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India’s richest man built a telecom operator everyone wants a piece of
As investors’ appetites sour in the midst of a pandemic, a three-and-a-half-year-old Indian firm has secured $10.3 billion in a month from Facebook and four U.S.-headquartered private equity firms.
The major deals for Reliance Jio Platforms have sparked a sudden interest among analysts, executives and readers at a time when many are skeptical of similar big check sizes that some investors wrote to several young startups, many of which are today struggling to make sense of their finances.
Prominent investors across the globe, including in India, have in recent weeks cautioned startups that they should be prepared for the “worst time” as new checks become elusive.
Elsewhere in India, the world’s second-largest internet market and where all startups together raised a record $14.5 billion last year, firms are witnessing down rounds (where their valuations are slashed). Miten Sampat, an angel investor, said last week that startups should expect a 40%-50% haircut in their valuations if they do get an investment offer.
Facebook’s $5.7 billion investment valued the company at $57 billion. But U.S. private equity firms Silver Lake, Vista, General Atlantic, and KKR — all the other deals announced in the past five weeks — are paying a 12.5% premium for their stake in Jio Platforms, valuing it at $65 billion.
How did an Indian firm become so valuable? What exactly does it do? Is it just as unprofitable as Uber? What does its future look like? Why is it raising so much money? And why is it making so many announcements instead of one.
It’s a long story.
Run up to the launch of Jio
Billionaire Mukesh Ambani gave a rundown of his gigantic Indian empire at a gathering in December 2015 packed with 35,000 people including hundreds of Bollywood celebrities and industry titans.
“Reliance Industries has the second-largest polyester business in the world. We produce one and a half million tons of polyester for fabrics a year, which is enough to give every Indian 5 meters of fabric every year, year-on-year,” said Ambani, who is Asia’s richest man.
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GoBear raises $17 million to expand its consumer financial services for Asian markets
Singapore-based fintech startup GoBear has raised $17 million from returning investors Walvis Participaties, a Dutch venture capital firm, and Aegon N.V., a life insurance and asset management provider. The funding brings GoBear’s total funding so far to $97 million, and will be used to expand its consumer financial services platform, which is available in seven Asian markets: Hong Kong, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Founder and CEO Adrian Chng told TechCrunch that GoBear will focus on what it calls its “three growth pillars”: an online financial supermarket that evolved from the company’s financial products aggregator/comparison service; an online insurance brokerage; and its digital lending business, which it recently expanded by acquiring consumer lending platform AsiaKredit.
The company has also added three new executives over the past few months: chief information technology officer Valeriy Gasratov; chief strategy officer Jinnee Lim as Chief Strategy Officer; and Mike Singh from AsiaKredit as its new chief lending officer.
GoBear originally launched in 2015 as a metasearch engine, before transitioning into financial services. The company now works with over 100 financial partners, including banks and insurance providers, and says its platform has been used by over 55 million people to search for more than 2,000 personal financial products.
The startup serves consumers who don’t have credit cards or other access to traditional credit building tools. Similar to other fintech companies that focus on underbanked populations, GoBear aggregates and analyzes alternative sources of data to judge lending risk, including patterns in consumer behavior. For example, Chng said if a loan application is filled out in less than a minute, it is more likely to be fraudulent, and applications made between 8:30PM and midnight are less risky than ones made between 2AM to 5AM.
Data points from smartphones is also used to assess creditworthiness in markets like the Philippines, where the credit card penetration rate is less than 10%, but more than 40% of the population uses a smartphone.
Despite the COVID-19 pandemic, Chng said GoBear has been gross margin positive since the end of 2019. Interest in travel insurance has declined, but the company has continued to see demand for other insurance products and lending. Its online insurance brokerage has grown its average order by 52% over the last three months, and the company has seen 50% year-over-year growth from its loan products.
There are other fintech companies in Asia that overlap with some of the services that GoBear offers, like comparison platform MoneySmart, CompareAsiaGroup and Grab Financial Group. In terms of competition, Chng told TechCrunch that not only is the market opportunity in Asia huge (he said there are 400 million underbanked people across GoBear’s seven markets), but the company also differentiates with its three core services, which are all interconnected and draw on the same data sources to score credit.
Chng anticipates that the pandemic will spur more financial institutions to begin digitizing their products and looking for partners like GoBear to help them manage risk. In turn, that will make more financial institutions open to using non-traditional data to score credit, enabling underbanked markets to have increased access to financial products.
“The momentum is here. I think now is the time for tech and data to transform financial services,” he said. “As a platform, we are really looking for partners to come with us for the next phase of growth and investment. I feel positive even with COVID-19, because I think that we will have more acceleration, and the opportunity to change people’s lives and benefit them and investors by solving tough problems will only increase.”
