Funding

Baidu has turned to the financial industry to bolster its consumer finance business. The Chinese search giant confirmed that it has sold a majority share in its Financial Services Group (FSG) business to a consortium of private equity firms in a deal worth $1.9 billion.

The business is in the consumer finance space and its services include credit and wealth management. Its competition, beyond traditional financial businesses, includes digital efforts from the likes of Tencent and Alibaba.

The deal — which had been speculated at the end of last year — sees FSG renamed to Du Xiaoman. The group of investors is led by TPG and The Carlyle Group, and it will pay around $1.06 billion for a majority stake. A further $840 million will be given to Du Xiaoman.

Following the transaction, Baidu will own 42 percent of the business, which will operate independently. Guang Zhu, who had been Baidu senior VP and GM of FSG, will become Du Xiaoman CEO.

It’s fairly common for China’s tech giants to incubate business which, when ready, are they spun out to raise capital from segment-specific investors. Indeed, JD.com — Tencent’s e-commerce partner — brought in a range of investors when it granted its financial services division independence via a spin-out two years ago.

Alibaba itself has long-courted investors for Ant Financial, its affiliate division that runs its Alipay mobile money business, its digital banking arm and other financial services. Ant was valued at $60 billion when it raised over $3 billion in 2016 and now the business — which is reportedly closing in on an IPO — is said to be raising as much as $10 billion more at a valuation that could hit $100 billion.

Outside of finance, Baidu’s iQiyi video streaming unit operates independently of the business in a similar model to Du Xiaoman. iQiyi raised over $1.5 billion from a clutch of private equity firms in 2017, before going on to list on the Nasdaq this past March. That’s very much the blueprint in this strategy.

“This transaction marks another milestone for Baidu to incubate new businesses with large opportunities and strong synergies with Baidu’s core business, on the heels of iQiyi’s public listing,” Robin Li, Chairman and CEO of Baidu, added in a statement.

But Baidu has also offloaded businesses that it deemed to be fringe. In food delivery for example, a space where it was out-manoeuvered by the competition, it sold its Waimai business to Ele.me, and then later sold its Ele.me shares to Alibaba when the e-commerce firm moved for a full buyout.

from TechCrunch

Sprint and T-Mobile, after years of going back and forth as to whether they are going to tie up two of the largest telecom providers in the U.S., have announced that the two companies have entered a merger agreement this morning.

The merger will be an all-stock transaction, and will now be subject to regulatory approval. That latter part is going to be its biggest challenge, because it will not only tie up the No. 3 and No. 4 carriers into the U.S. into a single unit, but also that international organizations hold significant stakes in both companies. Softbank controls a majority of Spring, while Deutsche Telekom controls a significant chunk of T-Mobile. Following the administration’s intervention in the Broadcom-Qualcomm takeover attempt, it isn’t clear what will actually go through in terms of major mergers these days.

Bloomberg is reporting that Deutsche Telekom will have 42% ownership of the combined company, while SoftBan will own around 27% of the company.

As expected, the argument here is for the expansion of 5G networks as plans for that start to ramp up. T-Mobile argues in its announcement that it will help it be competitive with AT&T and Verizon as telecom companies start to roll out a next-generation 5G network, though it does in the end remove a carrier choice for end consumers in the U.S..

“The New T-Mobile will have the network capacity to rapidly create a nationwide 5G network with the breadth and depth needed to enable U.S. firms and entrepreneurs to continue to lead the world in the coming 5G era, as U.S. companies did in 4G,” T-Mobile said in a statement as part of the announcement. “The new company will be able to light up a broad and deep 5G network faster than either company could separately. T-Mobile deployed nationwide LTE twice as fast as Verizon and three times faster than AT&T, and the combined company is positioned to do the same in 5G with deep spectrum assets and network capacity.”

Both companies appeared to be finalizing the deal on Friday, when they set valuation terms and were preparing to announce the merger today. The deal values Sprint at an enterprise value of around $59 billion, with the combined company having an enterprise value of $146 billion. AT&T has a market cap of around $214 billion, while Verizon has a market cap of around $213 billion, as of Sunday.

The transaction, the companies said, is of course subject to regulatory approval. But, pending approval, it is expected to close “no later than the first half of 2019.”

Disclosure: Verizon is the parent company of Oath, which owns TechCrunch.

from TechCrunch

DocuSign CEO Dan Springer was all smiles at the Nasdaq on Friday, following the company’s public debut.

