institutions have “failed to keep up,” in his view.
“Seventy percent of independent workers live paycheck to paycheck and 30% are inadequately insured,” he said. “Independent workers will soon become the majority of the US workforce, and the existing conversation, platforms, and institutions need to rapidly evolve to support them.”
Upon leaving Mint in 2020, Joshi founded Lean to support gig workers with a platform that offers access to financial products that he says are “custom built” for their needs. And today, Lean is announcing it has raised $4.5 million in a seed round led by Inspired Capital that included participation from Atelier Ventures, Oceans Ventures and Acequia Capital.
Notably, a slew of marketplace industry operators also put money in the round including DoorDash exec Gokul Rajaram; Instacart co-founder Max Mullen; Manik Gupta, ex-CPO Uber; , Vivek Patel, ex-COO of Postmates), Bird CPO Ryan Fujiu and others. The latest financing brings Lean’s total raised to nearly $6 million to date. Other high-profile angels who have backed the company include Charlie Songhurst, Lightspeed Venture Partners (and former Stripe exec) Justin Overdorff, Coinbase’s Marc Bhargava, and executives from ANGI Homeservices, Coinbase and Plaid.
“Independent workers see some of the most restrictive financial scenarios of anywhere in the U.S.,” Joshi told TechCrunch. “What workers do to patch up their financial problems is work across various gig marketplaces and when marketplaces try to keep them and pay them incentives, they just figure out how to game the system. It just turns into inefficiency on both sides where marketplaces don’t really have the stability of having a strong workforce they can rely on and workers are also just in a tight spot.”
Lean aims to help independent workers by partnering directly with marketplaces to offer financial products and benefits. The goal is to help marketplaces with worker acquisition and retention by giving gig workers access to “no-cost capital, instant payouts and financial products such as mortgages, “low-to-no-cost borrowing,” HSAs and insurance.
Lean works with marketplaces of all sizes that employ either 1099 or W2 workers that work in industries such as ride-hailing, courier, healthcare and construction. Joshi said that in addition to boosting worker acquisition and retention, Lean has the potential to “unlock” revenue for marketplaces via financial products and infrastructure rather than through fees to workers.
Its platform, Joshi said, is designed to be integrated with any marketplace in less than two weeks. Through its marketplace partnerships, Lean expects to be rolling out to “hundreds of thousands” of gig workers across the country over the coming months, according to Joshi.
There’s no cost for marketplaces and no cost for workers. Lean expects to earn revenue through the fees associated with the movement of money via its platform, Joshi said. So far, the startup has inked deals with half a dozen marketplaces, and has another half a dozen in the works.
The company plans to use its new capital to expand its offering and continue to scale across marketplaces.
Mark Batsiyan, partner at Inspired Capital, says he was attracted to Lean because of the team, market timing and approach.
“There are huge market tailwinds to better serving gig workers, and marketplaces are increasingly searching for better ways to attract and retain their workers,” he wrote via email. “Also, Tilak [Joshi] came to a similar conclusion to us at Inspired: that marketplaces would not build these solutions themselves. They need an intermediary — like Lean — to make financial benefits a turnkey solution.”
Batsiyan also believes that Lean’s B2B2C approach is unique.
“As a platform, Lean can then leverage its partnerships to achieve much more efficient distribution to the end workers,” he said.
Buy now, pay later is officially everywhere, and Latin America is no exception.
Today, one startup in the region, Addi, is announcing a $75 million extension to its Series B, bringing the total round size to $140 million. In late May, the startup announced it had raised $35 million in an equity round led by Union Square’s Opportunity Fund, and $30 million in debt funding from Architect Capital.
The company, which has dual headquarters in Bogota, Colombia, and São Paulo, Brazil, declined to reveal its new valuation other than to say it is “nearly triple” what it was 90 days ago when it closed on the first tranche of its Series B, and that it is now in the “hundreds of millions” of dollars range.
New York-based Greycroft led the extension, which also included participation from new backers GGV Capital, Citius Capital and Intersection Growth Partners, as well as existing investors Union Square’s Opportunity Fund, Andreessen Horowitz, Endeavor Catalyst, Foundation Capital, Monashees and Quona Capital.
With the latest financing, Addi has now raised a total of $220 million in debt and equity since its September 2018 inception — $140 million of that in equity and over $80 million in debt.
Addi co-founder and CEO Santiago Suarez, says he, Daniel Vallejo and Elmer Ortega started the company with a vision of making digital commerce a reality in Latin America — a region where an estimated fewer than 25% of people have a credit card.
“To do this, we had to solve the payment problem,” he said. “We wanted to make frictionless payments possible while allowing customers to afford what they wanted.”
Addi started with a buy now, pay later offering, which allowed consumers to make purchases in minutes with “just a few clicks.” Today, the company allows customers to pay for their purchases over three months at no cost. For bigger purchases, Addi lets them pay for up to 24 months at what it describes as “competitive and fair rates.”
Addi is currently available for e-commerce, mobile and brick-and-mortar purchases in Brazil and Colombia, with plans to expand across Latin America in the coming years. In particular, it plans to enter the Mexican market in 2022.
Since the beginning of this year alone, Addi has grown its GMV (gross merchandise volume) by 13x, according to Suarez.
“And our ARR has seen similar growth,” he said.
Like many other companies, Addi temporarily saw a slowdown in business as a result of the COVID-19 pandemic. But it quickly bounced back.
“We lost 99% of our GMV in 20 days when the pandemic hit. We had to make some painful decisions, including letting go of many of our colleagues at a very difficult time,” Suarez recalled. “We also refocused the business on e-commerce and digital payments, and we haven’t looked back since then.”
As a result, Addi reached its pre-COVID high again in March/April of 2021, and has grown by about 3x since.
For now, the company is more focused on growth than profitability, Suarez added.
“This round has increased our focus on making digital commerce ubiquitous and accessible across Latin America,” he said.
Indeed, Latin America led the world in e-commerce sales growth last year. For its part, Addi currently has more than 150,000 customers, a number that is growing at 30% to 40% month over month. On the merchant side, it has close to 500 merchant partners, including brands such as Arturo Calle, Mario Hernandez, Keep Running and Claro. Earlier this year, it inked a strategic partnership with Banco Santander.
Addi currently has over 260 employees (or as Suarez put it, partners), up from less than 120 a year ago. The company prides itself as being “one of the few Latin American startups” that grants equity to everyone on staff.
“And we make it a point of speaking about partners and co-owners rather than employees,” Suarez told TechCrunch.
The company plans to use the new capital to speed up its product roadmap and geographic expansion. On the product side, it will be launching “a one-click checkout solution” for its merchant partners and customers by year’s end. Addi will also be accelerating its entry into Mexico, as mentioned previously, where it’s aiming to launch in early 2022.
Greycroft’s Thabet Mahayni said that prior to investing in Addi, his firm had been tracking the startup “for a long time.”
“In addition to an exceptional team, we believe the BNPL value proposition is stronger in LatAm than anywhere else in the world,” Mahayni told TechCrunch.” We…believe they have an opportunity to fundamentally reshape the entire consumer payments experience in the region.”
That is in part because currently, consumers in Latin America have very few alternatives when it comes to credit, he points out. Card penetration is very low and those who apply for credit “face a cumbersome and frustrating application process,” Mahayni added.
And those who do have credit cards are often given very low limits with high interest rates.
“It’s easy to see how this dynamic makes it difficult and expensive for consumers to access safe and reliable credit,” he said.
Addi, according to Mahayni, has “rebuilt the entire onboarding, underwriting and fraud stack so they can provide safer credit alternatives to consumers while enabling merchants to meaningfully increase their basket sizes and GMV.”
It’s the second LatAm investment for Greycroft, which previously invested in Rocket.chat, a Brazilian enterprise communication and collaboration platform.
In Mexico next year, Addi will join existing player, Nelo. That startup raised $3 million in April, and at the time, was live with more than 45 merchants and over 150,000 users. Also, Alchemy earlier this year entered the Mexican market.
Over 70% of Egypt’s young and fast-growing population of over 100 million is financially underserved despite mobile penetration exceeding 90%.
Traditional banks often overlook this segment because of their spending power or financial status and fintechs have seized the opportunity to cater to their needs.
One such fintech is MNT-Halan, and today, the company which describes itself as “Egypt’s leading fintech ecosystem” is announcing that it has closed a $120 million investment.
The investors backing MNT-Halan include private equity firms Apis Growth Fund II, Development Partners International (DPI), and Lorax Capital Partners; VCs like Venture Partners, Endeavor Catalyst, and DisruptTech.
