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UK’s Paysend raises $125M at a $700M+ valuation to expand its all-in-one payments platform
With more people than ever before going online to pay for things and pay each other, startups that are building the infrastructure that enables these actions continue to get a lot of attention.
In the latest development, Paysend, a fintech that has built a mobile-based payments platform — which currently offers international money transfers, global accounts, and business banking and e-commerce for SMBs — has picked up some money of its own. The London-based startup has closed a round of $125 million, a sizable Series B that the company’s CEO and founder Ronnie Millar said it will be using to continue expanding its business geographically, to hire more people, and to continue building more fintech products.
The funding is being led by One Peak, with Infravia Growth Capital, Hermes GPE, previous backer Plug and Play and others participating.
Millar said Paysend is not disclosing valuation today but described it as a “substantial kick-up” and “a great step forward in our position ahead toward unicorn status.”
From what I understand though, the company was valued at $160 million in its previous round, and its core metrics have gone up 4.5x. Doing some basic math, that gives the company a valuation of around $720 million, a figure that a source close to the company did not dispute when I brought it up.
Something that likely caught investors’ attention is that Paysend has grown to the size it is today — it currently has 3.7 million consumer customers using its transfer and global account services, and 17,000 small business customers, and is now available in 110 receiving countries — in less than four years and $50 million in funding.
There are a couple of notable things about Paysend and its position in the market today, the first being the competitive landscape.
On paper, Paysend appears to offer many of the same features as a number of other fintechs: money transfer, global payments, and banking and e-commerce services for smaller businesses are all well-trodden areas with companies like Wise (formerly “TransferWise”), PayPal, Revolut, and so many others also providing either all or a range of these services.
To me, the fact that any one company relatively off the tech radar can grow to the size that it has speaks about the opportunity in the market for more than just one or two, or maybe five, dominant players.
Considering just remittances alone, the WorldBank in April said that flows just to low- and middle-income countries stood at $540 million last year, and that was with a dip in volumes due to COVID-19. The cut that companies like Paysend make in providing services to send money is, of course, significantly smaller than that — business models include commission charges, flat fees or making money off exchange rates; Paysend charges £1 per transfer in the U.K. More than that, the overall volumes, and the opportunity to build more services for that audience, are why we’re likely to see a lot of companies with ambitions to serve that market.
Services for small businesses, and tapping into the opportunity to provide more e-commerce tools at a time when more business and sales are being conducted online, is similarly crowded but also massive.
Indeed, Paysend points out that there is still a lot of growing and evolution left to do. Citing McKinsey research, it notes that some 70% of international payments are currently still cash-to-cash, with fees averaging up to 5.2% per transaction, and timing taking up to an hour each for sender and recipient to complete transfers. (Paysend claims it can cut fees by up to 60%.)
This brings us to the second point about Paysend: How it’s built its services. The fintech world today leans heavily on APIs: Companies that are knitting together a lot of complexity and packaging it into APIs that are used by others who bypass needing to build those tools themselves, instead integrating them and adding better user experience and responsive personalization around them. Paysend is a little different from these, with a vertically integrated approach, having itself built everything that it uses from the ground up.
Millar — a Scottish repeat entrepreneur (his previous company Paywizard, which has rebranded to Singula, is a specialist in pay-TV subscriber management) — notes that Paysend has built both its processing and acquiring facilities. “Because we have built everything in-house it lets us see what the consumer needs and uses, and to deliver that at a lower cost basis,” he said. “It’s much more cost-efficient and we pass that savings on to the consumer. We designed our technology to be in complete control of it. It’s the most profitable approach, too, from a business point of view.”
That being said, he confirmed that Paysend itself is not yet profitable, but investors believe it’s making the right moves to get there. To be clear, Paysend actually does partner with other companies, including those providing APIs, to improve its services. In April, Plaid and Paysend announced they were working together to power open banking transfers, reducing the time to initiate and receive money.
“We are excited by Paysend’s enormous growth potential in a massive market, benefiting from a rapid acceleration in the adoption of digital payments,” said Humbert de Liedekerke, managing partner at One Peak Partners, in a statement. “In particular, we are seeing strong opportunities as Paysend moves beyond consumers to serve business customers and expands its international footprint to address a growing need for fast, easy and low-cost cross-border digital payments. Paysend has built an exceptional payment platform by maintaining an unwavering focus on its customers and constantly innovating. We are excited to back the entire Paysend team in their next phase of explosive growth.”
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Forter raises $300M on a $3B valuation to combat e-commerce fraud
E-commerce is on the rise, but that also means the risk, and occurrence, of e-commerce fraud is, too. Now, Forter, one of the startups building a business to tackle that malicious activity, has closed $300 million in funding — a sign both of the size of the issue and its success in tackling it to date.
The new funding, a Series F, values Forter at $3 billion — notable not least because the funding is coming only about six months since Forter’s previous round, a $125 million Series E that valued it at over $1.3 billion.
