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June 17, 2019
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Food delivery startup Dahmakan eats up $5M for expansion in Southeast Asia

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It’s harvest season for Southeast Asia’s full-stack food delivery startups. Following on from Singapore’s Grain raising $10 million, so Malaysia-based Dahmakan today announced a $5 million financing round of its own.

The money takes the startup to $10 million raised to date — its last round as $2.6 million last year — and it comes via new investors U.S-based Partech Partners and China’s UpHonest Capital and existing backers Y-Combinator, Atami Capital and the former CEO of Nestlé who was an angel investor. The round was closed earlier this year but is now being announced alongside this expansion play.

It’s been a busy couple of years for the company, which was founded in 2015 by former execs from Rocket Internet’s FoodPanda service. Dahmakan — which means “Have you eaten?” in Malay — graduated Y Combinator in 2017 and it expanded to Thailand last year through an acquisition, so what’s on the menu for 2019?

It is going all in on ‘cloud kitchen’ model of using unwanted retail space to cook up meals specifically for digital orders, which is entirely its business since it handles all processes in house rather than through a marketplace model.

Already, in its home town of Kuala Lumpur, Malaysia, Dahmakan has introduced ‘satellite’ hubs that will allow it to serve customers located in different parts of the city more efficiently. The service already fares better than rivals like FoodPanda, Grab Food and (in Thailand) GoJek’s GetFood service because customers order ahead of time from a fixed menu with scheduled delivery times, but there’s room to do better and more.

“The way that we are thinking about it is that we are 18 months ahead of the competition in terms of the cloud kitchen model. Most are only starting to build out clusters of mini kitchens (150sqft) or so without leveraging too much AI in terms of product development, procurement or automation in machinery,” Dahmakan COO and co-founder Jessica Li told TechCrunch.

“What we’ve figured out is how to scale food production for thousands of deliveries while maintaining quality and keeping costs at 30 percent below comparable restaurant prices,” she added, explaining that the company plans to add “new brands and new products” using the satellite hub approach.

A serving of Ayam Penyet, Indonesian smashed chicken

Dahmakan is looking to extend its reach in Southeast Asia, too.

Li said the immediate priority is domestic growth in Malaysia with the service set to expand in Penang and Johor Bharu during the third quarter of this year. Beyond that, she revealed that Dahmakan plans to move into Singapore and Indonesia before the end of 2019.

Food delivery is quickly becoming the new ride-hailing war in Southeast Asia as Grab and Go-Jek, which have raised the most money in the region, pour capital into space. Quite why they are doing so isn’t entirely clear. Food could be a channel for loyalty (if such a thing can exist in incentive-led verticals) and user engagement for ride-hailing or other parts of their so-called “super app” services, but, either way, it is certainly distorting the market by flooding users with promotions.

That’s not necessarily a bad thing for startups like Dahmakan and Grain which have grown in a more sustainable and responsible manner. They benefit from more people using food delivery in general, while they may also become attractive acquisition targets in the future.

Like Grain, Dahmakan puts a focus on healthy eating, which stands in contrast to the typical junk food orders that others in the space serve through their marketplace of restaurants. That certainly helps them stand out among certain audiences, and it’ll be interesting to see what new products and brands that Dahmakan is hatching to capitalize on the flood of attention food delivery is seeing..

This is certainly only the start. A Google-Temasek report on Southeast Asia published last year forecasts that the region’s food delivery market will grow from an estimated $2 million last year to $8 billion in 2025. That four-fold prediction is larger than the growth forecast for ride-hailing, although the latter is larger.

“That’s faster than any other region even China,” Li said.

A report from Google and Temasek predicts huge growth for ride-hailing and food delivery services in Southeast Asia

China’s Tesla wannabe Xpeng starts ride-hailing service

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There’re a lot of synergies between electric vehicles and ride-hailing. Drivers are able to save more steering an EV compared to a gas vehicle. Environmentally conscious consumers will choose to hire an electric car. And EVs are designed with better compatibility with autonomous driving, which is expected to hit the public road in the coming decades.

