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Main article: Money

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Reset Button is approaching student debt from a new angle

18:05 | 12 February

Student loan debt in the U.S. totals $1.5 trillion, and more than 44 million Americans have outstanding student loan debt.

According to research by Jason Iuliano, Villanova law professor, a million student loan debtors have filed for bankruptcy in the past five years. However, 99.9 percent of them did not include their student loan debt in their bankruptcy filing.

This research was the seed of what would become Reset Button, a new startup founded by Iuliano and Rob Hunter looking to help student loan debtors who have gone through bankruptcy find a new way to include those debts in their filing.

The only way you can include student loan debt in a bankruptcy filing is through litigation. Those cases have been historically less likely to settle out of court than other types of civil cases.

This means that the cost of including student loan debt in bankruptcy filings is, at the very least, around $10K. Now, if there was some guarantee that you could trade hundreds of thousands of dollars of student loan debt for $10K-$15K, you’d obviously do it. But most folks who are already in the process of filing for bankruptcy don’t have a spare $10K minimum to spend on a litigator. And even if they did, there is no guarantee they’d win in court, resulting in even more debt and no relief.

This is what Reset Button is trying to change.

To be clear, Reset Button is targeted directly at folks who have already filed for bankruptcy but were told they couldn’t include their student loan debt in those filings, and so they didn’t.

Here’s how it works:

Reset Button has built a network of litigation lawyers who have experience in seeking student loan discharges. When a new user fires up Reset Button, the startup sends them through an evaluation process that collects financial information, etc. to assess whether or not one of those lawyers could litigate the discharge of that user’s student loan debt. That evaluation factors in a number of signals, including past legal cases that are comparable to the user’s situation.

That process also does a lot of the heavy lifting that makes hiring a litigator so expensive. These lawyers often have to do tons of research, tracking down statements and bills and other paperwork, before they can truly get started with the litigation.

Reset Button, as the connective tissue between debtor and lawyer, is able to automate a lot of that process for the lawyers, delivering a package of information on the case and connecting the user with the right lawyer for them.

Reset is also looking to bring the cost down for debtors. The company charges either 12 percent of the total debt discharged, or $10,000 (whichever is lowest). Reset also allows users to pay that sum over time, in $300 monthly installments. This is in stark contrast to people who hire their own lawyer, who would be responsible for the costs up front.

Reset Button is able to do this through a payment process called factoring. In short, Reset buys the receivables from the attorney’s fees, and charges the debtor with their own payment plan. Reset makes money from lawyers who pay for the lead generation, the technology services, and the marketing apparatus.

Factoring has come under fire from some who say that service providers sometimes raise prices to account for their fee, but Reset Button cofounders Rob Hunter and Iuliano say that their lawyers are actually charging less because of the workflow optimization provided by Reset Button.

The company also provides a Knowledge Base for debtors seeking financial guidance and resources, but the only revenue stream comes from the actual litigation of student loan debt in bankruptcy filings. Other services like refinancing, debt consolidation, or income-based payments are not provided by Reset Button, and the company has no official partnerships with those types of service providers.

However, Hunter said that it may be an avenue the company explores as it grows.

Perhaps most importantly, Reset Button offers a Fresh Start guarantee. In short, if the lawyer doesn’t manage to get your debt wiped, Reset will pay your legal bills.

There has been movement in the landscape of student loan discharges with bankruptcy.

Essentially, debtors must prove in court that they pass the test of “undue hardship,” which is a notably vague framework. Though there is a bit of variability among the various court circuits, the general idea is that a debtor must prove that they can’t currently pay back the loan, that there will not be a change down the line that will allow them to pay the loan in the future, and that they have made every effort to pay the loans in the past.

Historically, that’s been a difficult threshold to cross for the fraction of people who take steps to litigate their student loan debt. However, in small ways, courts seem to be opening up the interpretation of undue hardship.

“There’s a phrase that gets used in these cases that I think perpetuates this myth, and that is to call it a ‘certainty of hopelessness’,” said John Rao, attorney with the National Consumer Law Center. “And it’s almost like, as long as you’re still alive and breathing, something could improve for you. That’s just an impossible burden. It’s basically saying you could win the lottery or something. That’s just not the standard I think Congress had in mind.”

In 2015, in a case between Robert E. Murphy and the DOE/ECMC, Rao wrote to the courts arguing that they should reassess the test for undue hardship.

