Six-month-old Zepto, a 10-minute grocery delivery startup in India, raises $60 million

Two 19-year-old entrepreneurs, who have previously collaborated on a number of projects including a ride-hailing commute app for school kids and last year left Stanford to pursue a new startup, said on Sunday they have raised $60 million to disrupt India’s overcrowded and highly-competitive grocery delivery market.

Glade Brook Capital led the six-month-old app Zepto’s first institutional financing round, the startup’s founder and chief executive Aadit Palicha told TechCrunch in an interview. Nexus and Y Combinator as well as angel investors Lachy Groom, Neeraj Arora, and Manik Gupta participated in the round, which according to two people familiar with the matter, values Zepto between $200 million and $300 million.

Zepto, which has largely operated in stealth mode until today, has been the talk of the town for the past four months. The startup, whose name playfully uses a mathematical term to describe the business, offers a 10-minute grocery delivery service.

To achieve this feat, Zepto has set up dark stores across the cities where it operates (Mumbai, Bangalore, and as of this week, Delhi.) 19-year-old Palicha said these dark stores, which the startup has set up and owns, are designed and optimized for fast deliveries. (Zepto’s approach, for which Palicha said he looked at other markets and spoke with the operators running those firms, is different from many Indian startups that rely on regular grocery stores for inventory.)

This is a developing story. More to follow…

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ShipBlu bags $2.4M for its e-commerce and fulfilment service in Egypt

African e-commerce fulfilment startups backed by Y Combinator seem to be piquing investors’ interest this year for their niche e-commerce play.

Summer batch graduate ShipBlu is the latest on that list and confirmed to TechCrunch that it has raised $2.4 million in seed funding.

The company, founded by Ali Nasser, Ahmed ElKawass, Abdelrahman Hosny in 2020, operates a delivery and fulfilment model. It delivers packages of all kinds for merchants and retailers — ranging from mom and pop stores and social media to fashion retailers who make thousands of shipments and international brands — to customers in Egypt.

On the fulfilment side, ShipBlu stores merchants’ products in warehouses it leases. Then it connects with merchants’ online stores and monitors orders via a dashboard, so when they come in, ShipBlu picks and packs the orders from the warehouse and sends them to the customers.

ShipBlu charges its customers per package, depending on two standard sizes, destination and shipping speed.

While these three factors are common in e-commerce and fulfilment, CEO Nasser said shipping speed is not prioritized the same way as the other two in Egypt.

According to him, ShipBlu is one of the few e-commerce fulfilment companies that offers that service to customers in the country.

“We let the merchant decide: Do they need to get that product to their customer overnight, and therefore, pay or charge the customer for overnight fees?” Nasser said to TechCrunch in an interview.

“Or are they willing to for a more budget-friendly option and would like to ship that package in three to five days? We offer that option to merchants, who in turn can decide to offer that to customers. So it could be the customer’s choice or the merchants’ choice.”

ShipBlu only fully launched this August. Per its YC profile, ShipBlu signed on more than 40 merchants during its first month. And since then, the company has managed to double its clientele while tripling revenues in the same period, said Nasser without stating hard numbers.

Within the next couple of months, Nasser says he wants ShipBlu’s network and infrastructure to reach 99% of Egypt’s population.

“Whether you’re living in a small village or a large town or a large city, we want to be able to get to you and have the infrastructure in place to get to your delivery to you,” the CEO remarked.

The idea behind such a daring move — which appears to be a bit of a stretch considering the timeline — comes from the founders’ ambition to change an industry that has lagged behind other regions in the wider GCC, such as Saudi Arabia and the UAE, in terms of e-commerce penetration.

Over 100 million people live in the North African country compared to Saudi Arabia’s 30 million+ people, yet the e-commerce market in Egypt is a third of Saudi Arabia’s.

A significant reason this gap has always existed is that the infrastructure needed to facilitate the process of e-commerce in Egypt is abysmal. It runs deep even on an elementary level where zip codes are barely accurate or non-existent, presenting many challenges to last mile or delivery providers.

The zip codes were one of the issues Nasser observed from Egypt’s fragmented e-commerce and fulfilment market during his return from the US to the country months before the pandemic broke out.

As online payments boomed globally and in Egypt and upon finding out via research that the market size for last-mile delivery in MENA stands at over $3.1 billion annually, Nasser and his co-founders ElKawass, Abdelrahman Hosny got together to start ShipBlu.

“It was that period that it hit us and we realized how much more can be done for delivery services in the standard of service and the features that are available today. Compared to Europe and the US and other parts of the world, there was just so much more that we could bring to the market.”

But Egypt is an entirely different market compared to these developed regions. For instance, 40% of deliveries fail in the country, while the global benchmark for the latter is about 8%. The high rate of delivery failure makes the operating costs for over 150 providers in Egypt generally high. ShipBlu, differentiating itself from the market, says it has developed AI and ML algorithms to “reduce costs, meet delivery constraints, and refine its operating assumptions.”

The CEO says ShipBlu’s end goal is to make customers choose a three-hour delivery window for their packages and know what date to expect them, which contrasts how most traditional e-commerce fulfilment companies function.

“Roughly 56% of the time when someone in Egypt places an order online, they don’t even have a delivery date. After you place your order and you get an email confirmation, it’s complete silence until, on a random day, you’re going to get a call from the agent who’s on your on their way to you asking if you are available to pick up the package. We’re changing that,” he said.

ShipBlu has competition with the likes of Flextock and Bosta in Egypt. And following the completion of its seed round, the company now has a mutual investor with Flextock in Flexport, the billion-dollar freight and logistics company YC backed in 2014. The unicorn also invested in Nigerian e-commerce fulfilment startup Sendbox this year.

