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May 26, 2019
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Kargo is disrupting logistics in Myanmar, one of the world’s most challenging countries

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Founders in Seattle recently bemoaned a lack of capital and support when compared to Silicon Valley — what about those building startups in more remote markets?

Kargo, a company that takes the spirit of Uber and brings it to the disorganized world of trucking, has raised a SG$800,000 (US$580,000) round of funding, giving TechCrunch an excuse to delve into the world of startup development in Myanmar, one of the world’s most curious countries.

Ostracized from the world until its first free general election in 2015, Myanmar — which was previously known as Burma — has seen the world’s most radical digitization. Ruled by the military from 1962 until 2011, the price of a SIM card in the country was $250 as recently as 2013 (a big jump on $3,000-odd in the early 2000s) but that all change around the elections in 2015 when the country opened its doors to outside investment and global companies. Telecom companies rushed in, reducing the price of a SIM card to mere dollars, in U.S. terms, and giving those who bought them gigabits of data to use each month.

That rush saw services like Facebook go from non-existent to the key digital space overnight as Myanmar’s 55 million people poured online — the U.S. social network has failed to cope with that crazy growth. Today, some 46 million people are estimated to be online in the country, with mobile the dominant platform and Facebook the top browser — yep, the social network is that big.

Myanmar is getting its first 4G rollouts and the seeds have been sown for internet businesses and startups.

Simplifying logistics

Kargo — which is not to be confused by the Indonesia company of the same name that’s backed by Uber co-founder Travis Kalanick — was started in 2016 by Alexander Wicks, an Australian expat who had previously run digital marketing businesses.

The young company initially joined Phandeeyar, a tech accelerator in major city Yangon, before dropping out due to a disagreement on terms, CEO and founder Wicks said. He told TechCrunch that he valued the organization, but decided to “fly solo” with the business.

That is a bet that appeared to pay off, so far at least. Kargo won a grant from the GSM Association Ecosystem Accelerator Fund, a unit associated with the GSMA, and it represented Myanmar at the world Seedstars Summit last year. Now, it has secured this new funding led by Singapore-based early-stage specialist Cocoon Capital.

Wicks said the round is a pre-Series A deal and he hopes that Kargo can go on to raise a Series A to fuel overseas growth within the next year or 18 months.

Alexander Wicks started Kargo in 2016

Kargo works with multinational companies, including Coke and Nestle, to help them navigate the complicated world of logistics in Myanmar. By aggregating multiple fleets through its platform, Kargo becomes a single point of contact for companies moving product, thus simplifying the process massively. In the past, they’d deal with copious numbers of middlemen, who would liaise with truck fleets to add unnecessary levels of complication and cost.

“The market is very big, its a core part of how the whole country runs,” he explained, adding that Myanmar’s freight industry is expected to triple in the coming years.

Wicks said Kargo works with some 2,000-odd drivers mostly via fleet owners, who typically operate 5-50 trucks through their business. It disintermediates the aforementioned brokers and middlemen, to help drivers and fleet owners recoup a higher portion of each order and gain access to potential new clients. A partnership with Yoma Bank will also give the startup access to an SME loan that’ll enable it to make daily payouts to drivers that need more immediate cash flow than its regularly weekly deposits.

Kargo is currently close to $200,000 in monthly order volume, with 20-30 percent growth month-to-month during 2019, Wicks shared.

It is now exploring its first steps outside of Myanmar by covering ‘logistics corridors’ into Thailand. Wicks said the company has seen a high level of requests to move overseas from existing clients, and he intends to use those relationships to begin to step into new markets tentatively, starting with Thailand.

The new funding will also go towards developing Kargo’s new — and particularly improving the web app used by drivers — as well as increased education and training for truck operators and drivers.

“It’s very much a product for Myanmar,” Wicks said in an interview. “It’s an old industry being built with a new mindset.”

Finally, hiring is a key focus for the capital, too.

Kargo currently has a team of 32, most of whom are located in Yangon, and that headcount is forecast to rise to as many as 60 this year. Business development, fleet management and operations are the core areas where the startup plans to hire, and that will include beefing up its new office in Mandalay.

Wicks — center in a cap — with the members of the Kargo team

Building a startup in Myanmar

When asked what the hardest part of operating a startup in Myanmar is, Wicks claimed that dealing with the government is just ahead of raising investment money.

“Bureaucracy… there are no stats or systems here,” he said. “We have to deal with a lot of government issues.”