Indeed, Tesla is eyeing to launch its first robotaxis in 2020 as part of a broader ride-sharing scheme. Over in China where Tesla has a few disciples, EV startup Xpeng Motors, also known as Xiaopeng, just started offering a ride-hailing app powered by its own electric fleets.

Screenshot of Xpeng’s ride-hailing app ‘Youpeng Chuxing’

The company is the latest in a clutch of carmakers flocking to introduce their own ride-hailing platforms. Didi Chuxing’s massive loss has not deterred their ambitious plans. Rather, this may be a prime time to crack a market long dominated by Didi, which is prioritizing safety over growth following two high-profile incidents and a series of new government regulations.

Xpeng’s ride-hailing app is currently only available in a limited area within Guangzhou where it’s headquartered, shows a test conducted by TechCrunch’s on Thursday.

The company’s coffer is probably large enough to fund its newly minted venture. It’s one of the most-backed EV upstarts alongside rival Nio, which raised $1 billion from a New York initial public offering last year.

Xpeng has to date banked $1.3 billion from Alibaba, IDG Capital, Foxconn, UCAR and other big-name investors, according to disclosed funding data collected by Crunchbase. Founder He Xiaopeng, a serial entrepreneur who made a fortune selling his mobile browser company UCWeb to Alibaba, told CNBC in March that Xpeng may also try an IPO down the road but wants to focus on building the business first.

When it comes to sources of inspiration for the business, Xpeng told local media that it sees Tesla as its “benchmark”. The company has never been shy about its admiration for its American peer. In an interview with Quartz in 2018, He said one of the reasons he founded Xpeng “was because Elon Musk made Tesla’s patents available. It was so exciting.”

But the affection might have gone a little far. In March, Tesla sued an ex-employee for allegedly stealing Autopilot’s proprietary technology before taking a job at Xpeng.

Xpeng started shipping to its first owners in March and was founded five years ago against the backdrop of Beijing’s aggressive electric push in the transportation sector. The sprawling city Shenzhen, just north to Hong Kong, has turned all its public buses and almost all of its taxis electric.

EV startup Rimac scores $90M investment from Hyundai and Kia

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Rimac Automobili, the European EV startup that landed an investment from Porsche last year, has again gained the backing of traditional automakers after Hyundai Motor Company and Kia Motors jointly invested €80 million, or around $90 million.

Beyond the significant cash infusion, the three parties said the deal includes “a strategic partnership to collaborate on the development of high-performance electric vehicles.” In other words, Hyundai and Kia — both of which fall under the ownership of Hyundai Motor Group — plan to work very closely with Rimac, which is based in Croatia, to bring electric vehicles to market under their brands.

Already we have an idea of what that will look like.

Today’s announcement teased an electric car within Hyundai’s N sports car division and a “high-performance fuel cell electric vehicle,” both of which will include collaboration between the Korean group and Rimac. (It’s worth noting that Rimac is already a supplier for Hyundai Motor Group so the two sides are well acquainted.)

Rimac’s back story is fascinating. The company was founded in 2009 by then-21-year-old Mate Rimac who developed an electric vehicle in his garage. Today, the company is 500 people strong and aside from supplying parts to manufacturers — specifically high-voltage battery technology and electric powertrains — it designs in-car digital interfaces, runs a subsidiary-focused on electrics, and develops impressive electric “hypercars.” Its vehicles include the C Two, pictured at the top of this post at the Geneva International Motor Show.

The startup’s own boilerplate explains neatly why it is teaming up with major names like Porsche and Hyundai.

“The next challenge ahead is to grow from a low volume manufacturer of complex high-end electrification components, to an established Tier-1 supplier for the industry,” it reads.

