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January 17, 2019
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Fundings & Exits

Byju’s buys Osmo for $120M to add blended learning to its $4B digital education business

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Weeks after it raised a massive $540 million funding round, Indian education unicorn Byju’s is on the M&A path. The company announced today it has snapped up U.S-based Osmo, a startup that develops apps for kids that use offline input, in a deal worth $120 million.

Osmo has raised over $30 million from investors that include Mattel, Sesame Workshop, Upfront Ventures, K9 Ventures and Accel. They were offered a cash option but elected for an all-stock payout, Osmo CEO Pramod Sharma told TechCrunch in an interview. That, he added, is a “validation of the level of confidence” that they have in Osmo combining its resources with Byju’s, which is valued at nearly $4 billion from that recent funding round that featured Naspers, Tencent and others.

Founded by former Googlers Sharma and Jerome Scholler, the Osmo service was launched at TechCrunch’s Startup Battlefield in 2013, when it was initially called Tangible Play. The company combines the benefits of digital and offline learning using a dozen or so apps that tie into customized hardware, that’s a base designed for iPads or Amazon Kindle Fire tables alongside a red reflector and game pieces — as pictured above.

The result is ‘blended learning’ apps that integrate offline activities, varying from drawing to math, spelling and even making pizza, to help children aged between 5 and 12 learn. Currently, Sharma said, it is used in around 20,000 schools and it has reached around a million families, 90 percent of which are in the U.S.

That puts it squarely into the bracket of companies that Byju’s founder Byju Raveendran told TechCrunch that his company was seeking to snap up using its newly-acquired war chest.

In an interview announcing the fund last month, Raveendran said he wanted “product-based acquisitions that will be value-adds on top of our core product.”

Byju Raveendran founded Byju’s as an offline learning center business in 2008, today it is worth nearly $4 billion thanks to a thriving digital education business with over a million paying customers. Photographer: Dhiraj Singh/Bloomberg

In that respect, Osmo is an ideal complement to Byju’s existing business, which covers educational courses for grades 4-12 using a combination of videos, games and other materials and counts. It currently counts 30 million registered students to date and 1.3 million paying users with a specific focus on India. But, with its new funding in the bank, it is preparing a new service that will offer a number of courses in English for children aged 3-8 based across the world.

Raveendran and Sharma said that the immediate plan post-acquisition will see a huge increase in content for the Osmo platform, while the price of the hardware — which currently ranges from $99-$189 — may also be reduced to help grow the audience beyond its current base.

“For us to grow, we need to invest in content,” Sharma said. “We have a lot of ideas [and] have proven a set of interactions, [but] a lot can be expanded with more content and levels. We’ve proven this is a compelling platform for learning, and we are nowhere close to scaling it… our goal is to get it to every child.”

Osmo offers three different packages to customers wishing to buy its equipment for children

Echoing those comments, Raveendran said Osmo can “reach its maximum potential” with more content while he stressed that there is plenty of cross-pollination potential between the two companies.

“We’re asking: ‘How can we bring some of the offline learning kids do, is there a way to capture that back onto the app and personalize the learning experiences further?’” he said. “There’s overlap between Osmo users and the products we are building [so] how we can use that for multiple education use scenarios, even possibility for higher grades?”

Ten-year-old Byju’s started out in offline learning before moving into digital courses in 2015. Its push online has seen it do a number of deals and Osmo represents its fourth acquisition. But beyond being its most expensive, Raveendran hailed the acquisition as his company’s “most important” deal to date.

“We have video as a format, games as a format, and we think of Cosmo like a format… we could have thousands of supported apps,” he told TechCrunch by phone. “Education is not purely an online experience, especially for younger kids [so] the potential is huge if there’s a clear online-to-offline application.”

News Source = techcrunch.com

Instamojo raises $7M to help SMEs and ‘micro-entrepreneurs’ in India sell online

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In India, startups are quietly building the tools and platforms to enable a different kind of gig economy: one that allows ‘micro-entrepreneurs’ to tap growing access to the internet to sell goods and services online.

One such figure helping this burgeoning economy is Instamojo, a seven-year-old Bengaluru-based startup, has pulled in a $7 million Series B as it aims to grow its reach to over one million SMEs and micro-SMEs in India.

Founded in 2012 as a side-project, Instamojo offers independent merchants the means to operate a mobile-optimized storefront, collect payment and even take micro-loans. In an interview with TechCrunch, CEO and co-founder Sampad Swain said the company has some 650,000 merchants, and it is adding a further 1,200 daily. Most of them, he said, tend to earn less than $30,000 in annual sales; with around half sell physical products, such as e-commerce items, and the remainder using Instamojo to invoice for physical services or sell digital items such as courses.