Rather than adopt one existing test over another, we urge this Court to provide a formulation of the undue hardship standard in simple terms, that restricts consideration of extraneous and inappropriate factors not consistent with the statutory language. A finding about whether a debtor’s hardship is likely to persist should be based on hard facts, not conjecture and unsubstantiated optimism.

More recently, a judge in the Southern District of New York ruled in favor of a debtor, wiping more than $200,000 in Kevin Rosenberg’s student debt. Of course, the lenders will be appealing the case.

However, Judge Morris, who presided over the case, wrote in her decision that “most people (bankruptcy professionals as well as lay individuals) believe it impossible to discharge student loans,” and that her “Court will not participate in perpetuating these myths.”

Reset Button has raised money from investors Craft Ventures, Slow Ventures, and Jeff Morris Jr. of Lambda School, among others. The company declined to share its total amount of investment.

“Society has been led to believe something for decades that is not true, which is probably the biggest initial challenge,” said founder and CEO Rob Hunter. “One of the unfortunate things is the reason that many consumers believe incorrect information is because a lawyer told them that. So, that is a bit of an uphill battle to swim against.”

 


0

KPCB has already blown through much of the $600 million it raised last year

06:32 | 30 January

Kleiner Perkins, one of the most storied franchises in venture capital, has already invested much of the $600 million it raised last year and is now going back out to the market to raise its 19th fund, according to multiple sources.

The firm, which underwent a significant restructuring over the last two years, went on an investment tear over the course of 2019 as new partners went out to build up a new portfolio for the firm — almost of a whole cloth.

A spokesperson for KPCB declined to comment on the firm’s fundraising plans citing SEC regulations.

The quick turnaround for KPCB is indicative of a broader industry trend, which has investors pulling the trigger on term sheets for new startups in days rather than weeks.

Speaking onstage at the Upfront Summit, an event at the Rose Bowl in Pasadena, Calif. organized by the Los Angeles-based venture firm Upfront Ventures as a showcase for technology and investment talent in Southern California, venture investor Josh Kopelman spoke to the heightened pace of dealmaking at his own firm.

The founder of First Round Ventures said that the average time from first contact with a startup to drawing up a term sheet has collapsed from 90 days in 2004 to 9 days today.

 

“This could also be due to changes in the competitive landscape … and there may be changes with First Round Capital itself,” says one investor. “It may have been once upon a time that they were looking at really early raw stuff… But, today, First Round is not really in the first round anymore. Companies are raising some angel money or Y Combinator money.”

At KPCB, the once-troubled firm has been buoyed by recent exits in companies like Beyond Meat, a deal spearheaded by the firm’s former partner Amol Deshpande (who now serves as the chief executive of Farmers Business Network) and Slack.

And its new partners are clearly angling to make names for themselves.

“KP used to be a small team doing hands-on company building. We’re moving away from being this institution with multiple products and really just focusing on early-stage venture capital,” Kleiner Perkins  partner Ilya Fushman said when the firm announced its last fund.

Kleiner Perkins partner Ilya Fushman

“We went out to market to LPs. We got a lot of interest. We were significantly oversubscribed,” Fushman said of the firm’s raise at the time.

In some ways, it’s likely the kind of rejuvenation that John Doerr was hoping for when he approached Social + Capital’s Chamath Palihapitiya about “acquiring” that upstart firm back in 2015.

At the time, as Fortune reported, Palihapitiya and the other Social + Capital partners, Ted Maidenberg and Mamoon Hamid would have become partners in the venture firm under the terms of the proposed deal.

Instead, Social + Capital walked away, the firm eventually imploded and Hamid joined Kleiner Perkins two years later.

The new Kleiner Perkins is a much more streamlined operation. Gone are the sidecar and thematic funds that were a hallmark of earlier strategies and gone too are the superstars brought in by Mary Meeker to manage Kleiner Perkins’ growth equity investments. Meeker absconded with much of that late stage investment team to form Bond — and subsequently raised hundreds of millions of dollars herself.

Those strategies have been replaced by a clutch of young investors and seasoned Kleiner veterans including Ted Schlein who has long been an expert in enterprise software and security.