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M17 sells its online dating assets to focus on live streaming
M17 Entertainment announced today that it has sold its online dating assets to focus on its core live-streaming business in Asia and other markets. Paktor Pte, which operates Paktor dating app and other services, was acquired by Kollective Ventures, a venture capital advisory firm. The value of the deal was undisclosed.
In its announcement, Taipei-based M17 said the sale will allow it to focus on expanding its live-streaming business in markets including Taiwan, Japan and Hong Kong.
Earlier this month, the company said it had raised a $26.5 million Series D that will be used for growth in Japan, where M17 claims a 60% share of the live-streaming market, and expansion into new places like the United States and the Middle East. Its live-streaming apps include 17LIVE (an English-language version is called Livit), Meme Live and live-streaming e-commerce platforms HandsUP and FBBuy.
In a statement, M17 CFO Shang Koo said, “As our Japan live-streaming business has skyrocketed, we found we were unable to devote the same level of internal resources to our dating business in Southeast Asia. Becoming independent will allow Paktor to control its own destiny as M17 focuses heavily on the future of its streaming services in our largest market, Japan.”
Paktor will operate independently of M17 after the sale, but Koo said, “we hope to continue working with Paktor on future business cooperation and will always value the synergy and teamwork between M17 and Paktor.”
M17 was formed in April 2017 when Paktor merged with 17 Media. A year later, M17 was supposed to go public, but cancelled its initial public offering on the New York Stock Exchange on the same day it was supposed to start trading, citing “issues related to the settlement” of shares that CEO Joseph Phua later explained in detail to Tech in Asia.
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India’s Khatabook raises $60 million to help merchants digitize bookkeeping and accept payments online
Khatabook, a startup that is helping small businesses in India record financial transactions digitally and accept payments online with an app, has raised $60 million in a new financing round as it looks to gain more ground in the world’s second most populous nation.
The new financing round, Series B, was led by Facebook co-founder Eduardo Saverin’s B Capital. A range of other new and existing investors, including Sequoia India, Partners of DST Global, Tencent, GGV Capital, RTP Global, Hummingbird Ventures, Falcon Edge Capital, Rocketship.vc and Unilever Ventures, also participated in the round, as did Facebook’s Kevin Weil, Calm’s Alexander Will, CRED’s Kunal Shah and Snapdeal co-founders Kunal Bahl and Rohit Bansal.
The one-and-a-half-year-old startup, which closed its Series A financing round in October last year and has raised $87 million to date, is now valued between $275 million to $300 million, a person familiar with the matter told TechCrunch.
Hundreds of millions of Indians came online in the last decade, but most merchants — think of neighborhood stores — are still offline in the country. They continue to rely on long notebooks to keep a log of their financial transactions. The process is also time-consuming and prone to errors, which could result in substantial losses.
Khatabook, as well as a handful of young and established players in the country, is attempting to change that by using apps to allow merchants to digitize their bookkeeping and also accept payments.
Today more than 8 million merchants from over 700 districts actively use Khatabook, its co-founder and chief executive Ravish Naresh told TechCrunch in an interview.
“We spent most of last year growing our user base,” said Naresh. And that bet has worked for Khatabook, which today competes with Lightspeed -backed OkCredit, Ribbit Capital-backed BharatPe, Walmart’s PhonePe and Paytm, all of which have raised more money than Khatabook.
The Khatabook team poses for a picture (Khatabook)
According to mobile insight firm AppAnnie, Khatabook had more than 910,000 daily active users as of earlier this month, ahead of Paytm’s merchant app, which is used each day by about 520,000 users, OkCredit with 352,000 users, PhonePe with 231,000 users and BharatPe, with some 120,000 users.
All of these firms have seen a decline in their daily active users base in recent months as India enforced a stay-at-home order for all its citizens and shut most stores and public places. But most of the aforementioned firms have only seen about 10-20% decline in their usage, according to AppAnnie.
Because most of Khatabook’s merchants stay in smaller cities and towns that are away from large cities and operate in grocery stores or work in agritech — areas that are exempted from New Delhi’s stay-at-home orders, they have been less impacted by the coronavirus outbreak, said Naresh.
Naresh declined to comment on AppAnnie’s data, but said merchants on the platform were adding $200 million worth of transactions on the Khatabook app each day.
In a statement, Kabir Narang, a general partner at B Capital who also co-heads the firm’s Asia business, said, “we expect the number of digitally sophisticated MSMEs to double over the next three to five years. Small and medium-sized businesses will drive the Indian economy in the era of COVID-19 and they need digital tools to make their businesses efficient and to grow.”
