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Main article: Food delivery

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Instacart gets into ready-to-eat food deliveries with build your own sub service

12:52 | 28 January

Grocery picking service Instacart is dabbling with on-demand food delivery, announcing the launch in Florida of a pre-made meals delivery option that shoppers can tag onto a bigger supermarket order.

It’s partnering with US supermarket chain Publix for the initial launch of Instacart Meals — offering what it dubs a “digital deli counter” where app users can build their own sub and have it picked up and delivered alongside a grocery order.

“We know that when customers grocery shop, they’re thinking about both the food they need for the week in addition to what’s for dinner that night,” it writes in a blog post announcing Instacart Meals.

It says the service will be rolling out to Publix locations across Florida “in the coming weeks”, and to “nearly all Publix stores across the Southeast in the months ahead”.

“We see the highest volume of orders placed on the Instacart marketplace between 2 and 4pm and at less than half the price of an average fast-casual food order, made-to-order grocery meals offer access to a fresh, easy and more affordable option when life is hectic and dinner is soon,” it adds.

Instacart says the meals product integrates with existing grocery order management systems to generate what’s touted as “precise preparation and counter pickup windows at the end of the Instacart shopper’s shopping route”.

“This ensures that the customer’s sandwich gets from the store to their door as fresh as possible,” it adds.

Although quite how long a ready-to-eat sandwich might end up waiting around getting soggy before it’s picked up and delivered to the customer as lunch is one question. (As fresh “as possible” is a pretty open-ended promise.)

It’s notable that Instacart is touting the premade meals service as a price competitive option vs an “average fast-casual food” — presumably such as those a consumer might order via an on-demand food delivery app such as PostMates or Uber Eats.

So “more affordable” seems likely to translate to ‘not as quickly as those kind of services’ — but, hey, you’re getting cheaper eats.

Instacart also makes a point of noting that the pre-made meals feature will automatically apply any relevant deals vis-a-vis the rest of the shopping cart — so that app users will get “all applicable combo options and discounts”, just as an in store shopper would.

The move is the latest sign of the category overlap going on between on-demand food delivery and grocery delivery services, as startups in the space search for ways to cross-sell existing users on additional products that can boost the unit economics, per delivery.

Spain’s Glovo, for example, has expanded from on-demand food delivery into running its own dark supermarkets — where it stocks and sells (via app only) a limited selection of groceries which can be tagged onto a ready-to-eat food order. Though it’s also focused on very fast delivery as the differentiating factor for this ‘Super Glovo’ service, and does partner with select supermarkets for larger grocery deliveries.

Instacart, meanwhile, looks to be hoping to gobble some of the lunch of on-demand food delivery app rivals by being able to undercut them on price, as the meals are coming from supermarket deli counters not a standalone fast food brand. So speed of delivery can be handled as a secondary consideration.

Instacart Meals is the latest product expansion from the company — which, in recent years, has been building out an alcohol delivery service. It is also piloting prescription deliveries with Costco in select states.

The company has a network of 350 partner retailers operating 25,000+ stores across more than 5,500 cities in the U.S. and Canada — from which it could seek to build out the pre-made food offer.

Earlier this month Instacart announced upgraded pick-up options.  The business has come under fire for how it compensates the army of professional shoppers who do picking and delivering of orders.

 


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Diet autopilot Thistle raises $5M for health food subscriptions

00:28 | 28 January

What if it was easier to eat salad than junk food? Most diet routines take a ton of time, whether you’re cooking from scratch, making a meal kit, or seeking out a nutritious restaurant. But on-demand prepared food delivery companies like Sprig that tried to eliminate that work have gone bankrupt from poor unit economics.

Thistle is a different type of food startup. It delivers thrice-weekly cooler bags customized with meat-optional, plant-based breakfasts, lunches, dinners, snacks, sides, and juices. By batching deliveries in the less-congested early morning hours and optimizing routes to its subscribers, or by mailing weekly boxes beyond its own geographies, Thistle makes sure you already have your food the moment you’re hungry. Whether you heat them up or eat them straight out of the fridge, you’re actually dining faster than you could even place an Uber Eats order.

The food on Thistle’s constantly rotating men is downright tasty. You might get a sunrise chia parfait for breakfast, a chicken tropical mango salad for lunch, a microwaveable bulgogi noodle bowl for dinner, with beet hummus and kale-cucumber juice for snacks. Thistle’s not cheap, with meals averaging about $14 each. But compared to competitors’ on-demand delivery markups and service fees, wasting ingredients from the grocer, and the hours of cooking for yourself, it can be a good deal for busy people.

“We see Thistle as part of a movement to make health convenient rather than a high will power chore” CEO Ashwin Cheriyan tells me. What Peloton did to shave time off getting a great workout, Thistle does for eating a nourishing meal. It makes the right choice the easiest choice.

Thistle COO Shiri Avneri and CEO Ashwin Cheriyan with their daughter

The idea of button you can push to make you healthier has attracted a new $5.65 million Series A round for Thistle led by its first institutional investor, PowerPlant Ventures . Bringing the startup to $15 million in funding, the cash will expand Thistle’s delivery domain. Dan Gluck of PowerPlant, which has also funded food break-outs like Beyond Meat, Thrive Market, and Rebbl, will join the board.

Currently Thistle delivers in-person to the Bay Area, LA metro, San Diego, and Sacramento while shipping to most of Washington, Oregon, Utah, Idaho, Nevada, and Arizona. Thistle actually held off on raising more since launching in 2013 to make sure it hammered out unit economics to prevent an implosion. It’s also planning broader meal options, additional product lines, and fresh distribution strategies like getting stocked in office smart kitchens or subsidized by wellness plans.

“The reasons that so many food delivery companies have failed likely fall into two buckets: one, a lack of focus on margins and unit economics, and two, premature geographic expansion before proving out the business model” says Cheriyan. “Thistle makes money similar to how a well run restaurant would make money – by having strong gross margins, efficient customer acquisition costs, and solid customer retention / lifetime metrics. We currently deliver tens of thousands of meals on a weekly basis to customers on the West Coast and our annual average growth rate since launch has been 100%+.”

It’s nice that Thistle hasn’t gone out of business because I’ve been eating its salads 6X a week for three years. It’s been the most efficient way for me to get healthier and lose weight after a half-decade of ordering takeout sandwiches and then feeling sluggish all day. I legitimately look forward to each one since they often have 20+ ingredients and only repeat every few months so they’re never boring.

It’s helped me keep my work-from-home lunches to about 20 minutes so I have more time for writing. Thistle is one of the few startups I consistently recommend to people. When asked how I lost 25lbs before my wedding, I point to Peloton cycling, Future remote personal training, and Thistle salads — none of which require me to leave the house.

Cheriyan tells me “We wanted the better-for-you and better-for-planet choice to be the default choice.”

Growing Out Of On-Demand

Thistle has already pivoted past the business model burning tons of cash across the startup world. The company started as an on-demand cold pressed juice delivery service, sending hipster glass bottles of watermelon and charcoal extract to doors around San Francisco. It was 2013, yoga was booming, and people were paying crazily high prices for liquified lemongrass. Health made simple seemed like a sure bet to the founding team of Alap Shah, Naman Shah, Sheel Mohnot, and Johnny Hwin, some of whom run Studio Management, a family office and startup incubator. [Disclosure: Hwin and Shah are friends of mine but didn’t pitch or discuss this article with me.]

