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08.12.19 telecommunications

Africas top mobile phone seller Transsion to list in Chinese IPO

Chinese mobile-phone and device maker Transsion will list in an IPO on Shanghai’s STAR Market, Transsion confirmed to TechCrunch.

The company — which has a robust Africa sales network — could raise up to 3 billion yuan (or $426 million).

“The company’s listing-related work is running smoothly. The registration application and issuance process is still underway, with the specific timetable yet to be confirmed by the CSRC and Shanghai Stock Exchange,” a spokesperson for Transsion’s Office of the Secretary to the Chairman told TechCrunch via email.

Transsion’s IPO prospectus is downloadable (in Chinese) and its STAR Market listing application available on the Shanghai Stock Exchange’s website.

STAR is the Shanghai Stock Exchange’s new Nasdaq-style board for tech stocks that also went live in July with some 25 companies going public. 

Headquartered in Shenzhen — where African e-commerce unicorn Jumia also has a logistics supply-chain facility — Transsion is a top-seller of smartphones in Africa under its Tecno brand.

The company has a manufacturing facility in Ethiopia and recently expanded its presence in India.

Transsion plans to spend the bulk of its STAR Market raise (1.6 billion yuan or $227 million) on building more phone assembly hubs and around 430 million yuan ($62 million) on research and development, including a mobile phone R&D center in Shanghai, a company spokesperson said. 

Transsion recently announced a larger commitment to capturing market share in India, including building an industrial park in the country for manufacture of phones to Africa.

The IPO comes after Transsion announced its intent to go public and filed its first docs with the Shanghai Stock Exchange in April. 

Listing on the STAR Market will put Transsion on the freshly minted exchange seen as an extension of Beijing’s ambition to become a hub for high-potential tech startups to raise public capital. Chinese regulators lowered profitability requirements for the exchange, which means pre-profit ventures can list.

Transsion’s IPO process comes when the company is actually in the black. The firm generated 22.6 billion yuan ($3.29 billion) in revenue in 2018, up from 20 billion yuan a year earlier. Net profit for the year slid to 654 million yuan, down from 677 million yuan in 2017, according to the firm’s prospectus.

Transsion sold 124 million phones globally in 2018, per company data. In Africa, Transsion holds 54% of the feature phone market — through its brands Tecno, Infinix and Itel — and in smartphone sales is second to Samsung and before Huawei, according to International Data Corporation stats.

Transsion has R&D centers in Nigeria and Kenya and its sales network in Africa includes retail shops in Nigeria, Kenya, Tanzania, Ethiopia and Egypt. The company also attracted attention for being one of the first known device makers to optimize its camera phones for African complexions.

On a recent research trip to Addis Ababa, TechCrunch learned the top entry-level Tecno smartphone was the W3, which lists for 3,600 Ethiopian Birr, or roughly $125.

In Africa, Transsion’s ability to build market share and find a sweet spot with consumers on price and features gives it prominence in the continent’s booming tech scene.

Diving deep into Africa’s blossoming tech scene

Africa already has strong mobile-phone penetration, but continues to undergo a conversion from basic USSD phones, to feature phones, to smartphones.

Smartphone adoption on the continent is low, at 34%, but expected to grow to 67% by 2025, according to GSMA.

This, added to an improving internet profile, is key to Africa’s tech scene. In top markets for VC and startup origination — such as Nigeria, Kenya, and South Africa — thousands of ventures are building business models around mobile-based products and digital applications.

If Transsion’s IPO enables higher smartphone conversion on the continent, that could enable more startups and startup opportunities — from fintech to VOD apps.

Another interesting facet to Transsion’s IPO is its potential to create greater influence from China in African tech, in particular if the Shenzhen company moves strongly toward venture investing.

China’s engagement with African startups has been light compared to China’s deal-making on infrastructure and commodities — further boosted in recent years as Beijing pushes its Belt and Road plan.

Transsion’s IPO move is the second recent event — after Chinese owned Opera’s big venture spending in Nigeria — to reflect greater Chinese influence and investment in the continent’s digital scene.