The idea is to tap into those just testing the water of online commerce and give them the tools to ramp up their fledgling enterprise as India’s internet ‘population’ rises past 400 million people.

“A lot of micro-merchants in India are adopting [India’s payment service] UPI through [services like Paytm and PhonePe] but once they become a little more serious, at around 10-20 sales per month, we ask: ‘Can we give you lending, logistics, online store?’” explained Swain, who started the business with co-founders Akash Gehani and Harshad Sharma.

It’s a market that few banks or financial institutions care about because small loans and sales require enormous scale to be relevant to them. But Swain is bullish, and he believes the company will pass one million retailers this year.

The new funding is led by existing investor AnyPay — the Japanese fintech startup — with other returning backers Kalaari Capital, Beenext, and angel investor Rashmi Kwatra joining. Gunosy Capital, the VC arm of Japanese news app Gunosy, joined as a new investor. The deal takes Instamojo to around $9 million from investors to date.

Instamojo collects revenue through a two percent cut on sales, a fee on successful deliveries and commission on its micro-loan product, which essentially gives merchants advanced credit (same day or next-day) on their sales. The loans — which Swain describes as ‘sachet’ lending — are from Instamojo’s recently-established Mojo Capital unit which includes partnerships with 12 financial organizations. In just four months, Instamojo has dished out around $4 million in credit — through 50,000-odd dispersions — and Swain predicts it will scale to a $30 million run rate before the end of this year.

“Even I am surprised!” he said of the rapid uptake.

Instamojo founders [left to right] Akash Gehani, Sampad Swain and Harshad Sharma

Unlike Meesho, a YC-backed micro-entrepreneurship service in India that recently raised $50 million, Instamojo isn’t dominated by e-commerce to friends, family and neighbors. Swain said typical Instamojo sellers look to reach audiences outside of people they know, with platforms like YouTube, Facebook, WhatsApp and others commonly used to reach audiences. Instamojo’s big selling point is ease of sale; that’s through a unique link that sellers share with customers for the checkout therein bypasses some of the challenges of online payment in India, which include somewhat cumbersome steps for card transactions.

“Sellers just create a link and share it with the customer,” Swain explained. “Essentially they click and check out with debit or credit card or other means. Over the years we realized that’s the best beginning for our business.”

That was Instamojo’s first launch, and since then it has built out online store options to manage inventory and product as well as the recent credit launch. Beyond growing its scale, Swain said the next big focus is on developing a community for merchants, where they can share tips, collaborate and more. He is also aiming to increase the tech team and raise Instamojo’s headcount from 120 right now to around 250 by 2020.

For now, Swain said the company isn’t seeking overseas opportunities, although he did admit that the business could expand to regions like Africa or Southeast Asia. But more immediately, he sees a huge opportunity in India, where believes there are 65 million SMEs, of which 25 million are “micro-merchants,” to tackle initially. The company is planning a Series C round for later this year to finance a deeper push.

News Source = techcrunch.com

Smartsheet acquires Slope to help creatives collaborate

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Smartsheet, the project management and collaboration tool that went public last April, announced the acquisition of Seattle-based TernPro, Inc., makers of Slope, a collaboration tool designed for sharing creative assets.

The companies did not share the acquisition price.

Bringing Slope into the fold will enable Smartsheet users to share assets like video and photos natively inside the application, and also brings the ability to annotate, comment or approve these assets. Smartsheet sees this native integration through a broad enterprise lens. It might be HR sharing training videos, marketing sharing product photos or construction company employees inspecting a site and sharing photos of a code violation, complete with annotations to point out the problem.

Alan Lepofsky, an analyst at Constellation Research, who specializes in collaboration tools in the enterprise sees this as a significant enhancement to the product. “Smartsheet’s focus is on being more than just project management, but instead helping coordinate end-to-end business processes. Slope is going to allow content to become more of a native part of those processes, rather than people having to switch context to another tool,” he explained.

That last point is particularly important as today’s collaboration tools, whether Slack or Microsoft Teams or any other similar tool, have been working hard to provide that kind of integration to keep people focused on the task at hand without having to switch applications.

Mike Gotta, a long-time analyst at Gartner, says collaboration that happens within the flow of work can help make employees more productive, but being able to build specific use cases is even more critical. “The collaboration space remains open for innovation and new ways to addressing old challenges. For organizations though, the trick is how to create a collaboration portfolio that balances broad-based foundational investments with the more domain-specific or situational scenarios they might have where this type of use-case driven collaboration can make more sense,” Gotta told TechCrunch.