Decades of automotive know-how from its investors with experience is sure to help there.

[Left to right] Mate Rimac, founder and CEO of Rimac Automobili, and Euisun Chung, Executive Vice Chairman of Hyundai Motor Group, seal the deal

As for Hyundai Motor Group, the Korean firm has embarked on a series of deals as it looks to tap into tech to grow its business. That’s included investments in companies like Grab in Southeast Asia ($250 million), car infotainment startup Audioburst and, in India, car rental service Revv and Uber rival Ola, in a deal related to its EV unit.

On the partnership side, Hyundai is working with Russia’s Yandex on self-driving tech, Amazon on virtual showrooms and more.

Slack aims to be the most important software company in the world, says CEO

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Slack this morning disclosed estimated preliminary financial results for the first quarter of 2019 ahead of a direct listing planned for June 20.

Citing an addition of paid customers, the workplace messaging service posted revenues of about $134 million, up 66 percent from $81 million in the first quarter of 2018. Losses from operations increased from $26 million in Q1 2018 to roughly $39 million this year.

In addition to filing updated paperwork, the Slack executive team gathered on Monday to make a final pitch to potential shareholders, emphasizing its goal of replacing email within enterprises across the world.

“People deserve to do the best work of their lives,” Slack co-founder and chief executive officer Stewart Butterfield said in a video released alongside a livestream of its investor day event. “This desire of feeling aligned with your team, of removing confusion, of getting clarity; the desire for support in doing the best work of your life, that’s universal, that’s deeply human. It appeals to people with all kinds of roles, in all kinds of industries, at all scales of organization and all cultures.”

“We believe that whoever is able to unlock that potential for people … is going to be the most important software company in the world. We aim to be that company,” he added.”

Slack, valued at more than $7 billion with its last round of venture capital funding, plans to list on the NYSE under the ticker symbol “SK.”

The business filed to go public in April as other well-known tech companies were finalizing their initial public offerings. Following Uber’s disastrous IPO last week, public and private market investors alike will be keeping a close-eye on Slack’s stock market performance, which may determine Wall Street’s future appetite for Silicon Valley’s unicorns.

Though some of the recent tech IPOs performed famously, like Zoom, Uber and Lyft’s performance has served as a cautionary tale for going out in poor market conditions with lofty valuations. Uber began trading last week at below its IPO price of $45 and is today down significantly at just $36 per share. Lyft, for its part, is selling for $47.5 apiece today after pricing at $72 per share in March.

Slack isn’t losing billions per year like Uber but it’s also not as close to profitability as expected. In the year ending January 31, 2019, Slack posted a net loss of $138.9 million and revenue of $400.6 million. That’s compared to a loss of $140.1 million on revenue of $220.5 million for the year ending January 31, 2018. In its S-1, the company attributed its losses to scaling the business and capitalizing on its market opportunity.

Workplace messaging startup Slack said Monday, February 4, 2019 it had filed a confidential registration for an initial public offering, becoming the latest of a group of richly valued tech enterprises to look to Wall Street. (Photo by Eric BARADAT / AFP) (Photo credit should read ERIC BARADAT/AFP/Getty Images)

Slack currently boasts more than 10 million daily active users across more than 600,000 organizations — 88,000 on the paid plan and 550,000 on the free plan.

Slack has been able to bypass the traditional roadshow process expected of an IPO-ready business, opting for a path to Wall Street popularized by Spotify in 2018. The company plans to complete a direct listing, which allows companies to forgo issuing new shares and instead sell existing shares held by insiders, employees and investors directly to the market, in mid-June. The date, however, is subject to change.

Slack has previously raised a total of $1.2 billion in funding from investors, including Accel, Andreessen Horowitz, Social Capital, SoftBank, Google Ventures and Kleiner Perkins.

Lyft lost $1.14B in Q1 2019 on $776M in revenue

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In its first-ever earnings report as a public company, Lyft (NASDAQ: LYFT) failed to display progress toward profitability.