Nama Ventures led ShipBlu’s seed round with participation from 1984 Ventures; Orange Ventures, the venture capital arm of Orange Telecom; Starling Ventures and other VC funds and angel investors. The company says the investment will help grow its service offering and coverage across Egypt.

This YC Summer batch features the largest group of African startups yet

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TechCrunch+ roundup: BNPL competition heats up, Bowery Farming TC-1, Silicon Valley dreams

Is Southeast Asia about to hit an inflection point for tech startups?

Four hundred million people in the region already use the internet, but by year’s end, one estimate suggests that 80% of the population over the age of 15 in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam will be digital consumers.

“As per Jungle Ventures’ calculations, the total value of the region’s digital companies is around $340 billion today and is estimated to grow to $1 trillion by 2025,” says founding partner Amit Anand.

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E-commerce, fintechs and the rapid digitization of the region’s SME workforce are a few of the factors reshaping the landscape for Southeast Asia’s startups, but supply chain technology is also a major opportunity, Anand says.

“With new deals and intentions to list in the U.S. being announced more frequently, the region shows no sign of slowing down and the birth of many more unicorns is on the horizon.”

Thanks very much for reading TechCrunch+ this week!

Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist

Predicting the next wave of Southeast Asia tech giants

The Bowery Farming TC-1

Image Credits: Nigel Sussman

Just over a tenth of Americans have jobs in food and agriculture, so it’s easy to see why many of us lack a keen awareness about what we’re eating or where it comes from.

Our food supply isn’t as secure or predictable as we assumed: Climate change, safety recalls, the COVID-19 pandemic and even immigration policies can directly impact what’s available at the store.

The technological leaps that made it possible to feed (most of) the world will not see us through the next century unless we change course.

Plant-based protein has gotten a lot of press, but vertical farming that leans on hardware and robotics has reached scale, reports Brian Heater, TechCrunch hardware editor.

In a four-part series, he explores the origins and operations of Bowery Farming, a profitable startup that has raised almost $500 million since 2015 to create new tech and facilities that raise leafy greens sold in nearly 900 markets.

Part 1: Bowery Farming is forcing us all to look up at the future of vertical agriculture

Part 2: Hacking lettuce for taste and profit

Part 3: Can LEDs ultimately replace the sun?

Part 4: The voracious fight for your salad bowl

The Bowery Farming TC-1

Since Big Tech came to Denver, investors can’t buy enough local startups

Image Credits: Nigel Sussman (opens in a new window)

Denver, Colorado is nicknamed the Mile High City, but enthusiastic investors don’t seem to mind the thin air.

“Per a recent CB Insights report, Denver-based startups raised around $2.7 billion in all of 2020,” report Anna Heim and Alex Wilhelm in today’s edition of The Exchange.

“The same dataset says that startups in the city have raised $3.1 billion through Q3 of 2021 — more capital in less time.”

Colorado’s central location and quality of life have made Denver and nearby Boulder attractive hubs for Big Tech firms. Now that remote work has become the norm, remote investment in the area has dialed up as well.

“Denver was ready for the Zoom boom, and is reaping the — venture capital — rewards.”

Since Big Tech came to Denver, investors can’t buy enough local startups

Credit card and payments companies compete for a slice of the growing BNPL market

Image Credits: Photo Concepts (opens in a new window) / Getty Images

Giving consumers the convenience of deferring payment for a product is not a new idea, but now that upstarts like Klarna, Afterpay and Affirm have taken the concept to the next level, legacy credit card companies and payment firms are taking notice.

Mary Ann Azevedo and Ryan Lawler have identified a “slow emergence” in the BNPL space “of a symbiotic relationship between traditional financial institutions, payments upstarts and leading companies.”

Visa announced this week that many companies are using its technology to power point-of-sale BNPL solutions; last month, its rival rolled out Mastercard Installments, its bespoke offering.

“It’s not really a surprise that these credit card companies are stepping it up when it comes to BNPL,” reported Ryan and Mary Ann. “If anything, it’s a wonder that it took them this long.”

Credit card and payments companies compete for a slice of the growing BNPL market

Dear Sophie: Any advice for living my dreams in Silicon Valley?

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

After trying to find an H-1B job to immigrate to the United States for several years, I took a senior software engineer position with a company in Canada.

My dream is to immigrate to Silicon Valley to start my own venture. Any advice?

— Eager Entrepreneur

Dear Sophie: Any advice for living my dreams in Silicon Valley?

Heavily VC-backed salad chain Sweetgreen heads toward public markets

Image Credits: Adam Glanzman/Bloomberg / Getty Images / Getty Images

At a previous job, I worked near a Sweetgreen location, stopping in once each week to pick up our startup’s lunch order.

The salads were delicious, but the prices definitely made me appreciate our free lunch policy. While reading Alex Wilhelm’s review of Sweetgreen’s S-1, I recalled something else: whenever I visited, I was usually the only customer waiting for a pickup.

Heavily reliant on digital orders and office workers, Sweetgreen “is rather unprofitable and doesn’t appear to be on the cusp of a rapid march toward profitability,” writes Alex.

At the same time, “the company’s overall business plan appears sound on paper.”

Heavily VC-backed salad chain Sweetgreen heads toward public markets

How to root out shadow IT and maximize SaaS investments

Image Credits: MirageC (opens in a new window) / Getty Images

In a modern, mostly remote workplace, unapproved SaaS applications used by individual employees may lead to duplicate subscriptions, wasted IT spend and greater risk of a data breach.