Thistle eventually straightened things out with a shift to subscriptions and batched delivery under the leadership of the hired executives, Cheriyan and his wife and COO Shiri Avnery. “I came from a family of physicians – both my parents, brother, and enough aunts, uncles, and cousins are doctors that they could start a small hospital” Cheriyan, a former corporate attorney in M&A tells me. “A common point of frustration was about patients suffering from diet related illnesses who were unable to make a lifestyle change because it was too hard.”

Avenery, a PhD in air pollution and climate change’s impact on agriculture, had become exasperated with the slow pace of policy change and the inaction of governments and corporations. The two quit their jobs, moved to San Francisco, and searched for a point of leverage for positively influencing people diets and interaction with the environment. They teamed up with the founders and launched Thistle v1.

A lack of experience in logistics led to the initial detour into on-demand. But rather than trying to fix the problem with VC money, Thistle stayed lean and discovered the opportunity nestled between UberEats and BlueApron: sending people food they don’t have to eat now, but that takes low or no time to prepare when they’re peckish. Through its app, users can customize their meal plans, ban their allergens, pause deliveries, and see what they’ll eat next.

A sample of Thistle 8 meal plans

The unit economics problem most heavily plagued the early on-demand food companies. Food / labor waste and inefficient deliveries were likely the biggest reasons why the economics were unsustainable without venture life support. We know this personally as Thistle started our delivery service as an on-demand company before quickly realizing that the unit economics couldn’t sustain a healthy business” Cheriyan explains, regarding companies like Sprig, DoorDash, and Grubhub. Beyond unsold food, “the margins very likely did not support ordering a $12-$15 single meal for immediate delivery when average hourly driver wages reached $18-20.”

Meal kits were supposed to make dining healtheir and cheaper, but they proved too much of a chore and led customers to boxes of ingredients piling up unused. Munchery and Nomiku went out of business while giants like Blue Apron have incinerated hundreds of millions of dollars and seen their share prices sink.

“The meal kit companies fared a little better from a gross margin perspective (due to preorders and more efficient deliveries) but suffer most from an easy-to-copy business model. This led to a rise in copycats, and, as a result, heavily rising customer acquisition costs, low switching costs and poor retention” Cheriyan tells me. “Fundamentally the meal kit companies face another challenge, which is that people have less and less time to cook and are increasingly looking for ready-to-eat options.”

Push-Button Health

A slower, steadier approach with less overhead, more convenience, and fewer direct competitors has helped Thistle grow to 400 employees from culinary to engineering to logistics.

Still, it’s vulnerable. It may still be too expensive for some markets and demographics. Logistics experts like Amazon and Whole Foods could try to barge into the market. Cloud kitchens without dining rooms are making restaurant food more affordable for delivery. And another startup could always take the gamble on raising a ton of cash and subsidizing prices to steal market share, especially where Thistle doesn’t operate yet.

Thistle could counter these threats would be further eliminating delivery costs by selling through partners like office smart fridges where employees pay on the spot, or equipping gym lobbies with more than just Muscle Milk.

One opportunity we’re excited to test is attended and unattended retail – it would be great to be able to pick up Thistle products at your local grocery store, gym, or coffee shop” Cheriyan says. As for offices, “Today’s corporate lunchtime solutions often require a tradeoff between health and convenience: either wait in line for 30+ minutes at your favorite salad spot for a healthy option, or opt into catered restaurant meals that leave you feeling sluggish and unproductive.” Thistle could help employers prevent the 3pm energy lull.

The startup’s focus on plant-forward meals also centers it in the path of another megatrend: the shift to environmentally-conscious diets. Almost 60% of of Americans are trying to eat less meat and 50% are eating meat-alternatives like Impossible Burgers. That stems both from interest in the humane treatment of animals and how 15% of green house emissions come from livestock. But 45% of Americans say they hate to cook. That’s why Thistle makes pre-made meals where meat and egg are optional, but the food is healthy and delicious without them.

In the age of Uber, we’ve acclimated to an effortless life. The new wave of ‘push-button health’ startups like Thistle could finally take the hassle out of aligning your actions in the gym or kitchen with you intentions.

 


0

Nigeria’s Paga acquires Apposit, confirms Mexico and Ethiopia expansion

08:30 | 22 January

Nigerian digital payments startup Paga has acquired Apposit, a software development company based in Ethiopia, for an undisclosed amount.

That’s just part of Paga’s news. The Lagos based startup will also launch its payment products in Mexico this year and in Ethiopia imminently, CEO Tayo Oviosu told TechCrunch

The moves come a little over a year after Paga raised a $10 million Series B round and Oviosu announced the company’s intent to expand globally, while speaking at Disrupt San Francisco.

Paga will leverage Apposit — which is U.S. incorporated but operates in Addis Ababa — to support that expansion into East Africa and Latin America.

Repat founders

Behind the acquisition is a story threaded with serendipity, return, and collaboration.

Both Paga and Apposit were founded by repatriate entrepreneurs. Oviosu did his MBA at Stanford University and worked at Cisco Systems before returning to Nigeria.

Apposit CEO Adam Abate moved back to Ethiopia 17 years ago for an assignment in the country’s Ministry of Finance, after studying at Brown University and working in fintech in New York.

“I put together a team…to build…public financial management systems for the country. And during the process…brought in my best friend Eric Chijioke…to be a technical engineer,” said Abate.

The two teamed up with Simon Solomon in 2007 to co-found Apposit, with a focus on building large-scale enterprise software for Africa.

Apposit partners (L-R) Adam Abate, Simon Solomon, Eric Chijioke, Gideon Abate

A year later, Oviosu met Chijioke when he crashed at his house while visiting Ethiopia for a wedding. It just so happened Chijioke’s brother was his roommate at Stanford.

That meeting began an extended conversation between the two on digital-finance innovation in Africa and eventually led to a Paga partnership with Apposit in 2010.

Apposit dedicated an engineering team to build Paga’s payment platform, Eric Chijioke became Paga’s CTO (while maintaining his Apposit role) and Apposit backed Paga.

“We aligned ourselves as African entrepreneurs…which then developed into a close relationship where we became…investors in Paga and strategically aligned,” said Abate.

African roots, global ambitions

Fast forward a decade, and the two companies have come pretty far. Apposit has grown its business into a team of 63 engineers and technicians and has racked up a list of client partnerships. The company helped digitize the Ethiopian Commodities Exchange and has contracted on IT and software solutions with banks non-profits and brick and mortar companies.

For a decade, Apposit has also supported Paga’s payment product development.

Paga Interfaces

Over that period, Oviosu and team went to work building Paga’s platform and driving digital payment adoption in Nigeria, home to Africa’s largest economy and population of 200 million.

That’s been no small task considering Nigeria’s percentage of unbanked was pegged as high as at 70% in 2011 and still lingers around 60%, according to The Global Findex database.

Paga has created a multi-channel network to transfer money, pay-bills, and buy things digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps.

Paga products work on iOS, Android, and basic USSD phones using a star, hashtag option. The company has remittance partnerships with the likes of Western Union and allows for third-party integration of its app.

Since inception, the startup has processed 104 million transactions worth $6.6 billion, according to Oviosu.

With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers.  The company will direct its boosted capabilities and total workforce of 530 to support expansion.

Paga plans its Mexico launch in 2020, according to Oviosu.

Adam Abate is now CEO of Paga Ethiopia, where Paga plans to go live as soon as it gains a local banking license. The East African nation of 100 million, with the continent’s seventh largest economy, is bidding to become Africa’s next startup hub, though it still lags the continent’s tech standouts — like Nigeria and Kenya — in startup formation, ISP options and VC.