Khatabook will deploy the new capital to expand the size of its technology team as it looks to build more products. One such product could be online lending for these merchants, Naresh said, with some others exploring to solve other challenges these small businesses face.
Amit Jain, former head of Uber in India and now a partner at Sequoia Capital, said more than 50% of these small businesses are yet to get online. According to government data, there are more than 60 million small and micro-sized businesses in India.
India’s payments market could reach $1 trillion by 2023, according to a report by Credit Suisse .
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China’s smartphone shipments are reportedly up for April, following COVID-19-fueled decline
Smartphone shipments are reportedly beginning to see signs of life in China, after a sizable dip from the COVID-19 pandemic. New numbers from China Academy of Information and Communications Technology (a government-connected agency) point to a 17% rise in shipments for April, pointing to some recovery for the market.
The figure, from the China state-supported group, is virtually a mirror reflection of the 18% dip Canalys reported for Q1. COVID-19 was the primary culprit for those figures, through a combination of decreased spending among China’s phone-buying public and sizable supply chain constraints, as many Asian nations were on lockdown to slow the spread.
Both Huawei and Apple benefited from the rebound, though Reuters notes that the firm opted not to include an OS breakdown for the first time in a while, making it more difficult to parse market share.
Smartphone shipments have suffered across the board, along with countless other industries. A rebound for China’s market could be a bellwether for positive numbers for the industry moving forward — especially given the country’s close ties to the global supply chain. In spite of being the first country hit, China’s official figures for COVID-19 deaths have remained low, compared to countries in Europe and North America.
That’s likely due in part to some draconian measures used to stop the spread. Other countries (the U.S. in particular) may not be so likely to rebound from the pandemic, leading to a more protracted impact on the global market.
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Xiaomi spinoff POCO’s F2 Pro undercuts Android rivals with low price and flagship features
POCO, a brand that spun out of Chinese electronics giant Xiaomi earlier this year, today launched the POCO F2 Pro smartphone as it continues its new journey as an independent firm.
The POCO F2 Pro, like its two-year-old sleeper hit predecessor Pocophone F1 smartphone, punches above its price class. It features an all-screen 6.67-inch full-HD+ AMOLED display (with 2400×1080 pixels), in-screen fingerprint scanner, support for 5G, quad-core rear camera setup and a pop-up front camera that quietly tucks away when not in use. It also features a 3.5mm headphone jack.
The smartphone comes in two variants: one with 6GB of RAM and 128GB internal storage that is priced at €499 (roughly $540), and the other that features 8GB of RAM and 256GB internal storage that costs €599 (roughly $650).
Both the variants run Android 10 and are going on sale globally starting Tuesday through Gearbest and Aliexpress e-commerce sites. POCO said it will soon begin selling the POCO F2 Pro on Amazon, Lazada and Shopee among other e-commerce sites, including its official website.
The dual-SIM card-supported smartphone, a popular feature in several Asian markets, is powered by Qualcomm’s flagship octa-core Snapdragon 865 processor, coupled with Adreno 650GPU. POCO F2 Pro also sports what the company claims to be the largest vapor chamber in any smartphone to support LiquidCool, a technology that keeps the device cool even when a user is playing high-end games such as Fortnite and PUBG.
A total score of 589,983.
CPU Benchmark score of 184,817.
GFXbench Manhattan 4.0 benchmark score of 40.
Yes, the #POCOF2Pro is simply #PowerfullyCool! pic.twitter.com/KgyHJt2dI4
— POCO (@POCOGlobal) May 12, 2020
On the camera front, the POCO F2 Pro features a 64MP Sony IMX686 sensor, which serves as the primary camera, with a 13MP ultra wide-angle lens, a 5MP macro and one 2MP depth sensor. The pop-up camera, which serves as the selfie sensor, is a 20MP lens. The rear camera setup is capable of recording videos in 8K resolution at 24fps, and 4K in 60fps.
The POCO F2 Pro, which comes in Neon Blue, Electric Purple, Cyber Grey, Phantom White, houses a 4,700mAh battery with support for fast charging, and ships with a 33W charger in the box.
POCO listed a number of additional features that other flagship Android smartphones offer, such as support for HDR10+, display brightness of 500 nits, Corning Gorilla Glass 5 that protects the screen and an IR blaster. But its display lacks support for 120Hz refresh rate — as seen on OnePlus 8T Pro that makes viewing experience extra smooth.