How do you chase away the shadows? Just shine a light on your SaaS portfolio, according to CEO and co-founder of Zylo, Eric Christopher.

“Once IT has a line of sight into all applications in use and how they are used, they are positioned to optimize investments,” he says. “Implementing self-service SaaS at your organization is easier than you may think.”

How to root out shadow IT and maximize SaaS investments

Robinhood’s nasty quarter shows the ups, downs of trading incomes

Image Credits: Nigel Sussman (opens in a new window)

Any stock that trades on the prospect of a company’s growth rather than its current business value is treading on thin ice.

So when trading platform Robinhood reported worse-than-expected Q3 revenue and profit, and predicted Q4 revenue also below analysts’ expectations, the market responded.

In an in-depth examination of the company’s Q3 results, Alex Wilhelm found that Robinhood’s user base, crypto trading revenues and revenue per user all fell, which led to its profitability “taking a beating.”

If competitor Coinbase “has seen even a fraction of the downturn that Robinhood has experienced in terms of crypto transaction incomes, it could have a tough quarter,” he says.

Robinhood’s nasty quarter shows the ups, downs of trading incomes

How 2 companies leveraged organic and inorganic growth

Image Credits: Ivan Bajic (opens in a new window) / Getty Images

Taking a thoughtful, balanced approach to combining organic growth with the booster shot of a merger or acquisition can unlock sustainable growth, writes Progress Partners’ senior managing director, Chris Legg.

He highlights two examples of successful M&A strategies:

• Outside Inc.’s aggressive vertical acquisition spree to expand its offerings while entering completely new markets.
• Trusted Media Brands’ deal with Jukin Media to diversify its content and increase its advertising base.

How 2 companies leveraged organic and inorganic growth

Crafting a pitch deck that can’t be ignored

Image Credits: Boris SV (opens in a new window) / Getty Images

To find out what a pitch deck needs to stand out, Managing Editor Danny Crichton hosted a panel at TechCrunch Disrupt featuring Mar Hershenson, the founding MD of Pear VC; Mercedes Bent, a partner at Lightspeed, and Saba Karim, who heads the global startup pipeline at TechStars.

Their chat contains valuable insights into how pitches have evolved over the past year, the VCs’ thought process when reading decks and what founders should focus on if they don’t want to be ignored.

“The decks are getting better and better in terms of design,” said Bent. “I think more and more people have realized that the visual representation of your deck is just as important as the material and the content that’s in there.

Originality definitely helps an entrepreneur break apart from the crowd, said Karim.

The best pitch deck that I got in a different format would be from a company that recently got into TechStars — it was actually a podcast version of their pitch deck that had my face on it. I went into Apple Podcasts and it said, “Hey, Saba, here’s my pitch.” That was amazing! But the second or third time that happens, it might not be as impressive because I’ve seen it before.

Crafting a pitch deck that can’t be ignored

Allbirds flotation should help the market sort the value of tech-enabled IPOs

Image Credits: Nigel Sussman (opens in a new window)

I’ve always had an interest in the origin of words: We use “bellwether” as a term to describe trendsetters, but it originally referred to a sheep with a bell tied around its neck, which encouraged the rest of the flock to follow.

Similarly, IPO filings offer a glimpse into a company’s inner workings, but they can also offer insight into prevailing market trends.

Tech-enabled footwear maker Allbirds’ IPO filing serves both purposes quite well, reports Alex Wilhelm: The company expects to debut between $12-$14 per share, which would value it about $2 billion at the upper end of the range — not far from where Rent the Runway debuted at in its IPO this week.

Allbirds flotation should help the market sort the value of tech-enabled IPOs

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When should your B2C startup enter a new market?

Jim Mann Contributor

Jim Mann is director of acquisitions at Thrasio , a consumer goods company reimagining omnichannel commerce and consumer products.

The toughest questions most entrepreneurs face will involve international expansion. Whether to, when to, where to and how to expand all involve a wealth of complex considerations. The stakes are high: Success could mean the creation of a global multimillion-dollar business, whereas failure can often be fatal to a startup’s long-term viability.

Luckily, international expansion doesn’t have to be a blind gamble. With the right research and strategy combined with knowledge of the most common pitfalls, founders can mitigate a lot of risk and give their startup the best chance to succeed.

Naturally, many of the factors that we need to explore vary considerably between tech verticals. For ease, we will concentrate on midsized startups that sell directly to consumers. However, don’t be disheartened if you operate a B2B startup, as the approach I will outline may broadly apply to your business, too.

Go big by staying home

A mistake we often encounter is that businesses see expansion as a goal in itself rather than a move necessary to fulfill a clearly defined commercial strategy. There can be a tendency to rush the process without doing all the objective reflection needed. It’s important to ask yourself, with the risk involved, if international expansion is the only way to realize your dreams for your business. If so, are you really ready?

It may be that through luck or ingenuity, your business has thrived in your home country with minimal marketing spend, but there is absolutely no guarantee this will happen abroad.

In relation to being “ready,” the most successful consumer businesses use their home market to refine their product offering, build their team and infrastructure, and critically, learn to adapt their business per shifting consumer expectations and demand. It is generally much cheaper to gain experience and make your mistakes at home rather than abroad. If, after mulling these questions over, you’re ready to roll, great! Where should you go?

Start with the simple questions

There is absolutely no substitute for research, and you can never do enough. You’ll first need to gather data points from your existing customer base. In an ideal world, a percentage of sales would already come from international clients, and this information may, on the face of it, point to potential demand in a particular region.

