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March 23, 2019
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Bike sharing pioneer Mobike is retreating to China

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In a telling sign of the state of bike sharing, Mobike, a once red-hot startup that attracted billions in investment capital, is closing down all international operations and putting its sole focus on China.

On Friday, Mobike laid off its operations teams in APAC, which entailed more than 15 full-time employees and many more contractors and third-party agency staff across Singapore, Malaysia, Thailand, India and Australia. Those affected were told the company will “ramp down” the regional business without being provided specific reasons for the rollback, five people familiar with the matter told TechCrunch.

These layoffs are a key step towards the eventual goal of closing Mobike’s international footprint since the Asia Pacific region accounts for the majority of its non-China business. More staff cuts are impending outside Asia that can include Europe and the Americans, according to two sources. Eventually, Mobike will only be operational in its native China, which accounts for the majority of its overall global business.

The change of strategy encapsulates the struggle that Chinese bike sharing companies have experienced over the past year. Mobike was arguably the most successful from the camp. Before it was ultimately bought by Chinese delivery giant Meituan for $2.7 billion 11 months ago, it had raised over $900 million from investors such as Tencent, Foxconn, Hillhouse Capital and Warburg Pincus as bike-sharing became the hot topic in 2017. Ultimately, though, Mobike wasn’t able to find a sustainable business model amid tough competition and tight financials.

Photo source: Mobike

Employees were taken aback by Friday’s announcement as they had been under the impression that Mobike’s prospects were bright and there had not been issues with salaries or other financial concerns. In Singapore, specifically, the bike app claims to be the top player and is working closely with the government to make the city-state greener.

“I was shocked. The business is doing well from my perspective,” one source told TechCrunch. “But just because one country does well doesn’t mean the whole region will survive. Mobike ran a lot of analysis on profits and losses in the [overseas] region and came to the conclusion that there is no way it would turn profitable.”

Things were rosier just a year ago. When Meituan, the one-stop app for neighborhood services in China, acquired Mobike, the buyout was widely seen as a triumph for the young startup as its Chinese peer Ofo suffered mounting financial pressures standing as an independent company. Ofo started to phase out its international operations last year and was reportedly preparing for bankruptcy recently.

Before long, Meituan also started to show its restraint over the mobility segment. In an effort to cut costs, the Hong Kong-listed firm focusing on food delivery and hotel booking announced it would pause expansions on dockless bikes and car-hailing. Its bike unit is also facing growing competition from Hellobike, which is Alibaba’s latest attempt to crack China’s two-wheel transport industry.

Despite the hurdles, Mobike’s APAC employees told TechCrunch that they had believed the overseas business would stick it out as they had generated “a lot of cost-saving and progresses” in recent months after being assigned to boost the company’s operational efficiency.

mobike 3

Photo source: Mobike

Those affected won’t have much time to ponder but feel “unbalanced” and “upset” about the company’s “one-sided” decision. TechCrunch understands that staff weren’t given a chance to negotiate and most will leave by mid-April with a limited number of “key” employees asked to stay until the “ramping down” is completed. Severance packages vary on people’s termination dates, while some employees received no compensation altogether as the notice had arrived before the 30-day period required by the contract.

Meituan’s decision to close down the regional business has also come as a risky move for the company. In Singapore, Mobike’s largest market outside China, bike-sharing companies are required to file an exit plan with the government before they pull the trigger. Mobike has not informed the Singapore Land Transport Authority of its layoff as of Friday, according to two sources, although it has been in talks with the transportation regulator regarding a potential shutdown. Mobike told employees to keep news of the job cuts private before it announces them officially to the LTA.

Meituan declined to comment for this story. The company is scheduled to report earnings on Monday which may shed more light on the situation.

News Source = techcrunch.com

The Khashoggi murder isn’t stopping SoftBank’s Vision Fund

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Money talks in the startup community, especially when SoftBank comes knocking with the megabucks of its Vision Fund.