They join previous local investors like GB Capital, DPI, Algebra Ventures, Wamda, Egypt Ventures, Shaka VC, Nowaisi Capital, Unidelta, Battery Road Digital Holdings that have backed the company in the past.
In 2017, Mounir Nakhla and Ahmed Mohsen started Halan as a ride-hailing and delivery app offering two and three-wheeler services to customers in Egypt. Since then, it has provided other features including wallets, bill payment services, e-commerce with buy now, pay later (BNPL), micro and consumer loans, all in a bid to become a super app.
Then in June this year, Netherlands-based MNT Investments BV entered a share swap agreement with the Egyptian super app to accelerate the progress of its payments and lending arm, especially in BNPL across Egypt and the MENA region.
Before the merger, MNT acquired the shares of Raseedy, the first independent and interoperable digital wallet in Egypt licensed by its Central Bank to disburse, collect and transfer money digitally through mobile applications.
As MNT-Halan, it has also obtained the micro, consumer, and nano finance licenses to provide services to both businesses and consumers across Egypt.
This has enabled the company to build a fintech ecosystem that connects consumers, merchants, and micro-enterprises via a digital platform and payment solutions.
As a business and consumer lender, MNT-Halan offers BNPL services, nano loans, microfinance, SME lending, payroll lending, and light-vehicle finance.
Its digital payments ecosystem provides services around loan disbursement and collection, peer-to-peer transfers, payroll disbursement, remittances, and bill payments.
Then in mobility, MNT-Halan provides courier, delivery, and ride-hailing services.
MNT-Halan claims to be Egypt’s largest and fastest-growing lender to the unbanked. Serving over 4 million customers in Egypt, of which 1 million are monthly active users, MNT-Halan has disbursed over $1.7 billion worth of loans to 1.8 million borrowers since inception. The company also claims to process $100 million monthly, growing 20x over the past five years.
The investment, a mixture of private equity and venture capital money, will help the company improve its technology and product while scaling to customers within and outside Egypt.
“We are at the forefront of the digital revolution sweeping across Egypt, bringing together the unbanked population with our technology. We are on track to bring financial inclusion to tens of millions of Egyptians. As a result, we will unleash this segment’s earnings potential and drive greater participation in the economy,” said CEO Nakhla.
One of its investors, Apis Growth Fund II, is a London-based private equity fund. It makes quasi-equity investments in the financial sector and related market infrastructure — payment gateways, switches, and payment platforms — in Africa and Asia.
MNT-Halan is its first landmark investment in Egypt but second on the continent after taking part in TymeBank’s $109 million investment in February this year.
The co-founders and managing partners Matteo Stefanel and Udayan Goyal said this in a statement, “We are thrilled to be investing in MNT-Halan, which is our first investment in Egypt. Our belief is that they will be the leading player digitizing the unbanked and bringing financial services to millions of underserved customers in the country.
“We look forward to partnering with them to extend their impressive growth trajectory and believe Mounir Nakhla’s track record, combined with MNT-Halan’s tech team and operational expertise, provide the ideal opportunity to invest in Egypt’s fintech sector.”
Prior to this news, Halan as an independent entity had raised $26.4 million, according to Crunchbase. This investment takes it to a combined total of $146.4 million, of which the latest is one of the largest raised in Africa this year and continues to prove the dominance of fintech on the continent.
PayPal Holdings, the U.S. fintech company, announced an acquisition of Paidy, a Japanese buy now, pay later (BNPL) service platform, for approximately $2.7 billion (300 billion yen), mostly in cash, to enhance its business in Japan.
The transaction completion including the regulatory approval is expected in the fourth quarter of 2021.
After the acquisition, the Japan-based company will continue to operate its existing business and maintain the brand while the leaders, Paidy’s president and CEO Riku Sugie and founder and executive chairman of Paidy Russel Cummer, keep their positions.
Japan is the third largest e-commerce market in the world, and so this is a significant move by PayPal to gain more market share both in the country and the region, specifically in the area of providing deferred payment services as an alternative to credit cards.
PayPal has long played nice with payment cards – users can upload details of their cards to PayPal and use it as a kind of digital wallet to manage how they pay for things online through it – but it got its start actually as a payment platform in itself, where people could pay into and out of PayPal accounts. Paidy is, in that sense, a strengthening of PayPal’s first-party rails, providing a way to ‘own’ that flow of money on its own infrastructure, not involving the card networks.
Paidy is basically a two-sided payments service, acting as a middleman between consumers and merchants in Japan. Using machine learning it determines the creditworthiness of a consumer related to a particular purchase, and then it underwrites those transactions in seconds, guaranteeing payments to merchants. Consumers then make deferred payment to Paidy for those goods.
Paidy’s platform, which offers a monthly payment installment service branded ‘3-Pay’, enables shoppers to make purchases online and then pay for them each month in a consolidated bill at a convenience store or via bank transfer.
“Paidy pioneered buy now, pay later solutions tailored to the Japanese market and quickly grew to become the leading service, developing a sizable two-sided platform of consumers and merchants,” said Peter Kenevan, vice president, head of Japan at Paypal.
Paidy has more than 6 million registered users, and the plan is to integrate PayPal and other digital and QR wallets with Paidy Link to connect further online and offline merchants.
In April 2021, the Japan-based company launched Paidy Link, allowing users to link digital wallets with their Payidy account. PayPal was the first digital wallet partner to integrate with Paidy Link.
“PayPal was a founding partner for Paidy Link and we look forward to looking together to create even more value,” Sugie said in a statement.
“Japan has been a vibrant environment for our growth to date and we’re honored to have our team’s hard work and potential recognized by a global leader. Together with Paypal, we will be able to further achieve our mission of taking the hassle out of shopping,” Cummer said.
Even as there are hundreds of millions of Indians who have bank accounts, only about 30 million of them have credit cards. The adoption rate of the plastic card has largely remained stagnant in the South Asian nation for the last few years.
The relatively young credit-rating system in India covers only a tiny fraction of the nation’s population. And banks neither have sophisticated underwriting systems nor the risk appetite to make any attempts to move the needle.
Slice, a Bangalore-based startup, believes it has found the solution. The startup, which has years of experience in issuing its cards to young professionals with no traditional jobs, said on Wednesday it’s launching a card with 2,000 Indian rupees ($27) as the default limit to tap the nation’s potential addressable market of 200 million individuals.
Rajan Bajaj, founder and chief executive of Slice, said the startup’s new credit limit card — considerably lower than industry’s lowest of about $270 — is aimed at those who don’t have a great credit score — or any score — and slowly help them build it.
The startup, which has been lately disbursing as many as 100,000 new super cards — its marquee offering — to users each month, is not charging any joining fee or annual fee with its new card and is offering the same benefits as its super card.
Bajaj said the startup is able to offer this card to users because it has spent years building its own credit underwriting system that supports this.
“In the last few years, we have actively invested in building a strong risk infrastructure by leveraging data science. Without robust risk management capabilities, it’s impossible to scale such a business and make such a truly inclusive product. But once the capability is built, no one can take the growth away from you. Currently, with a 50% m-o-m growth, our NPA is still less than 2%, a validation of our superior credit underwriting capabilities.”
Rajan said the startup arrived at the $27 figure because it believes this amount “still allows users to make meaningful transactions,” adding that by properly utilizing this limit and paying on time, users can instantly get approved for higher limits.
“We are confident this will encourage users to provide us with extra information that we need to increase their credit limit,” he told TechCrunch in an interview.
The startup, which raised $20 million in a financing round two months ago, is hoping to issue about 1 million of these new cards to users by the end of March next year.
It may raise more, soon. Investors are chasing the startup to finance a new round of about $100 million at a significantly higher valuation than that of its previous round. Rajan declined to comment on fundraise talks.
Francophone Africa has its first unicorn, and if you’ve been following tech on the continent, you will be very unsurprised to hear that it’s coming from the world of fintech.
Wave, a U.S. and Senegal-based mobile money provider, has raised $200 million in Series A round of funding. The investment is the largest-ever Series A round for the region, and it values Wave at $1.7 billion.
Four big-name backers jointly led the round — Sequoia Heritage, a private investment fund and a subsidiary of Sequoia; Founders Fund; payments upstart Stripe; and Ribbit Capital. Others in the round include existing investor Partech Africa and Sam Altman, the former CEO of Y Combinator and current CEO of OpenAI.
The mobile money market in sub-Saharan Africa is growing exponentially. This past year, up to $500 billion has moved through the accounts of 300 million active mobile money users in the region. But despite being one of the largest alternative financial infrastructures known globally, this represents only a fraction of the overall market.