However, this is by no means definitive. Sales may be concentrated in a particular country simply because of the language your website is in or, if you’re selling via a third-party platform, due to where that customer base is. Pay attention to the customer journey and how interest has fluctuated over time. Flat demand or outlying surges could indicate a ceiling in that market or an extraneous factor that has skewed the data.

The next step is to shortlist locations. Countries with a similar time zone, commercial culture, language, and legal and regulatory framework should be at the top of the list.

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Luma raises $4.3M to make 3D models as easy as waving a phone around

When online shopping, you’ve probably come across photos that spin around so you can see a product from all angles. This is typically done by taking a number of photos of a product from all angles, and then playing them like an animation. Luma — founded by engineers who left Apple’s AR and computer vision group — wants to shake all of that up. The company has developed a new neural rendering technology that makes it possible to take a small number of photos to generate, shade and render a photo-realistic 3D model of a product. The hope is to drastically speed up the capture of product photography for high-end e-commerce applications, but also to improve the user experience of looking at products from every angle. Best of all, because the captured image is a real 3D interpretation of the scene, it can be rendered from any angle, but also in 3D with two viewports, from slightly different angles. In other words: you can see a 3D image of the product you’re considering in a VR headset.

For any of us who’ve been following this space for a while, we’ve seen for a long time startups trying to do 3D representations using consumer-grade cameras and rudimentary photogrammetry. Spoiler alert: It has never looked particularly great — but with new technologies come new opportunities, and that’s where Luma comes in.

A demo of Luma’s technology working on a real-life example. Image Credits: Luma

“What is different now and why we are doing this now is because of the rise of these ideas of neural rendering. What used to happen and what people are doing with photogrammetry is that you take some images, and then you run some long processing on it, you get point clouds and then you try to reconstruct 3D out of it. You end up with a mesh — but to get a good-quality 3D image, you need to be able to construct high-quality meshes from noisy, real-world data. Even today, that problem remains a fundamentally unsolved problem,” Luma AI’s founder Amit Jain explains, making the point that “inverse rendering,” as it known in the industry. The company decided to approach the issue from another angle.

“We decided to assume that we can’t get an accurate mesh from a point cloud, and instead are taking a different approach. If you have perfect data about the shape of an object — i.e. if you have the rendering equation — you can do Physics Based Rendering (PBR). But the issue is that because we are starting from photographs, we don’t have enough data to do that type of rendering. So we came up with a new way of doing things. We would take 30 photos of a car, then show 20 of them to the neural network,” explains Jain. The final 10 photos are used as a “checksum” — or the answer to the equation. If the neural network is able to use the 20 original images to predict what the last 10 images would have looked like, the algorithm has created a pretty good 3D representation of the item you are trying to capture.

It’s all very geeky photography stuff, but it has some pretty profound real-world applications. If the company gets it way, the way you browse physical goods in e-commerce stores will never be the same. In addition to spinning on its axis, product photos can include zooms and virtual movement from all angles, including angles that weren’t photographed.

The top two images are photographs, which formed the basis of the Luma-rendered 3D model below. Image Credits: Luma

“Everyone want to show their products in 3D, but the problem is that you need to involve 3D artists to come in and make adjustments to scanned objects. That increases the cost a lot,” says Jain, who argues that this means that 3D renders will only be available to high-end, premium products. Luma’s tech promises to change that, reducing the cost of capture and display of 3D assets to tens of dollars per product, rather than hundreds or thousands of dollars per 3D representation.

Luma’s co-founders, Amit Jain (CEO) and Alberto Taiuti (CTO). Image Credits: Luma

The company is planning to build a YouTube-like embeddable player for its products, to make it easy for retailers to embed the three-dimensional images in product pages.

Matrix Partners, South Park Commons, Amplify Partners, RFC’s Andreas Klinger, Context Ventures, as well as a gaggle of angel investors believe in the vision, and backed the company to the tune of $4.3 million. Matrix Partners led the round.

“Everyone who doesn’t live under a rock knows the next great computing paradigm will be underpinned by 3D,” said Antonio Rodriguez, general partner at Matrix, “but few people outside of Luma understand that labor-intensive and bespoke ways of populating the coming 3D environments will not scale. It needs to be as easy to get my stuff into 3D as it is to take a picture and hit send!”

The company shared a video with us to show us what its tech can do:

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Creadev seasons Salted with new funding for its QSR brands

Salted, a Los Angeles-based startup creating digitally native quick-service restaurant brands, brought in a new round of $16 million in Series A funding to continue its nationwide expansion.

The company was founded seven years ago by CEO Jeff Applebaum, but a focus on providing healthy QSR brands and going after the $325 billion food delivery space came about three years ago. Applebaum told TechCrunch that he aims to be “the Yum! Brands for the digital age.”

Salted has created six brands so far, including moonbowls, Califlower Pizza and lulubowls, and serves food from Chinese takeout to pizza to salads.

“Our technology and Salted Analytics product helps us grow at the rate we want to and still maintain customer experience,” Applebaum said. “We don’t consider ourselves a ghost kitchen, but a builder of budding brands that are going to be around for a hundred years. The great value is going to be in the brand layer, similar to Domino’s and Panda Express, which are scaling brands that people love.”

Creadev led the Series A that also included Proof Ventures and B. Riley Financial. The new investment joins with a $4 million seed round raised in May. At that time, Applebaum was using the funds for growth, and that strategy will continue with this new funding toward his goal of “building the next Chipotle,” he said.