Despite the public outcry around the firm’s dependence on money from Saudi Arabia in the wake of that country’s assassination of Washington Post journalist Jamal Khashoggi, deal flow for Softbank’s Vision Fund appears to be back to normal.

The $100 billion megafund has done 21 deals over the last two quarters, that’s as more than in the other quarters of the previous year combined, according to data from Crunchbase, thanks to an uptick from Asia. Since the October 2 murder, there have been 11 investments in U.S. companies, seven in Asia, two in Europe and one in Latin America. Just this week, the fund completed a near $1.5 billion investment in Southeast Asia-based ride-hailing company Grab.

While U.S. and European firms have more options, and therefore, perhaps deserve more scrutiny, Softbank’s cash is increasingly the only game in town for startups in Asia, where there are fewer alternatives for later stage capital outside of large Chinese private equity firms or tech giants — which come with their own risks.

The Vision Fund is seen by some critics as tainted money for its links to the Saudi Royal family. Saudi Arabia’s Public Investment Fund (PIF) is the fund’s anchor investor and it is controlled by Crown Prince Mohammed bin Salman, who has been strongly linked with the murder of Saudi journalist Jamal Khashoggi, an outspoken critic of the regime.

Khashoggi, a Washington Post columnist, was murdered on October 2 after he entered the Saudi consulate in Istanbul. His visit was part of an effort to obtain divorce documents in order to marry his fiancée, but it ended with his apparently gruesome death. Audio clips suggest he was beheaded, dismembered, and had his fingers severed before his body was dissolved in acid, although new reports suggest it may have been burned.

Jamal Khashoggi — pictured in 2014 — was murdered in the Saudi consulate in Istanbul last year [Photographer: Ohammed Al-Shaikh/AFP/Getty Images]

The Vision Fund is designed to finance ‘global winners’ which, like all investment funds, is set up to provide ‘unfair advantages’ to help its companies grow into hugely important businesses. On the financial end, as is the norm, it is built to provide handsome returns to the LPs, thus directly boosting the coffers of the PIF, the Saudi kingdom, and by extension the Saudi prince himself.

An investigation is going, but there’s already plenty of evidence to suggest that the murder happened at the request of the prince.

Sources within the U.S. State Department have reportedly said it is “blindingly obvious” that the Crown Prince ordered the killing — he reportedly threatened to shoot Khashoggi one year before. But, now that the apparent period of outrage is over, SoftBank has reverted back to writing checks and companies are taking them in spite of the links to Saudi Arabia.

For startups, the money flow means that a major source of capital for growth or subsidies for customers comes from the Saudi royal family’s pockets — a regime that would reportedly not hesitate to murder a critical voice.

SoftBank’s Vision Fund has ramped up its deals over the past six months, according to data from Crunchbase

What are the companies saying?

SoftBank itself said it has a commitment to “the people” of Saudi Arabia that will see it deploy its capital unchanged, although Chairman Masayoshi Son did concede that he will wait on the findings of the investigation into the murder before deciding on whether PIF will be involved in a second Vision Fund.

The founders taking the capital have been more cautious. When questioned, executives talk about the specifics of their deal and their growth plans, most defer issues on the management of LPs, like PIF, to SoftBank. While offering words in support of the ongoing murder investigation, they manage to say little about the ethics of taking money from the Saudi regime.

Bom Kim, CEO of Korean e-commerce company Coupang — which raised $2 billion from the Vision Fund — told TechCrunch in November that the allegations around the murder “don’t represent us and don’t represent [Vision Fund] companies.”

“We are deeply concerned by the reported events and alongside SoftBank are monitoring the situation closely until the full facts are known,” Tokopedia CEO William Tanuwijaya told TechCrunch in December after the Vision Fund co-led a $1.1 billion round.

William Tanuwijaya is the co-founder and CEO of Tokopedia [Photographer: Jason Alden/Bloomberg]

OYO, the budget hotel network based out of India, did not respond to a request comment sent the day before this story was published. The startup raised $1 billion led by the Vision Fund in September.