So in coming years, China could be less known for building roads and bridges in Africa and more for selling smartphones and providing VC for African startups.

Opera founded startup OPay raises $50M for mobile finance in Nigeria

Read more: https://techcrunch.com/2019/08/07/africas-top-mobile-phone-seller-transsion-to-list-in-chinese-ipo/

06.08.19 Credit Cards

Step raises $22.5M led by Stripe to build no-fee banking services for teens

The smartphone revolution has well and truly disrupted the world of banking. A wide range of startups have cropped up that have completely removed the need to make visits to physical branches to open accounts, make deposits, pay for things, and ask for loans: you can now do all of these on the go by way of a simple tap on an app.

Now, in the latest development, a new startup is leveraging that progress to create a new service targeting one of the most avid demographics when it comes to smartphone usage. Step, which builds mobile-based banking services for teenagers, is today announcing a round of $22.5 million led by Stripe.

“Schools don’t teach kids about money,” CJ MacDonald, the CEO and co-founder, said in an interview. “We want to be their first bank accounts with spending cards, but we also want to teach financial literacy and responsibility. Banks don’t tailor to this, and we want to be a solution teaching the next generation of adults to be more responsible with money in the cashless era. It was easy with cash to go to the mall but now everyone is using their phone for Uber and more.” (MacDonald has a track record in mobile commerce applications: his previous startup, mobile loyalty card app Gyft, got acquired by First Data.)

Step’s first market will be the US, where it’s estimated that there are just under 50 million teenagers in the population.

MacDonald said the aim with the funding will be to use it to bring Step’s first product — banking accounts with payment cards attached — to market, in partnership with Mastercard and Evolve.

Step actually launched in January this year (when its card partner was actually Visa) but only to unveil a waitlist. Since then, it has amassed 500,000 names of interested would-be users — likely one reason why it attracted this funding, and the attention of a pretty high-profile set of investors, including several who know a thing or two about the youth market.

In addition to Stripe, the round includes Will Smith’s Dreamers fund, Nas, Jeffrey Katzenberg’s Wndrco, Ronnie Lott, Matt Rutler, Kevin Gould, and Moat founders Noah and Jonah Goodhart. Previous investors Crosslink Capital, Collaborative Fund and Sesame Ventures also participated. (It’s raised just under $30 million to date. Valuation is not being disclosed.)

Step is not wading into unchartered territory by building a banking service targeting teens. Banks have been offering people the ability to open accounts for their kids under the umbrella of their accounts for many years. And other startups that have built banking services for this age group, who already have products out in the market, include teen debit card and bank app Current, and Greenlight, which makes a debit card for kids. (And that’s before you consider the likes of Chime, which don’t target teens specifically but might be used by them.)

And nor will Step be the last: there have also been rumors that Amazon has been working on its own service offering bank accounts to teens.

MacDonald said there are differences between what Step and these others are offering. First and foremost, its primary point of engagement is the teenager him/herself, with the aim being to give the account holder full autonomy (or at least the feeling of it: parents can still monitor and put controls on an under-18 account, as well as pay funds into it).

To that end, Step has been marketing directly to its future users, doing viral things like incentivizing sign-ups by giving users a dollar towards their bank accounts (when they come online) for each person that gets referred and also signs up using a person’s code. Teenagers under 18 will even be able to sign up for accounts without parental or guardian consent — although these accounts with be very limited in their functionality.

Another key difference will be the business model around which Step is built. As with any company that provides card services, Step gets a cut from card transactions, but unlike others in this space (and unlike most banks), Step is launching with a no-fee model for the basic account. This is because the idea will be to grow with the users, and over time to offer them services that will collect fees, when they are needed.

“As teens grow up we want to grow with them,” MacDonald said. “We will start offering products when they go to college, for example lending money to get books or computers.”

Stripe’s investment for now appears to be mainly a financial one in terms of the services that will be coming in the first wave of Step’s rollout this year. Behind the scenes, it’s actually strategic, too: the company has been quietly building interesting inroads into developing services for card issuers, alongside the services for merchants that you might already know. That’s included the acquisition of Touchtech earlier this year.

