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Main article: Payments

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Venmo woos retailers with branded, animated stickers for its newsfeed

17:46 | 21 January

Venmo’s newsfeed is about to get more interesting. Historically, the PayPal-owned app’s users would comment on their transactions using text, or as is more common, emoji. But now the company is planning to add support for custom, animated stickers, as well.

These animations were designed in partnership with Holler so they’re unique to the Venmo app and tailored to the sorts of transactions that take place there. For example, one is of a hoagie sandwich broken in half with text that reads “split the bill.” Another features a spinning pizza. One includes two characters pushing an IKEA shopping cart. And so on.

IKEA isn’t the only brand to be included in the new stickers, as it turns out — Subway and others are also participating, Venmo says. (Keurig was initially listed as a sticker partner, then pulled out at the last minute. Other news sites have still included the brand’s mention, but to be clear — it isn’t launching now.)

The move to introduce stickers — and particularly those featuring select retailers — comes at a time when Venmo is looking for ways to establish itself as a payment method of choice at brick-and-mortar stores. On that front, the company this past fall launched a rewards program tied to its physical Venmo card to offer users 5% back at stores like Target, Sephora, Dunkin’ Donuts, and Wendy’s, among others.

Though Venmo parent company PayPal had already tried to establish itself as an optional at checkout through point-of-sale integrations in years past, it never really took off. In more recent months, PayPal instead chose to partner instead of competing with payment rivals like Apple, Google, Visa, Mastercard, and others. Venmo, however, still has a shot at becoming at establishing a foothold in the physical retail space, thanks to its Venmo account-linked card and its forthcoming credit card.

In addition, its service is favored by millennial and Gen Z shoppers who often opt for non-traditional cards and banking products, like mobile banking apps and cards that also function as status symbol cards, like the new  Apple Card. Plus, they prefer visual communication when it comes to sharing what they’re spending — over 90% of Venmo transactions include emojis, the company notes.

Venmo says the new stickers in the app will help the retailers to better connect with Venmo users and could allow for tailored experiences, going forward. But not all the stickers are branded — some are just happy tacos or burritos, jars and mugs filled with pennies, and other generic images.

The stickers are rolling out, starting today, says Venmo.

 


0

Marijuana delivery giant Eaze may go up in smoke

00:07 | 17 January

The first cannabis startup to raise big money in Silicon Valley is in danger of burning out. TechCrunch has learned that pot delivery middleman Eaze has seen unannounced layoffs, and its depleted cash reserves threaten its ability to make payroll or settle its AWS bill. Eaze was forced to raise a bridge round to keep the lights on as it prepares to attempt major pivot to ‘touching the plant’ by selling its own marijuana brands through its own depots.

If Eaze fails, it could highlight serious growing pains amid the ‘green rush’ of startups into the marijuana business.

Eaze, the startup backed by some $166 million in funding that once positioned itself as the “Uber of pot” — a marketplace selling pot and other cannabis products from dispensaries and delivering it to customers — has recently closed a $15 million bridge round, according to multiple source. The fund was meant to keep the lights on as Eaze struggles to raise its next round of funding amid problems with making decent margins on its current business model, lawsuits, payment processing issues, and internal disorganization.

 

An Eaze spokesperson confirmed that the company is low on cash. Sources tell us that the company, which laid off some 30 people last summer, is preparing another round of cuts in the meantime. The spokesperson refused to discuss personnel issues but noted that there have been layoffs at many late stage startups as investors want to see companies cut costs and become more efficient.

From what we understand, Eaze is currently trying to raise a $35 million Series D round according to its pitch deck. The $15 million bridge round came from unnamed current investors. (Previous backers of the company include 500 Startups, DCM Ventures, Slow Ventures, Great Oaks, FJ Labs, the Winklevoss brothers, and a number of others.) Originally, Eaze had tried to raise a $50 million Series D, but the investor that was looking at the deal, Athos Capital, is said to have walked away at the eleventh hour.

Eaze is going into the fundraising with an enterprise value of $388 million, according to company documents reviewed by TechCrunch. It’s not clear what valuation it’s aiming for in the next round.

An Eaze spokesperson declined to discuss fundraising efforts but told TechCrunch, “The company is going through a very important transition right now, moving to becoming a plant-touching company through acquisitions of former retail partners that will hopefully allow us to more efficiently run the business and continue to provide good service to customers.

Desperate to grow margins

The news comes as Eaze is hoping to pull off a “verticalization” pivot, moving beyond online storefront and delivery of third-party products (rolled joints, flower, vaping products and edibles) and into sourcing, branding and dispensing the product directly. Instead of just moving other company’s marijuana brands between third-party dispensaries and customers, it wants to sell its own in-house brands through its own delivery depots to earn a higher margin. With a number of other cannabis companies struggling, the hope is that it will be able to acquire brands in areas like marijuana flower, pre-rolled joints, vaporizer cartridges, or edibles at low prices.

