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September 26, 2018
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China splits the internet while the U.S. dithers

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There are few stories as important right now as the internet being ripped asunder by the increasing animosity between the U.S. and China. Eric Schmidt, the former chairman of Alphabet, said last week at a private event in San Francisco that “I think the most likely scenario now is not a splintering, but rather a bifurcation into a Chinese-led internet and a non-Chinese internet led by America.”

He should know: Alphabet and its Google subsidiary are on the front lines of that split, experiencing a massive furor over the company’s Project Dragonfly to launch a censored search engine in the Middle Kingdom. It’s hardly alone though, with Apple facing militant criticism from Chinese netizens over its iPhone presentation and Facebook finding its application for a corporate entity on the mainland being returned and rejected.

At the heart of this split is the death of the internet as we once knew it: a unified layer for the transfer of human knowledge. As the internet has gained more and more power over society and our everyday lives, the need by governments worldwide to tame its engineering to political and moral ends has increased dramatically.

About four years ago, I wrote a piece called “From internet to internets” in which I argued that this sort of split was obvious. As I wrote at the time: “Across the world, it is becoming abundantly clear that the internet is no longer the independent and self-reliant sphere it once was, immune to the peculiarities of individual countries and their laws. Rather, the internet is firmly under the control of every government, simultaneously.”

Yet, the rules that countries like Spain put in place around media and news didn’t split the internet as I had predicted. The economic power of the U.S. and China did. Alibaba, Tencent, and Baidu may have declined in value this year, but their combined market caps is still in the trillions of dollars. WeChat, which is owned by Tencent, has more than a billion users, and while only 10% of its user base is estimated to be outside China, the ties are growing as more countries build economic bridges with the mainland.

Sometimes, those bridges are quite literal. Through the Belt and Road initiative and fledgling institutions like the Asian Infrastructure Investment Bank, China has provided massive outlays to other nations primarily around infrastructure, building partnerships and deepening economic ties.

China and the U.S. are increasingly fighting a global battle for tech legitimacy (Photo by Jason Lee / AFP / Getty Images)

That infrastructure is sometimes roads, but it can also be in areas like telecommunications. Huawei has made massive inroads into Africa, both in smartphones and in core infrastructure. Chinese-owned Transsion, which most Westerners have probably never heard of, is the dominant smartphone manufacturer on the continent.

Chinese-made telecom infrastructure. Chinese handsets. Increasingly Chinese apps. For all of the concerns of Congress and national security officials about Huawei and ZTE equipment entering the American or Australian markets, the real fight for the future of the internet is going to be in precisely these developing regions which have no incumbent technology.

That’s what has made the Trump administration’s strategy toward trade negotiations with China so miserable to watch. The focus has been on repeated rounds of tariffs that will ensure that Chinese goods — particularly in high-tech industries — are more expensive to American consumers, allowing domestic manufacturers to better compete. Yet, the policies have done nothing to ensure that American values around the internet are exported to continents like Africa or South America, or that Cisco’s equipment will be chosen over Huawei’s.

That might be changing at long last. The Financial Times reported yesterday that the Trump administration is preparing to double down on the Overseas Private Investment Corporation, which offers commercial lending facilities to developing countries. It would be merged into another agency and given a much more rich budget (as high as $60 billion) to go and compete with Chinese financing around the world.

Maybe that measure will be successful in closing the strategic distance between the two countries. Maybe rumors that the administration is going to broadly double down on the trade war will lead to a much more comprehensive set of policies.

But along the way, regardless of what happens, these skirmishes will lead to a fracturing of the internet, and along with it, the death of the internet as a bastion and voice of freedom and knowledge for all people everywhere.

News Source = techcrunch.com

Africa’s Jumo raises $52M led by Goldman to bring its fintech services to Asia

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Asia’s fintech scene is poised to get a little larger after Jumo, a company that offers loans to the unbanked in Africa, revealed plans to expand into the continent. To get the ball rolling, Jumo has opened an office in Singapore to lead the way and landed a massive $52 million investment led by banking giant Goldman Sachs to fuel the growth.