TechCrunch was also unable to get a response to questions sent to Chehaoduo, the Vision Fund’s first China-based startup which raised $1.5 billion in February. The company is notable for being the only one of this group that didn’t count SoftBank as an existing investor prior to its Vision Fund deal.

The latest addition to the collection is Grab, the ride-hailing company in Southeast Asia that’s led by CEO Anthony Tan, who is very publicly a devout Christian. In a statement sent to TechCrunch this week, Grab defended its relationship with SoftBank, which first invested in Grab back in 2014:

What happened to Jamal Khashoggi was obviously horrible. We hope whoever is responsible is held accountable. We are not in a position to comment on behalf of SoftBank but from our perspective Son-san and the entire SoftBank team have brought so much value to the table for Grab – beyond just financing. They have brought advice, mentorship and potential business opportunities. The Vision Fund is about investing for the next 100 or 200 years and investing in trends that will move the needle for humanity in positive ways. This is a lofty and ultimately positive goal.

Anthony Tan is the co-founder and chief executive officer of Grab [Photographer: Ore Huiying/Bloomberg/Getty Images]

The Vision Fund is just getting started in Asia, however, with rumors suggesting it is planning to open offices in China and India. Singapore is presumably on that list, too, while the fund has been busy hiring a general team that will operate globally out of the U.S.

To date, the fund’s focus in Asia has been on some of the region’s largest (highest-valued) companies, but as it develops a local presence it is likely to seek out less obvious deals to grow its portfolio. That’s going to mean this question of ethics and conscience around the Vision Fund’s capital will present itself to more founders in Asia. Going on what we’ve seen so far, most will have no problem taking the money and issuing platitudinous statements.

Privately, VCs in the region who I have canvassed have told me that founders have little choice but to take the Vision Fund’s money. They explain that nobody else can offer billion-dollar-sized checks, while SoftBank is an existing investor in many of them already which gives it additional leverage. The fund also takes the aggressive approach of threatening to back rival companies if it doesn’t get the deals it wants, as we saw when Son said he’d consider a deal with Lyft when its Uber investment was uncertain.

That reality may be true — finding an alternative to a hypothetical $1 billion Vision Fund check is a daunting challenge — but we’ve reached a very sad time and place when the sheer size of an investment overrides important concerns about where that money came from.

News Source = techcrunch.com

Sea is raising up to $1.5B for its Shopee e-commerce business in Southeast Asia

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Alibaba is about to get a jolt from its largest rival in Southeast Asia. Sea, the Nasdaq-listed business, is raising as much as $1.5 billion from a new share offering that’s sure to be funneled into its Shopee e-commerce business.

Singapore-based Sea said in a filing that it plans to offer 60 million American Depositary Shares (ADS) at a price of $22.50 each. That could raise $1.35 billion, but that number could increase by a further $202 million if underwriters take up the full allotment of 9 million additional shares that are open to them. If that were to happen, the grand total raised would pass $1.5 billion. (Shopee raised $500 million in a sale last year.)

Sea said it would use the capital for “business expansion and other general corporate purposes.” That’s a pretty general statement and its business span gaming (Garena) and payments (AirPay), but you would imagine that Shopee, its primary focus these days, would be the main benefactor.

The $22.50 price represents a discount on Sea’s current share price — $24.06 at the time of writing — and the timing sees Sea take advantage of a recent share price rally. The company announced its end of year financials for 2018 last month, but which included positive progress for Shopee and Garena.

Whilst it remains unprofitable, Shopee saw annual GMV — total e-commerce transactions, an indicator of business health — cross $10 billion for the first time, growing 117 percent in the fourth quarter alone.

Those green shoots were met with enthusiasm by investors, as trading drove the stock price to a record high since its October 2017 IPO. That, in turn, made founder Forrest Li a billionaire on paper and gave Sea a market cap of over $8 billion.

Shopee shares have rallied after its 2018 financial report showed signs of promising growth for its Shopee e-commerce business

The capital is very much needed, however, as Shopee is some way from profitability and that is dragging down Sea’s overall business.

