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Sea seeks $400M raise to develop its e-commerce and payment businesses

Southeast Asia-based internet firm Sea is raising $400 million through the sale of notes in what would be its first fundraising activity since it went public via in an October 2017 IPO that raised over $1 billion.

The Singapore-based company, formerly known as Garena, said that the senior note offering will put toward general costs and business expansion. Long-time investor Tencent is expected to buy up $50 million of the notes on offer, and the offering itself could be extended by a further $60 million.

Sea’s IPO was a landmark for Southeast Asia, where startup exits are few and far between, but the company hasn’t exactly set Wall Street on fire since making its public bow. Its share price is $16.40 at the time of writing, having debuted at $15. It has risen thanks to gains over the past month following its most recent earnings but initially the company spent a lot of time priced under $15.

Sea share price, via Yahoo Finance

So what got investors excited? In short, signs of growth.

Revenue for Q1 jumped 81 percent year-on-year as its Shopee e-commerce service doubled its GMV and the firm’s AirPay payment unit quadrupled its transaction volume, but ultimately the business remains unprofitable. Losses jumped from $73 million to $216 million and Sea’s cost of revenue more than doubled, indicating that it is still chasing growth for its businesses.

While AirPay and Shopee, which competes with the likes of Alibaba-owned Lazada for the attention of Southeast Asia’s 600 million consumers, are growing, the same can’t be said of Sea’s main business. It rose to prominence selling games via its Garena service, with Tencent a particular ally here, but that business is seeing new user growth flatten and and revenue gains slow.

It makes sense that Sea is playing up its digital business since the big opportunity in Southeast Asia is e-commerce, as evidenced by Alibaba’s recent double-down on Lazada — which it first bought a majority stake in for $1 billion in 2016. Alibaba invested $1 billion more in 2017 and then a further $2 billion in March to increase its ownership. It also installed a number of its own executives in a bid to help Lazada grow its business and the overall e-commerce industry in Southeast Asia, too.

A much-cited report co-authored by Google forecasts that e-commerce in Southeast Asia will surpass $88 billion by 2025. That’s up from an estimated $10.9 billion in 2017.

Sea said previously that it expects Shopee to reach $8.2-$8.7 billion in GMV in 2018, a increase that’s potentially as high as 112 percent year-on-year. That’s up on its previous guidance of $7.5-$8 billion but, since it is GMV, it doesn’t translate to direct revenue for the company itself. Sea had previously boosted Shopee by allowing a high burn rate to fund merchant and buyer promotions. It only began to monetize the service last year.

News Source = techcrunch.com

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India’s PolicyBazaar raises $200M led by SoftBank’s Vision Fund

India’s PolicyBazaar, which runs a digital insurance business of the same name and a lending marketplace called PaisaBazaar.com, is the latest company to join SoftBank’s $100 billion Vision Fund after it announced a new funding round of over $200 million.

The deal was led by the Vision Fund with participation from existing investors including InfoEdge, the company behind jobs platform Naukri.com. The startup’s other investors count Softbank, Temasek, Tiger Global and True North, but an announcement from PolicyBazaar didn’t specifically mention if any of those names took place in this latest round.

This new round takes PolicyBazaar to nearly $350 million to date. The deal is another investment in India for the Vision Fund, which so far has backed OYO Rooms, Flipkart and Paytm parent One97 Communication among others.

PolicyBazaar was founded in 2008 initially as an information portal for learning about insurance and insurance programs. Today, the company operates its own digital insurance brand and a marketplace that aggregates and selects deal from across the industry.

Across both services, PolicyBazaar claims to process 100 million visitors in website traffic per year with a transaction volume that’s approaching 300,000 per month. More broadly, the company estimates that PolicyBazaar.com is used to purchase over 20 percent of life insurance coverage in India and seven percent of the country’s retail health coverage.

Going forward, PolicyBazaar is targeting 10 million transacting customers by 2020, which it believes it can reach by growing at a compound annual growth rate of 80 percent.

Over the last decade, PolicyBazaar has become synonymous with online insurance shopping in India. We believe that the Indian insurance market continues to remain massively under-developed and PolicyBazaar, supported by SoftBank’s capital and ecosystem, is uniquely positioned to dramatically increase the adoption of insurance products in the country,” Munish Varma, partner at SoftBank Investment Advisers, said in a statement.

PolicyBazaar’s closest ideological rival is Acko, but the two companies are quite contrasted.

While PolicyBazaar is a decade old, Acko is very much a newcomer which has raised $42 million since its launch some 18 months ago. Most recently, Acko added Amazon after the U.S. retail giant led a $12 million investment that was announced last month. In addition, Acko founder Varun Dua is a co-founder of Coverfox, an online insurance policy aggregator that also rivals PolicyBazaar.com.

News Source = techcrunch.com

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Singapore-based game studio Mighty Bear raises $2.5M ahead of debut release

Mighty Bear, a game studio startup that grew out of King.com’s former office in Singapore, has landed new funding as it readies its debut title for smartphones.