Still, he said, the arrival of Uber and its regional competitor Grab — which ultimately acquired the U.S. firm’s regional business — in Myanmar in 2017 gave Kargo and other on-demand startups in the country a real foothold in working with governments by educating them on new business models.

“They made it clear what a platform is for the government,” Wicks said.

He believes that their arrival, coupled with growing internet usage and increased speed, have also helped get investors comfortable with the idea of investing in tech in Myanmar, although he insisted that they must still be “patient” over growth.

“It’s certainly a much more positive landscape for founders today,” Wicks said. “That trust has changed for investors, there are a few of us building companies across the country.”

Educating and training drivers is a major focus for Kargo following its fundraising

That’s certainly true for Cocoon Capital — which is currently raising for a $20 million fund having completed a first close last year.

Managing partner Michael Blakey told TechCrunch that Kargo is the firm’s second investment from that new fund. He’s equally bullish that Kargo is well placed to take advantage of both digital growth and the development of logistics as Myanmar continues to appeal to overseas businesses.

“Myanmar is the fastest growing economy in Southeast Asia and logistics is a key industry to support this growth,” Blakey said in a statement. “We believe the Kargo platform has the potential to disrupt the trucking industry, not only in Myanmar, but in the region.”

If ‘Myanmar 1.0’ was the establishment of credible startups, then the second chapter will be the cream of that crop venturing overseas. Kargo is one of the early contenders that is intent on making that move.

ShopBack, a cashback startup in Asia Pacific, raises $45M from Rakuten and others

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ShopBack, a Singapore-based startup that offers cashback and consumer rewards in Asia Pacific, has closed a $45 million round led by new investors Rakuten Capital and EV Growth.

Founded in 2014, the startup had been relatively under-the-radar until late 2017 when it announced a $25 million investment that funded expansion into Australia among other things. Now, it is doubling down with this deal which sees participation from another new backer, EDBI, the corporate investment arm of Singapore’s Economic Development Board. Shopback has now raised close to $85 million from investors, which also include Credit Saison Blue Sky, AppWorks, SoftBank Ventures Korea, Singtel Innov8 and Qualgro.

The investment will see Amit Patel, who leads Rakuten-owned cashback service Ebates, and EV Growth managing partner Willson Cuaca, join the board. Cuaca is a familiar face since his East Ventures firm, which launched EV Growth alongside Yahoo Japan Capital and SMDV last year, was an early investor in Shopback, while the addition of Patel is potentially very significant for the startup. Indeed, when I previously wrote about ShopBack, I compared the startup directly to Ebates, which was bought by Rakuten for $1 billion in 2014.

Ebates brings operating experience in the cashback space,” Henry Chan, ShopBack co-founder and CEO told TechCrunch in an interview.

“A lot has changed in the last year and a half, Ebates has a very strong focus on the U.S… given that we’re not competing, it makes sense to partner and to learn,” he added.

The obvious question to ask is whether this deal is a precursor to a potential acquisition.

So, is it?

“It is squarely for learning and for growth,” Chan said in response. “It makes sense for us to partner with someone with the know-how.”

ShopBack operates in seven markets in Asia Pacific — Singapore, Malaysia, the Philippines, Thailand, Taiwan, Australia and Indonesia — with a core rewards service that gives consumers rebates for spending on areas like e-commerce, ride-hailing, food delivery, online travel and more. It has moved offline, too, with a new service for discovering and paying for food which initially launched in Singapore.

ShopBack said it saw a 250 percent growth in sales and orders last year which translated to nearly $1 billion in sales for its merchant partners. The company previously said it handled $400 million in 2017. It added that it typically handles more than 2.5 million transactions for upwards of seven million users.

(Left to right) Henry Chan, co-founder and CEO of ShopBack, welcomes new board member Amit Patel, CEO of Rakuten -owned Ebates [Image via ShopBack]

Chan said that, since the previous funding round, ShopBack has seen its business in emerging markets like Indonesia, Thailand and the Philippines take off and eclipse its efforts in more developed countries like Singapore. Still, he said, the company benefits from the diversity of the region.

Markets like Singapore and Taiwan, where online spending is more established, allow ShopBack to “learn ahead of time how different industries will develop” as the internet economy matures in Southeast Asia, Chan — who started the company with fellow co-founder Joel Leong — explained.

Outside of Southeast Asia, Chan said that ShopBack’s Australia business — launched nearly one year ago — has been its “most phenomenal market in terms of growth.”

“We’re already superseding incumbents,” he said.

