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From India’s richest man to Amazon and 100s of startups: The great rush to win neighborhood stores
After spending more than a decade disrupting the neighborhood stores in the U.S. and several other markets, Amazon and Walmart are employing an unusual strategy in India to face off this competitor: Friending them.
Walmart and Amazon, both of which face restrictions from New Delhi on what all they could do in India, have partnered with tens of thousands of neighborhood stores in the world’s second-largest internet market this year to leverage the vast presence of these mom and pop stores.
In June this year, at the height of the pandemic, Amazon announced “Smart Stores.” Through this India-specific program, for instance, Amazon is providing physical stores with software to maintain a digital log of the inventory they have in the shop and supplying them with a QR code.
When consumers walk to the store and scan this QR code with the Amazon app, they see everything the shop has to offer, in addition to any discounts and past reviews from customers. They can select the items and pay for it using Amazon Pay. Amazon Pay in India supports a range of payments services, including the popular UPI, and debit and credit cards.
The world’s largest e-commerce giant also maintains partnerships that allow it to turn tens of thousands of neighborhood stores as its delivery point for customers — and sometimes even rely on them for inventory.
India has over 60 million small businesses that dot the thousands of cities, towns and villages across the country. These mom and pop stores offer all kinds of items, are family run, and pay low wages and little to no rent.
This has enabled them to operate at an economics that is better than most — if not all — of their digital counterparts, and their scale allows them to offer unmatched fast delivery.
Krishna Shah, a New Delhi-based doctor, on paper is one of the perfect customers of e-commerce services. She lives in an urban city, uses digital payments apps and her earnings put her in the top 5% income level in the country. Yet, when she needed to buy food for her cats and needed it as soon as possible, she realized the major giants would take hours, if not longer. She ended up placing a call to a neighborhood store, which delivered the item within 10 minutes.
That neighborhood store, which employs fewer than half a dozen people, was competing with over a dozen giants and heavily funded startups including Grofers and BigBasket — and it won.
At stake is India’s retail market, which is estimated to be worth $1.3 trillion by 2025, from about $700 billion last year, according to Boston Consulting Group and the Retailers’ Association India. E-commerce, by several estimates, accounts for just 3% of the retail market in the country.
If that figure wasn’t small enough already, consider this: Some of the biggest customers of Flipkart and Amazon are these small retail stores. An executive with direct knowledge of the matter told TechCrunch that during some sales, as high as 40% of all smartphone units are bought by physical stores. The idea is, the executive said, to buy the devices at a discounted price, sit on them for a few days and when Amazon and Flipkart are done with their sales, sell the same phones at their standard prices.
Sujeet Kumar, co-founder of Udaan, a Bangalore-based startup that works with merchants, said that even as smartphones and the internet have reached all corners of India, e-commerce hasn’t been able to disrupt the retail market.
“The problem is that it is very difficult for e-commerce companies to build a supply chain and distribution network that is more efficient than those established by neighborhood stores. These mom and pop stores operate on an insanely different kind of cost economics. E-commerce companies are not able to match it,” he said.
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HealNow raises $1.3 million to bring online payments to pharmacies
As the health tech landscape rapidly evolves, another startup is making its presence known. HealNow has closed a $1.3 million round of funding from SoftBank Opportunity Fund and Alabama Futures Fund.
The company was founded by Halston Prox and Joshua Smith. Prox has worked in healthcare for more than a decade with major organizations such as Providence Health, Mount Sinai and Baylor Scott & White, mostly focused on digitizing health records and designing and implementing software for doctors, nurses, etc. Smith, CTO at the company, has been a developer since 2012.
The duo founded HealNow to become the central nervous system for order and delivery of prescriptions, according to Prox. Your average payments processing system isn’t necessarily applicable to pharmacies large and small because of the complexities of health insurance and the regulatory landscape.
Not only is it costly to facilitate online payments for pharmacies, but they also have their own pharmacy management systems and workflows that can be easily disrupted by moving to a new payments system.