“Maybe at this point they think they can raise based on the whole story about Mamoon taking over and a few years from now they won’t be able to raise on that story and will have to raise on the results,” says one investor with knowledge of the industry. “Mamoon is a pretty legit, good investor. But the legacy of the firm is going to be tough to overcome.”

All of these changes are not necessarily sitting well with limited partners.

“LPs are not really happy about what’s going on,” says one investor with knowledge of the venture space. “Everybody thinks valuations are too high since 2011 and people are thinking there’s going to be a recession. LPs think funds are coming back to market too fast and they’re being greedy and there’s not enough vintage diversification but LPs … feel almost obligated that they have to do these things… Investing in Sequoia is like that saying that you don’t get fired for buying IBM .”

 


0

A founder’s guide to recession planning for startups

22:37 | 24 January

Schwark Satyavolu Contributor
Schwark Satyavolu is a general partner at Trinity Ventures where he makes early-stage investments in fintech, security and AI. A serial entrepreneur, he co-founded Yodlee (YDLE) and Truaxis, both of which were acquired. Previously, he held senior executive positions at LifeLock and Mastercard. He is an inventor on 15 patents.

We are living through one of the nation’s longest periods of economic growth. Unfortunately, the good times can’t last forever. A recession is likely on the horizon, even if we can’t pinpoint exactly when. Founders can’t afford to wait until the midst of a downturn to figure out their game plans; that would be like initiating swim lessons only after getting dumped in the open ocean.

When recession inevitably strikes, it will be many founders’ — and even many VCs’ — first experiences navigating a downturn. Every startup executive needs a recession playbook. The time to start building it is now.

While recessions make running any business tough, they don’t necessitate doom. I co-founded two separate startups just before downturns struck, yet I successfully navigated one through the 2000 dot-com bust and the second through the 2008 financial crisis. Both companies not only survived but thrived. One went public and the second was acquired by Mastercard.

I hope my lessons learned prove helpful to building your own recession game plan.

 


0

African fintech firm Flutterwave raises $35M, partners with Worldpay

14:00 | 21 January

San Francisco and Lagos-based fintech startup Flutterwave has raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.

With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.

The company will also expand capabilities to offer more services around its payment products.

More than payments

“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.

That means Flutterwave will provide more solutions around the broader needs of its clients.

The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.

Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.

In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.

Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.

Flutterwave Cardi B Nigeria“We want to scale in all those markets and be the payment processor of choice,” GB said.

The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.

“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.

GB Flutterwave disrupt

Olugbenga Agboola, aka GB

“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.

That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.

Worldpay partnership

The new round makes Flutterwave the payment provider for Worldpay in Africa.

“With this partnership, any Worldpay merchant in Europe or the U.S. can accept any African payment. If someone goes to pay Netflix with an African card, it just works,” GB said.

In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.

Therein lies the benefit of collaborating with Flutterwave.

FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.

Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech company announced a series of weighty partnerships.

In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

The Alipay collaboration followed one between Flutterwave and Visa to launch a consumer payment product for Africa, called GetBarter.

Flutterwave and African fintech

Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.

As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.

While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.

Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.

The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.

A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to be relevant in Africa.

 


0

What we know (and don’t) about Goldman Sachs’ Africa VC investing

22:30 | 16 January

Goldman Sachs is investing in African tech companies. The venerable American investment bank and financial services firm has backed startups from Kenya to Nigeria and taken a significant stake in e-commerce venture Jumia, which listed on the NYSE in 2019.

Though Goldman declined to comment on its Africa VC activities for this article, the company has spoken to TechCrunch in the past about specific investments.

Goldman Sachs is one of the most enviable investment banking shops on Wall Street, generating $36 billion in net revenues in 2019, or roughly $1 million per employee. It’s the firm that always seems to come out on top, making money during the financial crisis while its competitors were hemorrhaging. For generations, MBAs from the world’s top business schools have clamored to work there, helping make it a professional incubator of sorts that has spun off alums into leadership positions in politics, VC and industry.

All that cache is why Goldman’s name popping up related to African tech got people’s attention, including mine, several years ago.

 


0

Visa is acquiring Plaid for $5.3 billion, 2x its final private valuation

01:06 | 14 January

Visa announced today that it is buying financial services API startup Plaid for $5.3 billion. 

Plaid develops financial services APIs. It is akin to what Stripe does for payments, but instead of facilitating payments, it helps developers share banking and other financial information more easily. It’s the kind of service that makes sense for a company like Visa.