The company has over 200 employees, including kitchen staff, and recently opened its 19th location. It is serving food in seven states, including California, Illinois and Ohio, and each location operates four to six brands. Applebaum expects to have over 50 locations by next year.

The locations are already collectively showing profitably and are generating between $1 million and $2.5 million in annual sales, he added.

Adrien Lejal, investment director at Creadev, said he was attracted to Salted because the company “doesn’t take shortcuts in the healthier food options and stands true to its mission, which speaks to the values of the team.”

He has been following the company for about 18 months and decided to jump in when the company started raising its A round. The QSR space isn’t one Creadev typically invests in, but Lejal said it does invest across the food chain and in companies that have “huge scalability potential,” and Salted was an interesting example, he added.

“The company as it is now was founded in 2018 and is already operating in seven states and combines scalability with execution, quality and speed,” Lejal said. “We also definitely invest in people first and Jeff’s leadership and management style is very impressive in the way he is reaching milestones in a short period of time.”

The voracious fight for your salad bowl

 

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Social Chat launches with $6M to bring brands closer to their customers

When brands sell through social media and other third-parties, they often spend millions of dollars to advertise on those platforms, yet have little or no knowledge of who their customers actually are. Social commerce startup Social Chat is out to change that.

Frost Li, the former head of growth at Wish, founded the company in May to create software that leverages machine learning and artificial intelligence for personalization, recommendations and live customer service — all to enable brands to convert lost social engagement into revenue and customer acquisition without having to rely on a big engineering team.

“While at Wish, we learned that to offer the right shopping experience, you had to do absolute personalization,” Li told TechCrunch. “That was done with machine learning engineers, but when I left Wish and was advising brands, I found that what we had at Wish was rare. People were doing things manually and could not do personalization as much as a result.”

She aims to mimic the customer experience you might receive in-store working with a favorite salesperson, but in the digital world, and allow consumers to purchase and transact during the social events, she added.

Can social and e-commerce transform the future of the open web?

Li believes that social commerce should be the standard for every store, and it may very well be soon. Earlier this year, Grand View Research reported that the global social commerce market was forecasted to reach $3.4 trillion by 2028 from growing annually by over 28% between now and then.

“Online shopping is very transactional right now, but we help construct, over time, a long-term relationship through social interaction with customers,” she added.

As it launches its e-commerce customer engagement and revenue software, Social Chat also announced a $6 million seed round co-led by Race Capital and Gradient Ventures and that included Kevin Lin, co-founder of Twitch; Tony Zhao, founder of Agora.io; Ran Makavy, former chief product officer at Lyft; Alanna Gregory, global head of engagement at AfterPay; and Jack Xie, vice president of engineering at Wish.

Social Chat team, from left, Richard Lin, Pearl Tsang, Frost Li and Michael Chen. Image Credits: Social Chat

Edith Yeung, partner at Race Capital, says the future of shopping will be social — children are watching less television and more TikTok, so brands need to take control of their data so they don’t lose their audience to another platform.

“What Frost is doing is giving power back to the brands so that they can shift customers back to their own websites to convert them to sales, that is why Shopify is doing so well,” she added. “Facebook is trying to get people to trust them again, but companies are still at their mercy to keep paying millions, but they don’t know who their customers are.”

Meanwhile, Social Chat previously raised $2 million for a total of $8 million and will use the funding to hire more AI and ML engineers to expand its product offerings.

Though it is a fairly new company and too early to see concrete growth metrics, Social Chat is already working with customers like HTC and 10 other brands and seeing some early traction.

As Li watches the social commerce market grow into a multitrillion-dollar market and the technical part of tracking going away, it will provide the company an opportunity to scale and solve problems for its users.

“We are differentiating ourselves with the AI play so that you can see value, but don’t have to keep paying Facebook to keep your users,” she said. “When Google gets rid of the cookies, it is going to be crazy: you will have to really own the first-party data to communicate with users, or you will lose visibility.”

The demise of browser cookies could create a Golden Age of digital marketing

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Predicting the next wave of Southeast Asia tech giants

Amit Anand Contributor

Amit Anand is a founding partner of Jungle Ventures and an early pioneer and leader in the development of Southeast Asia’s venture capital industry.

With Grab’s announcement of its imminent Nasdaq listing and GoJek merging with Tokopedia to form tech giant GoTo, casual international observers could be forgiven for believing that Southeast Asia’s tech universe only comprises similar companies. However, these companies only represent the highlights of what is a blossoming startup ecosystem.

Southeast Asia is hitting a sweet spot. It remains at a relatively nascent phase expansion in the technology industry but is at the same time developed enough to have a 400-million-strong internet user base. By late 2021, approximately 80% of the Southeast Asian population (aged 15 and above) will be digital consumers, according to a report by Facebook and Bain & Company.

Unsurprisingly, tech startup growth is booming as well. More than 35 tech startups across e-commerce, fintech and SaaS have achieved unicorn status in Southeast Asia, which has over 200 significant startups. As per Jungle Ventures’ calculations, the total value of the region’s digital companies is around $340 billion today and is estimated to grow to $1 trillion by 2025.

Further, Southeast Asian companies are breaking IPO records. Both Grab and GoTo’s valuations hover around the $35 billion to $40 billion mark. Sea is the 65^th most valuable company in the world with a market cap of $187 billion, while Bukalapak was Indonesia’s largest-ever IPO at $1.5 billion at a market cap of $8 billion. There are many more waiting in the pipeline hoping to join this illustrious club of Southeast Asian tech decacorns.

Despite strong e-wallet adoption, over 70% of adults in Southeast Asia remain either underbanked or unbanked due to various cost and geographical limitations.