HealNow has built a system that’s specifically tailored to pharmacies of any shape or size, from grocery stores to mom and pop pharmacies and everything in between. It’s a white label solution, meaning that any pharmacy can put their brand language on the product.
“We’re embedded in their current workflows and pharmacies don’t have to do anything manual, even if they’re using a pharmacy management system,” said Prox.
When a user looks to get a prescription from their pharmacy, they are sent a link that allows them to securely answer any questions that may be necessary for the pickup, enter insurance info, make a payment and schedule a curbside pickup or a delivery. The tech also integrates with third-party delivery services for pharmacies that offer deliveries.
This technology has been particularly important during the COVID-19 pandemic, giving smaller pharmacies the chance to compete with bigger chains who have digital solutions already set up that allow for curbside pick up. This is especially true now that Amazon has gotten into the space with the launch of Amazon Pharmacy.
HealNow is a SaaS company, charging a monthly subscription fee for use of the platform, as well as a service fee for prescriptions purchased on the platform. However, that service fee is a flat rate that never changes based on the cost of the prescription.
The space is crowded and growing more crowded, with competitors like NimbleRX and Capsule offering their own spin on simplifying and digitizing the pharmacy. One big difference for HealNow, says Prox, is that the startup has no intention of ever being a pharmacy, but rather serving pharmacies in a way that doesn’t disrupt their current workflow or system.
“We’re not a pharmacy, and we want to enable all these pharmacies to be online,” said Prox. “To do that we have to do that in an unbiased way by focusing on being a complete tech company.”
The funding is going primarily toward building out the sales and marketing arms of the company to continue fueling growth. HealNow has a foothold in the West, Southwest and Middle America, and is opening an office in Birmingham to sprint across the East Coast. Prox says the company is processing thousands of orders a day and tens of thousands of orders each month.
HealNow launched in 2018 after graduating from the Entrepreneurs Roundtable Accelerator .
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Revolut lets businesses accept online payments
Fintech startup Revolut is launching its own acquiring solution. With this move, the company is competing directly with Stripe, Adyen, Braintree or Checkout.com. This is an in-house product and not just a fresh coat of paint on an existing solution.
As a reminder, Revolut already offers business accounts. It lets you send and receive international payments, and exchange funds in multiple currencies. You also can order debit cards to spend money from your Revolut account directly.
With Revolut’s acquiring solution, the company is going one step further, as you can now accept card payments from your customers. Revolut supports 14 currencies and settles payments on your Revolut Business account the next day.
When it comes to fees, you get a small allowance of free card payment processing fees depending on your plan. Above that limit, you pay 1.3% on card transactions from customers based in Europe and the U.K. For other cards, you pay 2.8% on all transactions — there’s no free allowance.
This is slightly cheaper than Stripe, which costs 1.4% + £0.20 for European cards and 2.9% + £0.20 for non-European cards. Of course, companies like Stripe have been optimizing their payments infrastructure for many years. Right now, Stripe supports more payment methods, more currencies, advanced fraud prevention features, etc.
After you’ve created your merchant account, Revolut offers plugins for WooCommerce, Prestashop and Magento. You can also use the Merchant API to add a checkout widget on your custom website.
If you’re a freelancer and you just need to send a couple of invoices per month, you can also generate payment links. The recipient can then pay from a web page hosted by Revolut.
The main advantage of Revolut’s acquiring solution is that it’s integrated with Revolut Business. You can see payments and banking in the same interface, you don’t need to alternate between your Stripe account and your bank account to reconcile transaction data.
It could work particularly well for B2B businesses that don’t handle a ton of transactions and don’t want to set up a separate payments solution. Let’s see what customers think of the API when they start using it.
Online payments are available for business customers in the U.K., Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Netherlands, Poland, Portugal, Spain and Sweden. The rest of the European Economic Area should get the feature soon.