Tiger Global Management is leading this latest equity infusion, with new backers Third Point Ventures and Adage Capital Management, and existing investors Bessemer Venture Partners, Sequoia Capital, March Capital, NewView Capital, Salesforce Ventures and Scale Venture Partners, also involved.
The plan will be to use to the money to expand Forter — founded in Tel Aviv and now based in New York — geographically, bring more functionality into its product and explore adjacent areas where Forter might expand its capabilities, either organically or by way of acquisition.
Forter today focuses mainly on identifying fraud at the point of transaction and building an AI-based platform that “learns” more behaviors to improve its accuracy; it also builds models that keep more people transacting and helps bring down the number of “false positives” where activity that appears suspicious actually is not.
One area on its roadmap for expansion is remediation after the fraud occurs, said Liron Damri, Forter’s co-founder and president.
“Our vision is to serve the merchant as the go-to trusted partner for everything, so remediation is definitely on our roadmap,” he said of potential acquisition targets.
Damri, who co-founded the company with Michael Reitblat, CEO, and Alon Shemesh, chief analyst, said in an interview that the startup — which works with some 350 large customers like Priceline and Instacart and a growing number of service providers like FreedomPay and Flutterwave, altogether seeing some $250 billion worth of transactions globally last year — wasn’t proactively looking for more money.
“All we wanted to do was go back to run the company,” he said. “But in the past six months we’ve seen such a great momentum, doubling revenue and ARR, and seeing our customer volumes grow.”
That led to a lot of investors proactively reaching out and asking questions, he continued. He described Tiger as a “kingmaker” in the category of e-commerce, so it was an easy decision to make, and gave it the “gas” it needed to take its next growth steps.
E-commerce has been one of the major technology growth stories of the last year, fueled by a rush of consumers and businesses playing out their lives online at a time when it has been harder, and in some cases impossible, to transact in person.
While we have definitely seen a lot of growth, and growing sophistication, in the number of tools on the market to combat cybercrime, it’s in some ways an ouroboros of a problem: The more transactions that are made, the more there are that need to be monitored for suspicious activity. And in any case, fraud in e-commerce is not exactly going away. It’s estimated that it will cost retailers some $20 billion in 2021 and is always on the rise.
Forter got its start in 2013 focusing first on monitoring activity on sites wherever customers happened to be to identify suspicious behavior — a sign that it might be a bot or someone on an illicit spending spree racking up a lot of items in quick succession — with the bigger concept being to build a network of activity from which to learn and help make more informed decisions over time.
In more recent years, the essence of the issue has expanded somewhat, and also grown more sophisticated. As companies have grown their businesses to reach beyond early adopters and core audiences, and into a more “omnichannel” environment beyond basic check-outs on their own sites, so too have the kinds of consumers coming to shop.
This has meant that traditional “signals” of legitimate buyers no longer were the same as before — a predicament that really rose in profile in the last year, as many newcomers came to e-commerce for the first time during the pandemic. In fact, Damri told me that in 2020 there were seven times more “newcomers” to sites than in 2019.
So with most of the flagging of suspicious activity coming up at the point of transaction, Forter expanded to analyzing activity there.
As with a recent acquisition of Stripe’s, Bouncer, to build out its own anti-fraud product, a large part of Forter’s attention these days is on providing tools to companies to identify suspicious purchasing, but even more than that, to make sure that the many occasions that might look suspicious are not, to help reduce the amount of “cart abandonment” and increase conversions.
The old way of doing things, Damri said, involved “thousands of rules and applying suspicion on everyone. You were guilty unless proved otherwise.”
Using its AI engine and some risk analysis (not unlike the kind that, say, an insurance or loan provider might apply in their businesses), Forter turned the proposition on its head.
“We wanted to approve as much as possible. We wanted to gradually increase the trust you have of your own customers. We changed the sentiment and approach… especially in areas that were neglected, such as those who saw significant changes in life,” Damri said. “This was extremely important as COVID-19 hit.”
Forter’s risk tolerance model, it seems, has so far proven out. Damri said that its algorithms applied reduce the total number of declines by 80%, but also reduce the number of chargebacks — one indicator of a mistake — by 60%.
This implies that it’s blocking more of the “wrong” kind of purchases, and letting through more of the legitimate ones. (That is, he pointed out, in addition to a few bad actors Forter intentionally lets buy things, just to learn how they operate. Damri referred to this as “paid-tuition.”)
Risk-based approvals, coupled with algorithms to learn what is truly bad, has resonated with customers, and investors.
“With the unprecedented rate of digital transformation and the fierce competition in creating the slickest user experience, superior fraud prevention plays an ever more critical role in e-commerce revenue growth” said John Curtius, a partner at Tiger Global Management, in a statement. “After we talked with dozens of customers of every relevant solution in this space, it was very clear to us that Forter is the clear leader in performance and scale.”
“As a longtime investor, it’s been incredible to see Forter’s ascent,” added Ravi Viswanathan, NewView Capital. “It’s a testament to the leadership team’s vision and execution in allowing merchants to provide the seamless experiences customers expect and to be able to accept as many transactions as possible, while still accurately identifying and blocking fraud.”