POCO F2 Pro is the second smartphone from the company since it spun out of Xiaomi earlier this year. The company’s first product, called Pocophone F1, launched in 2018 and was well received by the market.
At the time of the launch, Xiaomi executives said they had big plans for the POCO brand but never launched anything afterward. During the period the company also saw a big departure when Jai Mani, a senior product executive, left the firm. Earlier this year, the company launched the mid-range POCO X2 smartphone in India.
POCO executives today shared little plans on what the future holds for the firm, but assured that they are here to stay. “We’re back. It’s been awhile, but we are back,” said Angus Ng, a product marketing manager at POCO.
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Acast partners with JioSaavn, one of India’s largest streaming audio services
Acast, a podcast monetization and distribution platform, announced a new partnership with JioSaavn, one of the largest streaming audio services in India. The agreement mean JioSaavn will distribute content from Acast and have access to its technology for podcasters.
JioSaavn, which claims 104 million monthly active users, is the second-largest streaming audio service in India after Gaana, and holds about 24% market share, according to an OTT Audience Measurement Insights report.
Podcasts from Acast’s network will be added to JioSaavn’s streaming app over the next two months. Based in Sweden, Acast focuses on developing ways to help podcasters monetize, including subscription paywalls and dynamic ads. Publishers on Acast’s network include the Guardian, BBC, the Financial Times and PBS NewsHour.
JioSaavn launched original programming in 2016, including JioSaavn podcasts, which it says now has more than 200 hours of original content.
In a press statement, Ishani Dasgupta, JioSaavn’s lead of podcast partnerships, said, “Podcasting is still largely nascent to consumers in the Indian market, with momentum growing quickly. The ability to grow and build new audiences, new shows and establish pathways for brands to access both is really just beginning for our 1.3 billion potential consumer market.”
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Indian education startup Byju’s is fundraising at a $10B valuation
Byju’s, an education learning startup in India that has seen a surge in its popularity in recent weeks amid the coronavirus outbreak, is in talks to raise as much as $400 million in fresh capital at a $10 billion valuation, said three people familiar with the matter.
The additional capital would be part of the Bangalore-based startup’s ongoing financing round that has already seen Tiger Global and General Atlantic invest between $300 million to $350 million into the nine-year-old startup.
That investment by the two firms, though, was at an $8 billion valuation, said people familiar with the matter. Byju’s was valued at $5.75 billion in July last year, when it raised $150 million from Qatar Investment Authority and Owl Ventures.
If the deal goes through at this new term, Byju’s would become the second most valuable startup in India, joining budget lodging startup Oyo, which is also valued at $10 billion, and following financial services firm Paytm that raised $1 billion at $16 billion valuation late last year.
The talks haven’t finalized yet and terms could change, said one of the aforementioned people. This person, along with the other two, requested anonymity as the matter is private.
Spokespeople of Byju’s and Prosus Ventures, the largest investor in the startup, declined to comment. A spokesperson for Tiger Global did not respond to a request for comment.
Byju’s has seen a sharp surge in both its free users and paying customers in recent weeks as it looks to court students who are stuck at home because of the nationwide lockdown New Delhi ordered in late March.
The startup told TechCrunch last month that traffic on its app and website was up 150% in March and it added six million students to the platform during the month.
Other edtech startups, including Unacademy, which was recently backed by Facebook, and early-stage startups such as Sequoia Capital India-backed Classplus, and Chennai-based SKILL-LYNC, have also seen growth in recent weeks, they told TechCrunch last month.
Through its app, tutors on Byju’s help all school-going children understand complex subjects using real-life objects such as pizza and cake. The app also prepares students who are pursuing undergraduate and graduate-level courses.
Over the years, Byju’s has invested in tweaking the English accents in its app and adapted to different education systems. It had amassed more than 35 million registered users, about 2.4 million of which are paid customers as of late last year.
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Streaming service Hooq shuts down, ends partnerships with Disney’s Hotstar, Grab and others
Hooq, a five-year-old on-demand video streaming service that aimed to become “Netflix for Southeast Asia,” has shut down weeks after filing for liquidation and terminated its partnerships with Disney’s Hotstar, ride-hailing giant Grab, and Indonesia’s VideoMax.
Hooq Digital, a joint venture among Singapore telecom group Singtel (majority owner), Sony Pictures, and Warner Bros Entertainment, discontinued the service on Thursday. It had amassed over 80 million subscribers in nearly half of the dozen markets in Asia.
“For the past 5 years, we gave you unbelievable thrills, heartrending drama, roaring laughs, awesome action, and more. Our goal was to bring you the best entertainment from here to Hollywood. Our hearts are full of gratitude for all of you who shared the journey with us,” it says on its website.