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Looking to emulate Venmo, JoomPay preps a Euro launch for easy bill splitting and cash payments
JoomPay, a startup with a similar product to PayPal-owned Venmo in the U.S., is set to launch in Europe shortly after being granted a Luxembourg Electronic Money Institution (EMI) license. The app allows people to send and receive money with anyone, instantly and for free. “Venmo me” has become a common phrase in the U.S., where people use it to split bills in restaurants or similar instances. Venmo is in common use in the U.S., but it’s not available in Europe, although dozens of other innovative mobile peer to peer transfer options exist, such as Revolut, N26, Monese and Monzo. The waitlist for the app’s beta is open now (iOS, Android).
Europe leads the world’s instant payments industry, with $18 trillion in worldwide volume predicted by 2025, up from $3 trillion in 2020 — a growth of more than 500%. Western Europe — and COVID-19 — is now driving that innovation and will account for 38% of instant payment transaction value by 2025. While Europe lacks simple peer-to-peer payments solutions such as Venmo or Square Cash App in the U.S., challenger banks have stepped up to provide similar kinds of services. JoomPay’s opportunity lies in being able to be a middle-man between these various banking systems.
Shopping app Joom, which has been downloaded 150 million times in Europe, has spun-off JoomPay to solve this problem. The app allows users to send and receive money from any person, regardless of whether they use JoomPay or not — and you only need to know their email or the phone number. JoomPay connects to any existing debit/credit card or a bank account. It also provides its users with a European IBAN and an optional free JoomPay card with cashback and bonuses.
Yuri Alekseev, CEO and co-founder of JoomPay, said: “Since COVID-19 started, we’ve seen a significant decline in cash usage. People can’t meet as easily as before but still need to send money, and we offer a viable alternative.”
JoomPay may have an uphill struggle. Its main competitors in Europe are the huge TransferWise, Paysend and, of course, PayPal itself.
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YC-backed Cashfree raises $35.3 million for its payments platform
Cashfree, an Indian startup that offers a wide-range of payments services to businesses, has raised $35.3 million in a new financing round as the profitable firm looks to broaden its offering.
The Bangalore-based startup’s Series B was led by London-headquartered private equity firm Apis Partners (which invested through its Growth Fund II), with participation from existing investors Y Combinator and Smilegate Investments. The new round brings the startup’s to-date raise to $42 million.
Cashfree kickstarted its journey in 2015 as a solution for restaurants in Bangalore that needed an efficient way for their delivery personnel to collect cash from customers.
Akash Sinha and Reeju Datta, the founders of Cashfree, did not have any prior experience with payments. When their merchants asked if they could build a service to accept payments online, the founders quickly realized that Cashfree could serve a wider purpose.
In the early days, Cashfree also struggled to court investors, many of whom did not think a payments processing firm could grow big — and do so fast enough. But the startup’s fate changed after Y Combinator accepted its application, even though the founders had missed the deadline and couldn’t arrive to join the batch on time. Y Combinator later financed Cashfree’s seed round.
Fast-forward five years, Cashfree today offers more than a dozen products and services and helps over 55,000 businesses disburse salary to employees, accept payments online, set up recurring payments and settle marketplace commissions.
Some of its customers include financial services startup Cred, online grocer BigBasket, food delivery platform Zomato, insurers HDFC Ergo and Acko and travel ticketing service provider Ixigo. The startup works with several banks and also offers integrations with platforms such as Shopify, PayPal and Amazon Pay.
Based on its offerings, Cashfree today competes with scores of startups, but it has an edge — if not many. Cashfree has been profitable for the past three years, Sinha, who serves as the startup’s chief executive, told TechCrunch in an interview.
“Cashfree has maintained a leadership position in this space and is now going through a period of rapid growth fuelled by the development of unique and innovative products that serve the needs of its customers,” Udayan Goyal, co-founder and a managing partner at Apis, said in a statement.
The startup processed over $12 billion in payments volumes in the financial year that ended in March. Sinha said part of the fresh fund will be deployed in R&D so that Cashfree can scale its technology stack and build more services, including those that can digitize more offline payments for its clients.
Cashfree is also working on building cross-border payments solutions to explore opportunities in emerging markets, he said.