The startup bought Quovo two years ago to move beyond just banking, and into broader financial services and investments. The idea was to provide a more holistic platform for financial services providers. As the founders wrote in a blog post at the time of the acquisition, “Financial applications have historically used Plaid primarily to interact with checking and savings accounts. In acquiring Quovo, we are extending our capabilities to a wider class of assets.”

The Price

Plaid’s exit price is a triumph for its investors, who put a combined $353.3 million into the company, according to Crunchbase data. Most important among those rounds was a $250 million infusion that came in late 2018. Index and Kleiner led that round, valuing Plaid at $2.65 billion, or 50% of its final sale price (we doubt that that ratio is a coincidence).

At the same time, it was later revealed, Mastercard and Visa also took part in the round, with TechCrunch reporting in 2019 that the two payments giants “quietly participated in the round.” 

Whether those investments were large enough to grand Visa information rights isn’t clear, but certainly the two credit card giants had more insight into what Plaid was doing than they did before their investment. We can presume, then, that Plaid was doing well as a private company; no one pays twice a multi-billion dollar valuation for a firm unless they want to keep it away from their core business, or a key competitor. 

Or perhaps both in the case of Plaid.

The Twilio comparison

Plaid is often compared to Twilio, another API-first company that sits in the background, helping other players do business. Noyo, on the early-stage front, is doing something similar with its healthcare information and insurance APIs. Stripe, as mentioned above, is similar but in the payment space. The model has proved lucrative for Twilio, which has soared as a public company; Plaid’s huge exit will add extra shine to the startup varietal.

However, unlike Twilio, Plaid was bought while still private, depriving us of a good look into its figures. We anticipate that they would show growth in high-margin revenues. That’s something that all companies, public and private, covet.

For Visa, however, there’s likely something more to the deal. Namely it now has a view into scads of high-growth, private companies that are reinventing the world that Visa operates in. Buying Plaid is insurance against disruption for Visa, and also a way to know who to buy. 

But for today, it’s a win for Plaid shareholders (including employees).

 


0

Payment startup Chipper Cash raises $6M for Southern Africa expansion

08:21 | 17 December

African cross-border fintech startup Chipper Cash has raised a $6 million seed-round led by Deciens Capital.

The San Francisco-based company offers mobile-based, no fee, P2P payment services in six countries: Ghana, Uganda, Nigeria, Tanzania, Rwanda, and Kenya.

Chipper Cash will use the capital to grow its team and move into new geographic areas, according to CEO Ham Serunjogi.

“Southern Africa is an area we’re looking to expand to in 2020,” he told TechCrunch on a call. Chipper Cash won’t yet disclose which countries that could entail.

The digital finance startup’s had a busy 12 months in an eventful year overall for Africa’s fintech scene. After going live in 2018, Chipper Cash raised $2.4 million in May 2019 in a seed round that included support from 500 Startups and Liquid 2 Ventures — co-founded by American football icon Joe Montana.

In September, Chipper Cash expanded into what is now arguably Africa’s largest fintech market, Nigeria. With its latest round, the startup has raised over $8 million in seed capital. Participants in the $6 million financing include previous investors, and a few new backers, such as Boston based Raptor Group.

Deciens Capital Co-Founder Dan Kimerling confirmed the fund’s lead on the latest round and that he will continue his role on Chipper Cash’s board.

The fintech company, co-founded by Ghanaian Maijid Moujaled, now has more than 600,000 active users and has processed over 3 million transactions on its no-fee, P2P, cross-border mobile-money payments product, according to Serunjogi.

Maijid Moujaled and Ham Serunjogi

The startup also runs Chipper Checkout: a merchant-focused, fee-based C2B mobile payment product that generates the revenue to support Chipper Cash’s free mobile-money business.

The startup’s planned move to Southern Africa — home to the continent’s second-largest and most advanced economy of South Africa — will place Chipper Cash in all three corners of the Africa’s triangle of leading digital finance markets.

There are hundreds of payments startups across Africa looking to bring the continent’s large unbanked and underbanked populations onto mobile finance applications.

Some products, such as M-Pesa in Kenya, have succeeded in reaching tens of millions. However, one characteristic of successful African fintech products is their use has been geographically segregated, with few apps able to scale widely across borders.