The International Monetary Fund says that as of 2017, only 43% of adults in sub-Saharan Africa were “banked” by way of a traditional bank or mobile money account. When it comes to growing that proportion, however, mobile money — based on simpler technology and with an easier onboarding process — wins out, and it is set to capture more market share faster than traditional banking in the region. And this has investors, especially foreign ones, excited and looking to get on board.
(Neobanking, based on mobile technology too, falls somewhere in the middle of the two).
From Sendwave to Wave
If you’re wondering why you haven’t heard of Wave, the reason might be because you don’t know it’s a spinoff from Africa-focused remittance provider Sendwave.
Drew Durbin and Lincoln Quirk founded Sendwave in 2014 to offer little or no fee remittances from North America and Europe to select African and Asian countries. The YC-backed company became a WorldRemit subsidiary last year when the global fintech paid up to $500 million in cash and stock for Sendwave.
L-R: Drew Durbin and Lincoln Quirk
But before that, the team stealthily worked on a mobile money product described as having no account fees and “instantly available and accepted everywhere.”
In 2018, the product was piloted as Wave in Senegal but it was still within the Sendwave ecosystem. When WorldRemit acquired Sendwave, Durbin and his team turned their focus to Wave.
“We saw an opportunity to make a bigger impact by trying to build a better, much more affordable mobile money service than the telcos are building throughout much of sub-Saharan Africa,” Durbin told TechCrunch in an interview. “We didn’t see any companies besides the telcos trying to solve that problem.”
Going up against incumbents
Telecom operators and banks have been the early entrants in the mobile money space, not least because they control much of the infrastructure in the process, from having mobile subscribers using handsets on their networks through to building the financial services to manage money and payments at the back end, and everything in between.
Third-party providers, mostly fintechs, have tried to capture some market share from these incumbents. Wave, however, wants to disrupt it.
Durbin tells TechCrunch that unlike M-Pesa, the mobile payment provider led by Safaricom, and other products of telecom operators like Orange and Tigo, Wave is building a mobile money service that is “radically affordable.”
The Dakar-based platform is akin to PayPal (with mobile money accounts, not bank accounts) runs an agent network that uses their cash on hand to service Wave users. According to the company, users can make free deposits and withdrawals and charge a 1% fee whenever they send money.
Durbin says this is 70% cheaper than telecom-led mobile money and whenever there is a transfer problem, refunds are madeinstantly, unlike with incumbents where users might need to wait for some days.
Wave’s technology also differs from telecom-led mobile money. Whereas the incumbents mostly focus on USSD (although there are provisions to use applications), Wave is solely app-based. For users without a smartphone, Wave also provides a free QR-card to transact with an agent.
By building its own infrastructure full-stack — agent network, agent and consumer applications, QR cards, business collections, and disbursements — Wave has been able to fuel its growth to several million monthly active users and billions of dollars in annual volume.
Image Credits: Wave
The two-year-old startup claims to be the largest mobile money player in Senegal and that over half of the country’s adults are active users. That pegs the number of users between 4 million and 5 million, and Wave wants to replicate this growth in Ivory Coast, the second market it officially expanded to last year.
This sort of growth pressure on telecom operators. That has indeed been the case for the leading telecom operator in both regions, Orange. In June, the telecom operator stopped users in Senegal from purchasing Orange airtime via Wave’s mobile application.
Per this report, Wave argued that Orange was applying anti-competitive tactics by restricting it from selling directly or via an approved wholesaler. Orange said it had made proposals “in line with those offered to its other providers” and that Wave wanted special treatment.
To reach a fair decision, both parties are working with the regulatory body in charge, Regulatory Authority for Telecommunications and Posts (RATP). And if the regulator isn’t capable of settling the issue, BCEAO, the regional bank of Francophone countries, is the next in line to resolve the dispute.
According to Wave’s CEO, the bank’s regulatory approach is one reason why Wave has been able to take on the telecom operators in the first place. But among all the West African countries where mobile money is prevalent, why start with Senegal, an emerging market?
“Senegal is a big enough market that we would have to work really hard to potentially win the market. But also a small enough market that if we were doing well, we could win the market quicker than if we were in a giant country. And so that combination of those two things made it seem like a good place to start,” Durbin remarked.
Following this fundraise, Wave will deepen its presence in Senegal and Ivory Coast and grow its already 800-strong team across product, engineering, and business. In addition, Wave will expand into other markets it feels are regulatory-friendly like Uganda.
“I think there’s a pretty broad array of countries that have strong central banks and clear regulations are open to new players, or even want new players to come in and try to compete with the telcos. And so we have a lot of licenses that are in progress, and we’ll try to prioritize the countries where we’re able to get started sooner over the ones that it takes longer.”
A unicorn after two rounds
While some reports say Wave had raised $13.8 million prior to this, Durbin declined to comment on the figure when asked. However, he did mention that Partech, the French outfit with an African fund, invested in a seed round alongside other investors like Founders Fund and Stripe.
In addition to Sequoia and Sam Altman, the same crop of investors also participated in this monster Series A round.
In a market that has typically lacked innovation, Partech general partner Tidjane Deme says the investment will help Wave improve its service.
“Since 2018, we’ve supported Wave because we were convinced mobile money is still an unsolved problem in Africa,” he said in a statement. “Wave has great product design, stellar execution, and a strong financial trajectory. We are proud to see it become the first unicorn from Senegal.”
In May, Sequoia Capital invested in Egyptian fintech Telda, its first big deal on the continent. The Wave investment, meanwhile, is coming via subsidiary Sequoia Heritage and is the latter’s first investment in an Africa-focused startup.
In a call with TechCrunch, Altman said that Wave ticked the boxes he considers before an investment — strong founders, an important problem in a large market, working product, and traction.
“I’ve known these founders for a long time, and I think they’re like off the charts good. I’ve been super impressed with their ability to figure out what users want and how to grow,” he said. “I think the company is solving the most important problem around money transfer in Africa and fixing the inefficient agent networks.”
All these companies attained unicorn status following their respective rounds. The same goes for Wave but more spectacularly, considering the company bagged it in a Series A round, it’s transcending the region and is one of the largest A-rounds globally this year.
Wave joins OPay and Flutterwave as the newly minted unicorns in Africa this year — that is, startups valued above $1 billion — and the fourth African unicorn after Interswitch. Other billion-dollar companies include publicly traded Jumia and Egyptian fintech Fawry.
Funding rounds in Africa keep getting bigger and the continent has reached an inflection point. However, some skeptics have questioned the valuations of previous unicorns; Wave wouldn’t be an exception.
The argument would be around why Wave commands such a high valuation when for instance, two prominent telecom operators, Airtel and MTN, are looking to list their mobile money businesses between $2 to $6 billion despite being in the operations for several years across multiple African countries.
Yet like any investor optimistic about a portfolio company, Altman doesn’t believe Wave is overvalued. In fact, he thinks the company is undervalued.
“The opportunity in front of the company is massive. But plenty of times, I’ve gotten it wrong, so you never know. However, I have been fortunate to make a number of great investments and I feel Wave has as good of a shot as you can ask for,” he said. “Africa is going to be the fastest growing and most important market over the next coming decades for many companies. I think people are realizing how big the market opportunity is and how much value is going to be created and we’ll see a lot more things like this happen.”
BP Ventures, the investing arm of oil and gas giant BP, has announced a €10 million (~$11.9 million) investment in Ryd, a German in-car digital payments provider. The fresh funds will help Ryd expand its service into international markets and build out its offering, according to a statement.
Ryd’s service allows users to lump together online payments for services like fuel purchases, EV charging and car washing via the startup’s app or integration with smart car systems. BP already offers digital payment options in the UK and the Netherlands through its BPme app. As part of its investment and partnership with Ryd, the legacy company hopes to expand its digital offerings as it learns from the startup’s secure and flexible digital payment options. Ryd will get the benefit of scaling its technology to BP customers across Europe.
“In-car digital payments are an integral part of the seamless and convenient experience that customers increasingly expect at our retail sites,” Alex Jensen, bp’s senior vice president mobility and convenience, Europe and Southern Africa, said in a statement. “Ryd’s technology can help deliver just that, and for an increasing range of services.”
This isn’t the first bet BP is taking in the smart vehicle space, and it likely won’t be the last. In June, the firm also invested $7 million in IoTecha, a smart EV charging company that connects chargers with the electricity grid using IoT and automates charging payments. Strategic investments like these ultimately add to BP Ventures’s ecosystem which is designed to help BP reinvent itself as an integrated energy company, as well as help it reduce its carbon footprint.