“We still see payments as an evolving industry with its own challenges and we would be investing in next-gen payments as well as banking tech to make payments processing easier and more reliable. With the solid foundation of in-house technologies, tech-driven processes and in-depth industry knowledge, we are confident of growing Cashfree to be the leader in the payments space in India and internationally,” he said.
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Extra Crunch roundup: Inside DoorDash’s IPO, first-person founder stories, the latest in fintech VC and more
One of my favorite series of Monty Python sketches is built around the concept of surprise:
Chapman: I didn’t expect a kind of Spanish Inquisition.
[JARRING CHORD]
[Three cardinals burst in]
Cardinal Ximénez: NOBODY expects the Spanish Inquisition!
I was reminded of this today when I needed to reschedule a few stories so we could cover DoorDash’s S-1 filing from multiple angles. First, Managing Editor Danny Crichton looked at how well the company’s co-founders and many investors stand to make out. Alex Wilhelm covered the IPO announcement in depth on TechCrunch before writing an Extra Crunch column that studied the role the COVID-19 pandemic played in the home-delivery platform’s recent growth.
Our all-hands-on-deck coverage of DoorDash’s S-1 is a good illustration of Extra Crunch’s mission: timely analysis of current and future technology trends that serves founders and investors. We have a talented team, and as today’s coverage shows, they’re just as good as they are fast.
The stories that follow are an overview of Extra Crunch from the last five days. The full articles are only available to members, but you can use discount code ECFriday to save 20% off a one or two-year subscription. Details here.
Thanks very much for reading Extra Crunch this week. I hope you have a great weekend!
Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist
What I wish I’d known about venture capital when I was a founder
Why I left edtech and got into gaming
Image Credits: Klaus Vedfelt / Getty Images
We frequently run posts by guest contributors, but two stories we published this week were written in the first person, which is a bit of a departure.
In Why I left edtech and got into gaming, Darshan Somashekar brought us inside his decision to pivot away from a sector that’s been growing hotter in 2020.
His post is a unique take on two oft-discussed categories, but it also examines one founder/investor’s thought process when it comes to evaluating new opportunities.
Andy Areitio, a partner at early-stage fund TheVentureCity, wrote What I wish I’d known about venture capital when I was a founder, a reflection on the “classic mistakes” founders tend to make when it’s time to fundraise.
“Error number one (and two) is to raise the wrong amount of money and to do it at the wrong time,” he says. “They can also put all their eggs in one basket too early. I made that mistake.”
You can find business writing that explores best practices anywhere, which is why we hunt down stories that are firmly rooted in data or personal experience (which includes success and failure).
How COVID-19 accelerated DoorDash’s business
Image Credits: DoorDash
The coronavirus pandemic looms large in DoorDash’s S-1 filing.
According to the food-delivery platform, “58% of all adults and 70% of millennials say that they are more likely to have restaurant food delivered than they were two years ago,” and “the COVID-19 pandemic has further accelerated these trends.”
As in other sectors, the pandemic didn’t wave a magic wand — instead, it hastened trends that were already in play: consumers love convenience, which means DoorDash’s gross order volume and revenue were tracking well before the virus started to shape our lives.
“It’s your call on how to balance the factors and decide whether or not to buy into the IPO, but this one is going to be big,” writes Alex Wilhelm in a supplemental edition of today’s The Exchange.
The VC and founder winners of DoorDash’s IPO
SAN FRANCISCO, CA – SEPTEMBER 05: DoorDash CEO Tony Xu speaks onstage during Day 1 of TechCrunch Disrupt SF 2018 at Moscone Center on September 5, 2018 in San Francisco, California. (Photo by Kimberly White/Getty Images for TechCrunch)
None of us knew DoorDash would release its S-1 filing today, but Danny Crichton jumped on the story “so we can see who is raking in the returns on the country’s delivery startup champion.”
After estimating the value of the respective ownership stakes held by DoorDash’s four co-founders, he turned to the investors who participated in rounds seed through Series H.
Some growth funds are about to look very good after this IPO, and each founder is looking at hundreds of millions, he found.
But even so, their diminished haul of about $1.3 billion is “a sign of just how much dilution the co-founders took given the sheer amount of capital the company fundraised over its life.”