Step’s service will be very dependent on building out, and using, robust APIs to let parents and companies pay into their accounts, and for people to be able to use their Step accounts to pay for things, and part of that will involve using and implementing card issuing APIs.

“We are working with Stripe on its issuing API and on developing the issuing side of its business,” MacDonald said. “That is something that we are excited about.” More generally, he said their goals are aligned. “They want to grow the GDP of the internet and grow businesses online. Part of what we are trying to do is to make young people participate responsibly in the online economy, and I think that mission is in line with Stripe’s.” 

Stripe’s head of corporate development, Jordan Angelos, is joining the board of Step with this round.

“Stripe is committed to searching for new ways to remove barriers to commerce and broaden economic access to more people,” Angelos said in a statement. “Step will help teenagers responsibly participate in a financial system that’s moving online, and teach money management skills through direct experience. We’re thrilled to support their efforts.”

The bigger opportunity also seems to be that much larger and more incumbent organizations will tap into what Step is building so that it can make sure to remain relevant and a part of whatever shape financial services take for so-called “generation alpha.”

“Today’s young people are digitally savvy, having grown up with technology as a mainstay in their day-to-day lives. As a result, we also need to ensure that they become familiar with the unique aspects of digital payments including providing education about the various finance and payment products available,” said Sherri Haymond, EVP Digital Partnerships, North America for Mastercard, in a statement. “Step has taken a thoughtful approach to developing an offering for teens and families that provides that first step in educating and acclimating today’s youth to help them gain confidence and awareness around their finances.”

Read more: https://techcrunch.com/2019/06/06/step-raises-22-5m-led-by-stripe-to-build-no-fee-banking-services-for-teens/

04.15.19 Credit Cards

Partnering with Visa, emerging market lender Branch International raises $170 million

The San Francisco-based startup Branch International, which makes small personal loans in emerging markets, has raised $170 million and announced a partnership with Visa to offer virtual, pre-paid debit cards to Branch client networks in Africa, South-Asia and Latin America. 

Branch — which has 150 employees in San Francisco, Lagos, Nairobi, Mexico City and Mumbai — makes loans starting at $2 to individuals in emerging and frontier markets. The company also uses an algorithmic model to determine credit worthiness, build credit profiles and offer liquidity via mobile phones.

“We’ll use [the money] to deepen existing business in Africa. Later this year we’ll announce high-yield savings accounts…in Africa,” says Branch co-founder and chief executive Matt Flannery.

The $170 million round from Foundation Capital and its new debit card partner, Visa, will support Branch’s international expansion, which could include Brazil and Indonesia, according to Flannery. Branch launched in Mexico and India within the last year. In Africa, it offers its services in Kenya, Nigeria and Tanzania.

A potential Branch customer

The Branch-Visa partnership will allow individuals to obtain virtual Visa accounts with which to create accounts on Branch’s app. This gives Branch larger reach in countries such as Nigeria — Africa’s most populous country with 190 million people — where cards have factored more prominently than mobile money in connecting unbanked and underbanked populations to finance.

Founded in 2015, Branch started operating in Kenya, where mobile money payment products such as Safaricom’s M-Pesa (which does not require a card or bank account to use) have scaled significantly. M-Pesa now has 25 million users, according to sector stats released by the Communications Authority of Kenya. Branch has more than 3 million customers and has processed 13 million loans and disbursed more than $350 million, according to company stats.

Branch has one of the most downloaded fintech apps in Africa, per Google Play app numbers combined for Nigeria and Kenya, according to Flannery.

Already profitable, Branch International expects to reach $100 million in revenues this year, with roughly 70 percent of that generated in Africa, according to Flannery.

In addition to Visa and Foundation Capital, the $170 Series C round included participation from Branch’s existing investors Andreessen Horowitz, Trinity Ventures, Formation 8, the IFC, CreditEase and Victory Park, while adding new investors Greenspring, Foxhaven and B Capital.