That is precisely what Smartsheet is trying to achieve with this purchase, giving them the ability to incorporate workflows involving creative assets, whether that’s including all of the documents required to onboard a new employee or a training workflow that includes learning objectives, lesson plans, photos, videos and so forth.

Smartsheet, which launched in 2005, raised over $113 million before going public last April. The company’s stock price has held up, gaining ground in a volatile stock market. It sits above its launch price of $19.50, closing at $25.24 yesterday.

Slope was founded in 2014 and has raised $1.4 million, according to Crunchbase data. Customers include Microsoft, CBS Sports and the Oakland Athletics baseball team. The company’s employees, including co-founders Dan Bloom and Brian Boschè have already joined SmartSheet.

News Source = techcrunch.com

Daily Crunch: Bing has a child porn problem

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The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here:

1. Microsoft Bing not only shows child pornography, it suggests it

A TechCrunch-commissioned report has found damning evidence on Microsoft’s search engine. Our findings show a massive failure on Microsoft’s part to adequately police its Bing search engine and to prevent its suggested searches and images from assisting pedophiles.

2. Unity pulls nuclear option on cloud gaming startup Improbable, terminating game engine license

Unity, the widely popular gaming engine, has pulled the rug out from underneath U.K.-based cloud gaming startup Improbable and revoked its license — effectively shutting them out from a top customer source. The conflict arose after Unity claimed Improbable broke the company’s Terms of Service and distributed Unity software on the cloud.

3. Improbable and Epic Games establish $25M fund to help devs move to ‘more open engines’ after Unity debacle

Just when you thought things were going south for Improbable the company inked a late-night deal with Unity competitor Epic Games to establish a fund geared toward open gaming engines. This begs the question of how Unity and Improbable’s relationship managed to sour so quickly after this public debacle.

4. The next phase of WeChat 

WeChat boasts more than 1 billion daily active users, but user growth is starting to hit a plateau. That’s been expected for some time, but it is forcing the Chinese juggernaut to build new features to generate more time spent on the app to maintain growth.

5. Bungie takes back its Destiny and departs from Activision 

The creator behind games like Halo and Destiny is splitting from its publisher Activision to go its own way. This is good news for gamers, as Bungie will no longer be under the strict deadlines of a big gaming studio that plagued the launch of Destiny and its sequel.

6. Another server security lapse at NASA exposed staff and project data

The leaking server was — ironically — a bug-reporting server, running the popular Jira bug triaging and tracking software. In NASA’s case, the software wasn’t properly configured, allowing anyone to access the server without a password.

7. Is Samsung getting serious about robotics? 

This week Samsung made a surprise announcement during its CES press conference and unveiled three new consumer and retail robots and a wearable exoskeleton. It was a pretty massive reveal, but the company’s look-but-don’t-touch approach raised far more questions than it answered.

News Source = techcrunch.com

Daily Crunch: How the government shutdown is damaging cybersecurity and future IPOs

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The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 9am Pacific, you can subscribe here:

1. How Trump’s government shutdown is harming cyber and national security
The government has been shut down for nearly three weeks, and there’s no end in sight. While most of the core government departments — State, Treasury, Justice and Defense — are still operational, others like Homeland Security, which takes the bulk of the government’s cybersecurity responsibilities, are suffering the most.

2. With SEC workers offline, the government shutdown could screw IPO-ready companies
The SEC has been shut down since December 27 and only has 285 of its 4,436 employees on the clock for emergency situations. While tech’s most buzz-worthy unicorns like Uber and Lyft won’t suffer too much from the shutdown, smaller businesses, particularly those in need of an infusion of capital to continue operating, will bear the brunt of any IPO delays.

3. The state of seed 

In 2018, seed activity as a percentage of all deals shrank from 31 percent to 25 percent — a decade low — while the share and size of late-stage deals swelled to record highs.

4. Banking startup N26 raises $300 million at $2.7 billion valuation

N26 is building a retail bank from scratch. The company prides itself on the speed and simplicity of setting up an account and managing assets. In the past year, N26’s valuation has exploded as its user base has tripled, with nearly a third of customers paying for a premium account.

5. E-scooter startup Bird is raising another $300M 

Bird is reportedly nearing a deal to extend its Series C round with a $300 million infusion led by Fidelity. The funding, however, comes at a time when scooter companies are losing steam and struggling to prove that its product is the clear solution to last-mile transportation.

6. AWS gives open source the middle finger 

It’s no secret that AWS has long been accused of taking the best open-source projects and re-using and re-branding them without always giving back to those communities.

7. The Galaxy S10 is coming on February 20 

Looks like Samsung is giving Mobile World Congress the cold shoulder and has decided to announce its latest flagship phone a week earlier in San Francisco.

News Source = techcrunch.com

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