Chipper Cash touts its ability to grow its P2P product in several countries in 2019, including Nigeria.

Serunjogi explained the imperative to move to the West African country earlier this year. “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.

Apparently a number of actors were on the same wavelength when he said that, as Nigerian fintech gained $360 million in VC in November — the equivalent of roughly one-third of all the startup capital raised in Africa in 2018, according to Partech stats.

Part of this venture influx was directed to potential Chipper Cash competitors.

In two separate rounds, Chinese investors put $220 million into OPay and PalmPay — two fledgling payment startups with plans to scale in Nigeria and the broader continent. That money dwarfs rounds raised by other P2P focused fintech companies, such as Chipper Cash.

On how the startup will compete with the these new players with big coffers, Serunjogi points to Chipper Cash’s gratis-payment structure, among other factors.

Money doesn’t buy product market fit. It doesn’t buy ultimate success in this space,” he said.

“By offering our product for free, we’re not in a pricing war or competing on a dollar-to-dollar basis. We’re in a pure utility war on who can provide the most value to our users. We’re quite comfortable with our position, and our long-term value proposition will speak for itself over time,” Serunjogi added.

At the end of 2020 we can review where Chipper Cash and competitive platforms stand on country reach and volumes in the startup race to scale digital payments across Africa’s 1.2 billion people.

 

 


0

As the new year beckons European investors start moving into new roles

17:57 | 30 November

As the Holiday Season approaches, new jobs for players in the tech ecosystem beckon. And this is no less true for investors. Two notable moves have recently happened that are worthy of note in the European scene.

The first is that GR Capital, a pan-European VC, is opening an office in London and has lured Jason Ball, who, earlier this year, left Qualcomm Ventures where had been European Managing Director for over a decade. Bad spent ten years as a mentor at Seedcamp and individually invested in more than ten companies. He was understood to be looking for new challenges, either building a new fund or joining another – so now we have our answer as to what he decided.

Founded in 2016 by Roma Ivaniuk in Ukraine, GR Capital specializes in late-stage VC investments. It has over $70M under management and has invested in Lime, Azimo, WeFox, McMakler, Glovo and Meero among others. The fund has traditionally been known for investing in Eastern Europe, but with a London office and the extremely well-networked Ball under its belt, we should be hearing more from them on the wider European scene in future.

Ivaniuk said in a statement that the move “means we can now drive our pan-European business activities from the continent’s most important VC hub, London.”

Ball said “We see a huge opportunity here to connect the dots between West and East. The London ecosystem is an exciting offering for investors in Eastern Europe, which in turn presents unique R&D and growth opportunities for portfolio companies.”

Meanwhile, Jon Bradford was most recently a partner of Motive Partners and a UK investment pioneer — having founded the Springboard Accelerator that merged with Techstars to become Techstars London, as well as helping to co-found F6S and Tech.eu. But he is also on the move, now joining Dynamo Ventures as its newest partner.

Bradford will be joining Dynamo on a full-time basis having previously been an advisor who helped launch the debut fund. He has invested in over 100 startups over the last decade including Apiary, Hassle, Tray.io, Flitto (that recently IPO’ed in Korea), Sendbird and Chainalysis. Dynamo is a US-EU based seed fund focused on B2B startups in supply chain and mobility. It has invested in 20 startups across the US and overseas, investing in including Sennder (Berlin), Skupos, Stord, Gatik and LEAF Logistics.

 


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Startups Weekly: Chinese investors double down on African startups

16:00 | 30 November

Hello and welcome back to Startups Weekly, a weekend newsletter that dives into the week’s noteworthy startups and venture capital news. Before I jump into today’s topic, let’s catch up a bit. Last week, I wrote about Airbnb’s issues. Before that, I noted Uber’s new “money” team.

Remember, you can send me tips, suggestions and feedback to kate.clark@techcrunch.com or on Twitter @KateClarkTweets. If you’re new, you can subscribe to Startups Weekly here.


China’s pivot to Africa

Three African fintech startups; OPay, PalmPay and East African trucking logistics company Lori Systems, closed large fundraises this year. On their own, the deals aren’t particularly notable, but together, they expose a new trend within the African startup ecosystem.