An Eaze spokesperson confirmed that the company plans to announce the pivot in the coming days, telling TechCrunch that it’s “a pretty significant change from provider of services to operating in that fashion but also operating a depot directly ourselves.”

The startup is already making moves in this direction, and is in the process of acquiring some of the assets of a bankrupt cannabis business out of Canada called Dionymed — which had initially been a partner of Eaze’s, then became a competitor, and then sued it over payment disputes, before finally selling part of its business. These assets are said to include Oakland dispensary Hometown Heart, which it acquired in an all-share transaction (“Eaze effectively bought the lawsuit,” is how one source described the sale). This will become Eaze’s first owned delivery depot.

In a recent presentation deck that Eaze has been using when pitching to investors — which has been obtained by TechCrunch — the company describes itself as the largest direct-to-consumer cannabis retailer in California. It has completed more than 5 million deliveries, served 600,000 customers and tallied up an average transaction value of $85. 

To date, Eaze has only expanded to one other state beyond California, Oregon. Its aim is to add five more states this year, and another three in 2021. But the company appears to have expected more states to legalize recreational marijuana sooner, which would have provided geographic expansion. Eaze seems to have overextended itself too early in hopes of capturing market share as soon as it became available.

An employee at the company tells us that on a good day Eaze can bring in between $800,000 and $1 million in net revenue, which sounds great, except that this is total merchandise value, before any cuts to suppliers and others are made. Eaze makes only a fraction of that amount, one reason why it’s now looking to verticatlize into more of a primary role in the ecosystem. And that’s before considering all of the costs associated with running the business. 

Eaze is suffering from a problem rampant in the marijuana industry: a lack of working capital. Since banks often won’t issue working capital loans to weed-related business, deliverers like Eaze can experience delays in paying back vendors. A source says late payments have pushed some brands to stop selling through Eaze.

Another drain on its finances have been its marketing efforts. A source said out-of-home ads (billboards and the like) allegedly were a significant expense at one point. It has to compete with other pot purchasing options like visiting retail stores in person, using dispensaries’ in-house delivery services, or buying via startups like Meadow that act as aggregated online points of sale for multiple dispensaries.

Indeed, Eaze claims that its pivot into verticalization will bring it $204 million in revenues on gross transactions of $300 million. It notes in the presentation that it makes $9.04 on an average sale of $85, which will go up to $18.31 if it successfully brings in ‘private label’ products and has more depot control.

Selling weed isn’t eazy

The poor margins are only one of the problems with Eaze’s current business model, which the company admits in its presentation have led to an inconsistent customer experience and poor customer affinity with its brand — especially in the face of competition from a number of other delivery businesses.  

Playing on the on-demand, delivery-of-everything theme, it connected with two customer bases. First, existing cannabis consumers already using some form of delivery service for their supply; and a newer, more mainstream audience with disposable income that had become more interested in cannabis-related products but might feel less comfortable walking into a dispensary, or buying from a black market dealer.

It is not the only startup that has been chasing that audience. Other competitors in the wider market for cannabis discovery, distribution and sales include Weedmaps, Puffy, Blackbird, Chill (a brand from Dionymed that it founded after ending its earlier relationship with Eaze), and Meadow, with the wider industry estimated to be worth some $11.9 billion in 2018 and projected to grow to $63 billion by 2025.

Eaze was founded on the premise that the gradual decriminalisation of pot — first making it legal to buy for medicinal use, and gradually for recreational use — would spread across the US and make the consumption of cannabis-related products much more ubiquitous, presenting a big opportunity for Eaze and other startups like it. 

It found a willing audience among consumers, but also tech workers in the Bay Area, a tight market for recruitment. 

“I was excited for the opportunity to join the cannabis industry,” one source said. “It has for the most part has gotten a bad rap, and I saw Eaze’s mission as a noble thing, and the team seemed like good people.”

Eaze CEO Ro Choy

That impression was not to last. The company, this employee was told when joining, had plenty of funding with more on the way. The newer funding never materialised, and as Eaze sought to figure out the best way forward, the company cycled through different ideas and leadership: former Yammer executive Keith McCarty, who cofounded the company with Roie Edery (both are now founders at another Cannabis startup, Wayv), left, and the CEO role was given to another ex-Yammer executive, Jim Patterson, who was then replaced by Ro Choy, who is the current CEO. 

“I personally lost trust in the ability to execute on some of the vision once I got there,” the ex-employee said. “I thought that on one hand a picture was painted that wasn’t the truth. As we got closer and as I’d been there longer and we had issues with funding, the story around why we were having issues kept changing.” Several sources familiar with its business performance and culture referred to Eaze as a “shitshow”.

No ‘Push For Kush’

The quick shifts in strategy were a recurring pattern that started well before the company got tight financial straits. 