And he had a lot to be happy about. After pricing the IPO at a better-than-expected $29, the company raised $629 million. Then DocuSign finished its first day of trading at $39.73, up 37% in its debut.

Springer, who took over DocuSign just last year, spoke with TechCrunch in a video interview about the direction of the company. “We’ve figured out a way to help businesses really transform the way they operate,” he said about document-signing business. The goal is to “make their life more simple.”

But when asked about the competitive landscape which includes Adobe Sign and HelloSign, Springer was confident that DocuSign is well-positioned to remain the market leader. “We’re becoming a verb,” he said. Springer believes that DocuSign has convinced large enterprises that it is the most secure platform.

Yet the IPO was a long-time coming. The company was formed in 2003 and raised over $500 million over the years from Sigma Partners, Ignition Partners, Frazier Technology Partners, Bain Capital Ventures and Kleiner Perkins, amongst others. It is not uncommon for a venture-backed company to take a decade to go public, but 15 years is atypical, for those that ever reach this coveted milestone.

Dell Technologies Capital president Scott Darling, who sits on the board of DocuSign, said that now was the time to go public because he believes the company “is well positioned to continue aggressively pursuing the $25 billion e-signature market and further revolutionizing how business agreements are handled in the digital age.”

Sales are growing, but it is not yet profitable. DocuSign brought in $518.5 million in revenue for its fiscal year ending in 2018. This is an increase from $381.5 million last year and $250.5 million the year before. Losses for this year were $52.3 million, reduced from $115.4 million last year and, $122.6 million for 2016.

Springer says DocuSign won’t be in the red for much longer. The company is “on that fantastic path to GAAP profitability.” He believes that international expansion is a big opportunity for growth.

from TechCrunch

It looks like a potential merger deal between T-Mobile and Sprint, two of the major telecom companies in the U.S., is getting closer and now has set valuation terms, according to a report by Bloomberg.

The deal could be announced as soon as Sunday, according to a report by CNBC. The proposed tie-up of the two companies was called off in November last year, but now that deal appears to be coming closer, with T-Mobile’s backer valuing Sprint at around $24 billion, according to Bloomberg. As part of the deal, Deutsche Telekom AG will get a 69% voting interest on a 42% stake in the company, according to that report. (Both reports, however, disagree on the valuation — with CNBC citing a $26 billion valuation.)

This deal seems to have been a long time coming, and consolidates two of the four major telecom providers in the U.S. into one larger entity. That could, in theory, offer it some more flexibility as they expand into 5G networks. Still, a deal of this scale could still fall apart and would be subject to regulation — with significant international ownership of both companies (Softbank for Sprint, and Deutsche Telekom for T-Mobile).

Sprint shares fell more than 8% in extended trading to under $6, while T-Mobile shares were largely unchanged. Shares of Sprint were up around 8% on the day up to $6.50 in early trading.

A representative from Sprint declined to comment. A representative from T-Mobile did not immediately respond to a request for comment.

from TechCrunch

EcoFlow, a Chinese hardware firm developed by former JDI engineers that sells portable power stations, has pulled in a Series A round of over $4 million ahead of the imminent launch of new products and an international sales expansion.

The Shenzhen-based company has taken an interesting route. Founded in 2016, the startup burst on to the scene when it launched its River product in an Indiegogo campaign that pulled in $1 million. Today, River is available in the U.S. where it is sold via Home Depot, Camping World, Amazon, HSN and the EcoFlow website for $699 upwards.

That’s pretty impressive progress for a young company, and CEO and co-founder Eli Harris told TechCrunch in an interview that relationships with key partners are at the core of that. In particular, EcoFlow has raised strategic investment from supply chain partners rather than traditional VC and that is the case again. This new $4 million came courtesy of battery makers Guangzhou Penghui Energy and SCUD Group, industrial design tooling factory ESID, and supply chain-focused firms Delian Capital and Chunjia Assets.

Names that aren’t known in Silicon Valley, for sure, but the key is what they bring to the table.

“Our investors are almost entirely vertically integrated with every component in our supply chain,” Harris said. “That gives us access to these top-tier manufacturers that no startups could enjoy and help us get direct access to vendors at large companies.”