Vertical e-commerce is climbing the vine

E-commerce will continue to accelerate in Southeast Asia — the sector is projected to grow 80% year on year and double in five years to $254 billion from $132 billion in 2021, according to the Facebook and Bain report. Shopee, Lazada, GoTo and Bukalapak are testament to the phenomenal growth opportunities available, and they are still growing.

While initial e-commerce success came from retail-focused companies such as Shopee and Lazada, the next value creation wave is emerging through vertical e-commerce.

Carro, which achieved unicorn status this year, offers an automotive marketplace in addition to supplementary products such as financing and insurance. Others like Livspace, Pomelo, Zalora and Sociolla are serving the home goods, fashion and personal care industries, respectively, and raising millions of dollars in funding. Their success is underpinned by the fact that at a product category level, Southeast Asia is still in the early stages of online retail penetration.

Based on the chart below, just “catching up” to the same level of penetration as China in verticalized segments increases the e-commerce opportunity by four to five times across the region.

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Credit card and payments companies compete for a slice of the growing BNPL market

Buy now, pay later is here to stay.

A year ago, the biggest players in the space were companies founded solely to offer consumers the ability to pay in installments at the point of sale. Sweden’s Klarna, Australia’s Afterpay and U.S.-based Affirm were the top names associated with BNPL.

But the landscape looks very different now that more companies recognize the opportunity and fight for a piece of the pie. PayPal last month spent $2.7 billion for Japan’s Paidy in an effort to crack the market in Asia. In early August, Square announced plans to acquire Afterpay in a $29 billion deal. Even Apple is said to be getting into the BNPL game.

Today’s BNPL space is seeing a slow emergence of a symbiotic relationship between traditional financial institutions, payments upstarts and leading companies. As credit card and payments firms eye BNPL as a new growth opportunity, incumbents like Klarna and Affirm are seeking ways to make their installment loans available to more consumers.

The bigwigs enter the fray

Now that consumers are growing comfortable with BNPL services, the big credit card providers are taking steps to ensure they aren’t left behind. Visa said on Wednesday that a “growing list” of issuers, acquirers and fintechs are using its technology to offer BNPL options to their customers.

In a statement, Mary Kay Bowman, Visa’s SVP and global head of payment and platform products, said the company has been “enthusiastically embracing BNPL” for years “because it expands choice and convenience for buyers and sellers alike.”

“If shoppers prefer a BNPL fintech solution, we are here and enabling it,” she said. “If they want an option from their banks, we’re helping offer those too.” Interestingly, Visa said today it has inked a “global brand deal” with BNPL giant Klarna to accelerate its expansion and scale in several markets.

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Allbirds flotation should help the market sort the value of tech-enabled IPOs

Allbirds is a tech-enabled shoe company that raised a series of venture capital rounds since mid-2015, per Crunchbase data. And it’s going public.

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The company’s IPO would be something we’d cover regardless of how it fit into — or didn’t — a particular trend that we’re watching in the larger startup market. But luckily for us, Allbirds’ IPO pricing not only reprises its own value, but also provides a bit more context concerning what related startups may be worth.

That’s thanks to its status as a “tech-enabled company,” as opposed to a pure technology outfit. To reiterate our notes concerning the distinction between the two, we consider Allbirds tech-enabled instead of tech proper because it uses technology methods (e-commerce, in its case) to improve on a traditional business (making and selling shoes), instead of, say, operating a purely digital marketplace where others sell wearable goods.

You can use a gross-margin test for this sort of distinction, if you want to be technical.

“Tech-enabled” may sound like a pejorative, but it’s not. It’s a descriptor, and one that is only rude if you are hoping that tech-enabled businesses will attract pure-tech valuations, and, implicitly, larger revenue multiples than may be truly warranted.

Allbirds gave us pricing information for its IPO this week, providing another window into the world of tech-enabled valuations. A key topic, given that we just saw Rent the Runway price its IPO quite well and we have Sweetgreen in the wings.

With lots of pure tech companies going public, and enough tech-enabled unicorns debuting at the same time, we can break the two groups into distinct cohorts.

With that, let’s talk Allbirds and what its expected revenue multiple tells us about how such companies are valued. Hint: We appear to be narrowing on a price range.

Allbirds’ IPO valuation

In an S-1/A filing this week, Allbirds disclosed that it expects its IPO to price between $12 and $14 per share. The company is selling 15,384,615 shares itself, with an option to sell another 360,415 shares under certain conditions. That works out to as much as $220.4 million in gross receipts for the company itself, not including shares being sold by existing stockholders.

After its IPO, Allbirds expects to have 143,480,229 shares outstanding, inclusive of the full whack of shares offered to underwriters that they may or may not purchase. Using that max share count, and the upper end of Allbirds’ current IPO price range, the company would command a valuation of $2.0 billion.

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Monashees backs grain trading startup Tarken

Brazilian grain trading marketplace Tarken secured $3.5 million in a seed round, co-led by Monashees and Maya, to continue developing its technology that connects grain buyers and sellers and operates an artificial intelligence tool for commodity pricing.

Joining them was Gilgamesh Ventures and individual investors, including Kavak founder Carlos Garcia, Ualá founder Pierpaolo Barbieri, Zap VivaReal Group’s Brian Requarth and DoorDash’s Gokul Rajaram.

Luiz Tângari and Carlos Neto founded Tarken this year after working together in agriculture for the past eight years at Strider, a crop protection systems company they co-founded and later sold to Syngenta in 2018.