One employee recalled an acquisition Eaze made several years ago of a startup called Push for Pizza. Founded by five young friends in Brooklyn, Push for Pizza had gone viral over a simple concept: you set up your favourite pizza order in the app, and when you want it, you pushed a single button to order it. (Does that sound silly? Don’t forget, this was also the era of Yo, which was either a low point for innovation, or a high point for cynicism when it came to average consumer intelligence… maybe both.)

Eaze’s idea, the employee said, was to take the basics of Push for Pizza and turn it into a weed app, Push for Kush. In it, customers could craft their favourite mix and, at the touch of a button, order it, lowering the procurement barrier even more.

The company was very excited about the deal and the prospect of the new app. They planned a big campaign to spread the word, and held an internal event to excite staff about the new app and business line. 

“They had even made a movie of some kind that they showed us, featuring a caricature of Jim” — the CEO at a the time — “hanging out of the sunroof of a limo.” (I’ve been able to find the opening segment of this video online, and the Twitter and Instagram accounts that had been created for Push for Kush, but no more than that.)

Then just one week later, the whole plan was scrapped, and the founders of Push for Pizza fired. “It was just brushed under the carpet,” the former employee said. “No one could get anything out of management about what had happened.”

Something had happened, though: the company had been taking payments by card when it made the acquisition, but the process was never stable and by then it had recently gone back to the cash-only model. Push for Kush by cash was less appealing. “They didn’t think it would work,” the person said, adding that this was the normal course of business at the startup. “Big initiatives would just die in favor of pushing out whatever new thing was on the product team’s radar.” 

Eaze’s spokesperson confirmed that “we did acquire Push For Pizza . . but ultimately didn’t choose to pursue [launching Push For Kush].”

Payments were a recurring issue for the startup. Eaze started out taking payments only in cash — but as the business grew, that became increasingly problematic. The company found itself kicked off the credit card networks and was stuck with a less traceable, more open to error (and theft) cash-only model at a time when one employee estimated it was bringing in between $800,000 and $1 million per day in sales. 

Eventually, it moved to cards, but not smoothly: Visa specifically did not want Eaze on its platform. Eaze found a workaround, employees say, but it was never above board, which became the subject of the lawsuit between Eaze and Dionymed. Currently the company appear to only take payments via debit cards, ACH transfer, and cash, not credit card.

Another incident sheds light on how the company viewed and handled security issues. 

Can Eaze rise from the ashes?

At one point, employees allegedly discovered that Eaze was essentially storing all of its customer data — including users’ signatures and other personal information — in an Azure bucket that was not secured, meaning that if anyone was nosing around, it could be easily discovered and exploited.

The vulnerability was brought to the company’s attention. It was something that was up to product to fix, but the job was pushed down the list. It ultimately took seven months to patch this up. “I just kept seeing things with all these huge holes in them, just not ready for prime time,” one ex-employee said of the state of products. “No one was listening to engineers, and no one seemed to be looking for viable products.” Eaze’s spokesperson confirms a vulnerability was discovered but claims it was promptly resolved.

Today, the issue is a more pressing financial one: the company is running out of money. Employees have been told the company may not make its next payroll, and AWS will shut down its servers in two days if it doesn’t pay up. 

Eaze’s spokesperson tried to remain optimistic while admitting the dire situation the company faces. “Eaze is going to continue doing everything we can to support customers and the overall legal cannabis industry. We’re excited about the future and acknowledge the challenges that the entire community is facing.”

As medicinal and recreational marijuana access became legal in some states in the latter 2010s, entrepreneurs and investors flocked to the market. They saw an opportunity to capitalize on the end of a major prohibition — a once in a lifetime event. But high government taxes, enduring black markets, intense competition, and a lack of financial infrastructure willing to deal with any legal haziness have caused major setbacks.

While the pot business might sound chill, operations like Eaze depend on coordinating high-stress logistics with thin margins and little room for error. Plenty of food delivery startups from Sprig to Munchery went under after running into similar struggles, and at least banks and payment processors would work with them. With the odds stacked against it, Eaze has a tough road ahead.

 


0

2019 saw a stampede of fintech unicorns

21:10 | 9 January

Dana Stalder Contributor
Dana Stalder is a partner at Matrix Partners, where he invests predominantly in fintech, consumer marketplaces and enterprise software.
Jake Jolis Contributor
Jake Jolis is a partner at Matrix Partners and invests in seed and Series A technology companies including marketplaces and software.

Two years ago, we created the Matrix FinTech Index to highlight what we saw as the beginnings of a 10+ year mega innovation wave in financial services.

The trillion-dollar financial services industry was going to be turned on its head over the next decade, and we were just getting started. At the time, the top 10 publicly traded U.S. fintech companies had just surpassed the $100 billion mark in terms of total market capitalization, 12 unicorns had emerged in the category, and the U.S. VC industry had just poured in $6.7B — a record at the time.