Aside from reaching quality components and getting a good price, relationships with these component makers help EcoFlow with its cash flow — always a challenge puzzle piece for hardware startups. Harris explained that the relationships allow his company to delay paying for components rather than having to pay upfront — before product is sold and revenue comes in — which optimizes the books and means the capital can be put to work on R&D, sales and marketing and more.

The River itself is touted as industry-leading portable power. Aside from an aesthetic nice design, the li-ion-based device has a total output of 500 watts, weighs just 11 pounds and features two quick-charge USB ports, two USB type C ports, two standard USB ports, two AC outlets, two DC outlets and one 12V car port.

Now EcoFlow is doubling down with plans to launch two new products before the end of this year. Harris isn’t providing specific details right now, but he said the company is looking to take advantage of its promising growth.

“We think we are around 18 months ahead of the market in terms of engineering capabilities. Most experienced battery players are going after electronic vehicles and industrial opportunities, while smaller players have issues getting to manufactures, talent and money to build portable energy solutions,” he said.

While $699 may make the product a luxury for some — despite a $100 discount right now — Harris said that the price is likely to decrease going forward as technology develops.

“Batteries are expensive products but we will see costs come down with the expansion of the EV market, so we’ll be trending in the right direction. But people who understand the tech don’t think it is an expensive product,” Harris explained.

“A lot of the tech we use now will be utilized in future products so that’ll mean lower development costs as we leverage existing IP. We’re also exploring using second life batteries since cells are one of the biggest expenses of the product,” he added.

Working with those battery makers that it also counts as investors could help on that second-life battery push, which could cut the costs to one-fourth of what EcoFlow pays now.

While tactically-selected investors are a boon for many reasons, Harris admitted that they do require educating of the investor-investee relationship as it is unconventional in their space. But, he said, increasingly large component and manufacturing firms are keen to do startup investments to help get new ideas, open relationships in the U.S. and explore other new areas of focus.

“A lot of the manufacturing industry players have been stuck in that OEM wheelhouse and there’s more competition now. The previous models of just churning out product might not be sustainable, and margins are thinner,” he said.

Most immediately, EcoFlow is looking to expand sales beyond the U.S and Canada with plans to move into Europe later this year. It also plans to raise a “significant” funding round before 2018 is out as the two new products hit the market.

from TechCrunch

The ongoing trend of consolidation in the world of ridesharing continues apace, with the latest development coming out of Europe. BlaBlaCar, the French carpooling platform, is acquiring Less, a young carpooling platform based in Paris and focusing only on urban rides, paying drivers on a per-kilometer rate to incentivize them.

The financial terms are not being disclosed but BlaBlaCar is picking up all of the company’s assets — it mentions skills and IP in app creation and distribution, big data analytics and in-car embedded systems — and employees (around 20 in all).

Less was less than mature. Co-founded by the founder of adtech firm Criteo, Florent Boutellier, it had launched a beta of its service only five months ago, in December 2017 (and it was founded about 18 months ago altogether).

Two salient facts of the ride-sharing industry are that it’s generally a very capital-intensive business — market leader Uber has raised $21 billion, for context — and it is built on economies of scale, and those two forces have been leading to a lot of movement, with the bigger fish snapping up the more promising of the smaller fish, and many more startups going belly up. Less threw in the towel so quickly, in part, because it didn’t see itself able to hit the right growth targets to survive.

“Less is conscious of the challenges of creating a scalable marketplace in the mobility space, and anticipating consolidation within the market, the team wanted to combine its forces with an established industry player”, said Jean-Baptiste Rudelle, the CEO of Less, in a statement to TechCrunch.

“Joining forces with BlaBlaCar is a fantastic opportunity for the team to innovate within the mobility sector, with immediate impact and on a large scale,” said Florent Boutellier, in a statement.

BlaBlaCar has made seven other acquisitions in its own efforts to position itself as a Big Fish, including its closest competitor, Carpooling.

Less is not disclosing how many users it had, but BlaBlaCar itself now has around 60 million users in 22 countries.

BlaBlaCar has raised about $335 million in funding to date from investors that include Accel and Insight Venture Partners; and it was last valued at $1.6 billion when it raised $200 million back in 2015 (when it had only 20 million users). Less had raised $19 million from investors that included Index Ventures (who had also been one of Criteo’s early and consistent backers).

What the acquisition of Less will do potentially is help BlaBlaCar build out its short-distance urban mobility play. The bigger company got its start originally by focusing on long-distance rides, although last year it expanded into city rides with BlaBlaLines.