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E-commerce startup Little Birdie lands $30M AUD prelaunch funding from Australia’s largest bank
Commonwealth Bank group executive Angus Sullivan and Jon Beros, co-founder and CEO of Little Birdie. Image Credits: Little Birdie
Melbourne-based Little Birdie, an e-commerce startup that wants to become the “new homepage of online shopping,” won’t launch until next month, but it’s already scored a major investor. Commonwealth Bank of Australia (CBA), the largest of Australia’s “Big Four” banks, has poured $30 million AUD (about $23.2 million USD) in prelaunch funding into Little Birdie, and will also integrate its shopping content, including exclusive offers, into its consumer banking app, which reaches 11 million retail customers in Australia.
Little Birdie says this brings its valuation to $130 million AUD (about $100 million USD). Compared to the United States, where Amazon is the largest e-commerce retailer by far, Australian shoppers spend more time choosing between several platforms, including large marketplaces like eBay, Gumtree, Amazon, Woolworths and a host of smaller players.
Set to launch in mid-June, Little Birdie will aggregate more than 70 million products from different online brands and stores, with the goal of being the first place shoppers look when they want to buy something. Users can use Little Birdie to track and compare products, and look for price drops, sales and offers. The SKUs come from a combination of brand partnerships and scraping e-commerce sites, with the majority from retailers’ product feeds.
Co-founder and chief executive officer Jon Beros told TechCrunch that “Australia’s e-commerce market is very competitive and quite fragmented with a lot of retailers fighting for market share. The pandemic accelerated online adoption and saw many retailers switch on an online presence, or shift their focus online. With so many players fighting for the attention of shoppers and driving up the cost of acquisition, Little Birdie can genuinely help retailers by providing a new marketing channel that delivers qualified customers leads.”
Commonwealth Bank will be able to access Little Birdie’s catalog of shopping content to create targeted offers for customers, including features that link savings goals to specific items through its money management tools. Beros said that Little Birdie will also seek two different types of brand partnerships: “Firstly with retailers who come on board to promote their exclusive offers and products on Little Birdie and secondly with major brands and media companies that look to integrate our shopping content into their apps or websites. These integration partners ultimately deepen the value Little Birdie offers its retail partners by helping to amplify the reach of their offers to a wider audience.”
The company is looking at expansion into Southeast Asia and the United States, but Beros said there is not a firm timeline for its international growth yet, since it depends on the COVID-19 pandemic situation and when borders start to reopen.
In a press statement, Commonwealth Bank group executive Angus Sullivan said, “We believe customers should have access to the world’s best digital experience and our partnership with Little Birdie will give customers access to exclusive industry leading deals via the CommBank app.”
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Invoca acquires DialogTech for $100M to expand its conversational intelligence tools
On the heels of expanding its marketing call analytics platform last year to provide more insights to help those in sales, e-commerce and customer experience, Invoca is making its first acquisition to widen the net of companies that it targets. The company has acquired DialogTech, a startup that builds tools for marketers to analyze inbound phone calls and other contacts, in what TechCrunch understands to be a $100 million deal.
As part of the transaction, Santa Barbara-based Invoca will be divesting Swydo, a company that Chicago-based DialogTech acquired in 2018. Swydo — originally from The Netherlands — will remain a partner of Invoca’s, the company said.
Invoca has up to now focused on larger consumer-facing enterprises — its customers include the likes of ADT, AutoNation, DISH, TELUS and The Home Depot — providing them with an AI-based platform that lets their marketing, sales and other teams analyze calls from consumer customers and provide call tracking, coaching and other insights in real time and in the form of post-call reports to help those teams do their jobs more easily.
Gregg Johnson, Invoca’s CEO and one of a growing pool of Salesforce veterans who are reinventing the marketing and sales technology landscape, described DialogTech as “complementary” to what Invoca does, but will specifically help Invoca better target mid-market companies.
The opportunity that both Invoca and DialogTech have identified is that, despite the growth of digital media advertising, social media and other channels for brands to connect to would-be customers, inbound calls remain a very key part of how companies sell goods and services, especially when the sale is of a complex item.
“About 40% to 80% of revenues come through contact centers,” Johnson said. “Brands can do all the retargeting they want but the same strategies in digital don’t work there.”
For those working at the other end of the line, the need for tools to do their jobs better became even more pressing in the last year, a time when customers stayed home and away from physical stores, shifting all of their interactions to virtual and remote channels. Subsequently, they demanded and expected better levels of service there.
“This move enables us to be an even better partner to enterprises and agencies looking to optimize their marketing and drive sales,” said DialogTech CEO Doug Kofoid, in a statement. “Together as Invoca, our combined company will deliver an unrivaled solution for conversation intelligence, with the most innovative technology, expertise, experience, and resources in our industry.”
The combined business will become one of the bigger “martech” startups focusing on conversational insights, with 2,000 customers, more than 300 employees and on track to make more than $100 million this year in revenue. This is, however, just the tip of the iceberg: The conversational intelligence market was estimated to be worth some $4.8 billion in 2020 and is expected to balloon to nearly $14 billion by 2025.