This year, those three companies brought in a total of $240 million in venture capital funding from 15 different Chinese investors, who’ve become increasingly active in Africa’s tech scene. TechCrunch reporter Jake Bright, who covers African tech, writes that 2019 marks “the year Chinese investors went all in on the continent’s startup scene” — particularly its fintech projects. Why?

“The continent’s 1.2 billion people represent the largest share of the world’s unbanked and underbanked population — which makes fintech Africa’s most promising digital sector,” Bright notes. “In previous years, the country’s interactions with African startups were relatively light compared to deal-making on infrastructure and commodities. Chinese actors investing heavily in African mobile consumer platforms lends to looking at new data-privacy and security issues for the continent.”

Active Chinese investors in Africa include Hillhouse Capital, Meituan-Dianping, GaoRong, Source Code Capital, SoftBank Ventures Asia, BAI, Redpoint, IDG Capital, Sequoia China, Crystal Stream Capital, GSR Ventures, Chinese mobile-phone maker Transsion and NetEase .

Here’s more of TechCrunch’s recent coverage of Africa startup activity:


VC Deals

It was a short week (Happy Thanksgiving, by the way). But here’s a quick look at the top deals of the last few days.


M&A (VR edition)

Last week, Facebook announced it was buying Beat Games, the game studio behind Beat Saber, a rhythm game that’s equal parts Fruit Ninja and Guitar Hero. Heard of the company? Maybe if you’re a gamer, but if you’re readying this newsletter because of your interest in VC, this company may not have come across your radar.

Why? It’s one of virtual reality’s biggest successes today, but it’s just an eight-person team with no funding.

“I’m really proud that we were able to build the company with this mindset of making decisions based on what is good for the game and not what is the most profitable thing,” Beat Games CEO told TechCrunch earlier this year. Read about Facebook’s acquisition here and an in-depth profile of the small team here.


Equity

If you like this newsletter, you will definitely enjoy Equity, which brings the content of this newsletter to life — in podcast form! Join myself and Equity co-host Alex Wilhelm every Friday for a quick breakdown of the week’s biggest news in venture capital and startups.

This week, we discussed Weekend Fund’s new vehicle, Cocoon’s new friend-tracking app and the unfortunate demise of a startup called Omni. You can listen here.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

 


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Google to offer checking accounts in partnership with banks starting next year

15:21 | 13 November

Google is the latest big tech company to make a move into banking and personal financial services: The company is gearing up to offer checking accounts to consumers, as first reported by the Wall Street Journal, starting as early as next year. Google is calling the projected “Cache,” and it’ll partner with banks and credit unions to offer the checking accounts, with the banks handling all financial and compliance activities related to the accounts.

Google’s Caesar Sengupta spoke to the WSJ about the new initiative, and Sengupta made clear that Google will be seeking to put its financial institution partners much more front-and-center for its customers than other tech companies have perhaps done with their financial products. Apple works with Goldman Sachs on its Apple Card credit product, for instance, but the credit card is definitely pretend primarily as an Apple product.

So why even bother getting into this game if it’s leaving a lot of the actual banking to traditional financial institutions? Well, Google obviously stands to gain a lot of valuable information and insight on customer behavior with access to their checking account, which for many is a good picture of overall day-to-day financial life. Google says it’s also intending to offer product advantages for both consumers and banks, including things like loyalty programs, on top of the basic financial services. It’s also still considering whether or not it’ll charge service fees, per Segupta – not doing so would definitely be and advantage over most existing checking accounts available.

Google already offers Google Pay, and its Google Wallet product has hosted some features beyond simple payments tracking, including the ability to send money between individuals. Meanwhile, rivals including Apple have also introducing payment products, and Apple of course recently expanded into the credit market with Apple Card. Facebook also introduced its own digital payment product earlier this week, and earlier this year announced its intent to build its own digital currency called ‘Libra’ along with partners.

The initial financial partners that Google is working with include Citigroup and Stanford Federal Credit Union, and their motivation per the WSJ piece appears to be seeking out and attracting younger and more digital-savvy customers who are increasingly looking to handle more of their lives through online tools. Per Sengupta’s comments, they’ll also benefit from Google’s ability to work with large sets of data and turn those into value-add products, but the Google exec also said the tech company doesn’t sue Google Pay data for advertising, nor does it share that data with advertisers. Still, convincing people to give Google access to this potentially sensitive area of their lives might be an uphill battle, especially given the current political and social climate around big tech.

 


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