As we predicted last year, the innovation cycle continues, and we are transitioning into its mid-phase. So what happened in U.S. fintech in 2019? In short, monster growth.

On the public side, fintechs delivered resoundingly. PayPal alone gained $26B in market capitalization. On a return basis, the public Matrix FinTech Index continued to crush every major equity index as well as the financial services incumbents. Nicely matching our forecasts, our Index delivered 213% returns over the last three years. The Index outperformed the financial services incumbents by 151 percentage points and the S&P 500 by 170 percentage points.

 


0

Snackpass snags $21M to let you earn friends free takeout

17:58 | 19 December

“We were in the back washing blenders so they could keep taking Snackpass orders” recalls co-founder and CEO Kevin Tan. The team from order-ahead food startup Snackpass was willing to get their hands dirty to keep up with demand at one of their first restaurant partners, Tropical Smoothie Cafe on the Yale college campus.

Why were people so eager to pay for takeout through Snackpass? Because it lets them earn loyalty points to redeem for free food — both for themselves and as gifts for their friends. Sending people Snackpass rewards became a new way to flirt or show gratitude at Yale. And through the Venmo-esque Snackpass social feed, users could keep up with a fresh form of gossip while discovering restaurants.

“Anywhere someone is standing in line to order something, we can solve that with Snackpass” says Tan. “Consumer spending will be social in the future.”

That future is already taking hold. Two years after launch, Snackpass is on 11 college campuses across the US, often boasting a 75% penetration rate amongst students within 6 months. It takes a cut of every order and keeps margins high since users pick up the food themselves rather than waiting for delivery. While other food ordering startups battle to offer discounts as marauding users deal-hop between apps, Snackpass keeps users coming back through its loyalty program.

Its momentum, retention, and opportunity to expand from colleges to dense cities has now won Snackpass a $21 million Series A led by Andreessen Horowitz partner Andrew Chen. The round was joined by other heavy hitters like Y Combinator, General Catalyst, Inspired Capital, and First Round plus angels including musician Nas, NFL star Larry Fitzgerald, and legendary talent agent Michael Ovitz. Building on Snackpass’ $2.7 million seed, the cash will go towards hiring up with the goal of reaching 100 campuses in 2 years.

“Takeout is an important market because it’s huge — also in the hundreds of billions — and fragmented” writes Chen. “The opportunity complements the food delivery market in a big way: For the average restaurant, there are 6 takeout orders for every delivery order!”

“It’s Own Language”

Like many of the best startup ideas, Snackpass was born out of the founders’ own needs at Yale. Slow and expensive food delivery services didn’t make sense for smaller orders like a coffee, ice cream, or a pepperoni slice on campuses small enough for customers to walk or bike to the restaurant. Tan says “I was dabbling in several side projects, including helping a friend who managed a local pizza shop build a website to help better reach the local student community.” He realized how tough it was for restaurants around colleges to retain and reward customers, especially as regulars graduated.

Tan joined up with neuroscience student and Thiel Fellow Jamie Marshall, who became Snackpass’ COO. “I had grown up calling in every order” Marshall tells me. “Waiting in line didn’t make sense for me. I used every order-ahead platform and thought this was the future.” Jonathan Cameron, a serial entrepreneur who’d built his own order-ahead app called Happy Hour, rounded out the founding team.

Snackpass founders (from left): Jamie Marshall and Kevin Tan

Snackpass offers users a list of nearby restaurants they can order ahead from, with special tags for ones offering deals. Menu items include counts of how many people have ordered them and how many rewards points you’ll earn buying them. You pay in the app, skip the line at the restaurant, and grab your order from the counter. Each restaurant can configure their own rewards system with how much items earn and cost, such as giving you a free coffee for every 10 you buy.

Users can then spend their points to get themselves free menu items, or send a virtual Snackpass gift card to any of their phone contacts or people they find via search. This gives Snackpass a way to grow virally that most food apps lack. Thankfully, you can block people on Snackpass if they get creepy showering you with gifts.

Each purchase and gift on Snackpass shows up in its social feed unless you make it private. “That’s become its own language. People use it to flirt with each other, or bond and connect with someone new” Tan tells me. “There’s some drama or intrigue there seeing who’s sending gifts to who. People even look at the feed in the way they look at someone’s Instagram to see what’s going on with them.”

Snackpass has also done some integration work specifically for the college market that sets it apart from other order-ahead and delivery services. It can sync with students’ campus meal plans so they can spend them through the app. And student groups from clubs to fraternities can pre-load and replenish accounts for their members. Snackpass works with the same organizations to launch on new campuses. “We host parties, sponsor tailgates, and make it feel like a student-led effort so it grows organically across campus communities” Tan explains. “These efforts, combined with the social feed which would give anyone FOMO if they’re not in the app.”