Branch last raised $70 million in 2018. The company’s overall VC haul and $100 million revenue peg register as pretty big numbers for a startup focused primarily on Africa. Pan-African e-commerce startup Jumia, which also announced its NYSE IPO last month, generated $140 million in revenue (without profitability) in 2018.

Startups building financial technologies for Africa’s 1.2 billion population have gained the attention of investors. As a sector, fintech (or financial inclusion) attracted 50 percent of the estimated $1.1 billion funding to African startups in 2018, according to Partech.

Branch’s recent round and plans to add countries internationally also tracks a trend of fintech-related products growing in Africa, then expanding outward. This includes M-Pesa, which generated big numbers in Kenya before operating in 10 countries around the world. Nigerian payments startup Paga announced its pending expansion in Asia and Mexico late last year. And payment services such as Kenya’s SimbaPay have also connected to global networks like China’s WeChat.

Read more: https://techcrunch.com/2019/04/08/partnering-with-visa-emerging-market-lender-branch-international-raises-170-million/

09.22.17 ecommerce

Amazon launched Prime Now in Singapore and sold 3 times the volume that it did in Seattle. Here’s how.

Amazon staff in Singapore at the Prime Now warehouse
Image: victoria ho/mashable

People were surprised when Amazon launched its two-hour delivery service, Prime Now, in Singapore last month. Unlike other countries where it launched Prime Now, the e-commerce giant didn’t have a retail presence here to begin.

So going from no Amazon at all to the ultra high pressure two-hour Prime Now delivery service certainly raised eyebrows.

SEE ALSO: Amazon’s new Prime Now warehouse in Singapore is absolutely massive

Customers responded by calling for an avalanche of orders on launch day, July 27. Singaporeans were so enthusiastic, Amazon’s first day here closed three times the order volume in this tiny island, than it did when it launched in its home city of Seattle in 2015.

And as the orders piled up, the app started showing delivery was “unavailable” within the day as Amazon ran out of physical delivery folks to fulfill orders.

But because it was relying on multiple third party logistics services, instead of running delivery itself, it could ramp up capacity over the next day by requesting for more help.

The company was so serious about making good on its two-hour promise, it sent off some of its warehouse officers in Ubers and cabs to make deliveries, too, confirmed Henry Low, director of Amazon Prime Now for Asia-Pacific.

With that, Amazon pulled off its biggest Prime Now launch in its history.

Amazon closed three times the order volume in this tiny island than it did when it launched in its home city of Seattle in 2015.

Singapore packs its 5.5 million people into a metropolis of just 710 square kilometers (274 square miles), with most of its residents living in high-rise apartment buildings. Amazon serves the country out of a single warehouse — its largest Prime Now facility yet, at 100,000 square feet. 

Seventy-nine of the 80 postal districts that cover Singapore have made orders in the month since Prime Now launched.

How Amazon did it: data, data, data

Amazon had already offered two-day or next-day delivery in the U.S., UK, and Japan, which has allowed it to iron out its processes in the lead up to offering Prime Now.

In Singapore though, it had to come out with a bang and go straight into two- and one-hour delivery, without the luxury of testing it out in real life.

To get it right, the secret was Singapore’s fairly unique postal code system, Low said. Each six-digit number corresponds to an individual building — and not a broader district, as it does in other countries.

This gave the company sufficient granularity to run in-depth simulations on delivery routes right to a customer’s doorstep. It could also develop more sophisticated models, with data it had on what customer sets would likely order from Prime Now, and when.

In addition, Amazon has years of historical data on Singaporean buying patterns on Amazon (the slow, non-Prime Now way). All of this helped its predictive systems see into the future, providing a picture of how the real day would likely play out, Low explained.

Local goods on the warehouse shelf.

Image: victoria ho/mashable

And what are Singaporeans buying? The top five items in its first month of operation are toilet paper, green tea, fresh milk, hot and spicy potato chips, and — curiously — broccoli.

Apart from groceries, Amazon has also delivered a toy flamingo set, and a car transmission cooler here.