The new round takes Jumo to $90 million raised from investors. While Goldman is the lead — and standout name — the round also saw participation from existing backers that include Proparco — which is attached to the French Development Agency — Finnfund, Vostok Emerging Finance, Gemcorp Capital, and LeapFrog Investments.

Jumo launched in 2014 and it specializes in social impact financial products. That means loans and saving options for those who sit outside of the existing banking system, and particularly small businesses. To date, it claims to have helped nine million consumers across its six markets in Africa and originated over $700 million in loans. The company, which has some 350 staff across 10 offices in Africa, Europe and Asia, was part of Google’s Launchpad accelerator last year and it is led by CEO Andrew Watkins-Ball, who has close to two decades in finance and investing.

Watkins-Ball told TechCrunch that he believes Jumo’s experience working in Africa sets it up perfectly to offer similar services in markets across Asia.

“We grew up in a very tough play yard,” he said in an interview. “We built our initial success in Tanzania which is probably one of the hardest [financial] markets in the world. A lot of these environments [in Asia] look more attractive.”

Unlike the West, where challengers are trying to unseat banks, fintech startups in emerging markets work with the existing system. That isn’t some cop-out, it actually makes perfect sense. Banks simply aren’t equipped to deal with customers seeking small loans in the hundreds of U.S. dollar bracket.

Jumo CEO Andrew Watkins-Ball believes his company’s work in Africa is ideal preparation for its expansion into Asia

Financially, the returns aren’t there from these customers and it doesn’t make sense for banks to invest resources sounding out a prospective loan. Even if they wanted to, they couldn’t vet these would-be customers, though. Many emerging markets simply don’t have the formalized credit checking systems that exist in the West, while many of the unbanked (or ‘less banked’) consumers wouldn’t even show up if they did due to a range of factors.

That’s where a new approach is needed. Fintech startups essentially act like a funnel. They manage the customer acquisition and retention, develop systems to assess credit based on alternative signals and, over time, build up a customer profile that reduces credit risk. That suits banks because they don’t need to handle the nitty-gritty and, when it works well, the startups bring them larger enough volumes of small loans that are a worthwhile opportunity for financial institutions.

Just looking at recent funding deals, the model is evident in markets like India — where ZestMoney pulled in funds last month — and Southeast Asia, where Experian backed fintech startup C88.

Watkins-Ball said Jumo is aiming to do the same having already proven its model in Africa. He acknowledged that a number of startups are also tackling the problem and welcomed the increase competition and growth potential across the fintech and micro-financing space.

“We’ve offered services to millions of new customers who weren’t part of the banking ecosystems,” he explained. “Essentially we grow the addressable market for banks.”

Already, Jumo has begun offering services in Pakistan and it has plans to open up in more markets in Asia, although Watkins-Ball isn’t saying which ones or when right now. But, in addition to proving its model, he believes that Jumo has already shown it can adapt to new markets.

“The differences between countries like Ghana, Tanzania and Zambia are as great as those between India, China and Indonesia,” he told TechCrunch. “So we’ve had to learn to use our platform, which we built to be flexible, and localize in order to fit the customer.”

That’s backed up by Goldman Sachs executive director Jules Frebault, who said in a statement: “There’s an immense opportunity across Africa and beyond for Jumo to build on their successful track record developing digital marketplace infrastructure to offer mobile subscribers access to relevant financial products.”

In addition to Asian expansions, Jumo’s new capital will also go towards expanding its current selection of productions in Africa. In particular, Watkins-Ball says the company is working to partner with more banks and it plans to introduce “new generations” of saving products.

While it isn’t taking its foot off the pedal in Africa, he said Jumo will likely devote the majority of its resources to the Asia expansion plan. That’ll make Jumo a very notable addition to a fintech scene that is already showing significant potential across the Asian region.

News Source = techcrunch.com

African experiments with drone technologies could leapfrog decades of infrastructure neglect

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A drone revolution is coming to sub-Saharan Africa.

Countries across the continent are experimenting with this 21st century technology as a way to leapfrog decades of neglect of 20th century infrastructure.