While adjusted revenue for Shopee increased by over 1,500 percent last year, it represented just over one-quarter of Sea’s overall $1 billion income in 2018 and contributed heavily to the parent company’s net loss of $961 million. Shopee alone posted a $893 million net loss in 2018.

Shopee is up against some tough competitors in Southeast Asia, most of which have strong links to Alibaba. Those include Alibaba’s own AliExpress service, Lazada — the e-commerce service it acquired — and Tokopedia, the $7 billion-valued Indonesian company that counts Alibaba and SoftBank’s Vision Fund among its backers.

Sea claims to be the largest e-commerce firm in “Greater Southeast Asia” — a classification that includes Taiwan alongside Southeast Asia — although direct comparisons are not possible since Alibaba doesn’t provide detailed information on its e-commerce businesses outside of China.

Alibaba said its international e-commerce businesses — which include many other services beyond Lazada — made $849 million in revenue during its most recent quarter, an annual increase of 23 percent. Lazada is in the midst of a transition — it appointed a new CEO in December — that has included a move away from direct sales. Alibaba said that impacted growth, with GMV rates slowing, but it pledged to continue its focus, having invested a fresh $2 billion into the business last year.

“We continue to invest resources to integrate Lazada’s business and technology operations into Alibaba with the aim of building a strong foundation for us to extend our offerings in Southeast Asia,” it said.

News Source = techcrunch.com

Jupiter raises $23 million to tell businesses and governments how climate change will destroy them

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Whether it’s by flood, fire, or the fury of a storm, climate-related catastrophes are now impacting most cities and towns across the country. As these natural disasters increase in frequency and severity, cities and the businesses that reside in them are mobilizing to understand how best to prepare for the climatological challenges they’re going to face — and increasingly they’re turning to companies like Jupiter Intelligence for information.

From offices in San Mateo, Calif., Boulder, Colo., and New York Jupiter Intelligence has made a business selling data from satellite imagery and advanced computer models to cities like New York and Miami, along with the Federal government and big insurance and real estate customers.

With its new financing, Jupiter plans to take its show on the global road, and is bringing its services to clients in Rotterdam, London, and Singapore.

It’s a story that has its roots in over two decades of work from founders Rich Sorkin, Eric Wun, Josh Hacker, and Alan Blumberg.

Wun and Sorkin met in 1996 in the early days of the development of mapping and weather prediction technologies. And got their start in the business co-founding Zeus, a weather prediction technology developer that was pitching its services to commodities traders.

“Zeus was way too early from a technology platform perspective,” says Sorkin. “We put Zeus on the shelf eight years ago. Then when we came up with the idea for Jupiter most of the early ideas were already there.”

In the interim, Sorkin served as the president of Kaggle, a company Google acquired back in 2017. By that point, Sorkin had already left to launch Jupiter, which he started in 2016.

While Zeus predicted the thirty day weather for commodities traders, Jupiter is a more powerful toolkit that predicts the possibility of damage from severe weather and climate change for a much broader set of customers, Sorkin says.

Wun and Sorkin were on board immediately, and the next person to join the fledgling team, was Hacker — who had run satellite operations for Skybox — another Google acquisition. Following the merger of Skybox with Planet Labs, Hacker took a job at the National Oceanic and Atmospheric Administration within the Department of Commerce (one of the pre-eminent organizations focused on climate change).

The final recruit was Blumberg who was approached because of his role in developing the Princeton Ocean Model, which is used by over 5700 research and operational groups in 70 countries and his leadership position in developing 2-hour and 4-day flood predictions for Port Authority of New York and New Jersey.

Storm surge from Hurricane Sandy in New York City

After its launch the company was able to land three big insurance companies, QBE, Mitsui, and Nephila, which all agreed to throw cash into the company’s new $23 million round.

Jupiter’s predictive and analytics technologies have applications far beyond insurance. Airports, ports, power plants, water facilities, hospitals, municipal and even the federal government are turning to the company for information, according to Sorkin.