Low said Amazon is keen to be in Singapore, despite its small size, because the country’s tech-obsessed citizens are super connected and “love shopping.”

Plus, Amazon hopes to plug into the talent pool here, he added. “The business environment allows us to experiment with various innovations like new payment services, that we haven’t before.”

All well and good, but our only question is, who’s ordering all that broccoli? 

WATCH: Amazon’s new meal kits are already available to select Prime members

Read more: http://mashable.com/2017/09/21/amazon-prime-now-singapore-one-month-later/

09.07.17 ecommerce

Human laziness is a market strategy for mattress and furniture startups

Bed-in-a-box businesses are booming by betting most people won't send them back.
Image: Shutterstock / Vladimir Nenezic

The explosion of companies selling mattresses and other big-ticket items online is based on a clear gamble: You’re not going to want to have to return that giant thing, even if it’s free to do so.

It’s a bet that these companies are winning, even when items are returned.

“Some of our biggest promoters are actually people who’ve already returned their mattress,”  said  Aaron Bata, head of customer experience at Phoenix mattress startup Tuft & Needle. “Those are some of the people we find who are recommending us to their friends and family more than those who keep the mattress because they’ve gone through the returns process and they know how easy it is.”

SEE ALSO: Amazon made a freaky algorithm that designs clothes based on popular styles

Tuft & Needle is just one of a bevy of startups that have emerged in the past couple years to sell mattresses online. Any person who has listened to a podcast has probably heard the pitch: Ditch that nightmare “mattress showroom experience” and get your next bed stuffed in a mind-bogglingly small box in the mail. 

The scale-tipping selling point? A months-long no-cost and ostensibly hassle-free trial period meant to put to rest any doubts you might have about sinking around $1,000 into something you’ve never even seen. If you don’t like it, the company takes it back and refunds all your money.

“‘Hey, try this mattress for four months.’ What a weird company!”

“Leesa gives you 100 nights to try your mattress for free. That is insane—that’s a third of a year” Comedy Bang Bang host Scott Aukerman says in one representative ad. “‘Hey, try this mattress for four months.’ What a weird company!”

That formula has allowed these bed-in-a-box startups to upend the traditional mattress industry, in which return and exchange fees of more than a hundred dollars were commonplace. Casper, Leesa, and at least half a dozen other companies are now operating with this model and it’s spread to similarly unwieldy items you might not otherwise think to buy online like sofas (Burrow and Joybird), bed frames (Pons), and flatpack furniture (Greycork).

But there’s a flip side to the promise at the heart of this new vision of home shopping: Returns are an expensive drag on bottom lines. There’s a reason that showrooms have always charged an exorbitant fee; they provide a buffer against hefty losses. 

Returns are an inventory-wasting headache for any e-commerce business—they tend to be by far the biggest fulfillment cost on retail balance sheets—and especially intensive for those selling big-ticket items like sofas and beds that oftentimes can’t be resold, according to Forrester retail analyst Ananda Chakravarty 

The new breed of online furniture retailers have to rely on the assumption that the overwhelming majority of customers won’t follow through with their return.

So far, they claim that’s working out.

“Returns are obviously a cost, but that’s something that has to be built in,”  Bata said. “We think it’s going to be perfect for so many people—for the vast majority of people out there… But it’s not going to be perfect for everybody.”

Image: casper

But their marketing has to balance the confidence that people will like their product with reassurance that the refund will be easy and painless if they don’t.

“We don’t want to make people jump through a bunch of hoops,” he said. “It’s one of the most important parts of our relationship with our customers is being able to have that trust.” 

Even so, perhaps an unspoken factor in the online furniture space’s success is that, however stellar the customer service, there will probably always be a few who see it as too much of a bother. In those cases, customers might opt to make do with a so-so product. 

“People are reluctant to send back their mattresses because it’s a hassle.”   

“Furniture probably has a lower return rate in general—people are reluctant to send back their mattresses because it’s a hassle,” Chakravarty said.