Hooq publicly disclosed that it had raised about $95 million, but the sum was likely higher. News outlet The Ken analyzed the regulatory filings last month to report that Hooq had raised $127.2 million, and its losses in the financial year 2019 had ballooned to $220, suggesting that it had received more capital.
The streaming service said last month that it could not receive new funds from new or existing investors.
Homepage of Hooq
The service counted India, where it entered into a partnership with Disney’s Hotstar in 2018 and telecom operators Airtel and Vodafone, as its biggest market. The company also maintained a partnership with ride-hailing giant Grab to supply content in its cab, and VideoMAX in Indonesia.
Hooq brought dozens of D.C. universe titles including “Arrow,” “The Flash,” “Wonder Woman” and other popular TV series such as “The Big Bang Theory” to its partners. In India, users began noticing last week that those titles were disappearing from Hotstar.
A spokesperson of Hooq told TechCrunch today that its tie-ups with all its partners including Hotstar have closed. A Hotstar spokesperson did not respond to a request for comment.
Mobile operator Singtel first unveiled Hooq’s liquidation in an exchange filing last month. The Ken reported that the filing left hundreds of employees at Hooq stunned who thought the firm was doing fine financially. Nearly every employee at Hooq has been let go, with select few offered a job at Singtel, according to The Ken.
In an interview with Slator earlier this year, Yvan Hennecart, Head of Localization at HOOQ, said that the company was working to expand its catalog with local content and add 100 original titles in 2020.
“Our focus is mostly on localization of entertainment content; whether it is subtitling or dubbing, we are constantly looking to bring more content to our viewers faster. My role also expands to localization of our platform and any type of collateral information that helps create a unique experience for our users,” he told the outlet.
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WhatsApp eyes credit feature for users in India
WhatsApp, which began testing its mobile payments feature in India two years ago, could offer at least one more financial service to people in its biggest market.
In a filing with the local regulator in India, the company has listed credit as one of the areas it will pursue in the country. The Facebook -owned service declared with the local regulator earlier this month providing credit or loans as one of the “main objects to be pursued by it in the country.” No other financial service is listed in the filing.
At an event in Bangalore late last year, Abhijit Bose, WhatsApp’s head in India, said he believed that the mobile payments market in India, which has attracted dozens of local and international firms in recent years, is still at a very early stage in the country and may eventually see firms move beyond just offering a way for people to send money to one another.
WhatsApp has yet to receive approval from New Delhi for a nationwide rollout of Pay in India. Local media reports claimed earlier this year that WhatsApp had started to expand Pay’s reach in the country in various phases.
Ajit Mohan, a Facebook VP and India head, told TechCrunch in an interview last week that only 1 million WhatsApp users in India, same as before, have access to its mobile payment service.
Dozens of payment services in India have expanded to credit, or online lending, in recent quarters as they search for a business model in the country. A number of firms, including Paytm, India’s most-valued startup, and MobiKwik today offer small ticket credit to millions of users in India.
Tens of millions of users have started to digitally transact money in India in recent years. But the local payments body has removed most of the fees they could levy on banks and merchants to make money. The move has resulted in firms exploring other financial services, such as credit and insurance and target merchants to make money.
This year, Paytm has expanded to serve merchants, launching new gadgets such as a stand that displays QR check-out codes that comes with a calculator and a battery pack, a portable speaker that provides voice confirmations of transactions and a point-of-sale machine with built-in scanner and printer.
The Alibaba and SoftBank-backed company is offering these gadgets as part of a subscription service that helps it establish a steady flow of revenue. Paytm’s Money arm, which offers lending, insurance and investing services, has amassed more than 3 million users.
Flipkart’s PhonePe, another major player in India’s payments market, today serves more than 175 million users and over 8 million merchants. Its app serves as a platform for other businesses to reach users. The company is currently not taking a cut for the real estate on its app.
WhatsApp’s expansion in mobile payments in India, estimated to grow to $1 trillion by 2023 (according to Credit Suisse), could create new challenges for the aforementioned players.
Facebook, which like other American tech giants counts India as one of its biggest markets but makes considerably less revenue in the world’s second largest market, “reaffirmed” its commitment to India this month.
The social giant invested $5.7 billion in Reliance Jio Platforms this month to acquire a 9.99% stake in the Indian telecom giant. Over the weekend, JioMart, an e-commerce venture run by Jio’s parent firm, began testing an “ordering system” on WhatsApp, teasing the first peek at the collaboration between Facebook and Indian telecom giant Reliance Jio Platforms.
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