ShopBack claims some 300,000 registered users in Australia, where it said purchases through its platform have grown by 1,300 percent between May 2018 and March 2019. Of course, that’s growth from a tiny initial base and ShopBack didn’t provide raw figures on sales.

For its next expansion, ShopBack is looking closer to home with Vietnam its upcoming target. The country is already home to one of its three R&D centers — the other two are located in Singapore and Taiwan — and Chan said the startup is currently hiring for a general manager to head up the soon-to-launch Vietnam business.

Already, though, the company is beginning to think about reaching beyond Asia Pacific. Chan maintained that the company already has a proven playbook — particularly on the tech side — so it “can enter a Western market” if it chooses, but that isn’t likely to happen in the immediate future.

“We could [expand beyond Asia Pacific] but we have a fair bit on our plate, right now,” said Chan with a laugh.

Helen Yiang and Andy Wheeler will be speaking at TC Sessions: Robotics + AI April 18 at UC Berkeley

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We’re just under two months out from this year’s TC Sessions: Robotics + AI event, and we’ve still got a lot left to announce. As noted, we’ll have Anca Dragan, Marc Raibert, Alexei Efros, Hany Farid, Melonee Wise, Peter Barrett, Rana el Kaliouby, Arnaud Thiercelin and Laura Major at the April event, and today we’ve got a pair of names to add to the ever-growing speaker list.

Today we’re excited to announce to additions to our VC panel, who will be discussing the wild world of robotics investments.

Founding and Managing Partner of FoundersX Ventures, Helen Liang will be joining us at the event to discuss the 20 early stage robotics and AI startups she has invested in. Liang brings a decade of product development to her work at her early-stage capital fund and also serves as Founding President at Tech for Good.

Andy Wheeler is a founding partner at GV (formerly Google Ventures), focusing on bringing early-stage tech to market. He is a co-founder of Ember Corporation and a veteran of MIT Media Lab. His list of early investments include Carbon, Farmer’s Business Network, Abundant Robotics and Orbital Insight.

Early bird tickets are now on sale – book your $249 ticket today and save $100 before prices go up. Students, did you know that you can save $45 with a heavily-discounted student ticket? Book your student ticket here.

First China, now Starbucks gets an ambitious VC-funded rival in Indonesia

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Asia’s venture capital-backed startups are gunning for Starbucks .

In China, the U.S. coffee giant is being pushed by Luckin Coffee, a $2.2 billion challenger surfing China’s on-demand wave, and on the real estate side, where WeWork China has just unveiled an on-demand product that could tempt people who go to Starbucks to kill time or work.

That trend is picking up in Indonesia, the world’s fourth largest country and Southeast Asia’s largest economy, where an on-demand challenger named Fore Coffee has fuelled up for a fight after it raised $8.5 million.

Fore was started in August 2018 when associates at East Ventures, a prolific early-stage investor in Indonesia, decided to test how robust the country’s new digital infrastructure can be. That means it taps into unicorn companies like Grab, Go-Jek and Tokopedia and their army of scooter-based delivery people to get a hot brew out to customers. Incidentally, the name ‘Fore’ comes from ‘forest’ — “we aim to grow fast, strong, tall and bring life to our surrounding” — rather than in front of… or a shout heard on the golf course.

The company has adopted a similar hybrid approach to Luckin, and Starbucks thanks to its alliance with Alibaba. Fore operates 15 outlets in Jakarta, which range from ‘grab and go’ kiosks for workers in a hurry, to shops with space to sit and delivery-only locations, Fore co-founder Elisa Suteja told TechCrunch. On the digital side, it offers its own app (delivery is handled via Tokopedia’s Go-Send service) and is available via Go-Jek and Grab’s apps.

So far, Fore has jumped to 100,000 deliveries per month and its app is top of the F&B category for iOS and Android in Indonesia — ahead of Starbucks, McDonald’s and Pizza Hut .

It’s early times for the venture — which is not a touch on Starbuck’s $85 billion business; it does break out figures for Indonesia — but it is a sign of where consumption is moving to Indonesia, which has become a coveted beachhead for global companies, and especially Chinese, moving into Southeast Asia. Chinese trio Tencent, Alibaba and JD.com and Singapore’s Grab are among the outsiders who have each spent hundreds of millions to build or invest in services that tap growing internet access among Indonesia’s population of over 260 million.

There’s a lot at stake. A recent Google-Temasek report forecast that Indonesia alone will account for over 40 percent of Southeast Asia’s digital economy by 2025, which is predicted to triple to reach $240 billion.