Given how many startups we’ve seen launch in the name of better sales intelligence, it’s likely that this will not be the last piece of consolidation in the area. Combining to expand the functionality of a platform, or to expand the scale and reach of a business, or simply to bring on interesting tech that is easier to acquire than build from scratch, are three areas that will likely drive more M&A.
Invoca last raised funding in October 2019, a $56 million round just ahead of the world shifting into COVID-19 pandemic mode. Johnson confirmed that Invoca — which has to date raised $116 million from Accel, Upfront Ventures, H.I.G. Growth Partners, Morgan Stanley, Salesforce Ventures and others — is in a strong enough position as a business not to need to raise more for this acquisition.
However, I suspect that scaling up like this will help it bid for bigger money and a bigger valuation when it does, as will the fact that peers in the market like Gong (which Johnson described to me as the “B2B version of Invoca”) have seen their valuations catapult in the last year, spurred by the changes in how customers interact with businesses, and sales and marketing can work to better serve them.
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factory14 raises $200M to jump into the Amazon marketplace roll-up race
It doesn’t feel like a week goes by at the moment that another startup doesn’t emerge armed with a huge wallet of cash to pursue a strategy of consolidating and then scaling promising brands that have built a business selling on marketplaces like Amazon’s. In the latest development, a startup called factory14 is coming out of stealth mode in Europe with $200 million in funding to snap up smaller businesses and help them grow through better economies of scale.
Along with this, factory14 is also announcing its latest acquisition to underscore its acquisition strategy: it’s acquired Pro Bike Tool, a popular D2C seller of its own-brand bike accessories and tools, for an undisclosed sum. The company, which is now fully owned by factory14, has kept the original founders on to lead the smaller company.
This is factory14’s fourth acquisition since launching earlier this year, and the company said that its focus on acquiring marketplace sellers that are already seeing success and some scale means that it is already profitable.
The startup — based in Luxembourg (with offices in Madrid, London, Shanghai and Taipei) — is describing this funding injection as a seed round, but in fact the majority of it is coming in the form of debt to acquire companies. Dmg Ventures (the VC arm of the Daily Mail Group) and DN Capital co-led the equity-based seed funding, with VentureFriends and unnamed individuals in the tech world also participating. Victory Park Capital, meanwhile, provided the credit facility and also participated in the equity consortium.
CEO Guilherme Steinbruch, an alum of Global Founders Capital (the investment firm co-founded by the Samwer brothers of Rocket Internet fame, among others), co-founded factory14 with Marcos Ramírez (COO) and Gianluca Cocco (CBO) — who have respectively worked at e-commerce giants like Amazon and Delivery Hero.
Steinbruch himself also has an interesting background. He hails from Brazil and is a member of the powerful industrial family that controls a major steel producer, a leading textile producer and a bank (Steinbruch said that factory14 has no connection to these, and is not an investor in the startup).
He said that the idea for founding factory14 in Europe came out of his interest in e-commerce and specifically the traction that Thrasio, one of the U.S. based pioneers of the roll-up space, was seeing for the model.
The Marketplace on Amazon is a massive business. One estimate puts the number of third-party sellers at 5 million, with more than 1 million sellers joining the platform in 2020 alone. Thrasio, meanwhile, has in the past estimated to me that there are probably 50,000 businesses selling on Amazon via FBA making $1 million or more per year in revenues.
It’s the latter category that is the target for factory14, Steinbruch told me. Its belief is that focusing on more successful businesses will mean a better hit rate on finding companies that have already built more solid supply chains, branding and overall quality. Being willing to pay a little more for these sellers, he said, will help it compete against what has become a very crowded field.
“There are many players, there is no denying it,” he said, adding that their research has (so far) found more than 50 roll-up players going for the same general opportunities that it is.
But in the process of planning out how factory14 might differentiate itself in that mix, Steinbruch said it found some distinct differences.
“Some are looking for volume, and are willing to buy up many companies as cheaply as possible. But we took the decision to focus only on high-quality assets,” he said. “We knew we would have to pay higher multiples for a brand growing 200% a year, but when we started targeting these we were surprised to find there was less competition for these assets rather than for the smaller ones. That was a good surprise. It means that, yes, we have competition but we’ve managed to be pretty successful anyway.”
Even among the bigger retailers selling on Amazon using the e-commerce giant’s distribution and fulfillment platform, there are reasons why the consolidators have started to circle beyond just wanting to jump on a good thing. The system has within it a lot of work that is repeatable across many different companies, specifically in areas like analytics, supply chain management, marketing and more: building a framework that could handle those processes for many at once makes sense. There is also the fact that in many cases, marketplace sellers may have found themselves sitting on successful businesses but unable to source the investment (or the will) to scale them to the next step.
All the same, the mix of competitors hoping to scoop them up is a pretty formidable one, and the point of differentiation between them all may not in itself be as distinct as factory14 (or any of them) hopes.