BlaBlaLines has been building out its service with riders paying drivers directly, in cash, while Less’s model is based on a per-kilometer fee — currently €0.10/km — in the city of Paris, the only place Less had launched. It’s reasonable to expect that one outcome of this deal will be BlaBlaLines taking on a similar pricing model.

“We are delighted to welcome an innovative and talented team that is just as passionate about carpooling as we are,” said Nicolas Brusson, co-founder and CEO of BlaBlaCar, in a statement. “Today’s acquisition takes place at a period of real innovation at BlaBlaCar, following the roll-out of BlaBlaLines across France, and the development of a new algorithm that increases the granularity of our long-distance service.”

from TechCrunch

$4.5 billion-valued ride-sharing startup Go-Jek may be busy in Southeast Asia, where it is aiming to step into the gap following Uber’s exit, but that isn’t stopping it from looking at opportunities elsewhere in the world.

Over in Bangladesh, motorbike-taxi hailing service Pathao has announced that it raised a “pre-Series A” investment led by Go-Jek. The Indonesian firm first invested in Pathao last year, and it is leading this new deal which includes participation from existing backers Openspace Ventures — which just rebranded from NSI Ventures and is an early Go-Jek backer — Osiris Group and Battery Road Digital Holdings.

The round is undisclosed, but TechCrunch understands from a source that it is more than $10 million. The startup did confirm that its valuation is over $100 million.

CEO Hussain Elius told TechCrunch in an interview that Pathao plans to use the capital to expand to new cities, and continue to build out additional services. The company began offering motorbike taxis on-demand and a logistics service, and it branched out into food delivery this year. Now, Elius said, it is developing a mobile wallet app that he hopes can encourage adoption of digital payments among Bangladesh’s population of over 160 million. That could unlock the door for a move into other verticals in the future.

When you look at the ride-hailing space and the way that companies have used investment to grow their reach — in particular China Didi’s which has invested companies in the U.S., Latin America, India, Europe, the Middle East and Southeast Asia — it’s inevitable to think that Go-Jek’s investment might lead to future opportunities for the company to expand into South Asia.

Not so, says Elius.

“Go-Jek is an inspiration, [but] we are an independent business and not Go-Jek. [Our] market is very different; there are certain things we are doing which they are not. For example, bike financing is something we are exploring.

“They help us learning, but we don’t share any tech; that’s built in-house,” he added with some pride.

Pathao has plenty in common with Go-Jek. The company began in 2015 initially as a courier service latching on to the growth in e-commerce. It expanded to bike taxis — which was seen as a risk, since they aren’t as popular as in places like Indonesia, Thailand and Vietnam — and then into cars last year. The move appears to be paying off. Today Pathao claims 50,000 bikes and a team of 500 employees who cover its 22 cities. It said it handles a million rides and “over hundred thousand deliveries” each month.

Elius said the firm plans to broaden its coverage of Bangladesh and also look to expand into neighboring countries soon, although he isn’t giving away details at this point. One thing for sure is that they will avoid markets where Go-Jek is present, he said. That seems like a smart strategy.

from TechCrunch

DocuSign priced its IPO Thursday evening at $29 per share, netting the company $629 million.

It was a better price than the e-signature company had been expecting. The initially proposed price range was $24 to $26 and then that was raised to $26 to $28.

The price gives the company a valuation of $4.4 billion on the eve of its public debut, above the $3 billion the company had raised for its last private round.

The IPO has been a long-time coming. Founded in 2003, DocuSign had raised over $500 million over the course of 15 years.

The company brought in $518.5 million in revenue for its fiscal year ending in 2018. This is up from $381.5 million last year and $250.5 million the year before. Losses for this year were $52.3 million, down from $115.4 million last year and, $122.6 million for 2016.

“We have a history of operating losses and may not achieve or sustain profitability in the future,” the company warned in the requisite “risk factors” section of the prospectus.

The filing reveals that Sigma Partners is the largest shareholder, owning 12.9% of the company. Ignition Partners owns 11.7% and Frazier Technology Ventures owns 7.2%.

DocuSign, competes HelloSign and Adobe Sign, among others, but has managed to sign up many of the largest enterprises. T-Mobile, Salesforce, Morgan Stanley and Bank of America are amongst its clients. It has a tiered business model, with companies paying more for added services.