Ethiopia has also been slow to adopt digital finance, with less than 1% of the population using mobile-money, compared to 73% for Kenya, Africa’s mobile-payments leader.

Paga aims to shift the financial needle in the country. “The goal is straight-forward. We want Ethiopians to use the Paga wallet as their payment account. So it’s about digitizing cash transactions and driving financial services,” said Oviosu.

Paga CEO Tayo Oviosu

With the Apposit acquisition and country expansion, he also looks to grow Paga’s model in Africa and beyond, as an emerging markets fintech solution.

“There are several very large countries around the world in Africa, Latin America, Asia where these [financial inclusion] problems still exist. So our strategy is not an African strategy…We want to go where these problems exist in a large way and build a global payments business,” Oviosu said.

Fintech competition in Nigeria

As it grows abroad, Paga faces greater competition in Nigeria. For the last decade, South Africa and Kenya — with the success of Safaricom’s  M-Pesa product — have been Africa’s standouts in digital payments.

But over the last several years, Nigeria has become a magnet for VC and fintech startups. This trend reached a high-point in 2019 when Chinese investors put $220 million into Opera owned OPay and Transsion backed PalmPay — two fledgling startups with plans to scale in Nigeria and broader Africa.

That’s a hefty war chest compared to Paga’s total VC haul of $34 million, according to Crunchbase.

Oviosu names product market fit and benefits from the company’s expansion as factors that will keep it ahead of these well-funded new entrants.

“That’s where the world-class technology comes in,” he said.

“We also take a perspective that we cannot build every use-case,” he said — contrasting Paga’s model to Opera in Africa, which has launched multiple startup verticals around its OPay product, from ride-hailing to food-delivery.

Oviosu compares Paga’s approach to PayPal, which allows third-party developers to shape businesses around PayPal as the payment solution.

With its Apposit acquisition and plans for continued expansion, PayPal may become more than a model for Paga.

Founder Tayo Oviosu sees big fintech players, such as PayPal and Alipay, as future competitors with Paga’s planned expansion into more emerging markets.

 


0

Glovo exits the Middle East and drops two LatAm markets in latest food delivery crunch

18:00 | 21 January

The new year isn’t even a month old and the food delivery crunch is already taking big bites. Spain’s Glovo has today announced it’s exiting four markets — which it says is part of a goal of pushing for profitability by 2021.

Also today, Uber confirmed rumors late last year by announcing it’s offloading its Indian Eats business to local rival Zomato — which will see it take a 9.99% stake in the Indian startup.

In other recent news Latin America focused on-demand delivery app Rappi announced 6% staff layoffs.

On-demand food delivery apps may be great at filling the bellies of hungry consumers fast but startups in this space have yet to figure out how to deliver push-button convenience without haemorrhaging money at scale.

So the question even some investors are asking is how they can make their model profitable?

Middle East exit

The four markets Glovo is leaving are Turkey, Egypt, Uruguay and Puerto Rico.

The exits mean its app footprint is shrinking to 22 markets, still with a focus on South America, South West Europe, and Eastern Europe and Africa.

Interestingly, Glovo is here essentially saying goodbye to the Middle East — despite its recent late stage financing round being led by Abu Dhabi state investment company, Mubadala. (It told us last month that regional expansion was not part of Mubadala’s investment thesis.)

Commenting on the exits in a statement, Glovo co-founder and CEO, Oscar Pierre, said: “This has been a very tough decision to take but our strategy has always been to focus on markets where we can grow and establish ourselves among the top two delivery players while providing a first-class user experience and value for our Glovers, customers and partners.”

Last month Pierre told us the Middle East looks too competitive for Glovo to expand further.

In the event it’s opted for a full exit — given both Egypt and Turkey are being dropped (despite the latter being touted as one of Glovo’s fastest growing markets just over a year ago, at the time of its Series D).

“Leaving these four markets will help us to further strengthen our leadership position in South West and Eastern Europe, LatAm and other African markets, and reach our profitability targets by early 2021,” Pierre added.

Glovo said its app will continue to function in the four markets “for a few weeks” after today — adding that it’s offering “support and advice to couriers, customers and partners throughout this transition”.

“I want to place on record our thanks to all of our Glovers, customers and partners in the markets from which we’re withdrawing for their hard work, dedication, commitment and ongoing support,” Pierre added.

The exits sum to Glovo withdrawing from eight out of a total 306 cities.

It also said the eight cities collectively generated 1.7% of its gross sales in 2019 — so it’s signalling the move doesn’t amount to a major revenue hit.

The startup disclosed a $166M Series E raise last month — which pushed the business past a unicorn valuation. Pierre told us then that the new financing would be used to achieve profitability “as early as 2021”, foreshadowing today’s announcement of a clutch of market exits.

Glovo has said its goal is to become the leading or second delivery platform in all the markets where it operates — underlining the challenges of turning a profit in such a hyper competitive, thin margin space which also involves major logistical complexities with so many moving parts (and people) involved in each transaction.

As food delivery players reconfigure their regional footprints — via market exits and consolidation — better financed platforms will be hoping they’ll be left standing with a profitable business to shout about (and the chance to grow again by gobbling up less profitable rivals or else be consumed themselves). So something of a new race is on.

Back in November in an on-stage interview at TechCrunch Disrupt Berlin, Uber Eats and Glovo discussed the challenges of turning a profit — with Glovo co-founder Sacha Michaud telling us he expects further consolidation in the on-demand delivery space. (Though the pair claimed there had been no acquisition talks between Uber and Glovo.)

Michaud said then that Glovo is profitable on a per unit economics basis in “some countries” — but admitted it “varies a lot country by country”.

Spain and Southern Europe are the best markets for Glovo, he also told us, confirming it generates operating profit there. “Latin America will become operation profitable next year,” he predicted.

Glovo’s exit from Egypt actually marks the end of a second act in the market.

The startup first announced it was pulling the plug on Egypt in April 2019 — but returned last summer, at the behest of its investor Delivery Hero (a rival food delivery startup which has a stake in Glovo), according to Michaud’s explanation on stage.

However there was also an intervention by Egypt’s competition watchdog. And local press reported the watchdog had ordered Glovo to resume operations — accusing it and its investor of colluding to restrict competition in the market (Delivery Hero having previously acquired Egyptian food delivery rival, Otlob).

What the watchdog makes of today’s announcement of a final bow out could thus be an interesting wrinkle.

Asked about Egypt, a Glovo spokesperson told us: “Egypt has been a very complex market for us, we were sad to leave the first time and excited to return when we did so last summer. However, our strategy has always been to be among the top two delivery players in every market we enter and have a clear path to profitability. Unfortunately, in Egypt there is not a clear path to profitability.”

Whither profitability?

So what does a clear path to profitability in the on-demand delivery space look like?

Market maturity/density appears to be key, with Glovo only operating in one city apiece in the other two markets it’s leaving, Uruguay and Puerto Rico, for example — compared to hundreds across its best markets, Spain and Italy, where it’s operating out of the red.

This suggests that other markets in South America — where Glovo similarly has just a toe-hold, of a single or handful of cities, and less time on the ground, such as Honduras or Panama — could be vulnerable to further future exits as the company reconfigures to try to hit full profitability in just around a year’s time.

But there are likely lots of factors involved in making the unit economics stack up so it’s tricky to predict.