The ride-hailing business, which raised $2 billion in a March initial public offering, posted first-quarter revenues of $776 million on losses of $1.14 billion, including $894 million of stock-based compensation and related payroll tax expenses. The company’s earnings surpassed Wall Street estimates of $740 million while losses came in much higher as a result of IPO-related expenses.

“The first quarter was a strong start to an important year, our first as a public company,” Lyft co-founder and chief executive officer Logan Green said in a statement.  “Our performance was driven by the increased demand for our network and multi-modal platform, as Active Riders grew 46 percent and revenue grew 95 percent year-over-year. Transportation is one of the largest segments of our economy and we are still in the very early stages of an enormous secular shift from personal car ownership to Transportation-as-a-Service.”

The company said adjusted net losses came in at $211.5 million compared to $228.4 million in the first quarter of 2018. Next quarter, Lyft expects revenue of more than $800 million on adjusted EBITDA losses of between $270 million and $280 million. For the entire year, Lyft projects roughly $3.3 billion in total revenue on adjusted EBITDA losses of about $1.2 billion.

Lyft was the first of a cohort of venture-backed ‘unicorns,’ including Pinterest, Zoom and soon, Uber — which will make its long-overdue debut on the New York Stock Exchange later this week — to complete a public offering in 2019. Despite a sizeable IPO pop, Lyft shares have sunk since its first appearance on the Nasdaq. Lyft hit a share price of $87 on its first day of trading, up from a $74 IPO price. However, in the weeks post-IPO it’s floated closer to the $60 mark, closing Tuesday down 2 percent at $59.41 per share.

Lyft has never posted a profit and its founders John Zimmer and Green have made it clear they expect to invest in the company’s growth for the next several years as it expands its multimodal offerings and ultimately launches operations overseas.

“The road ahead represents a massive opportunity to serve our communities and drive value for our stockholders,” Lyft’s co-founders wrote in the company’s IPO prospectus. “We take this responsibility to serve our communities and stockholders seriously, and we look forward to proving that with actions and results. If we told you we were building the world’s best canal, railroad or highway infrastructure, you’d understand that this would take time. In that same light, the opportunity ahead requires continued long-term thinking, focus and execution.”

Given Lyft’s unprofitable history, analysts are likely keeping a watchful eye on top-line revenue, active riders and revenue per rider. According to its earnings report, Lyft’s revenue per active rider has grown 34 percent year-over-year to $37.86, while active riders, generally, expanded nearly 50 percent to 20.5 million.

The earnings report comes just three days before Uber is expected to begin trading on the NYSE. The company is set to price between $44 and $50 per share for a fully-diluted market cap of about $90 billion if it prices at the high end. Selling 180 million common shares, Uber plans to raise between $7.9 billion and $9 billion, 4x that of Lyft’s IPO bounty.

Given Lyft’s performance on the stock exchange, investors are likely hesitant to go all-in on Uber’s offering. Reports indicate that Uber slashed targets ahead of its IPO, citing Lyft’s stock nose-dive, with Uber executives “eager to avoid the pitfalls that sunk” Lyft, according to The Wall Street Journal.

“Because Lyft and Uber compete heavily in the U.S., Lyft’s first earnings report will provide insights into Uber’s prospects,” Goodwater Capital managing director Eric Kim told TechCrunch. “At the same time, each company has shown its own unique differentiation. For example, [Uber has] shown very strong unit economics with sub 4-month paybacks and very valuable international stakes worth billions.”

In addition to releasing its first-ever earnings report, Lyft also announced a partnership with Alphabet’s Waymo, the self-driving vehicle juggernaut. As part of the new deal, Waymo will deploy 10 of its vehicles on Lyft over the next few months in the Phoenix area.

The partnership is a bit of a slap in the face to Uber, which just like Lyft is backed by Alphabet.

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