Jupiter raised $1 million in its seed round from DCVC (Data Collective) and then closed on $10 million more from Ignition Partners . The latest $23 million was led by Energize Ventures, a fund focused on infrastructure and climate-related investments.

SYSTEMIQ, which was co-founded by McKinsey veteran Jeremy Oppenheim, also invested in Jupiter’s Series B. The architect of McKinsey’s Sustainability and Resource Practice said in a statement, “For a decade the planet has needed the kind of repeatable, globally consistent, insurance grade analytics Jupiter now delivers.”

Photo courtesy of Shutterstock

The toolkit that the company pitches does purport to offer new levels of granularity and insight into the kinds of threats climate and weather-related disasters post to government and private assets.

“We predict probabilistically at the asset level… at the loading dock of a warehouse or a transmission box or a hotel on the beach, we determine the actual expected risk in a form that the insurance industry or the risk manager at an organization can use and integrate into their plans,” says Sorkin. 

The company’s process begins with global climate models and then drills down into a specific region which is used as the basis of predicting peril-like events, according to Sorkin.

That goes into a statistical model which translate the predictions into a form that quantifies the uncertainty and in a way that’s tailored to decision makers, he said.

Using APIs from Mapbox, the company can also provide a mapping interface that gives customers visualizations along with a product that lets users see what damage can look like inside of a building through virtual reality and a collaboration with Oculus.

“The strategy was to start with one peril in one place in one market so we started with flooding in Carolinas for the real estate,” says Sorkin. “We have expanded into much broader perils and geographies and market segments.”

For all of the time that Sorkin spends modeling out how cities will meet their doom in one form of cataclysm or another, Jupiter’s chief executive is fairly positive about the prospects for society to withstand the climate threat it currently faces.

“Even with all the bad things that could happen, we don’t think the apocalypse is inevitable,” Sorkin says. “The extent of damage is a function of how much people invest in avoiding it over the next decade.”

News Source = techcrunch.com

Go-Jek’s Get app officially launches in Thailand as Southeast Asia expansion continues

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Go-Jek is extending its reach in Southeast Asia after its Thailand-based unit made its official launch, which included the addition of a new food delivery service.

Get, which is the name for Go-Jek business in Thailand, started out last year offering motorbike taxi on-demand services to a limited part of Thai capital city Bangkok, now the company said it has expanded the bikes across the city and added food and delivery options. Get’s management team is composed of former Uber staffers while CEO Pinya Nittayakasetwat was recruited from chat app Line’s food delivery business.

Over the last two months, Get claims to have completed two million trips in the past two months. There’s no word on when Get will add four-wheeled transport options, however. On the food side, Get is claiming to have 20,000 merchants on its platform but there are some issues. Rumming through the app, I found a number of listed restaurants that didn’t include menus. In those instances, customers have to input their dish and price which makes it pretty hard to use.

Go-Jek’s Get app in Thailand doesn’t include menus for a number of restaurants, making it nearly impossible to order

Grab is the dominant player in Thailand, where it offers taxis, private cars, motorbikes, delivery and food across eight markets in Southeast Asia. Go-Jek rose to success in its native Indonesia, where it began offering motorbikes on demand but has expanded to cover taxi, cars, food, general services on-demand and fintech. Its investors include Google, Tencent, Meituan and Sequoia India.

That’s the same playbook Grab is using, but Go-Jek is taking its time with its market expansions. Thailand represents its third new market beyond Indonesia, following launches in Vietnam and Singapore. The Philippines is another market where Go-Jek has voiced a desire to be present — it has even made an acquisition there — but regulatory issues are holding up a launch.

Regional expansion doesn’t come cheap and Go-Jek is in the midst of raising $2 billion to finance these moves. It recently closed $1 billion from existing investors, and Deal Street Asia reports that it could raise as much as $3 billion for the entire Series F round. That’s likely in response to Grab’s own fundraising plans. The Singapore-based company closed $2 billion last year, but it is looking to increase that total to $5 billion with a major injection from SoftBank’s Vision Fund a key piece of that puzzle.

News Source = techcrunch.com

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