Ryd is already accepted today at 3,000 partner service stations across seven countries, according to the company. It has 1.4 million direct customers, as well as access to up to 100 million additional customers through its partnerships with Mastercard and several car manufacturers. With the connected car data market expected to reach $19 billion globally by 2030, and the non-fuel retail sales market expected to reach $285 billion globally by the same year, the startup is now homing in on its strategy to integrate its tech into more vehicles.
“With Ryd we want to enable hassle-free and secure interactions with cars,” said Oliver Goetz, founder and chairman of Ryd, in a statement. “BP is the final piece to our puzzle and completes our ecosystem with strong strategic partners in all of our business areas: finance, automotive and energy. BP expects tens of millions of car drivers to move to direct digital payment systems, which are both connected to car data and to payment systems at gas stations and beyond. This new payment form is much faster, easier and more comfortable. Ryd is on its way to lead this movement in Europe.”
Ryd expects to go live at the first BP filling stations in the fourth quarter of 2021, according to Ryd’s CEO Sandra Dax.
TheCut, a technology platform designed to handle back-end operations for barbers, raised $4.5 million in new funding.
Nextgen Venture Partners led the round and was joined by Elevate Ventures, Singh Capital and Leadout Capital. The latest funding gives theCut $5.35 million in total funding since the company was founded in 2016, founder Obi Omile Jr. told TechCrunch.
Omile and Kush Patel created the mobile app that provides information and reviews on barbers for potential customers while also managing appointments, mobile payments and pricing on the back end for barbers.
“Kush and I both had terrible experiences with haircuts, and decided to build an app to help find good barbers,” Omile said. “We found there were great barbers, but no way to discover them. You can do a Google search, but it doesn’t list the individual barber. With theCut, you can discover an individual barber and discover if they are a great fit for you and won’t screw up your hair.”
The app also enables barbers, perhaps for the first time, to have a list of clients and keep notes and photos of hair styles, as well as track visits and spending. By providing payments, barbers can also leverage digital trends to provide additional services and extras to bring in more revenue. On the customer side, there is a search function with barber profile, photos of their work, ratings and reviews, a list of service offerings and pricing.
Omile said there are 400,000 to 600,000 barbers in the U.S., and it is one of the fastest-growth markets. As a result, the new funding will be used to hire additional talent, marketing and to grow the business across the country.
“We’ve gotten to a place where we are hitting our stride and seeing business catapulting, so we are in hiring mode,” he added.
Indeed, the company generated more than $500 million in revenue for barbers since its launch and is adding over 100,000 users each month. In addition, the app averages 1.5 million appointment bookings each month.
Next up, Omile wants to build out some new features like a digital store and the ability to process more physical payments by rolling out a card reader for in-person payments. TheCut will also focus on enabling barbers to have more personal relationships with their customers.
“We are building software to empower people to be the best version of themselves, in this case barbers,” he added. “The relationship with customers is an opportunity for the barber to make specific recommendations on products and create a grooming experience.”
As part of the investment, Leadout founder and managing partner Ali Rosenthal joined the company’s board of directors. She said Omile and Patel are the kind of founders that venture capitalists look for — experts in their markets and data-driven technologists.
“They had done so much with so little by the time we met them,” Rosenthal added. “They are creating a passionate community and set of modern, tech-driven features that are tailored to the needs of their customers.”
It’s a piece of news that once again highlights the hype around BNPL services and the quest for global dominance among the leading players.
This year we have covered BNPL services from the likes of Afterpay, Klarna and Affirm. And tech and payments giants Apple, Square, PayPal and Visa have joined in the action, too, massively funneling cash to their respective BNPL initiatives (for one, Square acquired Afterpay).
Australia, the U.K. and the U.S. are key markets for BNPL services. The U.S. market is so big that the number of BNPL service users is expected to hit 45 million by year’s end, representing an 81% growth from last year. But despite its Western focus, BNPL is exploding in other markets driven by a collective effort from local and global players.
Spotii isn’t the only acquisition Zip has made this past year. The Australian company also bought U.S.-based QuadPay and Twisto, a BNPL service in the Czech Republic, to expand footprints in both regions.
Payflex is the latest addition to that list. The company, founded in 2017, claims to be the first and largest BNPL player in South Africa with more than 1,000 merchants and 135,000 customers.Before fully acquiring Payflex, Zip had a 25% stake when it invested in the South African BNPL service six months ago.
Zip’s entry to Africa is important for several reasons. First, the continent is a largely untapped market that has enormous growth potential.
Credit appetite on the continent is very much in its infancy compared to Western markets, but it is growing rapidly. These days, people take loans to finance their needs at ridiculous interest rates while lending companies report low NPL ratios. Think of what happens when these consumers get a taste of low or no-interest alternative financing options that BNPL players like Zip provide: adoption rates will be off the charts.
Second, there’s a lack of infrastructure and BNPL innovation that only new entrants like Zip can execute because it has a large monetary chest.
And with the absence of credit cards and data on the continent, Zip can provide a competitive advantage with its technology, gather alternative data and build creditworthiness for customers in South Africa and other markets it plans to expand “with sizable underbanked, digitally savvy populations.”
Two of those markets are Egypt and Nigeria. If Zip expands to these regions, it will face competition from local players like Carbon, Shahry, M-Kopa, CredPal and CDCare, which are already pulling their weight. African e-commerce giant Jumia is also rumored to be revamping its BNPL service; it started one years ago but was discontinued after gaining little traction.
That said, Africa doesn’t have a concrete market leader yet since most of these products are yet to reach mass scale. On the other hand, Zip has been quite aggressive with its expansion into other markets — evident in some of its numbers.
The company currently serves 51,000 merchants and 7.3 million customers across 12 markets. This fiscal year, June 2021, a period when most of its acquisitions have occurred, Zip hit $5.8 billion in total transaction volume, up 176% year-over-year (YoY).
Zip numbers are impressive, but if there’s anything we’ve learnt from the BNPL business it’s that it isn’t a winner-takes-all market. If Zip makes significant headway and cracks the market, expect more global BNPL players to bring the heat. Also, local players will be encouraged to step up their game because global players have surplus cash to burn if they move into Africa, which is a win-win for the market.
Last summer, Jeeves was participating in Y Combinator’s summer batch as a fledgling fintech.
This June, the startup emerged from stealth with $31 million in equity and $100 million in debt financing.
Today, the company, which is building an “all-in-one expense management platform” for global startups, is announcing that it has raised a $57 million Series B at a $500 million valuation. That’s up from a valuation of just north of $100 million at the time of Jeeves’ Series A, which closed in May and was announced in early June.
While the pace of funding these days is unlike most of us have ever seen before, it’s pretty remarkable that Jeeves essentially signed the term sheet for its Series B just two months after closing on its Series A. It’s also notable that just one year ago, it was wrapping up a YC cohort.
Jeeves was not necessarily looking to raise so soon, but fueled by its growth in revenue and spend after its Series A, which was led by Andreessen Horowitz (a16z), the company was approached by dozens of potential investors and offered multiple term sheets, according to CEO and co-founder Dileep Thazhmon. Jeeves moved forward with CRV, which had been interested since the A and built a relationship with Thazhmon, so it could further accelerate growth and launch in more countries, he said.
CRV led the Series B round, which also included participation from Tencent, Silicon Valley Bank, Alkeon Capital Management, Soros Fund Management and a high-profile group of angel investors including NBA stars Kevin Durant and Andre Iguodala, Odell Beckham Jr. and The Chainsmokers. Notably, the founders of a dozen unicorn companies also put money in the Series B including (but not limited to) Clip CEO Adolfo Babatz; QuintoAndar CEO Gabriel Braga; Uala CEO Pierpaolo Barbieri, BlockFi CEO Zac Prince; Mercury CEO Immad Akhund; Bitso founder Pablo Gonzalez; Monzo Bank’s Tom Blomfield; Intercom founder Des Traynor; Lithic CEO Bo Jiang as well as founders from UiPath, Auth0, GoCardless, Nubank, Rappi, Kavak and others.
The “fully remote” Jeeves describes itself as the first “cross country, cross currency” expense management platform. The startup’s offering was live in Mexico and Canada and today launched in Colombia, the United Kingdom and Europe as a whole.
Thazhmon and Sherwin Gandhi founded Jeeves last year under the premise that startups have traditionally had to rely on financial infrastructure that is local and country-specific. For example, a company with employees in Mexico and Colombia would require multiple vendors to cover its finance function in each country — a corporate card in Mexico and one in Colombia and another vendor for cross-border payments.
Jeeves claims that by using its platform’s proprietary Banking-as-a-Service infrastructure, any company can spin up their finance function “in minutes” and get access to 30 days of credit on a true corporate card (with 4% cash back), non card payment rails, as well as cross-border payments. Customers can also pay back in multiple currencies, reducing FX (foreign transaction) fees.