Network Effect Commerce

With all the competition in the space, restaurants can be inundated with apps to manage, some of which just exacerbate spikes in demand that overwhelm kitchens. “There is certainly a risk that local restaurants will start to get platform fatigue, finding that using some apps will take too big of a bite out of their margins” says Tan. That’s why Snackpass built features that let restaurants batch orders and control how many come in at a certain time so dine-in patients and non-app users aren’t stuck with unreasonable delays.

Snackpass has recruited talent from Uber Eats and an advisor from Yelp’s executive team to help it navigate the tricky SMB sales process. One ace up its sleeve is that it can offer to send push notifications to announce recently signed partners or specials they’re launching, driving the new customers restaurants are desperate for. Tan says his startup is considering if it could charge for this kind of promotion down the line. Most customers who walk into restaurants are effectively in incognito mode, but Snackpass provides its partners with analytics to help them improve their own businesses.

“At the surface level there is a lot of competition in this space” Tan admits. “The social aspect of the app has been the key differentiator for us. Other companies have been focused on creating the fastest, cheapest, most efficient delivery service, but it’s really hard to make those margins work and consumers are trained to shop around on different apps to get
the best deal or fastest delivery time . . . Eating food is supposed to be fun and social,
and our generation grew up online and in social networks. We’re combining the social aspect of eating with the utility of order ahead, which has helped us build loyalty and enable retention
amongst our users.”

It will still be a battle to overtake long-running competitors like Allset, Level Up, and Ritual, plus incumbents that offer takeout pickup like Uber and Grubhub. Logistics is a cut-throat business, and plenty of startups have already failed in the restaurant loyalty space.

Having Andreessen Horowitz’s support could give Snackpass some extra fire power. “A16z has better support and services for their portfolio companies than any other VC we’ve come across and they’ve delivered” Tan tells me. “We knew that Andrew Chen understands growth and marketplaces from his blog and his Twitter.” That’s critical in a crowded space where such a precise balance of customer acquisition and lifetime value is necessary.

Snapchat, TikTok, and Fortnite have all tapped into the youth market with a lighthearted nature that keeps users coming back until they develop network effect. Snackpass is managing to do the same not with a messaging app or game, but a commerce platform. “We play up creativity, silliness and delight in areas where most companies focus on utility and convenience” Tan concludes. “We built Snackpass for ourselves and our friends. We’ve carried on this philosophy: if something makes us laugh, we put it in the app.”

 


0

PayPal completes GoPay acquisition, allowing the payments platform to enter China

17:27 | 19 December

PayPal this morning announced it has completed its acquisition of a 70% equity stake in GoPay (Guofubao Information Technology Co. [GoPay], Ltd.), making PayPal the first foreign payment platform to provide online payment services in China. The transaction was approved by the People’s Bank of China on September 30 and has now closed.

Deal terms have not been disclosed.

GoPay has licenses for both online and mobile transactions, and mainly provides payment products for industries including e-commerce, cross-border commerce, tourism, and others. Similar to PayPal, GoPay allows merchants to accept payments on their websites when customers are shopping online. Though China’s payment market today is led by local players, including eWallet providers like AliPay and WeChat Pay, there’s room for PayPal to grow in a market where digital payments per year are counted in the trillions, not billions, of dollars.

On the mobile payments side alone, the market is expected to grow at a compound annual growth rate of 21.8%, from US $29.93 trillion in 2017 to $96.73 trillion in 2023, driven partly by increasing demand for e-commerce, according to a forecast from Frost & Sullivan. And the total number of active mobile payment customers is expected to reach 956 million by 2023, as well, the firm said. The market has also seen an increase in cross-border transactions, particularly in sectors like e-commerce, travel and overseas education. These reached $6.66 trillion in 2016.

U.S. financial services firms have for a long time struggled to enter China. Last year, China’s central bank said it would open up further to foreign payment companies, but approvals have been slow. In November 2018, American Express notably became the first U.S. card network to gain permission to set up card-clearing services in China. Visa and Mastercard have tried to enter, as well.

“We’re pleased to complete this historic transaction, which enables us to broaden our participation in such a dynamic market,” said Dan Schulman, PayPal president and CEO, in a statement about the GoPay deal’s closure. “This important step will allow us to be a stronger partner to Chinese financial institutions and technology platforms. We look forward to contributing to the growth of China’s e-commerce and payments ecosystem.”

 


0

Robinhood lets you invest as little as 1 cent in any stock

18:00 | 12 December

One share of Amazon stock costs over $1700, locking out less wealthy investors. So to continue its quest to democratize stock trading, Robinhood is launching fractional share trading this week. This lets you buy 0.000001 shares, rounded to the nearest penny, or just $1 of any stock with zero fee.

The ability to buy by millionth of a share lets Robinhood undercut Square Cash’s recently announced fractional share trading, which sets a $1 minimum for investment. Robinhood users can sign up here for early access to fractional share trading.