Food delivered on-demand makes up the majority of Glovo’s orders per market but its app also touts being able to deliver ‘anything’ — from groceries to pharmaceuticals to the house keys you left at home — which it claims as a differentiating factor vs rival food-delivery-only apps.

A degree of variety also looks to be a key ingredient in becoming a sustainable on-demand delivery business — as scale and cross selling appear to where the unit economics can work.

Groceries are certainly a growing focus for Glovo which has been investing in setting up networks of dark supermarkets to support fast delivery of convenience style groceries as well as ready-to-eat food — thereby expanding opportunities for cross-selling to its convenience-loving food junkies at the point of appetite-driven (but likely loss-making) lunch and dinner orders.

Last year Michaud told us that market “maturity” supports profitability. “At the end of the day the more orders we have the better the whole ecosystem works,” he said.

While Uber Eats’ general manager for Northern and Eastern Europe, Charity Safford, also pointed to “scale” as the secret sauce for still elusive profits.

“Where we start to see more and more trips happening this is definitely where we see the unit economics improving — so our job is really to figure out all of the use cases we can put into people’s hands to get that application used as much as possible,” she said.

It’s instructive that Uber is shifting towards a ‘superapp’ model — revealing its intent last year to fold previously separate lines of business, such as rides and Eats, into a single one-stop-shop app which it began rolling out last year. So it’s also able to deliver or serve an increasing number of things (and/or services).

The tech giant has also been testing subscription passes which combine access to a range of its offerings under one regular payment. While Glovo launched a ‘Prime’ monthly subscription offering unlimited deliveries of anything its couriers can bike around for a fixed monthly cost back in 2018.

When it comes to the quest for on-demand profitability all roads so seem to lead to trying to become the bit of Amazon’s business that Amazon hasn’t already built out and swiped.

 


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Bolt raises €50M in venture debt from the EU to expand its ride-hailing business

14:30 | 16 January

Bolt, the billion-dollar startup out of Estonia that’s building a ride-hailing, scooter and food delivery business across Europe and Africa, has picked up a tranche of funding in its bid to take on Uber and the rest in the world of on-demand transportation.

The company has picked up €50 million (about $56 million) from the European Investment Bank to continue developing its technology and safety features, as well as to expand newer areas of its business such as food delivery and personal transport like e-scooters.

With this latest money, Bolt has raised over €250 million in funding since opening for business in 2013 and as of its last equity round in July 2019 (when it raised $67 million), it was valued at over $1 billion, which Bolt has confirmed to me remains the valuation here.

Bolt further said that its service now has over 30 million users in 150 cities and 35 countries and is profitable in two-thirds of its markets.

“Bolt is a good example of European excellence in tech and innovation. As you say, to stand still is to go backwards, and Bolt is never standing still,” said The EIB’s Vice President Alexander Stubb in a statement. “The Bank is very happy to support the company in improving its services, as well as allowing it to branch out into new service fields. In other words, we’re fully on board!”

The EIB is the non-profit, long-term lending arm of the European Union, and this financing in the form of a quasi-equity facility.

Also known as venture debt, the financing is structured as a loan, where repayment terms are based on a percentage of future revenue streams, and ownership is not diluted. The funding is backed in turn by the European Fund for Strategic Investments, as part of a bigger strategy to boost promising companies, and specifically riskier startups, in the tech industry. It expects to make and spur some €458.8 billion in investments across 1 million startups and SMEs.

Opting for “quasi-equity” loan instead of a straight equity or debt investment is attractive to Bolt for a couple of reasons. One is fact that the funding comes without ownership dilution is one attractive factor of the funding. Two is the endorsement and support of the EU itself, in a market category where tech disruptors have been known to run afoul of regulators and lawmakers, in part because of the ubiquity and nature of the transportation/mobility industry.

“Mobility is one of the areas where Europe will really benefit from a local champion who shares the values of European consumers and regulators,” said Martin Villig, the co-founder and CEO of Bolt, in a statement. :Therefore, we are thrilled to have the European Investment Bank join the ranks of Bolt’s backers as this enables us to move faster towards serving many more people in Europe.”

(Butting heads with authorities is something that Bolt is no stranger to: it tried to enter the lucrative London taxi market through a backdoor to bypass the waiting time to get a license. It really didn’t work, and the company had to wait another 21 months to come to London doing it by the book. In its first six months of operation in London, the company has picked up 1.5 million customers.)

While private VCs account for the majority of startup funding, backing from government groups is an interesting and strategic route for tech companies that are making waves in large industries that sit adjacent to technology. Before it was acquired by PayPal, IZettle also picked up a round from funding from the EIB specifically to invest in its AI R&D. Navya, the self-driving bus and shuttle startup, has also raised money from the EIB in the past.

One of the big issues with on-demand transportation companies has been its safety record — indeed, this is at the center of Uber’s latest scuffle in Europe, where London’s transport regulator has rejected a license renewal for the company over concerns about Uber’s safety record. (Uber is appealing and while it does, it’s business as usual. )

So it’s no surprise that with this funding, Bolt says that it will be specifically using the money to develop technology to “improve the safety, reliability and sustainability of its services while maintaining the high efficiency of the company’s operations.”

Bolt is one of a group of companies that have been hatched out of Estonia, which has worked to position itself as a leader in Europe’s tech industry as part of its own economic regeneration in the decades after existing as part of the Soviet Union (it formally left in 1990). The EIB has invested around €830 million in Estonian projects in the last five years.

“Estonia is as the forefront of digital transformation in Europe,” said Paolo Gentiloni, European Commissioner for the Economy, in a statement. “I am proud that Europe, through the Investment Plan, supports Estonian platform Bolt’s research and development strategy to create innovative and safe services that will enhance urban mobility.”

 


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2019 Africa Roundup: Jumia IPOs, China goes digital, Nigeria becomes fintech capital

12:53 | 30 December

2019 brought more global attention to Africa’s tech scene than perhaps any previous year.

A high profile IPO, visits by both Jacks (Ma and Dorsey), and big Chinese startup investment energized that.

The last 12 months served as a grande finale to 10 years that saw triple digit increases in startup formation and VC on the continent.

Here’s an overview of the 2019 market events that captured attention and capped off a decade of rapid growth in African tech.

IPOs

The story of the year is the April IPO on the NYSE of Pan-African e-commerce company Jumia. This was the first listing of a VC backed tech company operating in Africa on a major global exchange —  which brought its own unpredictability.

Founded in 2012, Jumia pioneered much of its infrastructure to sell goods to consumers online in Africa.

With Nigeria as its base market, the Rocket Internet backed company created accompanying delivery and payments services and went on to expand online verticals into 14 Africa countries (though it recently exited a few). Jumia now sells everything from mobile-phones to diapers and offers online services such as food-delivery and classifieds.

Seven years after its operational launch, Jumia’s stock debut kicked off with fanfare in 2019, only to be followed by volatility.

The online retailer gained investor confidence out of the gate, more than doubling its $14.95 opening share price post IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left,  whose firm Citron Research issued a report accusing the company of fraud. The American activist investor’s case was bolstered, in part, by a debate that played out

on Jumia’s legitimacy as an African startup, given its (primarily) European senior management.

The entire affair was further complicated during Jumia’s second quarter earnings call when the company disclosed a fraud perpetrated by some of its employees and sales agents. Jumia’s CEO Sacha Poignonnec emphasized the matter was closed, financially marginal and not the same as Andrew Left’s short-sell claims.

Whatever the balance, Jumia’s 2019 ups and downs cast a cloud over its stock with investors. Since the company’s third-quarter earnings-call, Jumia’s NYSE share-price has lingered at around $6 — less than half of its original $14.95 opening, and roughly 80% lower than its high.