Over the last two years, San Francisco-based startup Zipline launched a national UAV delivery program in East Africa; South Africa passed commercial drone legislation to train and license pilots; and Malawi even opened a Drone Test Corridor to African and its global partners. 

In Rwanda, the country’s government became one of the first adopters of performance-based regulations for all drones earlier this year. The country’s progressive UAV programs drew special attention from the White House and two U.S. Secretaries of Transportation.

Some experts believe Africa’s drone space could contribute to UAV development in the U.S. and elsewhere around the globe.

“The fact that [global drone] companies can operate in Africa and showcase amazing use cases…is a big benefit,” said Lisa Ellsman, co-executive director of the Commercial Drone Alliance.

Test in Africa

It’s clear that the UAV programs in Malawi and Rwanda are getting attention from international drone companies.

Opened in 2017, Malawi’s Drone Test Corridor has been accepting global applications. The program is managed by the country’s Civil Aviation Authority in partnership with UNICEF.

The primary purpose is to test UAV’s for humanitarian purposes, but the program “was designed to provide a controlled platform for… governments…and other partners…to explore how UAV’s can help deliver services,” according to Michael Scheibenreif, UNICEF’s drone lead in Malawi.

That decision to include the private sector opened the launch pads for commercial drones. Swedish firm GLOBEHE has tested using the corridor and reps from Chinese e-commerce company JD have toured the site. Other companies to test in Malawi’s corridor include Belgian UAV air traffic systems company Unifly and U.S. delivery drone manufacturer Vayu, according to Scheibenreif.

Though the government of Rwanda is most visible for its Zipline partnership, it shaping a national testing program for multiple drone actors. 

“We don’t want to limit ourselves with just one operator,” said Claudette Irere, Director General of the Ministry of Information Technology and Communications (MiTEC).

“When we started with Zipline it was more of a pilot to see if this could work,” she said. “As we’ve gotten more interest and have grown the program…this gives us an opportunity to open up to other drone operators, and give space to our local UAV operators.”

Irere said Rwanda has been approached by 16 drone operators, “some of them big names”—but could not reveal them due to temporary NDAs. She also highlighted Charis UAS, a Rwandan drone company, that’s used the country’s test program, and is now operating commercially in and outside of Rwanda.

UAV Policy

Africa’s commercial drone history is largely compressed to a handful of projects and countries within the last 5-7 years. Several governments have jumped out ahead on UAV policy.

In 2016, South Africa passed drone legislation regulating the sector under the country’s Civil Aviation Authority. The guidelines set training requirements for commercial drone pilots to receive Remote Pilot Licenses (RPLs) for Remotely Piloted Aircraft Systems. At the end of 2017 South Africa had registered 686 RPLs and 663 drone aircraft systems, according to a recent State of Drone Report.

Over the last year and a half Kenya, Ghana, and Tanzania have issued or updated drone regulatory guidelines and announced future UAV initiatives.  

In 2018, Rwanda extended its leadership role on drone policy when it adopted performance-based regulations for all drones—claiming to be the first country in the world to do so.

So what does this mean?

“In performance-based regulation the government states this is our safety threshold and you companies tell us the combination of technologies and operational mitigations you’re going to use to meet it,” said Timothy Reuter, Civil Drones Project Head at the World Economic Forum.

Lisa Ellsman, shared a similar interpretation.

“Rather than the government saying ‘you have to use this kind of technology to stop your drone,’ they would say, ‘your drone needs to be able to stop in so many seconds,’” she said.

This gives the drone operators flexibility to build drones around performance targets, vs. “prescriptively requiring a certain type of technology,” according to Ellsman.

Rwanda is still working out the implementation of its performance-based regulations, according to MiTEC’s Claudette Irere. They’ve entered a partnership with the World Economic Forum to further build out best practices. Rwanda will also soon release an online portal for global drone operators to apply to test there.

As for Rwanda being first to release performance-based regulations, that’s disputable. “Many States around the world have been developing and implementing performance-based regulations for unmanned aircraft,” said Leslie Cary, Program Manager for the International Civil Aviation Authority’s Remotely Piloted Aircraft System. “ICAO has not monitored all of these States to determine which was first,” she added.