As incumbent brokerages like Charles Schwab and E*Trade move to copy Robinhood’s free stock trading, the startup has to stay ahead in inclusive financial tools. Fractional share trading ensures no one need be turned away, and Robinhood can keep growing its user base of 10 million with its war chest of $910 million in funding.

Robinhood has a bunch of other new features aimed at diversifying its offering for the not-yet-rich. Today its Cash Management feature it announced in October is rolling out to its first users on 800,000 person wait list, offering them 1.8% APY interest on cash in their Robinhood balance plus a Mastercard debit card for spending money or pulling it out of a wide network of ATMs. The feature is effectively a scaled-back relaunch of the botched debut of 3% APY Robinhood Checking a year ago which was scuttled since the startup failed to secure the proper insurance it now has for Cash Management.

Additionally, Robinhood is launching two more widely requested features early next year. Dividend Reinvestment Plan (DRIIP) will automatically reinvest cash dividends Robinhood users receive into stocks or ETFS. Recurring Investments will let users schedule daily, weekly, bi-weekly, or monthly investments into stocks. With all this, Crypto trading, and  Robinhood is evolving into a full financial services suite that will be much harder for competitors to copy.

Robinhood Debit Card

How Robinhood Fractional Shares Work

“We believe that if you want to invest, it shouldn’t matter how much money you have. With fractional shares, we’re opening up a whole universe of stocks and funds including Amazon, Apple, Disney, Berkshire Hathaway, and thousands of others” Robinhood product manager Abhishek Fatehpuria tells me.

Users will be able to place real-time fractional share orders in dollar amounts as low as $1 or share amounts as low as 0.000001 shares rounded to the penny during market hours. Stocks worth over $1 per share with a market capitalization above $25 million are eligible, with 4000 different stocks and ETFs available for commission-free, real-time fractional trading.

“We believe that participation is power. Since day one, we’ve focused on breaking down barriers like trade commissions and account minimums to help people participate in the financial system” says Fatehpuria. “We have a unique user base — half our customers tell us they’re first time investors, and the median age of a Robinhood customer is 30. This means we have a unique opportunity to expand access to the markets for this new generation.”

Robinhood is racing to corner the freemium investment tool market before other startups and finance giants can catch up. It opened a waitlist for its UK launch next year which will be its first international market. But in just the past month, Alpaca raised $6 million for an API that lets anyone build a stock brokerage app, and Atom Finance raised $10.6 million for its free investment research tool that could compete with Robinhood’s in-app feature. Meanwhile, Robinhood suffered an embarrassing bug letting users borrow more money than allowed.

The move fast and break things mentality triggers new dangers when introduced to finance. Robinhood must resist the urge to rush as it spreads itself across more products in pursuit of a leveler investment playing field.

 


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PayPal’s exiting COO Bill Ready to join Google as its new president of Commerce

19:15 | 11 December

In June, PayPal announced its Chief Operating Officer Bill Ready would be departing the company at the end of this year. Now we know where he’s ending up: Google. Ready will join Google in January as the company’s new commerce chief, reporting directly to Prabhakar Raghavan, SVP, Ads, Commerce and Payments.

Ready’s role at Google will not involve payments, which means he won’t be directly involved with PayPal’s competitor, Google Pay. Instead, as Google’s new president of Commerce, Ready will focus on leading Google’s vision, strategy and delivery of its commerce products. However, the role will see Ready working in close partnership with both the advertising and payments operations.

Google’s prior head of ads, commerce and payments, Sridhar Ramaswamy, left the company in 2018 after more than 15 years, which is when Raghavan stepped in. But Ready’s role is a new one, as it will focus on commerce specifically.

“Bill’s exceptional track record building great experiences for consumers and deeply strategic partnerships makes him a powerful addition to our team. I couldn’t be more excited for the future of commerce at Google,” said Raghavan, in a statement.

Added Ready, “I’ve long admired how Google has enabled access to the digital economy for everyone. Google has been making world-class commerce capabilities universally accessible to partners of all sizes, and I look forward to furthering that mission,” he said.

Ready joined PayPal in 2013 when it acquired his startup, the payments gateway Braintree, for $800 million (he became CEO of Braintree and Venmo). Today, Braintree powers payments for businesses like Uber, Airbnb, Facebook and Jet.com, while Venmo sees more than $25 billion in transaction volume on a quarterly basis.

Once at PayPal, Ready moved up the ranks to become EVP and COO in 2016. In this role, he was responsible for product, technology and engineering at PayPal, as well as the end-to-end customer experiences for PayPal’s consumer, merchant, Braintree, Venmo, Paydiant and Xoom businesses. He was also co-chair of PayPal’s Operating Group, which focuses on delivering on revenue and profit goals for the company.

At PayPal, Ready was behind a number of the company’s biggest moves, including the introduction of its most-rapidly adopted product ever, PayPal One Touch, as well as Pay with Venmo, the redesign of the PayPal mobile app, PayPal Commerce and the expansion of Braintree’s global reach.

