Chinese bike-sharing startup Ofo raises $866M in new financing led by Alibaba Group


Beijing-based bike-sharing startup Ofo has raised $866 million in new financing led by Alibaba Group to fuel its expensive competition with Mobike, which is backed by Tencent, one of Alibaba’s biggest rivals. Ofo and Mobike are the two largest bike-sharing companies in China.

Other participants in the round, which consists of equity and debt financing, included Ant Financial (Alibaba Group’s financial affiliate), Haofeng Group, Tianhe Capital and Junli Capital. Alibaba Group also led Ofo’s $700 million Series E round last year, which was announced one month after Mobike disclosed that it had received a $600 million Series E led by Tencent.

Both companies have reached valuations of more than a billion dollars and, combined, hold over 90{36b96a1f853ebc4400789db5a6750c1e4fd7f7ac668ceaf8c757e025080de237} of China’s bike-sharing market (and are also expanding into other countries). Each are reportedly suffering from cash issues, however, due largely to the high cost of sustaining their fierce rivalry with one another, as well as dozens of other bike-sharing startups that emerged over the past few years. But the market could not sustain so many competitors and China’s “bike-sharing bubble,” which at one point numbered about 60 startups, began collapsing last year.

Casulties included Bluegogo, whose operations were partly taken over by Didi, China’s largest ride-sharing company, after the startup ran out of cash at the end of last year. Didi’s presence in the bike-sharing market is another headache for Ofo and Mobike. Didi offers various bike-sharing services through its app from partners including Ofo, but that doesn’t necessarily help them. As TechCrunch’s Jon Russell pointed out, that just means commuters use Didi’s app even more and don’t have to open or even bother installing any bike-sharing apps.

One solution would be for the two companies to merge, but Alibaba and Tencent are reportedly against the deal because each wants to gain control of China’s bike-sharing market.

Featured Image: mrfiza/Getty Images

Banking platform solarisBank closes €56.6M Series B from BBVA, Visa, Lakestar, and others


SolarisBank, the Berlin-based “banking platform” co-founded by fintech company builder Finleap, appears to be on quite a roll.

The company, which now claims nearly 60 corporate clients who offer various financial services powered by solarisBank, has closed €56.6 million in Series B funding in a round that includes a number of new strategic and financial investors.

Notably, they include Spanish banking giant BBVA — which only yesterday upped its investment in the U.K. challenger bank Atom — Visa, Lakestar, and ABN AMRO’s Digital Impact Fund (DIF). In addition, previous investors Arvato Financial Solutions, and SBI Group have increased their commitment, while I understand the Series B includes a small amount of secondary funding as a number of existing shareholders exit.

I’ve also learned that solarisBank’s Series B keeps Finleap as the leading shareholder, holding about 30 per cent. BBVA is now the second largest investor with all other investors below 10 per cent (incidentally, the co-founders of solarisBank, Finleap not included, are minority shareholders).

Founded in March 2016, solarisBank offers a Banking-as-a-Platform and holds a full banking license, meaning it provides both the technology and the banking rails needed to offer various banking and financial products, including the required regulatory mandate. In this sense, it’s a B2B2C play, letting other fintech startups and companies, or any corporate wanting to get into financial services, access the tools to do so, and, arguably, at a much lower cost and risk profile than going it alone and building from scratch.

Others in the BaaS space include the U.K.’s Railsbank directly, and to a lesser extent something liker challenger bank Starling which, aside from its own consumer current account, is building quite a compelling payment product, including serving other fintech startups.

To that end, solarisBank says it is active in seven countries, and expects to increase its customer base to over 100 corporate clients by the end of the year. The range of products the solarisBank platform can power is quite far reaching, having been designed as a series of modules. They broadly fall into three categories.

“Digital banking & cards,” which clients can use as a backbone to build retail or SME banking offerings (Penta is one such as example). “We have also gained interest from traditional banks to build a new digital subsidiary with us or retail or online companies, which would like to offer their customers an own bank account or payment card,” solarisBank CEO Dr. Roland Folz tells me. That has echoes of Amazon’s reported plans to offer a branded bank account.