Just today, another ambitious player in this space, Heyday out of San Francisco, announced a further $70 million in equity funding led by General Catalyst. It, too, is raising large amounts of debt and eyeing up more innovative ways of accommodating the most interesting companies selling on Amazon in a bid for more quality and success.
“The top 1.5% of marketplace sellers are doing $1 million in revenues, and we believe there may be some that cross the $1 billion threshold eventually,” Heyday CEO and co-founder Sebastian Rymarz told me last week. To woo the best of them in the current market, as part of its ambition to become the “P&G” of the 21st century, it too is taking a very open-ended approach, he said.
“We have some come to Heyday, or we bring in our own brand managers. Sometimes it’s a matter of some ongoing participation and interest, growth equity where we buy some now and will buy more of your business over time. We are still defining that and that is fine, we are comfortable with that,” he said. “It’s about unique partnerships that we’re forming to accelerate their businesses.”
Closer to home in more ways than one, Berlin’s Razor Group — funded by Steinbruch’s former colleagues from GFC, and founded by ex-Rocket Internet people — earlier this month raised $400 million. Thrasio itself has raised very large rounds in rapid succession totaling hundreds of millions of dollars in the last year, and is also profitable. Others in the same area that have also raised huge war chests include Branded; Heroes; SellerX; Perch; Berlin Brands Group (X2); Benitago; Latin America’s Valoreo (with its backers including Razor’s CEO) and an emerging group out of Asia including Rainforest and Una Brands.
Even with all of this, there will be opportunities, these entrepreneurs believe, to bring together more disparate smaller e-commerce retailers to help them better leverage marketing, supply chains, analytics and wider business expertise to grow for the longer term, leveraging the marketplace model that has come to dominate how many shop online today.
Factory14 said it expects to have $20 million in “trailing twelve months” EBITDA by the end of 2021 and expects to double its team to 80 by that point too.
For as long as Amazon and its marketplace model remain, it seems investors will come with their checkbooks, too.
“E-commerce is undergoing structural changes which are enabling thousands of exciting new brands to be born every day,” said Manuel Lopo de Carvalho, CEO at dmg ventures, in a statement. “Factory14 can provide these brands with the tools, capital and expertise that enable them to play in the big leagues.”
Ian Marsh, principal at DN Capital, said that the VC did its homework before backing the startup, too. “We had discussions with most aggregators and were immediately impressed by factory14’s differentiated vision focused on strong consumer brands and the world-class team they have put together with top tier private equity investors combined with seasoned e-commerce executive and former Amazonians. We are excited to work with Guilherme, Marcos, Gianluca and the rest of the factory14 team to create brands that inspire consumers around the world.”
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Philippine e-commerce enabler Great Deals raises $30M Series B led by logistics firm Fast Group
Steve Sy, CEO of Great Deals, and William Chiongbian II, CEO of Fast Group, sign the contract for the companies’ strategic partnership. Image Credits: Great Deals
Founded in 2014, Great Deals is an e-commerce enabler that helps brands like Abbot, L’Oréal and Unilever build their online retail operations in the Philippines. The startup announced today that it has raised $30 million in Series B funding led by Fast Group, one of the Philippines’ biggest logistics firms, with support from CVC Capital Partners. Navegar, which led Great Deals’ Series A, also returned for this round.
The transaction was advised by Rocket Equities. The investment by Fast Group, which has a fleet of more than 2,500 vehicles and 90,000 stores in its distribution network, marks the beginning of a strategic partnership. Great Deals will use part of the new capital to build an automated fulfillment center, and the deal will help it increase its penetration outside the Greater Manila Area and offer more Instant Commerce, or deliveries under one hour.
Great Deals currently operates only in the Philippines, but plans to expand regionally next year, founder and chief executive officer Steve Sy told TechCrunch.
In a statement, Fast Group president and chief executive officer William Chiongbian II said, “The Fast Group sees a lot of synergies with Great Deals in building capacity. We are privileged to contribute to the growth of Philippine e-commerce, as it relies heavily on a strong supply chain backbone.”
Some of Great Deals’ other clients include Nestlé, Samsonite, GSK, Bayer and Fila. In addition to serving as an e-commerce distributor, it offers an end-to-end services for brands, including digital content production, marketing campaign coordination and management of marketplace listings (Great Deals’ partners include Lazada, Shopee, Zalora, Zilingo, Shopify and Magento).
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Facebook debuts ‘Live Shopping Fridays’ featuring beauty, fashion and skincare brands
Facebook wants to whet consumers’ appetite for live streamed shopping with this week’s launch of “Live Shopping Fridays” event series, which will see larger brands live streaming beauty, skincare, and fashion content on a weekly basis. The event begins Friday, May 22nd and runs through mid-July, with streams from brands like Abercrombie and Fitch, Bobbi Brown, Clinique, Sephora, Dermalogica, Alleyoop, and Zox.
The events are meant to encourage larger brands to try out live shopping as a medium, as well as generally raise awareness about live shopping on Facebook among consumers.