PayPal announced Ready’s plans for departure this summer, saying he was planning to engage in other entrepreneurial interests outside the company.

Heading up commerce at Google will be a big task for Ready, given commerce’s close proximity to parent company Alphabet’s main source of revenue, which is advertising. In Q3 2019, Google’s ad revenue was $33.92 billion out of total revenue of $40.5 billion.

Today, many consumers visit Google first to shop for products, which allows it to charge top dollar for its ads. But over the years, Amazon has been steadily chipping away at Google’s lead as more consumers go directly to its site to hunt for products.

To address this challenge, Google has begun to transform its Shopping business.

At Google Marketing Live this year, Google unveiled a new look and feel for its shopping properties, which included rebranding its Google Express app as the new Google Shopping app. The goal with the changes is to better serve the way consumers now shop online. Today, people often start “shopping” by doing things like browsing Pinterest for inspiration or seeing what influencers are posting on Instagram, for example. Instagram capitalized on this trend with the launch of Instagram Shopping in March, which allows users to checkout right in its app.

PayPal is also now moving in this direction. The company recently made its largest-ever acquisition with a $4 billion deal for shopping and awards platform Honey. With Honey’s integrations, PayPal will be able to target shoppers with personalized promotions and offers earlier on in their shopping journey, then direct them to PayPal’s checkout as the final step.

Google’s commerce plans are similar in that regard.

It envisions a universal cart and new ways to shop across its platform of services, including Search, Shopping, Images, and even YouTube and Gmail. This will allow Google to also capture shoppers’ attention as they engage with Google properties — like browsing images for product ideas or watching YouTube videos, for example.

As a part of the Google Shopping revamp, the dedicated Shopping homepage was updated to allow consumers to filter products by brands they love, features they want, as well as read product reviews and videos. Shoppers could add items to a universal cart where purchases were backed by a Google guarantee, as well as receive customer service and make easy returns, as before with Google Express.

Google’s travel business also falls under commerce, and similarly received new attention this year with updates designed to simplify the experience of trip planning on google.com/travel, and more features around tracking flight price drops and predictions. 

On the advertising side, Google’s highly visual Showcase Shopping ads were expanded outside of Google Shopping. And Shopping Actions — customers’ ability to shop directly from Google surfaces, like Google Assistant — are making their way to new services, like YouTube.

Google is also ramping up its ability to serve smaller and local businesses with features aimed at driving in-store pickup traffic to brick-and-mortar stores.

Critical to making Google’s new Shopping platform successful is being able to forge retail partnerships — as, unlike Amazon, Google itself is not really in the business of selling directly to consumers, outside of its own hardware devices.

Ready’s experience will prove valuable here, too. At PayPal, he was able to build strategic partnerships with a number of unlikely players — including Visa, Mastercard, Apple, Walmart, Samsung, and even Google.

What Ready’s strategy and vision will more precisely entail for Google will have to wait until after he’s on board, however.

“I’m thrilled to welcome Bill to Google as we continue our work to create more helpful commerce experiences and build a thriving ecosystem for partners of all sizes,” said Sundar Pichai, CEO of Google and Alphabet.

Image Credits: Getty Images — Bloomberg/Contributor; Ready: Google

 


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Brazil’s new fintech startup Cora raised $10 million on the strength of its founding team

02:52 | 5 December

It didn’t take much for the founders of Cora, Brazil’s newest startup to tackle some aspect of the broken financial services industry in the country, to raise their first $10 million.

Igor Senra and Leo Mendes had worked together before — founding their first online payments company, MOIP, in 2005. That company sold to WireCard in 2016 and after three years the founders were able to strike out again.

They built their initial business servicing the small and medium sized businesses that make up roughly two-thirds of the Brazilian economy and represent some trillion dollars worth of transactions. But at WireCard, they increasingly were told to approach larger customers that didn’t have the same kind of demand for their services, according to Mendes.

So they built Cora — a technology enabled lender to the small and medium-sized businesses that they knew sowell.

The round was led by Kaszek Ventures, one of Latin America’s largest and most successful investment funds, with participation from Ribbit Capital — one of the most influential early-stage fintech investment firms globally.

“We created Cora to pursue our life purpose, which is to solve the financial problems faced by small and medium businesses. These businesses produce 67% of the Brazilian GDP but are totally underserved by the traditional banks”, said Senra, the company’s chief executive, in a statement.

The company is currently operating in closed beta and plans to launch its first product, a free SME-only mobile account in the first half of 2020, according to the statement. Cora will later release a portfolio of payments, credit related products, and financial management tools that are currently being developed.

“So far, large financial institutions have mainly built products that focus either on individuals or on large corporate clients and have totally ignored small and medium sized enterprises, who are the most relevant creators of value in our economies,” said Mendes in a statement. “We want to offer a high-quality, customer-centric suite of financial products that address the specific underserved needs of our clients’ businesses.”