Even with Jumia’s post-IPO rocky road, the continent’s leading e-commerce company still has heap of capital and is on pace to generate over $100 million in revenues in 2019 (albeit with big losses).

The company plans reduce costs by generating more revenue from higher-margin internet services, such as payments and classifieds.

There’s a fairly simple equation for Jumia to rebuild shareholder confidence in 2020: avoid scandals, increase revenues over losses. And now that the company’s publicly traded — with financial reporting requirements — there’ll be four earnings calls a year to evaluate Jumia’s progress. 

Jumia may not be the continent’s standout IPO for much longer. Events in 2019 point to Interswitch becoming the second African digital company to list on a global exchange in 2020.  The Nigerian fintech firm confirmed to TechCrunch in November it had reached a billion-dollar unicorn valuation, after a (reported) $200 million investment by Visa. 

Founded in 2002 by Mitchell Elegbe, Interswitch created much of the initial infrastructure to digitize Nigeria’s (then) predominantly cash-based economy. Interswitch has been teasing a public listing since 2016, but delayed it for various reasons. With the company’s billion-dollar valuation in 2019, that pause is likely to end.

“An [Interswitch] IPO is still very much in the cards; likely sometime in the first half of 2020,” a source with knowledge of the situation told TechCrunch. 

China-Africa goes digital

2019 was the year when Chinese actors pivoted to African tech. China is known for its strategic relationship with Africa based (largely) on trade and infrastructure. Over the last 10 years, the country has been less engaged in the continent’s digital-scene.

china africa techThat was until a torrent of investment and partnerships this past year.

July saw Chinese-owned Opera raise $50 million in venture spending to support its growing West African digital commercial network, which includes browser, payments and ride-hail services.

In August, San Francisco and Lagos-based fintech startup Flutterwave partnered with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

In September, China’s Transsion  — the largest smartphone seller in Africa — listed in an IPO on Shanghai’s new STAR Market. The company raised ≈ $394 million, some of which it is directing toward venture funding and operational expansion in Africa.

The last quarter of 2019 brought a November surprise from China in African tech. Over 15 Chinese investors placed over $240 million in three rounds. Transsion backed consumer payments startup PalmPay raised a $40 million seed, stating its goal to become “Africa’s largest financial services platform.”

Chinese investors also backed Opera-owned OPay’s $120 million raise and East-African trucking logistics company Lori Systems’ (reported) $30 million Series B.

In the new year, TechCrunch will continue to cover the business arc of this surge in Chinese tech investment in Africa. There’ll surely be a number of fresh macro news-points to develop, given the debate (and critique) of China’s role in Africa.

Nigeria and fintech

On debate, the case could be made that 2019 was the year when Nigeria become Africa’s unofficial capital for fintech investment and digital finance startups.

Kenya has held this title hereto, with the local success and global acclaim of its M-Pesa mobile-money product. But more founders and VCs are opting for Nigeria as the epicenter for digital finance growth on the continent.

A rough tally of 2019 TechCrunch coverage — including previously mentioned rounds — pegs fintech related investment in the West African country at around $400 million over the last 12 months. That’s equivalent to roughly one-third of all startup VC raised for the entire continent in 2018, according to Partech stats.

From OPay to PalmPay to Visa — startups, big finance companies and investors are making Nigeria home-base for their digital finance operations and outward expansion in Africa.

The founder of early-stage payment startup ChipperCash, Ham Serunjogi, explained the imperative to operate in the West African country. “Nigeria is the largest economy and most populous country in Africa. Its fintech industry is one of the most advanced in Africa, up there with Kenya  and South Africa,” he told TechCrunch in May.

When all the 2019 VC numbers are counted, it will be worth matching up Nigeria to Kenya to see how the countries compared for fintech specific investment over the last year.

Acquisitions

Tech acquisitions continue to be somewhat rare in Africa, but there were several to note in 2019. Two of the continent’s powerhouse tech incubators joined forces in September, when Nigerian innovation center and seed-fund CcHub acquired Nairobi based iHub, for an undisclosed amount.

CChub ihub Acquisition

The acquisition brought together Africa’s most powerful tech hubs by membership networks, volume of programs, startups incubated and global visibility. It also elevated CcHub’s Bosun Tijani standing across Africa’s tech ecosystem, as the CEO of the new joint-entity, which also has a VC arm.

CcHub CEO Bosun Tijani1

CcHub/iHub CEO Bosun Tijani

In other acquisition activity, French television company Canal+ acquired the ROK film studio from Nigerian VOD company IROKOtv, for an undisclosed amount. The deal put ROK founder and producer Mary Njoku in charge of a new organization with larger scope and resources.

Many outside Africa aren’t aware that Nigeria’s Nollywood is the Hollywood of the continent and one of the largest film industries (by production volume) in the world. Canal+ told TechCrunch it looks to bring Mary and the Nollywood production ethos to produce content in French speaking African countries.

Other notable 2019 African tech takeovers included Kenyan internet company BRCK’s acquisition of internet provider Surf, Nigerian digital-lending startup OneFi’s Amplify buy and Merck KGaa’s purchase of Kenya-based online healthtech company ConnectMed.

Moto ride-hail mania

In 2019, Africa’s motorcycle ride-hail market — worth an estimated $4 billion — saw a flurry of investment and expansion by startups looking to scale on-demand taxi services. Uber and Bolt got into the motorcycle taxi business in Africa in 2018.

Ampersand Africa e motorcycle

Ampersand in Rwanda

A number of local and foreign startups have continued to grow in key countries, such as Nigeria, Uganda and Kenya.

A battle for funding and market-share emerged in Nigeria in 2019, between key moto ride-hail startups Max.ng, Gokada, and Opera owned ORide.

The on-demand motorcycle market in Africa has attracted foreign investment and moved toward EV development. In May, MAX.ng raised a $7 million Series A round with participation from Yamaha and is using a portion to pilot renewable energy powered e-motorcycles in Africa.

In August, the government of Rwanda announced a national policy to phase out gas-motorcycle taxis altogether in favor of e-motos, in partnership with early-stage EV startup Ampersand.

New funds

The year 2019 saw several new funding initiatives for Africa’s startups. Senegalese VC investor Marieme Diop helped spearhead Dakar Network Angels, a seed-fund for startups in French-speaking Africa — or 24 of the continent’s 54 countries.

Africinvest teamed up with Cathay Innovation to announce the Cathay Africinvest Innovation Fund, a $100+ million capital pool aimed at Series A to C-stage startup investments in fintech, logistics, AI, agtech and edutech.

Accion Venture Lab launched a $24 million fintech fund open to African startups.

And Naspers offered more details on who can pitch to its 1.4 billion rand (≈$100 million) Naspers Foundry fund and made its first investment in online cleaning services company SweepSouth.

Closed up shop

Like any tech ecosystem, not every startup in Africa killed it or even continued to tread water in 2019. Two e-commerce companies — DealDey in Nigeria and Afrimarket in Ivory Coast — closed up digital shop.

Southern Africa’s Econet Media shut down its Kwese TV digital entertainment business in August.

And South Africa based, Pan-African focused cryptocurrency payment startup Wala ceased operations in June. Founder Tricia Martinez named the continent’s poor infrastructure as one of the culprits to shutting down. A possible signal to the startup’s demise could have been its 2017 ICO, where Wala netted only 4% of its $30 million token-offering.