For example, a growing business can use a Jeeves card in Barcelona and pay it back in euros and use the same card in Mexico and pay it back in pesos, reducing any FX fees and providing instant spend reconciliation across currencies.
Thazhmon believes that the “biggest thing” the company is building out is its own global BaaS layer, that sits across different banking entities in each country, and onto which the end user customer-facing Jeeves app plugs into.
Put simply, he said, “think of it as a BaaS platform, but with only one app — the Jeeves app — plugged into it.”
Image Credits: Jeeves
The startup has grown its transaction volume (GTV) by more than 5,000% since January, and both revenue and spend volume has increased more than 1,100% (11x) since its Series A earlier this year, according to Thazhmon.
Jeeves now covers more than 12 currencies and 10 countries across three continents. Mexico is its largest market. Jeeves is currently beta testing in Brazil and Chile and Thazhmon expects that by year’s end, it will be live in all of North America and Europe. Next year, it’s eyeing the Asian market, and Tencent should be able to help with that strategically, he said.
“We’re building an all-in-one expense management platform for startups in LatAm and global markets — cash, corporate cards, cross-border — all run on our own infrastructure,” Thazhmon told TechCrunch. “Our model is very similar to that of Uber’s launch model where we can launch very quickly because we don’t have to rebuild an entire infrastructure. When we launch in countries, we actually don’t have to rebuild a stack.”
Jeeves’ user base has been doubling every 60 days and now powers more than 1,000 companies across LatAm, Canada and Europe, including Bitso, Kavak, RappiPay, Belvo, Runa, Moons, Convictional, Muncher, Juniper, Trienta, Platzi, Worky and others, according to Thazhmon. The company says it has a current waitlist of over 15,000.
Jeeves plans to use its new capital toward its launch in Colombia, the U.K. and Europe. And, of course, toward more hiring. It’s already doubled its number of employees to 55 over the past month.
Former a16z partner Matt Hafemeister was so impressed with what Jeeves is building that in August he left the venture capital firm to join the startup as its head of growth. In working with the founders as an investor, he concluded that they ranked “among the best founders in fintech” he’d ever interacted with.
The decision to leave a16z also related to Jeeves’ inflection point, Hafemeister said. The startup is nearly doubling every month, and had already eclipsed year-end goals on revenue by mid-year.
“It is evident Jeeves has found early product market fit and, given the speed of execution, I see Jeeves establishing itself as one of the most important fintech companies in the next few years,” Hafemeister told TechCrunch. “The company is transitioning from a seed company to a Series B company very quickly, and being able to help operationalize processes and play a role in their growth and maturity is an incredible opportunity for me.”
CRV General Partner Saar Gur (who is also an early investor in DoorDash, Patreon and Mercury) said he was blown away by Jeeves’ growth and how it has been “consistently hitting and exceeding targets month over month.” Plus, early feedback from customers has been overwhelmingly positive, Gur said.
“Jeeves is building products and infrastructure that are very difficult to execute but by doing the ‘hard things’ they offer incredible value to their customers,” he told TechCrunch. “We haven’t seen anyone build from the ground up with global operations in mind on day one.”
Over the previous two or three years we’ve seen an explosion of new debit and credit card products come to market from consumer and B2B fintech startups, as well as companies that we might not traditionally think of as players in the financial services industry.
On the consumer side, that means companies like Venmo or PayPal offering debit cards as a new way for users to spend funds in their accounts. In the B2B space, the availability of corporate card issuing by startups like Brex and Ramp has ushered in new expense and spend management options. And then there is the growth of branded credit and debit cards among brands and sports teams.
But if your company somehow hasn’t yet found its way to launch a debit or credit card, we have good news: It’s easier than ever to do so and there’s actual money to be made. Just know that if you do, you’ve got plenty of competition and that actual customer usage will probably depend on how sticky your service is and how valuable the rewards are that you offer to your most active users.
To learn more about launching a card product, TechCrunch spoke with executives from Marqeta, Expensify, Synctera and Cardless about the pros and cons of launching a card product. So without further ado, here are all the reasons you should think about doing so, and one big reason why you might not want to.
Because it’s (relatively) easy
Probably the biggest reason we’ve seen so many new fintech and non-fintech companies rush to offer debit and credit cards to customers is simply that it’s easier than ever for them to do so. The launch and success of businesses like Marqeta has made card issuance by API developer friendly, which lowered the barrier to entry significantly over the last half-decade.
“The reason why this is happening is because the ‘fintech 1.0 infrastructure’ has succeeded,” Salman Syed, Marqeta’s SVP and GM of North America, said. “When you’ve got companies like [ours] out there, it’s just gotten a lot easier to be able to put a card product out.”
While noting that there have been good options for card issuance and payment processing for at least the last five or six years, Expensify Chief Operating Officer Anu Muralidharan said that a proliferation of technical resources for other pieces of fintech infrastructure has made the process of greenlighting a card offering much easier over the years.
Itamar Jobani was a software developer working for a medical company and “hated that time of the month” when he had to use the company’s chosen reimbursement tool.
“It was full of friction and as part of the company’s wellness team, I felt an urge to take care of the employee experience and find a better tool,” Jobani told TechCrunch. “I looked for something, but didn’t find it, so I tried to build it myself.”
What resulted was PayEm, an Israeli company he founded with Omer Rimoch in 2019 to be a spend and procurement platform for high-growth and multinational organizations. Today, it announced $27 million in funding that includes $7 million in seed funding, led by Pitango First and NFX, with participation by LocalGlobe and Fresh Fund, as well as $20 million in Series A funding led by Glilot+.
The company’s technology automates the reimbursement, procurement, accounts payable and credit card workflows to manage all of the requests and invoices, while also creating bills and sending payments to over 200 territories in 130 currencies.
It gives company finance teams a real-time look at what items employees are asking for funds to buy, and what is actually being spent. For example, teams can submit a request and go through an approval flow that can be customized with purchasing codes tied to a description of the transaction. At the same time, all transactions are continuously reconciled versus having to spend hours at the end of the month going through paperwork.
“Organizations are running in a more democratized way with teams buying things on behalf of the organization,” Jobani said. “We built a platform to cater to those needs, so it’s like a disbursement platform instead of a finance team always being in charge.”
Meanwhile, PayEm itself saw accelerated growth in the second quarter of 2021, including increasing its transaction volume by four times over the previous quarter and generating millions of dollars in revenue. It now boasts a list of hundreds of customers like Fiverr, JFrog and Next Insurance. It also launched new features like the ability to create corporate cards.
The company, which also has an office in New York, has 40 employees currently, and the new funds will enable the company to triple its headcount, focusing on hiring in the United States, and to bring additional features and payment capabilities to market.
“Each person can have a budget and a time frame for making the purchase, while accounting still feels in control,” Jobani added. “Everyone now has the full context and the right budget line item.”
Square’s popular free invoicing software is becoming the company’s next big subscription service. The company is poised to announced a paid subscription offering called Invoices Plus, which will offer sellers a set of advanced features, including some that had previously been available with the free service. The service itself had been quietly introduced to individual sellers, but has not yet been publicly announced.
Some sellers who were already using Square Invoices were recently alerted to the upcoming changes via email.
In the announcement shared with some sellers (the details of which can also be viewed here on a Square Seller Community forum), the new subscription will include a series of features that were released in the past year as part of a limited trial.
This includes multi-page estimates, custom invoice templates, and custom invoice fields. These will now become a part of Invoices Plus, as will two other features: the ability to automatically convert accepted estimates to invoices and the ability to build milestone-based schedules (three-plus installment invoices). Square’s announcement said it will introduce a “trial” button next to these features in the Square Invoices software to alert customers to the upcoming capabilities. (see below)
Image Credits: Square website
Square’s free invoicing software will not go away, the announcement noted. Sellers will be able to send unlimited invoices for free, as well as estimates and contracts, with the free plan. Free users will also be able to use invoice tracking, reminders and reporting tools.
The free plan has historically relied on processing fees to generate revenue. At present, this is 2.9% + $0.30 per invoice paid online by check or debit card plus a 1% fee per ACH transaction, per Square’s website. (Fees are slightly lower on in-person transactions and slightly higher for “card on file” transactions.) Pricing for the new, paid subscription has not yet been publicly announced.
A Square employee had explained the reasoning behind the change on the community forum site. They noted that many of Square’s other products — like Square Online, Appointments, Square for Retail, and Square for Restaurants — also offer both a free and paid tier. And although Square charges processing fees for Square Invoices, they aren’t enough to fuel its product development. With Invoices Plus, they said, the company aims to compete more directly with paid invoicing apps and products and the more advanced features those products offer.