 


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India’s financial services firm Paytm raises $1B

02:10 | 25 November

Paytm said on Monday it has raised $1 billion in a new financing round as the Noida-headquartered firm, which once dominated the local mobile payments market, attempts to fight back giants Google, Walmart’s PhonePe, and soon-to-arrive Facebook.

The company said the new financing round was led by U.S. asset manager T Rowe Price. Existing investors Ant Financials (contributed $400 million), SoftBank Vision Fund (contributed $200 million), and Discovery Capital also participated in the round, which valued the company at about $16 billion — higher than some of the high-profile Asian startups such as Grab and Gojek.

Paytm founder and chief executive Vijay Shekhar Sharma said the firm will use the fresh capital to court merchants, and expand its financial offerings such as lending and insurance. The company has amassed 15 million merchants, he said.

The big buck comes as India becomes the newest payments battleground for major global giants Google, Walmart, and Facebook . According to Credit Suisse, the digital payments market in India will be worth $1 trillion in the next four years, up from about $200 billion currently.

More to follow…

 


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India’s Razorpay launches corporate credit cards, more in major neo banking push

11:31 | 22 November

India’s RazorPay, one of the largest payments processing firms in the country, today announced a range of new services aimed at startups, businesses, merchants and freelancers as the Bangalore-based firm expands the reach of its financial platform in the nation.

The startup, which raised $75 million from Ribbit Capital and others in June this year, today introduced a new kind of corporate credit card and some banking services for startups and SMEs, and a new payment option for individuals to quickly receive money from their clients.

All of these services are solving some major challenges faced by tens of millions of businesses in the country. Even as startups are increasingly getting acceptance in Indian homes, banks in the nation are still wary of offering some financial services to them. Most “unprofitable” startups today can’t get a corporate credit card from a bank in India, for instance.

For its corporate credit card, Razorpay will assess other factors such as the flows and collections to determine who is eligible, the Bangalore-based startup’s founders — Harshil Mathur and Shashank Kumar — told TechCrunch in an interview.

The new corporate credit card, issued by RBL Bank, will allow businesses to access credit between Rs 50,000 ($700) and Rs 25,00,000 ($34,800). If they are able to pay it back in within 50 days, they will avoid any interest.

Razorpay also announced it is launching current accounts service. “While personal banking ecosystem in India has scaled tremendously in recent years, business banking is still old school,” said Mathur. “Most processes are still manual, and there is no communication among your invoice, payroll, booking systems. People have to deal with spreadsheet files.”

To solve this, Razorpay has built a neo banking platform. “As a business, if you want to create a current account bank with a bank, we take care of it. Everything — your transactions, and payables — happens on Razorpay’s platform and you can manage them through a single dashboard,” he said.

As part of this platform — and also as a standalone offering — Razorpay is offering a payroll management service. “One of the most common challenges in a business is how they handle payrolls. Most of these payrolls work with different systems such as HR and accounting. Again, you have to create spreadsheet files and provide it to the bank which does the processing. What our goal is that we will provide one single platform to manage payments better,” Mathur added.

To work on this service, Razorpay said it has acquired payroll and HR management software firm Opfin for what a person familiar with the matter said “a couple of millions of dollars.” Razorpay founders declined to comment on the amount.

And last, Razorpay has launched a new payment option for unregistered businesses such as mom and pop stores and freelancers. Millions of individuals in India today engage in business with one another, corporate companies, and clients overseas. For them, there exists a very limited set of options to receive payments from others and do it at a real-time pace.

Razorpay may have an answer. The company has launched a service that will allow individuals or businesses to create and send a link through text or email to their clients and receive payment in real-time. When the client clicks on the link, a payment gateway loads up that supports a range of paying options. “We support 100 currencies, so a person can have their money delivered from any country,” Mathur said. Another startup — Bangalore-based Instamojo — offers a similar functionality.

The announcements today illustrate Razorpay’s aggressive expansion into India’s burgeoning financial services market. The startup generates about 70% of its revenue today from its core business of processing payments.

More than 600,000 businesses in India including giants such as airline Indigo, Bombay Stock Exchange, conglomerate Reliance, Sony, ride-hailing service Ola and budget hotel operator Oyo Rooms today use Razorpay’s payments processing service. The two founders said they want RazorPay to be the financial cloud for businesses.

In recent years, the company has launched lending and a range of other services. Together with neo-banking services, Razorpay’s Kumar said he expects to have these generate 40 to 45% of revenue.

Razorpay today competes with a handful of companies including Naspers-owned PayU and legacy firms such as BillDesk. The startup, which focused on payments for the first two and a half years, says that business has grown by 600-700% year-over-year.

“We crossed a billion dollar in payments processing in September 2017. Now we are doing 10 billion,” Mathur said. “Our goal with today’s announcements is to have 20 to 30% of our merchants join and use our current account platform.”

 


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