Africa’s startups go global

2019 saw more startups expand products and business models developed in Africa to new markets abroad. In March, Flexclub — a South African venture that matches investors and drivers to cars for ride-hailing services — announced its expansion to Mexico in a partnership with Uber.

In May, ExtraCrunch profiled three African founded fintech startups — Flutterwave, Migo and ChipperCash — developing their business models strategically in Africa toward plans to offer their products in other regions.

By December, Migo (formerly branded Mines) had announced its expansion to Brazil on a $20 million Series B raise.

2020 and beyond

As we look to what could come in the new year and decade for African tech, it’s telling to look back. Ten years ago, there were a lot of “if” questions on whether the continent’s ecosystem could produce certain events: billion dollar startup valuations, IPOs on major exchanges, global expansion, investment from the world’s top VCs.

All those questionable events of the past have become reality in African tech, even if some of them are still in low abundance.

There’s no crystal ball for any innovation ecosystem — not the least Africa’s — but there are several things I’ll be on the lookout for in 2020 and beyond.

Two In the near term, start with what Twitter/Square CEO Jack Dorsey may do around Bitcoin and cryptocurrency on his return to Africa (lookout for an upcoming TechCrunch feature on this).

I’ll also follow the next-phase of e-commerce in Africa, which could pit Jumia more competitively against DHL’s Africa eShop, Opera and China’s Alibaba (which hasn’t yet entered Africa in full).

On a longer-term basis, a development to follow is how the continent’s first wave of millionaire and billionaire tech-founders could disrupt dynamics around politics, power, and philanthropy in Africa —  hopefully for the better.

More notable 2019 Africa-related coverage @TechCrunch

 


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Spain’s Glovo grabs $166M Series E for its ‘deliver anything’ app

11:00 | 19 December

Spain’s Glovo, an on-demand delivery app platform which operates in Europe, LatAm and Africa delivering food but also other urban conveniences from groceries to pharmaceuticals, has bagged another €150 million (~$166M) in a fast-following Series E round led by Abu Dhabi state investment company, Mubadala.

The raise follows a €150M in Series D that was announced in April, and $134M in Series C in mid 2018. The total raised since the business was founded back in 2015 is now around $488M.

The Barcelona-based startup says the latest raise has pushed its valuation past $1BN — putting it into a very exclusive Spanish unicorn club, with the likes of ride-hailing giant Cabify. (Glovo reckons it’s only the second privately held business in the country to achieve such a valuation).

Co-founder Oscar Pierre would not disclose the exact valuation investors are putting on the business now — beyond publicly acknowledging the unicorn milestone. “We’ve decided not to disclose valuation,” he said. “Even internally, all these valuation things it’s not something we care a lot about… Crossing the billion, I guess, is something worth announcing but not more details.”

Glovo’s new investor, Mubadala, is investing from a $400M fund announced earlier this year for backing European startups — which is itself backed by Japanese conglomerate, Softbank. Mubadala was also a backer of Softbank’s Vision Fund. (And the latter has made some very big bets in the on-demand delivery space, ploughing funding into DoorDash in the US and Rappi in Colombia to name two.)

Asked whether Glovo sees opportunities for expansion in the Gulf region in light of Mubadala joining its investor roster, Pierre said: “It hasn’t been part of the thesis of investment — so we’re not linking it.”

Glovo’s market focus remains fixed on three core regions where it currently operates: South America, South West Europe, and Eastern Europe and Africa — the strategy having been to target regions where competitors hadn’t already established themselves as the go-to on-demand delivery platform.

“Middle East for us it seems already a bit too competitive to go now,” he told us. “All our expansion playbook has been focused on going first to markets… [or where our competitors] were a second player. And the online food delivery market in Middle East is very developed already.

“So, never say never, but short answer is we’re not planning in the short term to launch there.”

Speaking in an on stage interview at TechCrunch Disrupt Berlin last week, Glovo’s other co-founder, Sacha Michaud, suggested the hyper competitive on-demand food delivery market is set for more consolidation in the short term. Though he said Glovo’s team will be head down “aiming for profitability” — rather than looking to go shopping for growth by buying rivals (or indeed being bagged themselves).

Pierre also told us the focus for the business in 2020 — now flush with Series E cash — will be achieving profitability. He said it’s hoping to achieve that in a little over a year’s time.

“Our plan is to use this money to go fully profitable as a company during early 2021,” he told TechCrunch. “I think that’s quite realistic. Still with a very high growth. So we’re expecting more than 2x-2.5x growth during next year.”

“Today we operate in 26 markets. And many of them are still in early stage, and they’re still in investment phase so I think first of all we’re going to use this money to take most of our countries to the positive operational profit stage,” he went on. “Our model is one where during the first 18 months you need to invest in a city — because you need to build the right capillarity, the right efficiency to start generating positive profits.”

Glovo launched its service in around eight new countries during 2019, per Pierre.

Which means there’s plenty of investment that still needs to go in to those markets over the coming year to bring them up to the required density to tilt for profitability.

So it looks likely that it will step off the gas a little on its blistering pace of growth and market expansions next year — as it puts more effort on deepening its footprint to push for the scale required to tip into positive margins.

Although Pierre also suggested there “might be a few new countries” it will ride into next year — noting, too, that it will have a larger marketing budget in 2020 vs this year.

“The rate of new cities that we’re currently launching is very high. Probably every week we keep launching at least ten cities — Italy for example has already like 60 cities launched and we think we can go to more than 200 so there’s a lot of cities still to penetrate,” he said. “We’ve had very good results in some African or Eastern European countries like Ukraine, Kazakhstan, Georgia. And there’s some similar markets that we could go to. [There are also examples] in Africa, like Ivory Coast. It’s been a great success.”

“We do expect a lot,” he added. “2019 on relative terms [growth] was very high. It was like 3.5x. It’s very hard to maintain that growth with the current size that we have but it’s still going to be very high — it’s probably going to be 2x-2.5x”

A big chunk of Series E funding will be ploughed into expanding Glovo’s engineer team — with a plan to hire around 300 additional developers by mid 2020. This will build on the circa 150 devs it already employs in Barcelona and a new tech hub it’s building out in Warsaw.

As a whole the business employs 1,500+ staff at this point — not including the thousands of self-employed couriers (who it calls ‘Glovers’) who make the deliveries — but 2020 will see it significantly grow headcount, with both up to 300 more engineers being added and potentially even more hires related to running the ‘dark stores’ it’s planning to significantly ramp up next year too.

Asked why this on-demand delivery business is so tech intensive Pierre said it’s all about eking out small gains to reduce friction and yield incremental savings by automating and optimizing platform and UX interactions which — cumulatively — make the difference for this type of thin margins business.

“Overall there’s a lot of complexity in what we do. So we deliver anything in your city in 30 minutes. And in this 30 minutes you need to co-ordinate a lot of things. A lot of things have to go well, like the restaurant or the store has to receive well information, they need to receive well the preparation time to get that ready, of course all the logistics and all the routing and the despatching of the orders with the couriers needs to work very well, and then the front end for the user — it’s an industry where there’s a lot of competition and we’re all developing better and better features. So that also has to work out very well.”

“If we had 400 engineers there’s many more specialized [product] teams that we would build,” he added. “On the other end we are by definition a super high volume, low margin business — and next year we’re talking about doing more than 100M orders, maybe close to 200M orders next year. Which means that you optimize every single order by 20 cents, which seems nothing in a €20 basket, and you’re generating €40M extra and a bit there. And most of the efficiencies — they come through tech.”