Reached for comment, Square confirmed to TechCrunch Invoices Plus is a software subscription the company plans to announce shortly. But the company didn’t want to share more details until the news is official.
References to the new subscription have also already made their way to the Square app’s code, where they were spotted by iOS developer Steve Moser. The code indicates users who previously used some of the paid-only features will be able to still use them for the time being. But as the announcement had also noted, sellers would not be able to use the paid features for free the next time they’re creating new files with Square Invoices.
Image Credits: Steve Moser
The new service arrives shortly after Square announced earnings, where it noted its seller business brought in $1.31 billion in revenue (out of the total of $4.68 billion) and $585 million of gross profit in the second quarter, driven in part by continued strong online growth. The company also announced its plan to acquire the buy now, pay later giant Afterpay in a $29 billion deal, speaking to its interest in chasing the broader payments market. The deal also offers Square a way to connect its different products, by allowing Afterpay customers to pay their monthly installments through Square’s Cash App, the company said.
An integration between Square and Afterpay is something that could be seen further down the road, as well, one could imagine. That’s something Square also hinted towards in a response to another seller on its community forum site, where a rep updated an older answer to share news of the acquisition, adding Square didn’t “have integration timelines to share at the moment.”
Welcome back to This Week in Apps, the weekly TechCrunch series that recaps the latest in mobile OS news, mobile applications and the overall app economy.
The app industry continues to grow, with a record 218 billion downloads and $143 billion in global consumer spend in 2020. Consumers last year also spent 3.5 trillion minutes using apps on Android devices alone. And in the U.S., app usage surged ahead of the time spent watching live TV. Currently, the average American watches 3.7 hours of live TV per day, but now spends four hours per day on their mobile devices.
Apps aren’t just a way to pass idle hours — they’re also a big business. In 2019, mobile-first companies had a combined $544 billion valuation, 6.5x higher than those without a mobile focus. In 2020, investors poured $73 billion in capital into mobile companies — a figure that’s up 27% year-over-year.
This Week in Apps offers a way to keep up with this fast-moving industry in one place with the latest from the world of apps, including news, updates, startup fundings, mergers and acquisitions, and suggestions about new apps and games to try, too.
Changes to the App Store ecosystem dominated the headlines this week. In South Korea, legislators areset to vote on a landmark bill that could end Apple and Google’s payment exclusivity on their app stores. Meanwhile, Apple dropped commissions to 15% for news publishers’ apps, if they agree to participate in the Apple News ecosystem. Apple also agreed to settle a class-action lawsuit from U.S. app developers that, pending court approval, will introduce a few changes to App Store rules — the most notable being that it allows developers to communicate with their users outside of their iOS apps to tell them about other purchase options.
Top Story: The App Store settlement underwhelms
Image Credits: TechCrunch
As it turns out, this App Store settlement agreement isn’t really as earth-shattering as some headlines may have made it seem. For starters, Apple had already slightly adjusted its App Store policies in June when it clarified developers were allowed to communicate through email and text with their customers about other purchasing methods besides Apple’s own in-app purchases. But this was only permitted if developers weren’t using contact information obtained from within the app. With the new settlement, that changes a bit.
Developers can now take the smallest of steps forward as they are allowed to inform users — well, users who have consented to receive offers via email or other communications — about alternative methods of payment besides in-app purchases. That means developers will also have to collect users’ contact information from their app where users may already be logging in using third-party credentials like Facebook’s, Google’s or even Apple’s own sign-on systems. (Apple’s system, of course, has an option to hide your email address from developers. Wow, someone was thinking ahead there!)
But this change wasn’t what developers want. They actually want to point users from inside their app to their website where they could market their own payment and subscription options — possibly even at a reduced rate since they wouldn’t have to share a commission with Apple. Even if Apple allowed this more permissive action, it’s likely many consumers would continue to use in-app purchases for the sake of convenience. The real concern on Apple’s part is that such a change could redirect significant income from the App Store’s biggest moneymakers, like games, to payment systems outside the App Store.
The settlement agreement proposes other changes as well, such as the expansion of price points from fewer than 100 to more than 500. Apple also agreed to publish a transparency report on the App Review process. (This could potentially be an even bigger deal than the App Store rule changes, as it could push Apple to address some of the outstanding issues with erroneous rejections, app scams and delays.) And Apple said it would establish a $100 million fund for U.S. developers less than $1 million per calendar year, which will pay out in a range of $250 to $30,000, depending on the size of the developers’ app business.
Developer responses to the settlement
Image Credits: Apple
Apple put out the news of the settlement in its usual style of a polished press release, albeit one buried late on a Thursday night with reporter briefings scheduled for hours where they could easily get missed. Apple, in its release, touted the “even better business opportunity” this represented for developers whose feedback it “appreciates” and whose “ideas… helped inform the agreement.”
We wanted to hear what developers thought about this change. Here’s a sampling of feedback from the community:
“I just keep praying Apple will wake up and change the rules themselves but today wasn’t that day. Its not a great idea to let 70-year-old bureaucrats who get tech support from their grandkids write technology ecosystem law. I just have to believe Apple is realizing this is a ticking time bomb – they have to change it themselves, or we’ll all pay the consequences for years to come. There’s real resentment building the way Apple PR keeps basically gaslighting us. Anyone who can read critically can immediately tell there’s zero substance to this announcement. They need to step up and make changes before courts do it for them.”
“On the face of it, it doesn’t seem like the announcements are particularly significant for us. It’s mainly clarification on existing rules that were already in place. It’s still not permitted to link within your app to an alternative payment mechanism, but you can at least email the customer to tell them about it, if they have opted-in. It’s not 100% clear to me that wasn’t allowed in the first place. The developer fund is also U.S. only, so that doesn’t help us. Overall, I don’t see this doing very much to change the opinion of those calling for antitrust legislation.”
“Apple has made zero concessions in this settlement. App Store search and discovery are still terrible, developers still can’t reference outside payment methods within their apps, and App Review is still a needlessly draconian process that discourages innovation and punishes good actors while letting scams run rampant. The ‘Small Developer Assistance Fund’ is nothing more than payouts to class members as a form of self-punishment. Nothing about this is good for developers, or consumers.”
“…The trophy of this settlement, as presented in the press, is supposedly that developers can now tell their customers where to buy services outside the app. Except no, that’s not actually what’s happening! Apple is simply ‘clarifying’ that companies can send an email to their customers, if they’ve gotten permission to do so, on an opt-in basis. That email may include information about how to buy outside the app. So the steering provisions of the App Store, that developers are not allowed to tell users inside their app or on the signup screen about other purchasing choices than IAP – the only places that actually matter! – is being cemented with this ‘clarification.’ It draws a thicker line, asserts Apple’s right to steer in the first place, and offers the meaningless concession of opt-in email, which was something developers had already been doing.”
“Apple’s draconian anti-steering provisions remain in place just as before. This settlement is a meaningless concession for developers who all see what PR game Apple is playing. And Apple labelling the restitution they’ve agreed to pay as an ‘assistance’ fund is deceitful and shameful: Developers aren’t asking for help, they are asking for fairness.”
Jacob Eiting, CEO of RevenueCat, which offers app developers a suite of tools for their subscription-based apps:
“The changes proposed in the settlement are largely a repackaging of existing work Apple has done, a much smaller change than it seemed from Apple’s press release. They are rolling back one recently enacted anti-steering rule, but leaving all other anti-steering rules in place. The settlement also puts into place commitments to programs that most likely weren’t going anywhere anyway. They’ve also agreed to pay out $100M to small developers as a settlement, acting as if it’s some magnanimous gesture. However, it’s in exchange for developers waiving any claims of unfairness in Apple’s fees for the last 6 years. Seeing how good Apple has gotten at patting themselves on the back, this will likely be dragged out any time Apple needs evidence of developer friendliness for years to come.”
“To me, there weren’t any real changes that matter. These are mostly clarifications of existing rules or statements. The pledge to keep the Small Business program is nice, but no one expected that to go away. Keeping App Store search the same was a near guarantee previously. The only real change is introducing more pricing points that I cannot see helping developers in a huge way in the immediate future. The $100 million fund is a lawsuit settlement, not Apple being generous to help developers. I find the PR spin on these ‘changes’ to be disingenuous. They aren’t fixing the core problems with the App Store that small or large developers face when they are simply trying to ship products to their customers.”