The brands will use their live shopping events in a number of ways. They may give a behind-the-scenes look at their business or they may partner with creators to showcase their products in “how-to” style videos, for example.
During the live streams, viewers can comment and ask questions which brands can read and respond to. Shoppers can also tap on the products displayed in the stream to learn more without having to leave the video. If they want to buy, they can add them to the cart and check out at any time — during or even after the event has wrapped. The brands receive the customer’s shipping information, and if the consumer opts in, they can gain access to other details as well, like email and phone number.
Live stream video shopping became publicly available on Facebook last summer, following a series of smaller trials and beta tests, where the format initially found traction with smaller to medium-sized businesses and digital-first brands, Facebook says.
The Covid pandemic also pushed adoption of the format, in some cases, as creative business owners turned to live shopping to reach their customers when lockdowns closed non-essential businesses.
Image Credits: Facebook
More recently, larger brands like Petco and Bobbi Brown have run live shopping events — the former as part of a charity effort, and the latter with a live stream featuring tips from makeup artist Michele Shakeshaft. (Pictured)
“The way that we’re thinking about this is that e-commerce has made buying incredibly convenient. So when you have a need, you pull out your phone, purchase, and your order is on its way,” explains Yulie Kwon Kim, who leads product for Facebook App Commerce.
“But buying is not shopping. And so, a lot of what people do is window shop to see what’s new, for entertainment. You discover something cool that you didn’t know about. When you’re shopping, people often want to hear from a live person, get suggestions, and see the product and context,” she says. “And increasingly, people are discovering and deciding what to buy through social media,” Yulie adds.
She also notes that almost three-quarters of consumers globally are getting shopping ideas through Facebook, Instagram, Messenger, and WhatsApp, and almost two-thirds agree that social media has now become as important as other information sources when making purchase decisions.
Facebook says the live events will be presented to consumers in a number of ways during the summer. If you follow a brand, you’ll be notified of their participation. You’ll also see News Feed announcements where you’ll be notified when events are starting (see above). And the Facebook Shop tab will offer a schedule of upcoming live shopping streams taking place across the platform.
Facebook, of course, is not the only one to realize the potential in live shopping.
Startups like NTWRK, Popshop Live, Talkshoplive, Dote, Bambuser, and others brought the live shopping model already popular in China to the U.S. and other markets, many months before the pandemic. TikTok has been testing live shopping, including with Walmart in the U.S., as well.
Amazon, meanwhile, live streams to its website, and YouTube announced earlier this year its beta tests of an integrated e-commerce experience.
As for Facebook, a live shopping platform could ultimately serve as a significant revenue stream, thanks to selling fees applied at checkout. While Facebook did waive those selling fees through June 2021 — a decision it claims was to help support small businesses during the Covid-19 pandemic — that move also conveniently helps Facebook stake its place in the live stream shopping market land grab now underway. Facebook also needs to diversify its revenue, given that Apple’s privacy push around third-party tracking will hurt Facebook’s ad business.
Facebook’s Live Shopping Fridays series will roll out across both mobile and desktop in the U.S. this week, and will also pop on Facebook’s Shop Tab for easy access.
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Bosta raises $6.7M to expand e-commerce delivery business across Africa and MENA
Per a recent report by Bain & Co., e-commerce is expected to grow to $28.5 billion in MENA by 2022 from a 2019 value of $8.3 billion. Egypt, one of the most active e-commerce countries in the region, is anticipated to grow 33% annually to reach $3 billion by 2022.
But for any e-commerce business to thrive, its last-mile delivery arm has to be well figured out. Bosta is one such company in Egypt helping small businesses with logistics and last-mile delivery. Today, the company is announcing it has closed a Series A investment of $6.7 million. U.S. and Middle East VC firm Silicon Badia led the round, with participation from 4DX Ventures, Plug and Play Ventures, Wealth Well VC, Khwarizmi VC, as well as other regional and global investors.
This investment comes a year after the company raised a $2.5 million round, which takes its total investment raised to $9.2 million.
Bosta was launched in 2017 by Mohamed Ezzat and Ahmed Gaber. The company offers next-day delivery to customers and handles exchange shipments, customer returns and cash collection.
The idea for Bosta came during Ezzat’s time at Lynks, his previous consumer goods startup. Lynks, the first YC-backed company from Egypt, allows people in Egypt to buy brands from the U.S., China and the U.K.
As co-founder and COO at Lynks, Ezzat was responsible for logistics, international clearance and last-mile delivery. In 2016, Egypt experienced an economic downturn coupled with the Egyptian pound devaluation and government restriction on imports. For Lynks it meant slow growth, but Ezzat was concerned about fixing the last-mile delivery bit, which, according to him, was a huge pain point.
“My nightmare was always the last mile. And at that time, you know that e-commerce is still very, very small. So it’s only 1% of the whole retail value,” he told TechCrunch. “So I was always thinking, how come if we want the e-commerce to grow, and we don’t have any strong company when it comes to last-mile because, in the end, every transaction on an e-commerce platform is a transaction on a courier platform.”