Groceries will be the other big focus for Glovo in 2020, with Pierre noting the category is it’s second biggest, after food (i.e. restaurant meal) deliveries.

Since 2018 Glovo has experimented with opening a handful of so-called ‘dark stores’ in key cities — such as Madrid and Barcelona. These are delivery-pick-up-only warehouses for convenience store style grocery shopping — be it toothpaste, snacks or soft drinks — with stores strategically sited to ensure speedy delivery across a city.

It has around seven cities with dark stores operational now, according to Pierre. The plan is to launch over 100 more of these ‘Super Glovos’ (as it calls them) in 2020 — focusing on larger cities.

“We are building our own dark stores and it’s a model that we like a lot,” he told us. “We think it works everywhere. So far we have basically been rolling it out in our biggest cities. And we’re going to keep with that focus.

“What we’re very focused on now is making sure that the biggest cities, we have enough capillarity of dark stores to guarantee super fast delivery time. And for us super fast delivery time means 15 minutes. So that’s what we’re focusing on… Before launching more cities we’re very focused on how do we guarantee this 15 minute delivery time.”

As noted above, ramping up on groceries will also add headcount to the business. Pierre confirmed the stores are staffed by employees — and said between four to five people are needed per store to work as packers and store managers. So that’s potentially another 500 staff Glovo will be adding to its books next year.

It also partners with supermarket giant Carrefour to offer full supermarket shopping on-demand via the app in select markets. But it sees dark stores as supplementary to that partnership model — playing to the push-button convenience its business encourages.

And — again with an eye on profitability — providing opportunities for cross selling to bulk up order size.

The dark store play piggybacks on convenience, using the fixed delivery fee as a lever to encourage users to add a few more staple items to an urgent shopping need, because, well, they might feel bad if they shell out to just get a bottle of mixer brought to their door. (Super Glovos stock a limited range of items (<1,000 SKUs) to help keep delivery times down.)

“There’s a lot of people that order because they need something very urgently — like for tonight, and since they’re ordering maybe four or five items I think we do a pretty good job at cross-selling and adding more,” said Pierre. “So it’s pretty basic things but that people need… tonight, tomorrow and maybe the day after that. They don’t do the big basket.

“In Super Glovo you can find things like oranges, potatoes, bananas. We have started selling some meat in some markets — like simple burgers. Actually we tested selling Impossible Burgers in Barcelona. But most of it is not perishable — like 90%.”

“We believe that the best for the user is to have both,” he added, discussing dark stores vs supermarket partnerships. “To have a very fast, 15 minute, more like convenience option and also offer them maybe one or two great retailers, like Carrefour — maybe for larger baskets or for their unique brands. I think that’s the best user experience possible.”

Beyond food, courier services will be another area of product focus for Glovo in 2020, per Pierre.

“Surprisingly enough there’s a lot of people that use us for courier,” he said.” Like I forgot my keys or just send some documents from point A to point B. This is a service where we want to improve our product a lot because it does take a lot of orders.”

But that’s just about going to be the limit. He suggested Glovo will have limited resources to fully implement some of the other stuff it’s experimenting with (or has plans to) — as it works towards its overarching vision of becoming an ‘everything app’ for urbanities. Because thin margins like plentiful orders.

For example, he said it’s currently testing its own brand on-demand scooters in Argentina.

“Our users in Buenos Aires there’s 500 scooters — yellow painted Glovo scooters in the streets — and they can use them with the same Glovo account. It’s a test for us to learn about a new industry and stuff.”

“Here in Barcelona we are looking at the possibility to sell ticketing — like last minute tickets for cinema, for theatres, for football matches,” he added. “And of course sell digital tickets not printed tickets. So we like everything that gets the user closer to their city and makes it basically easier. And we’re going to be testing things but I think not rolling out, scaling massively.

“We have a mentality of testing things. But we don’t think we’re going to have resources during 2020 to do a full rollout.”

Asked what he sees as the end game for Glovo if, as he hopes, it achieves profitability in 2021– whether it’s an IPO or exit via acquisition — Pierre said the team is focused on staying independent, however that can be achieved.

“We’re very focused on that point where we can basically decide our future. More or less investor independent. I think we can reach that,” he suggested. “And then decide what we want to do. Glovo’s one of these projects that it’s so fun and there’s so much entrepreneurship in terms of launching new services and verticals. The reality is that’s, for us, very important — and we don’t see ourselves doing anything else.

“So I think our dream would be stay as independent. Maybe IPO. It’s a tool for us to give liquidation to all our shareholders and employees. But it’s not a goal per se. We have 18 months to be profitable, depend on us, and keep having a very big impact.”

 


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Drone delivery startup Manna boosts seed funding ahead of launch in Ireland

17:51 | 18 December

Listening yo the radio (yes it still exists) the other day I realized that the ‘futurist’ that was being interviewed was speculating that drones would “one day be delivering food, but not any time soon”.

Well, so much for that prediction. Because coming to an Irish household early next year will be drones delivering exactly that.

For Manna, a B2B2 drone delivery ‘as-a-service’ company, today announced an additional funding round of $3M, led by Dynamo VC, a logistics-focused fund. The move brings Manna’s total seed funding to $5.2M.

Manna pitches itself as an ‘aviation-grade’ drone delivery company, and plans to roll-out a fully autonomous drone delivery platform beginning early 2020, first in Europe and then in the US.

Manna’s drone itself is different. It is far more ‘modular’ that other drones you might have seen and therefore lends itself to logistics, like deliveries. It also uses custom-designed aerospace-grade drones built in  Europe and the USA.  

The drones are designed for ‘all weathers’ and do not fly above 500 feet, taking them out of the airspace of planes. The initial food deliveries in Ireland will be in rural areas, eventually reaching the suburbs of towns and cities.

The first services offered will be to online meal ordering platforms, restaurant chains and ‘dark kitchens’ with an incredible 3-minute delivery promise. Obviously this would be far cheaper and faster than road-based deliveries, especially in rural areas.

It’s also teamed up with Flipdish, the company that operates an online delivery platform used by restaurants and takeaways, in Ireland.

The Manna drone fleet will, they say, be operated directly from the restaurant or dark kitchen premises and will be accessible via API to food tech providers and online food platforms alike in a channel-agnostic manner. That means you end up with one drone fleet serving all and any of the providers, based on demand.

Founder and serial entrepreneur Bobby Healy previously built and sold Eland Technologies to ‘SITA.AERO’ in 2003, and more recently built CarTrawler, a b2b mobility marketplace for the airline industry where he is still on the board after several private equity LBOs.

Healy says: “We are on the cusp of the fifth industrial revolution – powered by drones – and our intention with Manna is to make drone delivery as pervasive as running water – to literally transform marketplaces, economies, and communities all over the world in a way that not just reduces our carbon footprint, but saves lives and creates jobs while doing so.”
 
Jon Bradford who led the investment for Dynamo Ventures said: “It’s hard to find a rockstar team as ambitious and as capable as the Manna team, and in a domain that is as massive as it is difficult. In Bobby and his incredible team, we see a path to capture a real beachhead in this new emerging market that is truly unprecedented and we look forward to helping accelerate their vision in the US in 2020”.

 


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With $4B food delivery acquisition, Korea poised to enter upper tier of startup hubs

15:57 | 15 December

Seoul and South Korea may well be the secret startup hub that (still) no one talks about.

While often dwarfed by the scale and scope of the Chinese startup market next door, South Korea has proven over the last few years that it can — and will — enter the top-tier of startup hubs.