After integrating the company, they left and started Tarken, which is initially focused on corn, which Tângari estimates to be a $30 billion market. The National Supply Company (CONAB) from the Brazilian Ministry of Agriculture estimated corn production in Brazil at 102.6 million metric tons for the 2020-21 growing year.

“The biggest problem in commodity trading is that it is not liquid,” he added. “If you are a farmer growing corn and soy, if you want to sell in a hurry you have to sell at a discount, or you are waiting for weeks for the right prices.”

As its startup market accelerates, Brazil could be in for an IPO bonanza

He said the United States figured out price variations a decade ago. To give similar transparency to grain trading in Brazil, Tarken set up an AI tool that pulls in data from different sources and generates a price for every Brazilian city, something Tângari said was a mystery before. Buyers and sellers can search a map to see who is selling, at what price and the freight cost to get the product.

The farmer can communicate with the seller and the freight operators, which are vetted by Tarken, and execute the transaction right from the platform, which Tângari said “removes risk from the table.” A process that used to take about 12 weeks — between figuring out the prices, negotiations and product delivery — can now take just days, he added.

“This is a tool combined with education to draw scenarios for strategies to buy and sell,” Tângari added. “Currently, farmers have zero help, and we want to level that. We want to help market players be smarter, have smaller price variations and better liquidity. If we are successful, we will see chicken prices in the market go down 3%.”

Since Tarken launched four months ago, it has facilitated over 1,000 negotiations and has several hundred open bids for products. The number of negotiations is growing 50% per day, and Tângari expects to close the year with 10,000 registered customers.

Half of the new funding will go toward engineering to continue developing the product, including finishing out the AI tool. The other half will be invested in marketing for the marketplace to attract new customers, building content and education to help growers and buyers understand about trading and sales.

Tângari also notes that Tarken is on track to begin raising a Series A round and expects that to begin in six months.

Meanwhile, Marcelo Lima, partner at Monashees, said in a statement that he previously knew Tângari and Neto through an investment in Strider and is backing Tarken for its approach to the agricultural commodities market, which has not seen innovation in recent years.

“We strongly believe in the ability to use technology and data to aggregate supply and demand, improve the user experience and build a great marketplace in the region,” Lima said. “We’ve already seen this happening across multiple spaces and asset types. We are on the ideal timing and we have the perfect team to lead this movement in agribusiness.”

Latin America’s second wave of digital transformation

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N!CK’S grabs $100M to create better-for-you snacks

Swedish food tech company N!CK’S is taking on the world, one healthy ice cream pint at a time.

The company on Thursday announced $100 million Series C funding toward creating additional healthy snacks and ice cream products that have a proprietary blend of sweeteners and ingredients, but with a fraction of the calories and no added sugar.

Kinnevik, Ambrosia and Temasek co-led the round and were joined by Gullspang. The latest funding gives the company $160 million in total investments, Carlos Altschul, N!CK’S CEO North America, told TechCrunch.

N!CK’S got started in 2017 in Europe when founder and head of R&D Niclas Luthman’s mother was diagnosed as a diabetic, and Luthman diagnosed as pre-diabetic, according to Altschul.

“He recognized that there was not a lot of food science bringing better-for-you solutions to the space,” he added. “He found that it was easier to change the food versus change the way we eat.”

In Europe, the company makes ice cream, snack bars and confectionery products. However, Altschul says N!CK’S is a snacking brand that is “a platform for changing culture.” The innovation and ingredients, all rooted in the company’s R&D, are what differentiates the company from its competitors, he added.

The company has been busy over the past two years. At the end of 2019, N!CK’S entered the United States with ice cream and is now leading in velocity per store in that category, he added. It also launched a vegan dairy line featuring Perfect Day’s proprietary animal-free dairy proteins and plant-based alternative fat.

Its direct-to-consumer business launched in 2020 and has remained at the top of the DTC ice cream delivery space since July, Altschul said. This year, the company launched a line of Keto protein bars, starting on its direct-to-consumer and Amazon channels, with plans to expand into retail stores by the end of the year.

Between 2020 and 2021, N!CK’S expanded from 4,500 U.S. stores to 6,700, and expanded in the U.K. through a partnership with WHSmith.

Yamo scores €10.1M Series A to offer healthier food choices for young children

The new funding will accelerate the company’s goal of doubling its stores in the U.S. and Europe, hiring additional talent, marketing and making investments in R&D so that it can launch new products.

Magnus Jakobson, investment director at Kinnevik, said he has been investing in the food space for a few years and says the industry is attractive due to the multiple tailwinds of sustainability and health happening at the moment, which is driving demand and the upstream ability to build brands.

He considers it “an exciting point in time,” that the traction N!CK’S has shown to date “is impressive,” especially having done it on its own initially, and that strategy has now attracted other food technology partners.

“How people live and consume food is changing and is what is enabling new brands to be built,” Jakobson said. “Companies like Oatly, Beyond and Impossible started the industry, but we have seen more breakouts in technology and new ways of reaching consumers with standalone brands. N!CK’S is a super exciting one, and even in the early days of the industry, is showing promise.”

What’s beyond Beyond Meat and Impossible Foods in the future of food?

 

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Daring Foods bites into third round in 12 months as plant-based chicken product enters Walmart

Daring Foods closed on $65 million in Series C funding Wednesday as the plant-based chicken startup launches its products into 3,000 Walmart stores nationally.

Daring offers four plant-based chicken products, including Original, Lemon & Herb, Cajun and Breaded, that looks, cooks and tastes like its chicken counterpart.