E-commerce is a fragmented sector where 80% of transactions come from small businesses selling on Facebook, Instagram and social media in general. Most of these businesses lack a strong delivery experience, and Ezzat left Lynks the following year to start Bosta.
Being in the parcel delivery industry, Bosta wants to help these companies to grow profitably. It also tries to simplify logistics and allow its customers to have full control over the delivery process.
“You can use Bosta to get anything to your doorstep. You buy in our local currency, and we buy everything, handle the shipping, customs, clearance and bring it to your doorstep,” the CEO added.
The company doesn’t own fleets of vehicles to carry out operations. Instead, it operates an Uber-like model where drivers sign up, are made contractors and make money when a delivery is completed.
Since 2017, the company has delivered more than 4 million packages to businesses, more than half since the pandemic outbreak last year. Bosta completes more than 300,000 deliveries per month, which is a 3.5x increase from when it raised its previous round, Ezzat stated. He also claims that more than 2,200 businesses use its platform daily and achieve a 95% delivery success rate.
Asides from small businesses, Bosta works with major e-commerce platforms like Souq (an Amazon company) and Jumia. Depending on the volume of goods transported, Bosta charges small businesses about 35-40 Egyptian pounds, while the big players are charged less, at 20-25 Egyptian pounds.
Speaking on the investment, Fawaz H Zu’bi said in a statement: “E-commerce has always had amazing potential in our region but was always being held back by something whether payments, logistics, market fragmentation, or customer adoption. We are excited to finally see companies like Bosta emerge to tackle some of these issues and help e-commerce realize its full promise and potential in a region that has now ‘turned on’ digitally.”
In the next two years, Bosta plans to deliver more than 15 million parcels in Egypt and serve over 20,000 businesses. The funds will be used for those causes, as well as expanding operations across Africa, MENA and the GCC.
“The investment is to dominate Egypt,” said Ezzat. “We want to make sure that we deliver the next day across Egypt, not just in Cairo, where we currently do. And to be a market leader when it comes to e-commerce on the continent and be profitable. This is the main target for us now and also to start operations in Saudi Arabia.”
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Una Brands launches with $40M to roll up brands on multiple Asia-Pacific e-commerce platforms
Una Brands’ co-founders (from left to right): Tobias Heusch, Kiren Tanna and Kushal Patel. Image Credits: Una Brands
One of the biggest funding trends of the past year is companies that consolidate small e-commerce brands. Many of the most notable startups in the space, like Thrasio, Berlin Brands Group and Branded Group, focus on consolidating Amazon Marketplace sellers. But the e-commerce landscape is more fragmented in the Asia-Pacific region, where sellers use platforms like Tokopedia, Lazada, Shopee, Rakuten or eBay, depending on where they are. That is where Una Brands comes in. Co-founder Kiren Tanna, former chief executive officer of Rocket Internet Asia, said the startup is “platform agnostic,” searching across marketplaces (and platforms like Shopify, Magento or WooCommerce) for potential acquisitions.
Una announced today that it has raised a $40 million equity and debt round. Investors include 500 Startups, Kingsway Capital, 468 Capital, Presight Capital, Global Founders Capital and Maximilian Bitner, the former CEO of Lazada who currently holds the same role at secondhand fashion platform Vestiaire Collective.
Una did not disclose the ratio of equity and debt in the round. Like many other e-commerce aggregators, including Thrasio, Una raised debt financing to buy brands because it is non-dilutive. The round will also be used to hire aggressively in order to evaluate brands in its pipeline. Una currently has teams in Singapore, Malaysia and Australia and plans to expand in Southeast Asia before entering Taiwan, Japan and South Korea.
Tanna, who also founded Foodpanda and ZEN Rooms, launched Una along with Adrian Johnston, Kushal Patel, Tobias Heusch and Srinivasan Shridharan. He estimates that there are more than 10 million third-party sellers spread across different platforms in the Asia-Pacific.
“Every single seller in Asia is looking at multiple platforms and not just Amazon,” Tanna told TechCrunch. “We saw a big gap in the market where e-commerce is growing very quickly, but players in the West are not able to look at every platform, so that is why we decided to focus on APAC, launch the business there and acquire sellers who are selling on multiple platforms.”
Una looks for brands with annual revenue between $300,000 to $20 million and is open to many categories, as long as they have strong SKUs and low seasonality (for example, it avoids fast fashion). Its offering prices range from about $600,000 to $3 million.
Tanna said Una will maintain acquisitions as individual brands “because what’s working, we don’t change it.” How it adds value is by doing things that are difficult for small brands to execute, especially those run by just one or two people, like expanding into more distribution channels and countries.
“For example, in Indonesia there are at least five or six important platforms that you should be on, and many times the sellers aren’t doing that, so that’s something we do,” Tanna explained. “The second is cross-border in Southeast Asia, which sellers often can’t do themselves because of regulations around customs, import restrictions and duties. That’s something our team has experience in and want to bring to all brands.”