HelloSign COO Whitney Bouck said that “this space is changing the way business is done at its foundation — we are finally realizing the future of digital business and exactly how much more profitable it can be by removing the friction caused by outdated technology and processes.” But she said that DocuSign should be wary of competitive “more nimble vendors that can provide more innovative, faster, and more user-friendly solutions at a cheaper price.”

DocuSign has gone through several management changes over the years.  Dan Springer took over as CEO in early 2017, after running Responsys, which went public and then was later bought by Oracle for $1.5 billion. Chairman Keith Krach had been running the company since 2011. He was previously CEO of Ariba, which was acquired by SAP for $4.3 billion.

from TechCrunch

Stock market investors greeted payroll software company Ceridian with enthusiasm on its debut Thursday. After pricing above its expected range at $22 per share, the stock shot up 42%, closing above $31 by day’s end.

Ceridian helps clients ranging from BlackRock to Trader Joe’s keep tabs on personnel including payroll, benefits and onboarding. Its clients pay it a fee per employee per month.

“The platform is designed to ease administrative work for both employees and managers, creating opportunities for companies to increase employee engagement,” reads the prospectus.  ADP and Workday are amongst its competitors.

It was a large tech offering, raising $462 million in its IPO . But the Minneapolis-based business is lower-profile in Silicon Valley, partly because it didn’t raise venture capital.

Instead, Ceridian had financial backing from Fidelity and private equity firm, Thomas H. Lee, which owns 62% of the business. Formed in 1992, the company has gone through a few iterations. It was acquired by financial sponsors in 2007, but the acquisition of Dayforce Corporation in 2012 became the backbone of its software business.

David Ossip became CEO after that acquisition. He told TechCrunch that he was optimistic about its “single code-based platform” and that the money raised in the IPO will be used toward “paying off a bunch of debt.”

The company brought in $750.7 million in revenue for 2017, up from $704.2 million in 2016 and $693.9 million in 2015. Losses shrunk from $104.7 million to $10.5 million in that same timeframe.

“We have a history of losses and negative cash flows from operating activities, and we may not be able to attain or to maintain profitability or positive cash flows from operating activities in the future.

Goldman Sachs and J.P. Morgan served as lead bankers on the offering. Weil Gotshal and Latham & Watkins served as counsel.

The company listed on the New York Stock Exchange under the ticker “CDAY.”

from TechCrunch

GetLinks, a Thailand-based startup that offers a job finder app in six countries Southeast Asia and neighboring regions, has closed new funding led by Australia’s Seek group and Alibaba’s Hong Kong Entrepreneur fund.

The size of the investment was not disclosed. GetLinks previously raised $500,000 in 2016, and it later added $150,000 more to that round. GetLinks said Thailand’s SCG and a number of existing investors also took part in the round,

The deal seems highly strategic for the young company given those two lead investors. Publicly listed in Australia, Seek operates employment services in 19 countries, including popular Southeast Asia portals JobStreet and JobsDB. Its interest is centered around GetLink’s digital focus, which includes community events and a mobile app for job-seekers.

Alibaba started its Hong Kong fund, which has a total budget $130 million, in 2015. Its mandate is to support Hong Kong-based companies or ventures led by Hong Kong Chinese founders.

GetLinks doesn’t immediately seem spring to mind — its founder Djoann Fal is French and it was started in Thailand — but the company has an office (and entity) in Hong Kong, while co-founder and chairman Keenan Kwok is from Hong Kong.

The Alibaba fund — which is distinct from Alibaba Group and its e-commerce business — has typically invested in companies that can leverage its massive online retail footprint, but in GetLinks case the two companies are looking to pool their resources around the use of AI and machine learning in education.

GetLinks is planning to expand from recruitment into offering skills and talent training. That, plus is core business, are areas where Alibaba may help with its AI might. The Chinese firm launched a $15 billion initiative into emerging technology, including AI, last year and GetLinks could be one partner to help train its core AI tech and systems.

More generally, Alibaba is also working to build a footprint in Southeast Asia, and GetLinks fits into that focus. Alibaba owns e-commerce firm Lazada, has invested in Indonesia’s Tokopedia and — as we reported earlier this month — it is in talks to invest in Grab. In addition, its fintech affiliate Ant Financial has been busy striking deals across the region.

GetLinks claims to have 500,000 registered job seekers, with 3,000 companies on its platform.

from TechCrunch