CEO Ross Mackay told TechCrunch that the goal of the company is to provide a product that can be “a true one-to-one substitute for chicken” that is also healthy. Daring’s product contains just five ingredients compared to some of its competitors that have a blend of 30 to 40 ingredients, and it also is high in protein and lower in calories than traditional chicken, he said.

Daring Foods will offer healthy, tasty plant-based chicken

“Eighty percent of people changing to a plant-based diet do it for health reasons,” Mackay added. “They want to be able to trust the ingredient profile, and at Daring, we can say absolutely it is healthy.”

TechCrunch last visited with Mackay in 2019, about a year after the company was founded and it had received a $10 million investment from Rastelli Foods Group. Back then, the company was young, with just one product and fewer than 10 employees.

Today, the company’s new funding, led by Founders Fund, is the third investment into the company during the past 12 months, Mackay told TechCrunch. Joining Founders Fund is existing investor D1 Capital Group and new athlete and celebrity investors including Naomi Osaka, Cameron Newton, Steve Aoki and Chase Coleman.

Following this latest round, the company has now raised over $120 million. Its Series A, led by Maveron, was raised last September, and its B round, led by D1 Capital, was announced in May.

Daring Foods’ products can be found in Whole Foods, Sprouts and Kroger, with Wegmans and Albertsons coming soon, Mackay said. With the addition of Walmart, its distribution has doubled to 6,000, including online markets like Gopuff and Imperfect Foods, and is also being served in some restaurants across the country.

The company saw 900% growth over the past 12 months and will be using the new funding to support that growth and new innovation. In addition, the company grew to 60 employees. Mackay says Daring remains focused on plant-based chicken and has plans for new product launches, some in the coming months and others in the next year.

Daring’s growth is in line with what is going on in the global plant-based foods market, which is poised to be a $162 billion market by 2030.

“I don’t think this is a trend, but the future of food, and we are excited to lead in chicken,” Mackay said. “More brands can step into the category, and the innovation going on in the space is super exciting. Capital plowing into the industry is showing the growth trajectory, and at the end of the day, the consumers win.”

Startups making meat alternatives are gaining traction worldwide

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UK driver shortage could steer grocery retailers toward bigger profits

Jacob Tveraabak Contributor

Jacob Tveraabak is the CEO of StrongPoint.

The current driver shortage in the U.K. highlights the precarious and unpredictable nature of home delivery logistics in e-groceries. Although the market for e-groceries is bigger than ever, the shortage of drivers might trigger a new e-grocery megatrend in the U.K.

Costs of both first-mile and last-mile delivery are going to rise, but it’s the last mile where customers are going to see the biggest price pinch. Exactly by how much is hard to say, but depending on the scale of the impact, we could be seeing the start of a rebalancing of last-mile preferences for U.K. e-grocery consumers, with click-and-collect pickup playing a much larger role than ever before.

This is potentially good news for grocery retailers with a store network. They are the market players that can easily and — most importantly — profitably provide click-and-collect services at scale. A store network has often been considered more of a curse than a blessing in the e-grocery surge, but in this case, it might be one of the best assets.

The U.K. has historically been a majority home-delivery e-grocery market, with plenty of hyperlow delivery price options to tempt and retain customers. In addition, “quick commerce” has seen a big uptick in interest, with small orders delivered at lightning speed, sometimes within 15 minutes. Often backed by venture capital, they might be offering relatively low delivery costs or even running at an overall loss to gain market share.

But all home delivery customers, whether they’re weekly shoppers or just need a few items in a hurry, are dependent on the cost of the last mile being low enough for the service to remain economically viable in the long term.

The key question is this: At what price are today’s home-delivery customers going to reconsider their luxury service as unaffordable? That the market has significantly increased due to the pandemic inevitably means a greater percentage of more price-conscious customers.

Grocery retailers in the U.K. are already targeting these, for example, with yearly free delivery passes, but the driver shortage may make them reconsider the profitability of such offers. Just last month in the U.S., Amazon increased the price of its Whole Foods home delivery services, signifying the potential for a broader correction in the e-grocery home delivery market globally.

Internationally, home delivery of e-groceries is not as popular as it is in the U.K. In France, a country of equal size, drive-thru and at-store pickup are by far the most popular choices. In the U.S., click-and-collect overtook home delivery as the most popular last-mile choice in spring 2021.

One market that’s seen a similar trend is Sweden, where click-and-collect was more popular than home delivery by late 2020, but they have historically had to deal with extremely high labor costs, even without a driver shortage.

In-store supermarket associate costs start at £25 an hour in Sweden, and the price of labor in general is at the top of all global rankings. With their labor prices, even the tiniest cost increase could turn a small margin into a hefty loss.

What has Sweden done differently to cope with high labor costs? In terms of pickup or click-and-collect, the country appears to be an outlier in terms of its enthusiastic adoption of temperature-controlled grocery lockers — still a rarity in the U.K.

I believe the key driver of this trend is that they can be completely unmanned, with customers picking up their orders without any staff interaction. Smartphones using app-based age-verification systems could be integrated into these solutions, driving further efficiency gains.

But the key point is that they are leveraging their existing assets — their stores and staff — to provide these solutions.

If the U.K. is moving toward a larger click-and-collect pickup market, pure online players and e-grocery tech startups are going to struggle the most to serve these customers. However, because click-and-collect is less costly to provide, grocery retailers with a brick-and-mortar store network are in a prime position to capture market share at speed and scale and, consequently, turn a profit.

The increasing prices as a result of today’s driver shortage could, paradoxically, create a far more profitable e-grocery opportunity for British retailers by driving click-and-deliver customers to click-and-collect.

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