CAF, a nonprofit representing developers including Epic Games, Spotify, Tile and dozens of others pushing for regulation of app stores:
“Apple’s sham settlement offer is nothing more than a desperate attempt to avoid the judgment of courts, regulators, and legislators worldwide. This offer does nothing to address the structural, foundational problems facing all developers, large and small, undermining innovation and competition in the app ecosystem. Allowing developers to communicate with their customers about lower prices outside of their apps is not a concession and further highlights Apple’s total control over the app marketplace. If this settlement is approved, app makers will still be barred from communicating about lower prices or offering competing payment options within their apps. We will not be appeased by empty gestures and will continue our fight for fair and open digital platforms.”
“Nothing changed. You were always able to write whatever you wanted in your emails or website. They still are not letting you link to or mention an alternate payment processor inside your app. It’s a weird news story because it made me hopeful when I saw the headlines but nothing had actually happened.”
Overall, it’s seems developers aren’t impressed with this minor concession and it doesn’t seem this settlement will do anything to stop the push for increased App Store legislations.
Apple Platform Updates
Apple released the seventh developer betas for iOS 15 and iPadOS 15 as well as watchOS 8 and tvOS 15. Among the notable changes, Apple announced its new serviceiCloud Private Relay would now be introduced as a public beta to gather more feedback instead of being enabled by default as part of the iCloud+ subscription service. The release notes indicate some websites still have issues with the feature, including showing content for the wrong region or requiring extra steps to sign in.
Apple released a beta version of its TestFlight app testing platform to Mac developers for the first time. The beta only worked on macOS Monterey beta 5, which came out on August 10.
Apple also released an update to the App Store Connect app, which now allows developers to create multiple TestFlight internal tester groups and configure build access for each one.
Apple notified developers that local regulatory changes will require them to add the bank account holder’s address in App Store Connect, which must be done by October 22, 2021 in order to avoid an interruption in payments.
Apple launched a new iOS app called “Siri Speech Study” to gather feedback for Siri improvements. The unlisted app was only open to invited participants who choose to share to Apple when Siri gets one of their requests wrong.
Image Credits: App Store screenshot
Google Platform Updates
Google announced a change in how ratings and reviews on Google Play will appear to end users. Developers had complained how negative feedback that only affected users in one region could have brought down the rating for all. To address this, starting in November 2021, users on phones will only see ratings specific to their registered country. Then, in early 2022, users on other devices like tablets, Chromebooks and wearables, will see ratings that are only specific to the devices they’re on. Google says changes are rolling out to the Google Play Console which will help developers prepare for the changes, including dimensions like “Device Type” dimensions.
Shopify and TikTok for business with TikTok image of Kylie Jenner. Image Credits: Shopify
TikTok and Shopify announced an expansion of their existing partnership to launch a pilot test of “TikTok Shopping” in the U.S., U.K. and Canada. The new service allows Shopify merchants with a TikTok For Business account to add a new “Shopping” tab to their TikTok profiles and sync their product catalogs to create mini-storefronts on their profile. They’ll also be able to tag products with links in videos. When viewers click to purchase, they’re redirected to the Shopify merchant’s website to complete the transaction.
Instagram introduced ads on the Instagram Shop tab globally, rolling them out to all countries where the tab is available. Previously, the ads were tested only in the U.S.
TikTok is building its own AR development platform, which was spotted on a website called TikTok Effect House. The company confirmed the creative toolset is in private beta testing, but characterized it as an early experiment.
WhatsApp Pay will get more prominent placement in the messaging app. Changes spotted in testing show the WhatsApp Pay shortcut button in between the sticker and camera buttons, making it easier to access.
OnlyFans flip-flopped on its porn ban. Initially, the company said it would ban sexually explicit content on its platform as of October 1 — a decision that was met with much criticism from the sex worker community who relied on the platform for their income. Creators also said they had received no heads-up from the company, which gave them less time to prepare. OnlyFans, meanwhile, blamed its original decision on pressure from banking partners and payout providers. Now, it’s saying it has received “assurances” from these partners that will allow its business to continue as usual. But the situation may have burned up creator goodwill, and some may now choose to move their businesses elsewhere.
Image Credits: Snap Camera Shortcuts
Snapchat on Thursday upgraded its two-year-old “Scan” feature which lets people use Snap’s Camera to explore the world around them. The new generation of Scan, which was relocated to be front-and-center in the Snapchat app, will now offer suggestions of different ways to use the Camera, including Camera Shortcuts and shopping features. Camera Shortcuts help people capture a moment by suggesting things like camera modes, Lenses and soundtracks relevant to what is seen through the Camera. Over time, Snap will introduce more Shortcuts, including those for its short-form TikTok competitor, Spotlight. With the update, users can now also tap into their screenshots of items they wanted to buy, then use Scan to find and purchase those outfits through Memories. For instance, you can scan a friend’s outfit then use Screenshop to find similar looks across brands. You can also use Scan with food and ingredients at home to get recipe suggestions. Snap says it sees potential for Scan not only on mobile, but also in its next generation of Spectacles glasses.
Image Credits: Snap Screenshot
Instagram head Adam Mosseri announced changes to the app’s search feature on Wednesday. The changes will more prominently feature photos and videos in search results, alongside accounts and hashtags. The move makes Instagram search work more like TikTok’s.
Instagram is also ditching the “swipe up” links in Instagram Stories in favor of Link Stickers, starting on August 30. The feature will be available to businesses and creators who are either verified or who have met the threshold for follower count, commonly said to be at least 10,000.
TikTok is testing an extended video upload limit of five minutes or more. Some users have gained the ability to upload videos as long as 10 minutes, which indicates TikTok is experimenting with different lengths to gain feedback. The app in December introduced longer videos for the first time with the support for the three-minute video.
Image Credits: Messenger
Facebook celebrated Messenger’s 10th anniversary with new features that included games, effects, contact sharing and more. The company also confirmed it’s testing an integration that brings Messenger back into the Facebook mobile app, saying that it would give users an easy way to connect with people from where they already are. The company now sees Messenger more as the underlying “connective tissue” between its services, including one day, the metaverse.
WhatsApp is working on message reactions, according to a leak from WABetaInfo, which keeps tabs on the app’s newest features. Users who aren’t on the supported version would receive a message telling them to update their app in order to gain the ability to see the message reactions (emoji) that others had sent. It’s not yet known which emoji will be offered as a part of the new feature.
Streaming & Entertainment
Image Credits: Movies Anywhere
Digital locker app Movies Anywhere added a new feature that organizes users’ movie libraries into algorithmically generated lists, giving you an easier way to browse your collection by factors like genre, theme, actors, franchise and more.
YouTube is rolling out picture-and-picture viewing for all U.S. iPhone users, starting with its Premium subscribers. The feature will allow users to watch videos in a mini player while browsing other apps on their iPhone.
YouTube Music finally gets a WearOS version, but only for Samsung’s newest watches — the Galaxy Watch 4 or Galaxy Watch 4 Classic. The watches become available on August 27. Google didn’t say when the app will come to other WearOS devices.
Spotify’s Podcasts Subscriptions service opened to all U.S. creators. Using the Anchor app, creators can mark select episodes as subscriber-only content, then publish them to Spotify and other platforms. Since its launch, more than 100 podcasts have adopted subscriptions. The company also expanded the array of price points from three to 20 options to meet creators’ needs.
Clubhouse hid the account bios and images of its Afghan users in wake of the Taliban takeover of the country. The change impacted tens of thousands of users, but can be reversed if the user chooses.
Image Credits: Netflix
Netflix began testing mobile games in its Android app in Poland. The streamer, which said recently it would be expanding further into the mobile gaming market, said Poland was a good fit for the initial test because of its active mobile gamer community. The test will see listings for two “Stranger Things”-themed games inside the Netflix app, which direct members to the Google Play store to download. The games then require users’ Netflix credentials to start playing.
After backlash from its community, Niantic reinstated the COVID safety and accessibility features it had launched in Pokémon GO during the pandemic, then later removed when it looked like things were getting back to normal (before the Delta surge). It’s unclear why Niantic believed it was the right time to pull the features, which allowed users to social distance while gaming, as they hadn’t impacted game revenues — 2020 was the game’s best ever year to date, earning the AR title over $1 billion.
China’s largest indie game distributor, XD Inc., is planning to introduce its commission-free app store, TapTap, to global markets,Bloomberg reported. The company, which is backed by TikTok owner ByteDance and Alibaba, publishes its own titles to draw users to its app store. But shares of XD have fallen 60% since February over investor concerns about a model that relies on ads instead of commissions.