Other governments have done bits and pieces of Rwanda’s drone policy, according to Timothy Reuter, the head of the civil drones project at the World Economic Forum. “But as currently written in Rwanda, it’s the broadest implementation of performance based regulations in the world.”

Commercial Use Cases

As the UAV programs across Africa mature, there are a handful of strong examples and several projects to watch.

With Zipline as the most robust and visible drone use case in Sub-Saharan Africa.

While the startup’s primary focus is delivery of critical medical supplies, execs repeatedly underscore that Zipline is a for-profit venture backed by $41 million in VC.

The San Francisco-based robotics company — that also manufactures its own UAVs — was one of the earliest drone partners of the government of Rwanda.

Zipline demonstration

The alliance also brought UPS and the UPS Foundation into the mix, who supports Zipline with financial and logistical support.

After several test rounds, Zipline went live with the program in October, becoming the world’s first national drone delivery program at scale.

“We’ve since completed over 6000 deliveries and logged 500,000 flight kilometers,” Zipline co-founder Keenan Wyrobek told TechCrunch. “We’re planning to go live in Tanzania soon and talking to some other African countries.”  

In May Zipline was accepted into the U.S. Department of Transportation’s Unmanned Aircraft Systems Integration Pilot Program (UAS IPP). Out of 149 applicants, the Africa focused startup was one of 10 selected to participate in a drone pilot in the U.S.– to operate beyond visual line of sight medical delivery services in North Carolina.    

In a non-delivery commercial use case, South Africa’s Rocketmine has built out a UAV survey business in 5 countries. The company looks to book $2 million in revenue in 2018 for its “aerial data solutions” services in mining, agriculture, forestry, and civil engineering.

“We have over 50 aircraft now, compared to 15 a couple years ago,” Rocketmine CEO Christopher Clark told TechCrunch. “We operate in South Africa, Namibia, Ghana, Ivory Coast, and moved into Mexico.”

Rocketmine doesn’t plan to enter delivery services, but is looking to expand into the surveillance and security market. “After the survey market that’s probably the biggest request we get from our customers,” said Clark.

More African use cases are likely to come from the Lake Victoria Challenge — a mission specific drone operator challenge set in Tanzania’s Mwanza testing corridor. WeRobotics has also opened FlyingLabs in Kenya, Tanzania, and Benin. And the government of Zambia is reportedly working with Sony’s Aerosense on a drone delivery pilot program.

Africa and Global UAV

With Europe, Asia, and the U.S. rapidly developing drone regulations and testing (or already operating) delivery programs (see JD.com in China), Africa may not take the sole position as the leader in global UAV development — but these pilot projects in the particularly challenging environments these geographies (and economies) represent will shape the development of the drone industry. 

The continent’s test programs — and Rwanda’s performance-based drone regulations in particular — could advance beyond visual line of sight UAV technology at a quicker pace. This could set the stage for faster development of automated drone fleets for remote internet access, commercial and medical delivery, and even give Africa a lead in testing flying autonomous taxis.

“With drones, Africa is willing to take more bold steps more quickly because the benefits are there and the countries have been willing to move in a more agile manner around regulation,” said the WEF’s Reuter.

“There’s an opportunity for Africa to maintain its leadership in this space,” he said. “But the countries need to be willing to take calculated risk to enable technology companies to deploy their solutions there.”

Reuter also underscored the potential for “drone companies that originate in Africa increasingly developing services.”

There’s a case to be made this is already happening with Zipline. Though founded in California, the startup honed its UAVs and delivery model in Rwanda.

“We’re absolutely leveraging our experience built in Africa as we now test through the UAS IPP program to deliver in the U.S.,” said Zipline co-founder Keenan Wyrobek.

News Source = techcrunch.com

Brazilian startup Yellow raises $63M — the largest Series A ever for a Latin American startup

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After selling their ridesharing startup, 99, to Didi Chuxing for $1 billion last year, Ariel Lambrecht and Renato Freitas didn’t waste any time throwing their hats back in the ring.