Case in point: Baedal Minjok (typically shortened to Baemin), one of the country’s leading food delivery apps, announced an acquisition offer by Berlin-based Delivery Hero in a blockbuster $4 billion transaction late this week, representing potentially one of the largest exits yet for the Korean startup world.

The transaction faces antitrust review before closing, since Delivery Hero owns Baemin’s largest competitor Yogiyo, and therefore is conditional on regulatory approval. Delivery Hero bought a majority stake in Yogiyo way back in 2014.

What’s been dazzling though is to have witnessed the growth of this hub over the past decade. As TechCrunch’s former foreign correspondent in Seoul five years ago and a university researcher locally at KAIST eight years ago, I’ve been watching the growth of this hub locally and from afar for years now.

While the country remains dominated by its chaebol tech conglomerates — none more important than Samsung — it’s the country’s startup and culture industries that are driving dynamism in this economy. And with money flooding out of the country’s pension funds into the startup world (both locally and internationally), even more opportunities await entrepreneurs willing to slough off traditional big corporate career paths and take the startup route.

Baemin’s original branding was heavy on the illustrations.

Five years ago, Baemin was just an app for chicken delivery with a cutesy and creative interface facing criticism from restaurant franchise owners over fees. Now, its motorbikes are seen all over Seoul, and the company has installed speakers in many restaurants where a catchy whistle and the company’s name are announced every time there is an online delivery order.

(Last week when I was in Seoul, one restaurant seemingly received an order every 1-3 minutes with a “Baedal Minjok Order!” announcement that made eating a quite distracted experience. Amazing product marketing tactic though that I am surprised more U.S.-based food delivery startups haven’t copied yet).

The strengths of the ecosystem remain the same as they have always been. A huge workforce of smart graduates (Korea has one of the highest education rates in the world), plus a high youth unemployment and underemployment rate have driven more and more potential founders down the startup path rather than holding out for professional positions that may never materialize.

What has changed is venture capital funding. It wasn’t so long ago that Korea struggled to get any funding for its startups. Years ago, the government initiated a program to underwrite the creation of venture capital firms focused on the country’s entrepreneurs, simply because there was just no capital to get a startup underway (it was not uncommon among some deals I heard of at the time for a $100k seed check to buy almost a majority of a startup’s equity).

Now, Korea has become a startup target for many international funds, including Goldman Sachs and Sequoia. It has also been at the center of many of the developments of blockchain in recent years, with the massive funding boom and crash that market sustained. Altogether, the increased funding has led to a number of unicorn startups — a total of seven according to the The Crunchbase Unicorn Leaderboard.

And the country is just getting started – with a bunch of new startups looking poised to driven toward huge outcomes in the coming years.

Thus, there continues to be a unique opportunity for venture investors who are willing to cross the barriers here and engage. That said, there are challenges to overcome to make the most of the country’s past and future success.

Perhaps the hardest problem is simply getting insight on what is happening locally. While China attracts large contingents of foreign correspondents who cover everything from national security to the country’s startups and economy, Korea’s foreign media coverage basically entails coverage of the funny guy to the North and the occasional odd cultural note. Dedicated startup journalists do exist, but they are unfortunately few and far between and vastly under-resourced compared to the scale of the ecosystem.

Plus, similar to New York City, there are also just a number of different ecosystems that broadly don’t interact with each other. For Korea, it has startups that target the domestic market (which makes up the bulk of its existing unicorns), plus leading companies in industries as diverse as semiconductors, gaming, and music/entertainment. My experience is that these different verticals exist separately from each other not just socially, but also geographically as well, making it hard to combine talent and insights across different industries.

Yet ultimately, as valuations soar in the Valley and other prominent tech hubs, it is the next tier of startup cities that might well offer the best return profiles. For the early investors in Baemin, this was a week to celebrate, perhaps with some fried chicken delivery.

 


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Inside Prosus Ventures’ $4.5 billion bet on India

02:33 | 23 November

Prosus Ventures last week filed a hostile offer for British food delivery startup Just Eat, an attempt to defeat a unanimous rejection from its board and simultaneously fend off a bid from rival Takeaway.

The giant Naspers spinoff said it was willing to pay as much as $6.3 billion in cash to lure Just Eat, one of Europe’s largest foodtech players.

Prosus’ major bet on online food startups shouldn’t come as a surprise; the recently-listed subsidiary, whose parent firm has invested in companies in more than 90 nations, has shown a great appetite for food delivery startups globally.

How deeply Prosus believes in foodtech is perhaps on display in emerging markets such as India, one of the most buzziest nations for the investment firm, where the unit economics doesn’t work yet for almost any internet startup and probably won’t for another few years.

Prosus Ventures’ investments in food delivery startups globally

Last year, South Africa-based Naspers led a $1 billion financing round for Indian food delivery startup Swiggy. The investment firm contributed $716 million to the round, just shy of the roughly $750 million that Swiggy’s chief rival, Zomato, has raised in its 11 years of existence.

TechCrunch spoke with Larry Illg, CEO of Prosus Ventures and Food, and Ashutosh Sharma, head of investments for India at the venture firm, to understand how significant foodtech is for the investment firm and the bets it is making in India.

Swiggy

“We had a thesis on food delivery globally,” said Illg, describing the company’s first search for a food delivery company in India. “We knew that at least one big player will be there in India in the future. We went around the town and spoke to a lot of startups.”

And then they found Swiggy. But, Illg said, it was a very different Swiggy from the one that currently dominates the Indian market. “So here was a food delivery startup that was already profitable. The only challenge was that it was operational in just six cities in India.”

And thus began Naspers’ journey to convince Swiggy to expand its service nationwide. Now operational in more than 130 cities around the country, Swiggy today competes with Zomato, UberEats, and Ola-owned FoodPanda (now known as Ola Foods).

Prosus Ventures’ Sharma, who heads India business, cautioned that it is early for food startups in India. “I want to say we are on day one, but it might as well be day zero. The number of smartphone users in India who are ordering food online is still less than 2%,” he said.

But even this nascent category has attracted some tough competitors. While UberEats and Ola’s Foods are struggling to make a significant dent, Swiggy and Ant Financial-backed Zomato are locked in an intense battle.

Both companies, according to industry reports, are losing more than $20 million each month. Zomato was burning about $45 million each month a year ago, Info Edge, a publicly-listed investor in the startup revealed in its recent earnings call with analysts.

Illg is not really bothered with the frenzy cash burn in India’s food delivery market, and said Prosus has no shortage of cash, either.

That cash might come in handy very soon. A source at Zomato told TechCrunch that the company is in talks to raise as much as $550 million in a round led by Ant Financial .

TechCrunch reported earlier this year that Zomato is quietly setting up its own supply chain to control the raw material its restaurant partners use. Two sources familiar with Zomato say the food delivery startup is thinking of expanding beyond delivering food items.

Earlier this year, Swiggy announced that its delivery fleet can now move just about anything from one part of the city to another. The service, called Swiggy Go, is currently limited to select cities. Zomato plans to replicate this, sources say. Neither of these developments have been previously reported.

Additionally, cloud kitchens are current area of focus for Swiggy. This week, the company announced it has established more than 1,000 cloud kitchens in the country, more so than any of its rivals.

Illg said cloud kitchens are crucial for a country like India, which has a low density of restaurants. “We have the visibility of all the market dynamics,” he said. “We can look at a location, comb through the data and know what kind of restaurants and food supplies would work there.”

 


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