Health & Fitness
Image Credits: Sensor Tower
Amid the Delta surge, downloads for the two top COVID-19 home testing apps in the U.S., BinaxNOW and Ellume, have spiked 134% month-over-month so far in August, after seeing 107% growth in July, according to Sensor Tower.
Very few people used the COVID-19 apps powered by Apple and Google’s API in the U.S., an Insider investigation found. Only 2.14% of possible COVID cases were recorded in exposure notification apps across 26 U.S. states. The problem was likely hampered by the fact that launching apps was left up to individual states, instead of being a national effort as with the contact tracing apps built using the API in other markets. Less than half of U.S. states chose not to even build an app in the first place, limiting the tools’ reach further.
Google pulled the plug on Streams, a U.K.-based clinician support app which was developed back in 2015 by DeepMind, an AI division of Google. The app had been used by the U.K.’s National Health Service, with a number of NHS Trusts inking deals with DeepMind Health, including London’s Royal Free and Taunton & Somerset. Google says the patient data the app processed will be deleted.
Israel-based air quality measurement service BreezoMeter, which helps power Apple’s Weather app, introduced a new product, Wildfire Tracker. The feature can identify the edges of wildfires in real time using a combination of sensor data, satellite imagery and local eyewitness reports.
A reference to Peloton’s unannounced rowing machine was discovered in its app’s code. The code also suggested the app would track things like average and max stroke rates.
Google is shutting down its Android Auto mobile app, aka “Android Auto for Phone Screens,” starting with Android 12. The company said Google Assistant driving mode will be the built-in mobile driving experience going forward.
Telsa released a redesigned iPhone app in its biggest update in many months. The app features new controls, improvement management, new visuals and the choice between two differently sized widgets for your home screen. Among the new features is the ability to now send commands to your car immediately instead of waiting for the vehicle to wake up.
Electrify America launched CarPlay and Android Auto apps for finding the nearest EV charging stations across the U.S. Electrify America operates over 650 stations with 2,700 chargers total.
Image Credits: Edison
Edison’s new email service OnMail has launched a new feature that gives you a break from receiving emails for a temporary period of time or schedule you designate. The “Inbox Break” option lets you pick which accounts to pause and optionally set away messages that automatically reply to emails while you’re on a break.
Microsoft confirmed it would next month begin to transition its Android-based Office apps running on Chromebooks to web apps instead. “In an effort to provide the most optimized experience for Chrome OS/Chromebook customers, Microsoft apps (Office and Outlook) will be transitioned to web experiences (Office.com and Outlook.com) on September 18, 2021. This transition brings Chrome OS/Chromebook customers access to additional and premium features,” a spokesperson said.
Apple Maps expanded its native ratings and photos feature in the U.S. The feature, first introduced in iOS 14, allows users to review places like restaurants, shops and other businesses. In iOS 15, users can also thumb up and down specific factors like food, customer service, atmosphere and more, and can upload photos of their own to the listing.
Google Maps is working to add toll prices to help users price their rides. A similar feature is already available in Google’s Waze app.
Government & Policy
Image Credits: TechCrunch
South Korea delayed the vote on a landmark bill that would prevent Apple and Google from forcibly charging commissions on in-app purchases within apps. If approved, developers would be able to offer alternative payment systems inside their apps. The bill, the first of its kind globally, was supposed to see a final vote on Wed., August 25, but was tentatively delayed until August 30, according to media reports. Apple has pushed back on the bill saying it will put users at risk of fraud and privacy violations.
Chinese regulator, the Cyberspace Administration of China (CAC), on Friday proposed new guidelines that aim to forbid companies from deploying algorithms that “encourage addiction or high consumption” and endanger national security or disrupt the public order. Services also can’t create fake accounts or create other false impressions. And users will be able to turn off algorithmic recommendations. The rules appear to target companies like ByteDance, Alibaba Group, Tencent, Didi and others whose services have been built on top of proprietary algorithms. CAC will take public feedback about the guidelines through September 26.
Security & Privacy
A report from MDM company Jamf uncovered the most commonly requested iOS permissions by analyzing a sample of nearly 100,000 apps from 2.5 million Wandera customers. The most common were Photos, Camera, Location and Microphone access, it found.
An investigation by the Tech Transparency Project (TTP) found holes in the App Store’s child safety measures, noting it was too easy for kids and teens to access adult apps, due to lack of protections built into the apps themselves. However, the study didn’t enable parental controls which is the tools parents would presumably use to keep kids from accessing adult apps.
Funding and M&A
Design and editing app Picsart raised $130 million Series C led by Softbank with participation from Sequoia, GSquared, Tribe Capital, Graph Ventures and Siguler Guff & Company. The round values Picsart at a near $1.5 billion valuation. The app has over 1 billion installs across 180 countries and more than 150 million MAUs.
Mexican fintech Flink raised a $57 million Series B round of funding led by Lightspeed Venture Partners. The app allows consumers to participate in the stock market, and has grown to 1.6 million users, 85% of whom are first-time investors.
African mobile payments platform OPay raised $400 million in funding led by SoftBank Vision Fund 2, with participation from existing investors Sequoia Capital China, Redpoint China, Source Code Capital and Softbank Ventures Asia. The round values the business at $2 billion.
Meditation app Headspace announced plans to merge with on-demand mental health service Ginger, valuing the combined business of $3 billion with a headcount of more than 800.
London-based EV charging platform Bonnet raised $1.3 million (£920,000 total in new funding, including £850,000 in an equity financing round led by Ascension Ventures, with investors from Imperial College London and APX. It also won an additional £70,000 grant from Innovate UK and OZEV. The app gives drivers real-time data on charger availability and functionality and seller bundles of cheaper charging, which can be used across the network.
European stock trading app Shares raised $10 million in a pre-product seed round led by Singular for its app that would allow users to trade 1,500 stocks without paying fees, as well as start conversations with friends and learn from experts.
Tencent has entered advanced stages of talks to lead a new $20-35 million investment round in Gurgaon-headquartered podcasts and audiobooks app Pocket FM. The terms being discussed would value the three-year-old company around $75-$100 million.
Estonia-based grocery delivery app Membo, which serves a European audience, snagged Y Combinator backing and will present during the incubator’s Summer 2021 Demo Day next week.
A decade and a half of instability: The history of Google messaging apps. Sixteen years after the launch of Google Talk, Ars Technica analyzes everything that went wrong — and continues to go wrong — across Google’s messaging app strategy. “…no single company has ever failed at something this badly, for this long, with this many different products,” the article snipes, before introducing the long table of contents to its many sections, each detailing the fate of an individual app. The article concludes that no one seems to be in charge of the company’s overarching messaging app strategy, as messaging isn’t treated as one of the key pillars alongside others like Search, Gmail, Chrome, Android, Docs, Maps and YouTube.
A new startup called Popcorn wants to make work communication more fun and personal by offering a way for users to record short video messages, or “pops,” that can be used for any number of purposes in place of longer emails, texts, Slack messages or Zoom calls. While there are plenty of other places to record short-form video these days, most of these exist in the social media space, which isn’t appropriate for a work environment. With Popcorn, you can instead create a short video and then send a URL to that video anywhere you would want to add a personal touch to your message — like for outreach on LinkedIn or a quick check-in with a colleague, for example. The app is currently a free download on iPhone, iPad and Mac. (Read the full review here on TechCrunch.)
A new iPad drawing app called Luma connects the screen with real-world play by allowing kids (or anyone) to attach paper to their iPad then trace the lit-up drawing using a pen or pencil. Each drawing will connect to the previous one and can be colored in however the user sees fit. As kids draw, they’ll bring an audio story to life for a more immersive and creative experience. The app was built by Jonathan Wegener (Timehop co-founder, Snapchat designer), Bernardo Nunez (YouTube), Jeffrey Neafsey (Microsoft, Apple), Britt Hatzius and Ant Hampton. It’s backed by the founders of YouTube, Oculus, Eventbrite, Tumblr, HQ Trivia, Google Photos, Venmo, Tinder and more.
Image Credits: LOVE
A London-headquartered startup called LOVE, valued at $17 million following its pre-seed funding, aims to redefine how people stay in touch with close family and friends. The company is launching a messaging app that offers a combination of video calling as well as asynchronous video and audio messaging, in an ad-free, privacy-focused experience with a number of bells and whistles, including artistic filters and real-time transcription and translation features. But LOVE’s bigger differentiator may not be its product alone, but rather the company’s mission. LOVE aims for its product direction to be guided by its user base in a democratic fashion as opposed to having the decisions made about its future determined by an elite few at the top of some corporate hierarchy. In addition, the company’s longer-term goal is ultimately to hand over ownership of the app and its governance to its users. (Read the full review here on TechCrunch.)