Fintech VC keeps getting later, larger and more expensive
Image Credits: Nigel Sussman (opens in a new window)
Investors sent stacks of cash to late-stage fintech companies in Q3 2020, but these sizable rounds may also point to shrinking opportunities for early-stage firms, reports Alex Wilhelm in this morning’s edition of The Exchange.
2020 could be a record year for fintech VC in Europe and North America, but are these “huge late-stage dollars” actually “a dampener for new fintech startups trying to get off the ground?”
Accelerators embrace change forced by pandemic
Devin Coldewey interviewed the leaders of three startup accelerators to learn more about the adaptations they’ve made in recent months:
- David Brown, founder and CEO, Techstars
- Cyril Ebersweiler, founder HAX, venture partner at SOSV
- Daniela Fernandez, founder, Ocean Solutions Accelerator
Due to travel bans, shelter-in-place orders and other unknowns, they’ve all shifted to virtual. But accelerators are intensive programs designed to indoctrinate founders and elicit brutally honest feedback in real time.
Despite the sudden shift, that boot-camp mindset is still in effect, Devin reports.
“Cutting out the commute time in a busy city leaves founders with more time for workshops, mentor matchmaking, pitch practice and other important sessions,” said Fernandez. “Everybody just has more flexibility and tranquility.”
Said Ebersweiler: “People are for some reason more participative and have more feedback than physically — it’s pretty strange.”
Greylock’s Asheem Chandna on ‘shifting left’ in cybersecurity and the future of enterprise startups
Image Credits: Greylock
In a recent interview with Greylock partner Asheem Chandna, Managing Editor Danny Crichton asked him about the buzz around no-code platforms and what’s happening in early-stage enterprise startups before segueing into a discussion about “shift left” security:
“Every organization today wants to bring software to market faster, but they also want to make software more secure,” said Chandna.
“There is a genuine interest today in making the software more secure, so there’s this concept of shift left — bake security into the software.”
Square and PayPal earnings bring good (and bad) news for fintech startups
Image Credits: Nigel Sussman (opens in a new window)
If you missed Wednesday’s The Exchange, Alex scoured earnings reports from PayPal and Square to see what the near future might hold for several fintech startups currently waiting in the wings.
Using Square and PayPal’s recent numbers for stock purchases, card usage and consumer payment activity as a proxy, he attempts to “see what we can learn, and to which unicorns it might apply.”
Conflicts in California’s trade secret laws on customer lists create uncertainty
Image Credits: jayk7 (opens in a new window)/ Getty Images
In California, non-competition agreements can’t be enforced and a court has ruled that customer contact lists aren’t trade secrets.
That doesn’t mean salespeople who switch jobs can start soliciting their former customers on their first day at the new gig, however.
Before you jump ship — or hire a salesperson who already has — read this overview of California’s trade secret laws.
“Even without litigation, a former employer can significantly hamper a departing salesperson’s career,” says Nick Saenz, a partner at Lewis & Llewellyn LLP, who focuses on employment and trade secret issues.
As public investors reprice edtech bets, what’s ahead for the hot startup sector?
Image: Bryce Durbin / TechCrunch
News of a highly effective COVID-19 vaccine appeared to drive down prices of the three best-known publicly traded edtech companies: 2U, Chegg and Kahoot saw declines of about 20%, 10% and 9%, respectively after the report.
Are COVID-19 tailwinds dissipating, or did the market make a correction because “edtech has been categorically overhyped in recent months?”
Dear Sophie: What does a Biden win for tech immigration?
Image Credits: Sophie Alcorn
What does President-elect Biden’s victory mean for U.S. immigration and immigration reform?
I’m in tech in SF and have a lot of friends who are immigrant founders, along with many international teammates at my tech company. What can we look forward to?
— Anticipation in Albany
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Current and upcoming trends in Latin America’s mobile growth
Jen Laloup
Contributor
Contributor
Jen Laloup is CEO of Mobile Growth Association.