Amazon FBA roll-up players have the advantage of Amazon Marketplace analytics that allow them to quickly measure the performance of brands in their pipeline of potential acquisitions. Since it deals with different marketplaces and platforms, Una works with much more fragmented sources of data for revenue, costs, rankings and customer reviews. To scale up, the company is currently building technology to automate its valuation process and will also have local teams in each of its markets. Despite working with multiple e-commerce platforms, Tanna said Una is able to complete a deal within five weeks, with an offer usually happening within two or three days.
In countries where Amazon is the dominant e-commerce player, like the United States, many entrepreneurs launch FBA brands with the goal of flipping them for a profit within a few years, a trend that Thrasio and other Amazon roll-up startups are tapping into. But that concept is less common in Una’s markets, so it offers different team deals to appeal to potential sellers. Though Una acquires 100% of brands, it also does profit-sharing models with sellers, so they get a lump sum payment for the majority of their business first, then collect more money as Una scales up the brand. Tanna said Una usually continues working with sellers on a consulting basis for about three to six months after a sale.
“Something that Amazon players know very well is that they can find a product, sell it for four to five years, and then ideally make a multi-million deal exit and build another product or go on holiday,” said Tanna. “That’s something Asian sellers are not as familiar with, so we see this as an education phase to explain how the process works, and why it makes sense to sell to us.”
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As concerns rise over forest carbon offsets, Pachama’s verified offset marketplace gets $15 million
Restoring and preserving the world’s forests has long been considered one of the easiest, lowest-cost and simplest ways to reduce the amount of greenhouse gases in the atmosphere.
It’s by far the most popular method for corporations looking to take an easy first step on the long road to decarbonizing or offsetting their industrial operations. But in recent months the efficacy, validity and reliability of a number of forest offsets have been called into question thanks to some blockbuster reporting from Bloomberg.
It’s against this uncertain backdrop that investors are coming in to shore up financing for Pachama, a company building a marketplace for forest carbon credits that it says is more transparent and verifiable thanks to its use of satellite imagery and machine learning technologies.
That pitch has brought in $15 million in new financing for the company, which co-founder and chief executive Diego Saez Gil said would be used for product development and the continued expansion of the company’s marketplace.
Launched only one year ago, Pachama has managed to land some impressive customers and backers. No less an authority on things environmental than Jeff Bezos (given how much of a negative impact Amazon operations have on the planet), gave the company a shoutout in his last letter to shareholders as Amazon’s outgoing chief executive. And the largest e-commerce company in Latin America, Mercado Libre, tapped the company to manage an $8 million offset project that’s part of a broader commitment to sustainability by the retailing giant.
Amazon’s Climate Pledge Fund is an investor in the latest round, which was led by Bill Gates’ investment firm Breakthrough Energy Ventures. Other investors included Lowercarbon Capital (the climate-focused fund from über-successful angel investor, Chris Sacca), former Uber executive Ryan Graves’ Saltwater, the MCJ Collective, and new backers like Tim O’Reilly’s OATV, Ram Fhiram, Joe Gebbia, Marcos Galperin, NBA All-star Manu Ginobili, James Beshara, Fabrice Grinda, Sahil Lavignia and Tomi Pierucci.
That’s not even the full list of the company’s backers. What’s made Pachama so successful, and given the company the ability to attract top talent from companies like Google, Facebook, SpaceX, Tesla, OpenAI, Microsoft, Impossible Foods and Orbital Insights, is the combination of its climate mission applied to the well-understood forest offset market, said Saez Gil.
“Restoring nature is one of the most important solutions to climate change. Forests, oceans and other ecosystems not only sequester enormous amounts of CO2 from the atmosphere, but they also provide critical habitat for biodiversity and are sources of livelihood for communities worldwide. We are building the technology stack required to be able to drive funding to the restoration and conservation of these ecosystems with integrity, transparency and efficiency” said Saez Gil. “We feel honored and excited to have the support of such an incredible group of investors who believe in our mission and are demonstrating their willingness to support our growth for the long term.”
Customers outside of Latin America are also clamoring for access to Pachama’s offset marketplace. Microsoft, Shopify and SoftBank are also among the company’s paying buyers.
It’s another reason that investors like Y Combinator, Social Capital, Tobi Lutke, Serena Williams, Aglaé Ventures (LVMH’s tech investment arm), Paul Graham, AirAngels, Global Founders, ThirdKind Ventures, Sweet Capital, Xplorer Capital, Scott Belsky, Tim Schumacher, Gustaf Alstromer, Facundo Garreton and Terrence Rohan were able to commit to backing the company’s nearly $24 million haul since its 2020 launch.
“Pachama is working on unlocking the full potential of nature to remove CO2 from the atmosphere,” said Carmichael Roberts from BEV, in a statement. “Their technology-based approach will have an enormous multiplier effect by using machine learning models for forest analysis to validate, monitor and measure impactful carbon neutrality initiatives. We are impressed by the progress that the team has made in a short period of time and look forward to working with them to scale their unique solution globally.”
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