Of all the human characteristics to build a business around, laziness might be among the more consistent. Around three in five millennials admitted in a recent survey that they’ve kept items they disliked simply because they didn’t want to go through the trouble of returning them — around 18 percent more than shoppers over 30. That’s probably because nearly half of them say the returns they have made have been bad experiences, the report found.

“Retailers who want to remain competitive will find ways to reduce friction in the returns process, whether that’s communicating more updates, providing more transparency, or offering free return shipping,” said Sucharita Mulpuru, a retail industry analyst who worked on the study.

Many retailers do just the opposite. Walmart-owned Jet.com tries to dissuade returns by offering customers a discount if they forfeit the right to send an item back upfront. Other stores discourage them with restocking, shipping, and processing fees.

Old-school mattress sellers are one of the worst offenders. The Wall Street Journal reported in 2004 that most local and regional retailers barred returns altogether, and national chains made them frustrating and arduous with missed appointments, long waits, and fees of up to nearly $250.  

Casper changed that. The startup took advantage of the blatantly consumer-hostile practice by touting an unprecedentedly returns-friendly model that doesn’t cost customers a dime.

“They pioneered the 100-day trial/return free that others in the category have tried to adopt,” said Michael Duda, a managing partner at venture firm Bullish Inc. who’s invested in Casper.

A Casper spokesperson declined to reveal any specific returns data beyond a claim that its rate is in the “low single digits.” But the co-founders have discussed in previous interviews how they keep the cost down.

In the case of a return, Casper arranges for a local church or charity like the Salvation Army to come to the customer’s home and take the product for donation. The loss is actually cheaper than shipping the mattress across the country and washing it for resale, the company’s chief creative officer told Inc. last year. Casper also gets a tax write-off out of the deal.

Image: casper

For some customers, those steps played out seamlessly and conveniently.

“It was super easy and they were very helpful,” said Amy Luo of San Francisco. “They asked why I was returning it, but other than that, they didn’t pressure me to keep it or anything, which was really nice.”

But other mattress buyers found the company decidedly less enthusiastic. John Geletka of Chicago said it took him “a few attempts by their third-party donation service and some complaining on Twitter” before he was able to lock down an appointment.

“It’s an awkward and messy experience,” he said of the grunt work of getting the mattress in and out of his home. “I think a lot of people would deal with a Casper because it’s not terrible for sleeping on in the center.”

Another customer claimed on Yelp that Casper wouldn’t send a mattress topper for free after the deadline because a representative said that was “only used to dissuade folks from returning it.” (For the record, the offer mentioned isn’t Casper’s current official policy). Someone else called the process “a big hassle.”

Then there were a few people who seem to have more or less resigned themselves to the mattress.

“It is now an enormous, gigantic, expensive paperweight,” said one customer who missed the deadline.

“It is now an enormous, gigantic, expensive paperweight”

In Casper’s defense, the number of testimonies claiming customer service was helpful and easy outweighed complaints like that. A Casper employee also responded to many of the negative reviews.

Bata claims Tuft & Needle has a return rate of around 5 percent, and its three physical galleries where customers can try mattresses out before having them shipped to their door all boast average reviews of 4.5 stars or higher on Yelp.

He said some of the incentive to discourage returns in the name of lower overhead is at least partially offset by the word-of-mouth marketing the company can earn from people who tried the product and decided it just wasn’t a good personal fit. 

Even so, at least a few Yelp reviewers of the company claimed their returns didn’t go as advertised and the company wasn’t forthcoming in trying to coordinate a pick-up. But there were indeed rave reviews from people who ended up sending theirs back.

“This review is about how Tuft and Needle is blazing a trail to retail utopia,” one particularly enthusiastic refund recipient wrote. “They have managed to take virtually all of the risk out of a very difficult and confusing and expensive purchase.”

That reviewer probably meant that risk if gone for consumers, but it’s businesses that have figured out a way to make sure people aren’t returning stuff—but getting it in their homes before they can think twice. And it’s turning out to be a lucrative strategy.

WATCH: Neil deGrasse Tyson gets to the bottom of GMOs

Read more: http://mashable.com/2017/08/31/mattress-returns-gamble/

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