Latin America (LATAM) is home to one of the fastest-growing mobile markets in the world. In 2018, there were 326 million mobile internet users in the region, and that figure is anticipated to increase to over 422 million users by 2025. Part of the reason for such exponential growth is that mobile is the main tool for internet access in Latin America, providing a portable way for people living in rural areas to get online. The social media boom and rise in messaging platforms in recent years have also spurred demand for optimized mobile services.
As mobile penetration continues in LATAM, it is facilitating innovative apps that promote opportunities for social mobility, financial control, access to overseas markets and societal development. And while a difference in maturity levels and local regulations dictates the mobile landscape for individual countries, there are visible trends throughout the region.
These trends are both reactions to LATAM’s unique mobile conditions and broader international influences, so can be telling of future mobile user expectations and behaviors. By recognizing and assimilating these trends, new mobile apps and services can disrupt the market in a more meaningful way.
Here are the current and upcoming trends of mobile growth across Latin America:
Digital wallets
Approximately 70% of Latin America’s population is unbanked or underbanked, meaning there is a huge opportunity to improve financial access. One emerging solution is digital wallets, which work via top-ups and don’t require a bank account with a physical company or branch to set up. Digital wallets, therefore, bypass the mistrust that many Latin Americans have around official banking institutions.
COVID-19 has certainly contributed to the heightened demand for mobile wallets in LATAM. As a predominantly cash-driven location, concerns about handling paper money have been confirmed as new studies reveal that the virus can survive on physical currency for 28 days. In turn, masses of citizens and consumers have begun looking for safer alternatives to cash. In Mexico, digital wallets are thought to occupy a 27.7% share of the business-to-consumer e-commerce payments market by 2021, while Argentina has also been showing high in-store use of digital wallets during the pandemic.
Over in Venezuela, AirTM’s digital wallet has been processing funds promised by interim President Guaidó to essential workers. The company has been instrumental in delivering the money to healthcare staff after the Maduro regime blocked the provider operating in the country. Beyond financial aid, digital wallets in Venezuela and other countries with high inflation rates mean locals don’t have to carry large amounts of bills and coins with them.
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Stripe Climate is a new tool to let Stripe customers make carbon removal purchases
Last year, payments giant Stripe announced that it would donate $1 million of its own funds annually into companies that are building technology to remove carbon from our environment, with the recipients of that investment announced in May of this year. Now, it’s expanding that commitment with a new product aimed at getting its customers to invest, too.
Today, the company is launching Stripe Climate, a new tool that companies using Stripe can integrate to set up automatic contributions that are made as a percentage of each transaction — the company can set the percentage itself — with the proceeds feeding into an add-on pot on top of Stripe’s own investments in carbon reduction companies.
Currently there are four companies on that investment list: CarbonCure (which collects carbon dioxide and recycles it for other purposes, among other things); Climeworks, which is building carbon removal plants; Project Vesta, which has worked on projects like “green sand” to remove carbon on beaches; and Charm Industrial (converting waste biomass to bio-oil). These are “earthshots,” as it were — not completely proven tech that might be too costly to run if it does work — but as with moonshots, there will be a lot of capital needed even to see how and if they can get off the ground.
It’s also likely there will be more efforts added to the list — and maybe some subtracted — over time.
For now, companies using Stripe Climate don’t get a chance to choose how their contributions get invested: they basically mirror and follow the path of those being made by Stripe itself.
Stripe Climate is free to use, and Stripe said that the 25 companies testing the service in a closed beta — the list includes Flexport, Substack, Flipcause and OpenSnow — have already contributed hundreds of thousands of dollars to the effort.
“We built Substack because, while it’s easy to be depressed about the current state of the media business, we think there’s tremendous opportunity for those daring enough to be optimistic. We feel the same way about climate change,” said Chris Best, co-founder and CEO of Substack, in a statement. “We’re done with defaulting to depression. We want to help show the way to a better future—and better yet, we want to give all Substack writers the opportunity to join us. Stripe’s climate initiative is a gift because it removes all barriers to positive action. This program makes it easy, and valuable, to do the right thing. We’re proud to be part of it.”