As one founder recently told TechCrunch anonymously: “There is no such thing as winning Southeast Asia but losing Indonesia. The number one priority for any Southeast Asian business must be to win Indonesia.”

Forecasts from a recent Google-Temasek report suggest that Indonesia is the key market in Southeast Asia

This new money comes from East Ventures — which incubated the project — SMDV, Pavilion Capital, Agaeti Venture Capital and Insignia Ventures Partners with participation from undisclosed angel backers. The plan is to continue to invest in growing the business.

“Fore is our model for ‘super-SME’ — SME done right in leveraging technology and digital ecosystem,” Willson Cuaca, a managing partner at East Ventures, said in a statement.

There’s clearly a long way to go before Fore reaches the size of Luckin, which has said it lost 850 million yuan, or $124 million, inside the first nine months in 2018.

The Chinese coffee challenger recently declared that money is no object for its strategy to dethrone Starbucks. The U.S. firm is currently the largest player in China’s coffee market, with 3,300 stores as of last May and a goal of topping 6,000 outlets by 2022, but Luckin said it will more than double its locations to more than 4,500 by the end of this year.

By comparison, Indonesia’s coffee battle is only just getting started.

With its Greenlots acquisition, Shell is moving from gas stations to charging stations

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In a bid to show that it’s getting ready for the electrification of American roads, Royal Dutch Shell is buying Greenlots, a Los Angeles-based developer of electric vehicle charging and energy management technologies.

Shell, which is making the acquisition through its Shell New Energies US subsidiary, snatched the company from Energy Impact Partners, a cleantech-focused investment firm.

“As our customers’ needs evolve, we will increasingly offer a range of alternative energy sources, supported by digital technologies, to give people choice and the flexibility, wherever they need to go and whatever they drive,” said Mark Gainsborough, Executive Vice President, New Energies for Shell, in a statement. “This latest investment in meeting the low-carbon energy needs of US drivers today is part of our wider efforts to make a better tomorrow. It is a step towards making EV charging more accessible and more attractive to utilities, businesses and communities.”

Courtesy of Ed Robinson/Shell

Since Greenlots raised its cash from Energy Impact Partners, the company has become the partner of choice for utilities for electric vehicle charging, according to the firm. Greenlots was selected as the sole software provider for VolksWagen’s “Electrify America” charging program  last January.

“Utilities are playing a pivotal role in accelerating the transition to a future electric mobility system that is safer, cleaner and more efficient,” said Greenlots CEO Brett Hauser, adding, “We look forward to now working with the resources, scale and reach of Shell to further accelerate this transition.”

“Greenlots is on an incredible trajectory and, in the hands of a company with the resources such as Shell, will be able to advance the important electrification of transportation even faster,” said EIP managing partner Hans Kobler in a statement.

For Shell, the deal adds to a portfolio of electric charging assets including the Dutch-based company, NewMotion.

Across the board energy companies are spending more time and money backing and deploying electric charging technology companies. ChargePoint, a Greenlots competitor, raised $240 million in a November financing that included Chevron Technology Ventures, while BP bought the UK-based public charging network Chargemaster last year.

Despite pushback in some corners of America to the increasing electrification of U.S. highways and byways, the future of mobility needs to be electric if there’s any hope of slowing (and ideally halting and reversing) climate change globally.

Some signs of hope can be found in the latest earnings statement from Tesla, which points to increased uptake of its electric vehicles.  The teased release of an electric truck could potentially even help win converts among those drivers who like to “roll coal” in the presence of hybrids or electric cars.

 

States are already investing heavily in electric infrastructure themselves to promote the adoption of vehicles. California, New York, and New Jersey announced last June a total of $1.3 billion in new infrastructure projects focused on electric vehicle charging.

That’s still not enough to meet the goals necessary to reduce greenhouse gases significantly enough. In all, the U.S. needs to put roughly 13 million electric vehicles on the road in order to meet the targets put forward in the Paris Accords climate treaty (which the U.S. walked away from last year).

According to estimates from the Center for American Progress, the U.S. needs to spend $4.7 billion through 2025 to buy and install the 330,000 public charging outlets the nation will need to meet that electric demand.

“As power and mobility converge, there will be a seismic shift in how people and goods are transported,” said Brett Hauser, Chief Executive Officer of Greenlots. “Electrification will enable a more connected, autonomous and personalized experience. Our technology, backed by the resources, scale and reach of Shell, will accelerate this transition to a future mobility ecosystem that is safer, cleaner and more accessible.”

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