The startup was founded by four former King.com staffers — Simon Davis, Fadzuli Said, Benjamin Chevalier and Saurabh Shukul — after the gaming giant closed its Singapore office — inherited via the acquisition of Non Stop Games — following its $5.9 billion acquisition by Activision. Today, Mighty Bear’s team of 18 counts experience working with Ubisoft, EA, Lucasarts, Disney, Gameloft and others.

The startup previously raised $775,000 in a pre-seed round in early 2017, and this time around it has pulled in a seven-figure USD investment. The deal is officially undisclosed, but a source with knowledge of discussions told TechCrunch it is worth around $2.5 million.

The deal was led by U.S.-based Skycatcher, New York hedge fund banker Eric Mindich’s Everblue fund, and M Ventures from Los Angeles. Others in the round include Singapore’s Atlas Ventures, Lev Leviev — who is co-founder of VK.com among other things — and existing backer Global Founders Capital, which is affiliated with Rocket Internet.

“We’ve already got a good set of investors from Europe and Asia so we realized we needed networks in North America, too,” Mighty Bear CEO Simon Davis told TechCrunch in an interview.

Davis added that, beyond extending their reach for purposes like hiring, partnerships and more, they open up the potential for IP and media deals further down the road.

First thing first though: Mighty Bear is working to launch its first title, which Davis said will be an MMORPG. Right now, it is being secretly tested for scalability and technical capabilities among users in India and the Philippines with a view to a full launch on iOS and Android later this year. Davis said the company plans to launch another title, too, with both games managed concurrently.

“We’ve basically taken a genre that we know is monetized and engaged with hardcore users and tried to bring it to a large audience. Our goal is to take big desktop experiences and streamline them into five-minute bursts,” he told TechCrunch in an interview.

You may not know it, but you may have run into Mighty Bear’s concepts already even though it hasn’t fully launched a title yet. That’s because part of the research and development process includes creating and disseminating videos and advertising for mock games through channels like Facebook.

That, Davis explained, can help Mighty Bear in all manner of ways, from basics such as figuring out what kind of visuals or advertising approach gets engagement from users, to broader purposes such as understanding the types of games that people want to play.

“The process helps witter down ideas to those that will get traction with users. If a game makes it through the various internal gates we have, and to soft launch, then we have the best potential for it to perform well,” Davis said.

Developing artwork and advertising for ‘fake’ games isn’t as obscure as it may sound. While it isn’t usual for smaller studios, it’s a practice that Davis said is common at huge game development companies — that in turn is a reflection in the experience that the team at Mighty Bear has under its belt.

News Source = techcrunch.com

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India’s budget hotel network unicorn OYO expands into China

The tech world sees plenty of Chinese companies move into India — including the likes of Alibaba and Xiaomi — but few expand the other way. OYO Rooms, the billion-dollar Indian startup that pioneered budget hotel networks, is looking to buck the trend, however, after it launched operations in China.

Today the company officially announced its arrival in China, where it says it covers 11,000 (exclusive) rooms across 26 cities, including Hangzhou, Xian, Nanjing, Guangzhou, Chengdu, Shenzhen, Xiamen and Kunming. That selection includes a combination of franchises and managed hotels. OYO is initially launching its ‘hotels’ product, and it isn’t saying whether others — which include ‘rooms’ and ‘townhouses’ — will also expand to China.

Interestingly, an OYO representative confirmed that this expansion wasn’t conducted in partnership with China Lodgings, the Nasdaq-listed hotel firm that invested $10 million in the startup last year. OYO said China Lodgings is assisting with the overall strategy in China, however. Make of that what you will.

OYO — which stands for On Your Own — was founded in 2013 by then-teenager Ritesh Agarwal, a Thiel Fellow who got the idea for the business after a stint backpacking across India staying budget hotels. The service helps bring the long-tail of small hotels online to generate bookings whilst also ensuring (often absent) minimum standards for travelers, such as hot water, clean towels and linen and Wi-Fi.

The company counts SoftBank among its backers and it has raised over $450 million in capital to date, including a $250 million round led by SoftBank’s Vision Fund last year.

OYO founder and CEO Ritesh Agarwal [image via OYO, Facebook]

OYO claims over 100,000 rooms in Inda, and it has been busy investigating new growth opportunities. The China launch is the third overseas foray from OYO, coming after expansions to Nepal and Malaysia. Given the size of the Chinese market and strong competition, this is a daunting challenge for OYO.

Just ask Airbnb .

While the two don’t compete directly on product, they target a similar consumer bracket — consumers seeking an alternative to conventional hotels and lodgings. In China, Airbnb’s big rival is Tujia, which is valued at $1.5 billion and pushing the U.S. company hard. Tujia and Airbnb were one final signature away from calling off their war and merging, Bloomberg recently reported, but ultimately Airbnb opted to go it alone in China. Tujia is determined to battle it so hard that it returns to the negotiation table.

So, how then, will OYO — which is well-funded but lacking the capitalization and experience of Airbnb — navigate the Chinese market? Time will tell but you’d suspect it will need to call on some local allies if it is to make an impact.

News Source = techcrunch.com

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