Another is “Payments and E-Money,” which enables companies to offer gift cards, vouchers, P2P payments or cross-border payments via solarisBank’s fully digital Payment APIs. As an example, fashioncheque is offering a gift card that can be used to purchase fashion at various retailers.

Lastly, “Lending & Deposits” lets companies integrate consumer loans or SME loans directly into their own offerings. This is being used by online platforms, such as marketplaces for used cars as well as comparison portals, to introduce a credit product under their own brand (e.g. solarisBank’s recent partnership with smava).

Paris-based VC firm Ventech is raising a new fund


Ventech has been around for 20 years, which is the equivalent of 80 years in tech time. And the VC firm is still going strong as it just announced the initial closing of a new fund. The firm has raised $170 million (€140 million) and wants to reach the $250 million hard cap (€200 million) within a few months.

And Ventech isn’t going to reinvent the wheel. The firm plans to do more of the same with seed and Series A investments in Europe. As the name suggest, Ventech is looking for tech investments in general. You can expect investments that range between €0.5 million and €15 million ($18.6 million).

Recent notable investments include StickyADS.tv, Vestiaire Collective and Webedia. Over the past 20 years, the firm has handled 120 investments, which led to 60 exits including 15 IPOs. That’s quite a good ratio.

Ventech Capital V represents the fifth European fund for the firm. Ventech has also raised multiple funds in China.

Behind the scene, Ventech relies exclusively on European institutional investors and family offices. You won’t find any big industrial company in the list of limited partners.

Ventech Europe has partners in Paris, Munich and Helsinki. If you’re creating a startup in one of those areas, chances are they want to hear from you. Many portfolio companies have opened offices in the U.S., so the firm knows how to enter the U.S. market too.

Featured Image: Richie Chan/Shutterstock

JD.com’s new accelerator focuses on blockchain startups


JD.com, one of China’s largest e-commerce companies, is launching a new Beijing-based accelerator program for artificial intelligence and blockchain startups. Called AI Catapult, its first batch includes six companies: Bankorus, CanYa, Bluezelle, Nuggets, Republic Protocol and Devery.

In an announcement, JD.com said startups will work with its operational teams to “test real-world applications of their technologies at scale.” This includes its logistics unit, which recently raised $2.5 billion and claims to run the largest last-mile logistics network in China.

Though Alibaba Group is probably better known outside of China, JD.com is a formidable rival. In 2016, it recorded 658.2 billion RMB, or about $100 billion, in gross merchandise value (JD.com will announce its full-year results for 2017 next month). JD.com and Tencent frequently partner to take on Alibaba, most recently backing several of the same online and offline retail companies, including Vipshop and Better Life. Walmart and JD.com also signed a strategic partnership in 2016 to combine their resources in China.

JD.com currently operates a sponsored AI research lab called the SAIL JD AI Research Institute with the Stanford Artificial Intelligence Laboratory. The company already uses blockchain technology in its supply chain to track products and AI in software it developed to control its logistics drones and automated package sorting centers.

Here are more details about AI Catapult’s inaugural batch:

CanYa—Based in Australia, CanYa is a peer-to-peer marketplace that lets users pay for digital or home services with cryptocurrency. During the program, CanYa will be marketed to JD.com’s customers.

Bluezelle—A Singaporean startup that provides scalable data storage and management services for decentralized apps.

Nuggets—a London-based e-commerce payments and ID platform that stores information on the blockchain to prevent data breaches.

Republic Protocol—a decentralized dark pool, or private exchange, for atomic cross-chain trading between Ether, ERC20 tokens and Bitcoin pairs.

Devery—Another Australian-based company, Devery uses blockchain tech to allow e-commerce companies to verify products through all steps of the supply chain and avoid counterfeits.

Bankorus—Formerly known as MiCai, this Chinese fintech startup claims to be the “world’s first private wealth management platform powered by AI and built on the blockchain.”

Featured Image: Bloomberg/Getty Images

Unicorns gorge as investors dish up bigger rounds, more capital


Is there a point when investors will turn off the spigots for giant unicorn funding rounds? If so, we haven’t reached that threshold yet.