Months after their big exit, the pair joined forces with Eduardo Musa, who spent two decades in the bicycle industry, to start another São Paulo-based mobility startup. Yellow, a bike- and scooter-sharing service, quickly captured the attention of venture capitalists, raising a $9 million seed round in April and now, the company is announcing the close of a $63 million Series A.

The round is the largest Series A financing ever for a startup in Latin America, where tech investment, especially from U.S.-based firms, has historically remained low. 2017, however, was a banner year for Latin American startups; 2018, it seems, is following suit. More than $600 million was invested in the first quarter of 2018, partly as a result of increased activity from international investors. And just last month, on-demand delivery startup Rappi brought in $200 million to become the second Latin American company to garner a billion-dollar valuation.

GGV Capital has led the round for Yellow . The Silicon Valley firm is a backer of several other mobility companies, including Grab, Hellobike and Didi Chuxing. Yellow represents the firm’s first foray into the Latin American tech ecosystem. Brazilian VC firm Monashees, Grishin Robotics, Base10 Partners and Class 5 also participated.

“We think there’s a new economy emerging in Latin America,” GGV managing partner Hans Tung told TechCrunch. “A lot of people are more cautious but what we’ve seen with our experience in China, when internet penetration started to happen, a new economy started to emerge that’s more efficient.”

Yellow’s bikes and e-scooters are only available in São Paulo. With the investment, the startup plans to expand to Mexico City, Colombia, Chile and Argentina, as well as add e-bikes to its portfolio of micro-mobility options.

The company also plans to tap into local resources by building a scooter manufacturing facility in the region. Yellow CEO Eduardo Musa told me the company doesn’t want to be reliant on Chinese manufacturers to import scooters and that a local supplier is a whole lot cheaper. The company’s bikes are already sourced locally.

“Since the beginning, we wanted to be vertically integrated,” Musa told TechCrunch. “We definitely believe you need a constant inflow of hardware and you need control and management over the supply chain … not only because of the cost but also because of the quality control.”

Yellow is one of several e-scooter startups to raise VC in 2018. Bird and Lime, for example, both raised large rounds of capital at billion-dollar valuations. A good chunk of that capital has gone into building more scooters, placing a huge demand on the few Chinese manufacturers that’ve tapped into the market.

“There was simply not available capacity or factories prepared to fulfill the demand that arose from the other scooter sharing companies,” Musa said. “This became, very, very quickly, a major bottleneck for this industry.”

 

 

News Source = techcrunch.com

Chinese electric vehicle maker Nio makes bumpy start following $1B IPO

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Nio, the Tesla -wannabe electric vehicle firm from China, enjoyed a mix start to life as a public company after it raised $1 billion through a listing on the New York Stock Exchange on Wednesday.

The firm went public at $6.26just one cent above the bottom of its pricing range — meaning that it raised a little over $1 billion. That’s some way down on its original goal of $1.8 billion, per an initial filing in August, and for a while it looked like even that price was optimistic. Early trading saw Nio’s stock fall as low as $5.84 before a wave of optimism took it to $6.81.

The stock closed its first day at $6.60, up 12 percent overall, to give Nio a total market cap of $7.1 billion.

Nio sells in China only, although its tech and design teams are based in the U.S, UK and Germany.

Its main model, the ES8, is designed for the masses and is priced at 448,000 RMB, or around $65,000. That makes it cheaper than Tesla vehicles in China but it has only just got to making money. Nio has accrued some 17,000 orders for the vehicle, but it only began shipping in June. As a result, it has posted some pretty heavy losses in recent times — including minus $759 million in 2017.

Ultimately, the firm raised $1 billion but its leadership may be disappointed that the final sum is well short of its original target.

Reasons behind lukewarm investor interest may include:

Meanwhile, Nio is far from the newest kid on the block. Byton, another Chinese EV firm with global operations, is preparing to send prototype SUVs to the U.S. for the first time, as TechCrunch reported earlier this month. Byton, which raised $500 million from investors in June, is one of a number of competitors to Nio which also include BYD — a startup backed by Warren Buffet’s Berkshire Hathaway — Youxia, MW Motor and others.

News Source = techcrunch.com

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