Stripe Climate is playing on some important themes at the company.
Stripe — now valued at $36 billion — has made a name for itself primarily through a simple payments service that site and app developers can integrate by way of APIs, using a few lines of code. That has helped the company grow fast and pick up a huge number of users, from sole-trader outfits to much bigger businesses.
The company is using the same low-friction principle here with Stripe Climate: the idea is that while companies and individuals might in theory be committed to making investments in environmental causes, many don’t know where to begin, or how to do it in an efficient way. This gives them that way, having it integrated as part of its existing payments flow.
“A lot of the social issues right now are collective action problems,” said Nan Ransohoff, Stripe’s head of climate, in an interview. “Climate change is a collective action problem. Coordinating can be complicated and expensive. So can we make it easy to bring Stripe businesses together to make the whole bigger than the sum of its parts? If we can do it even a little bit we as a planet we will be in a better place.”
The second theme of this is how it fits into what Stripe is building on a more strategic level. Basic payments may be the company’s bread and butter, but on top of that it’s been adding a host of other services for businesses, from tools to help them incorporate their operations in the U.S., through to fraud prevention and analytics, and money advances and credit based on their existing activity on the platform. And the other week it also made its largest ever acquisition, buying a startup called Paystack in Nigeria, to enter more comprehensively into new geographies like Africa.
The idea is not just to make more money from their customers through value-added services, but to increase stickiness with customers, who might be less reluctant to switch out a simple API if that data is also integrated into a number of other parts of their business and how they operate.
Stripe Climate isn’t going to make Stripe or its customers any money — in fact, it’s a way for its customers to give money away — but it’s a very strong goodwill gesture that could go some way to building more loyalty and regard with its customers.
Ransohoff said that the plan will also be to expand Stripe Climate into a tool that these companies can also in turn offer to their own customers at checkout — not unlike the many offers you might already see these days to contribute money toward good causes when you are hitting “buy now” on any number of sites.
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Adyen alumni raise €2.6M seed to launch Silverflow, a ‘cloud-native’ card payments processor
Silverflow, a Dutch startup founded by Adyen alumni, is breaking cover and announcing seed funding.
The pre-launch company has spent the last two years building what it describes as a “cloud-native” online card processor that directly connects to card networks. The aim is to offer a modern replacement for the 20 to 40-year-old payments card processing tech that is mostly in use today.
Backing Silverflow’s €2.6 million seed round is U.K.-based VC Crane Venture Partners, with participation from Inkef Capital and unnamed angel investors and industry leaders from Pay.On, First Data, Booking.com and Adyen. It brings the fintech startup’s total funding to date to ~€3 million.
Bootstrapped while in development and launching in 2021, Silverflow’s founders are CEO Anne-Willem de Vries (who was focused on card acquiring and processing at Adyen), CBDO Robert Kraal (former Adyen COO and EVP global card acquiring & processing of Adyen) and CTO Paul Buying (founder of acquired translation startup Livewords).
“The payments tech stack needs an upgrade,” Kraal tells me. “Today’s card payment infrastructure based on 30 to 40-year-old technology is still in use across the global payment landscape. This legacy infrastructure is costing everyone time and money: consumers, merchants, payment-service-providers and banks. The legacy platforms require a lengthy on-boarding process and are expensive to maintain, [and] they also aren’t fit for purpose today because they don’t support data use”.
In addition, Kraal says that adding new functionality is a lengthy and expensive process, requiring the effort of specialised engineers which ultimately slows down innovation “for the whole card payments system”.
“Finally, every acquirer provides its customer with a different processing platform, which for a typical payment service provider (PSP) means they have to deal with multiple legacy platforms — and all the costs and specialised support each entails,” adds de Vries.
To solve this, Silverflow claims it has built the first payments processor with a “cloud-native platform” built for today’s technology stack. This includes offering simple APIs and “streamlined data flows” directly integrated into the card networks.
Continues de Vries: “Instead of managing a complex network of acquirers across markets with dozens of bank and card network connections to maintain, Silverflow provides card-acquiring processing as a service that connects to card networks directly through a simple API”.