Last year, investors put a record amount of capital into members of the Crunchbase Unicorn Leaderboard, a list of private venture-backed companies valued at more than $1 billion.

Globally, a staggering $66 billion went into unicorn companies in 2017, up 39 percent year-over-year, according to an analysis of Crunchbase data. The ride-hailing space was the single largest recipient of investor dollars, with several rivals in the space raising billions. Investors also poured copious sums into co-working, consumer internet and augmented reality.

Newcomers also joined the unicorn club for the first time in 2017, albeit at a slightly slower pace than the preceding two years. For all of 2017, 60 new startups were added to the unicorn list. This compares to 66 newly minted unicorns in 2016 and the record-setting 2015 with 99 newcomers.

Below, we break down the leading locations for new and existing unicorns, top sectors for investment capital, exits and a few other trends affecting the space.

Geographic breakdown

The vast majority of unicorns are headquartered in either the U.S. or China, and that’s also the case for newcomers to the Unicorn Leaderboard.

In 2017, both the U.S. and China continued to mint new unicorns at a steady clip. A total of 29 U.S. companies inked their first funding round at a valuation of a billion dollars or more, up from 22 the prior year. In China, 24 new unicorns joined the leaderboard, down from 32 in 2016. Europe and Southeast Asia, meanwhile, also contributed a few unicorns.

In the chart below, we look at new entrants, categorized by country:

The newcomers were a pretty diverse bunch, spanning industries from agtech to enterprise software, including no-cost stock buying platform Robinhood, online education provider VIPKID and cryptocurrency buying and selling platform Coinbase.

Sectors

Unicorn investors showed a particularly strong appetite, however, for companies in a handful of sectors.

Ridesharing, in particular, had a strong funding year, with companies in the space taking more than 10 percent of all unicorn investment. That was largely attributable to billion and multi-billion dollar rounds for Lyft, Grab, Ola and Didi Chuxing.

Bike-sharing was also big. Two new entrants onto the unicorn list came from that space: Ofo and Mobike. However, concerns arose later in the year over whether consumer demand could support the ballooning bike supply.

Other recipients of really substantial funding rounds, even by unicorn standards, include U.S. co-working giant WeWork and China-based consumer internet players Toutiao and Koubei.

Exiting the board

So a lot of unicorns are raising big rounds. But is there any sign members of the group will eventually produce returns for investors?

Overall, 2017 provided some modestly positive news for unicorn exit watchers. Fifteen venture-funded companies with private valuations of a billion dollars or more went public last year, more than double 2016 levels and the highest total since Crunchbase began tracking the asset class.

Acquisition activity, meanwhile, was weaker. There were just seven recorded M&A exits involving unicorns in 2017, down from 10 in 2016. AppDynamics was the highest-performing exit at 95 percent over its last private valuation. For the remaining companies that exited, all appear to have been below or at their last private valuation.

In the chart below, we look at IPO and M&A counts for unicorns over the past seven years:

Unicorn IPOs weren’t just more common in 2017. Performance was often quite good, too. Many of last year’s newly public companies sustained market caps far higher than their last private valuations. Top performers by this metric include several China-based unicorns, led by investment manager Qudian and search engine Sogou. Other standouts include gaming hardware provider Razer  and app developer software provider MuleSoft.

In the chart below, we look at some of the top performers based on the post-IPO percentage gains over their last private valuations:

Lately, going public seems to be a better option for investor returns. If the company goes out below its last private valuation, that multiple can improve if it grows its market and public shareholders boost the stock. For an M&A transaction, the price is set and either late-stage investors have built in protections or are losing money at those exit prices.

Averages point to more exits ahead

For the 45 unicorn companies that have gone public, the average time to go public has been 26 months after first being valued at $1 billion. For the 25 companies that have been acquired, the average time to get acquired is 24 months after first being valued at $1 billion.

So what does that say about the current crop of still-private companies? Because more than 150 companies out of 263 have been on the Unicorn Leaderboard for more than two years, we expect exits to increase, given the backlog.

Special thanks to Steven Rossi who manages the Crunchbase Unicorn Leaderboard.

Featured Image: Li-Anne Dias