Target customers are PSPs, acquirers and “global top-market merchants” that are seeing €500 million to 10 billion in annual transactions.
“As a managed service, Silverflow provides the maintenance for connections and new product innovation that users have typically had to support in-house or work on long-term product road maps with suppliers,” explains Kraal. “Based in the cloud, Silverflow is infinitely scalable for peak flows and also provides robust data insights that users haven’t previously been able to access”.
With regards to competitors, Kraal says there are no other companies at the moment doing something similar, “as far as we are aware”. Currently, acquirers use traditional third-party processors, such as SIA, Omnipay, Cybersource or MIGS. Some companies, like Adyen, have built their own in-house processing platform.
So, why hasn’t a cloud-native card processing platform like Silverflow been done before and why now? A lack of awareness of the problem might be one reason, says de Vries.
“Unless you have built several integrations to acquirers during your career, you are not aware that the 30 to 40-years-old infrastructure is still in use. This is not typically a problem some bright college graduates would tackle,” he posits.
“Second, to build this successfully, you need to have prior knowledge of the card payments industry to navigate all the legal, regulatory and technical requirements.
“Thirdly, any large corporate currently active in card payment processing will be aware of the problem and have the relevant industry knowledge. However, building a new processing platform would require them to allocate their most talented staff to this project for two-three years, taking away resources from their existing projects. In addition, they would also need to manage a complex migration project to move their existing customers from their current system to the new one and risk losing some of the customers along the way”.
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Daily Crunch: Stripe acquires Nigeria’s Paystack
Stripe makes a big acquisition, Google rolls out search improvements and Snapchat adds a TikTok-y feature. This is your Daily Crunch for October 15, 2020.
The big story: Stripe acquires Nigeria’s Paystack
Stripe has made its biggest acquisition to date. It announced today that it bought Paystack, a Lagos-headquartered startup that makes it easy to integrate payment services — we’ve referred to it in the past as “the Stripe of Africa.”
Sources tell us that the acquisition price was more than $200 million.
In an interview with TechCrunch, Stripe CEO Patrick Collison said that expanding into Africa presents the company with “an enormous opportunity,” adding that Stripe is planning for “a longer time horizon” than most other companies: “We are thinking of what the world will look like in 2040-2050.”
The tech giants
Google launches a slew of Search updates — These new AI-focused improvements include the ability to better answer questions with very specific answers, as well as a new algorithm to better handle the typos in your queries.
Snapchat launches its TikTok rival, Sounds on Snapchat — Snapchat made good on its promise to release a new feature that would allow users to set their Snaps to music.
Mario Kart Live: Home Circuit review — Bryce Durbin offers an illustrated look at a new edition of Mario Kart that incorporates a real remote-controlled car.
Startups, funding and venture capital
River, the latest venture from Wander founder Jeremy Fisher, launches with $10.4M in funding — River is meant to rethink the way we consume content across the internet.
Small business payments and marketing startup Fivestars raises $52.5M — It’s a difficult time for small businesses, and Fivestars CEO Victor Ho said that many of the big digital platforms aren’t helping.
Bipedal robot developer Agility announces $20M raise — Agility’s Digit is a package delivery robot capable of navigating stairs and other terrain.
Advice and analysis from Extra Crunch
News that Calm seeks more funding at a higher valuation is not transcendental thinking — We rewind the clock and review data from 2018, 2019 and 2020 about the meditation app.
Brighteye Ventures’ Alex Latsis talks European edtech funding in 2020 — European edtech firm Brighteye Ventures recently announced the $54 million first close of its second fund.
Tesla’s decision to scrap its PR department could create a PR nightmare — The move effectively makes founder Elon Musk the company’s lone voice.
(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)
Everything else
New Oxford machine learning-based COVID-19 test can provide results in under 5 minutes — The test also offers advantages when it comes to detecting actual virus particles, instead of antibodies or other signs of the presence of the virus.
When was the last time you worked out your soul? — Another discussion of wellness startup funding, this time via the latest episode of the Equity podcast.
The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.
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