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African e-commerce startup Jumia files for IPO on NYSE

Posted by on Mar 12, 2019 in africa, eCommerce, Egypt, Fundings & Exits, Ghana, Goldman Sachs, IPO, jumia, kenya, Lagos, morgan stanley, morocco, Naspers, Nigeria, online retail, Rocket Internet, Smartphones, Startup company, Startups, TC, tech startup, travel bookings, U.S. Securities and Exchange Commission, unicorn | 0 comments

Pan-African e-commerce company Jumia filed for an IPO on the New York Stock Exchange today, per SEC documents and confirmation from CEO Sacha Poignonnec to TechCrunch.

The valuation, share price and timeline for public stock sales will be determined over the coming weeks for the Nigeria-headquartered company.

With a smooth filing process, Jumia will become the first African tech startup to list on a major global exchange.

Poignonnec would not pinpoint a date for the actual IPO, but noted the minimum SEC timeline for beginning sales activities (such as road shows) is 15 days after submitting first documents. Lead adviser on the listing is Morgan Stanley .

There have been numerous press reports on an anticipated Jumia IPO, but none of them confirmed by Jumia execs or an actual SEC, S-1 filing until today.

Jumia’s move to go public comes as several notable consumer digital sales startups have faltered in Nigeria — Africa’s most populous nation, largest economy and unofficial bellwether for e-commerce startup development on the continent. Konga.com, an early Jumia competitor in the race to wire African online retail, was sold in a distressed acquisition in 2018.

With the imminent IPO capital, Jumia will double down on its current strategy and regional focus.

“You’ll see in the prospectus that last year Jumia had 4 million consumers in countries that cover the vast majority of Africa. We’re really focused on growing our existing business, leadership position, number of sellers and consumer adoption in those markets,” Poignonnec said.

The pending IPO creates another milestone for Jumia. The venture became the first African startup unicorn in 2016, achieving a $1 billion valuation after a $326 funding round that included Goldman Sachs, AXA and MTN.

Founded in Lagos in 2012 with Rocket Internet backing, Jumia now operates multiple online verticals in 14 African countries, spanning Ghana, Kenya, Ivory Coast, Morocco and Egypt. Goods and services lines include Jumia Food (an online takeout service), Jumia Flights (for travel bookings) and Jumia Deals (for classifieds). Jumia processed more than 13 million packages in 2018, according to company data.

Starting in Nigeria, the company created many of the components for its digital sales operations. This includes its JumiaPay payment platform and a delivery service of trucks and motorbikes that have become ubiquitous with the Lagos landscape.

Jumia has also opened itself up to traders and SMEs by allowing local merchants to harness Jumia to sell online. “There are over 81,000 active sellers on our platform. There’s a dedicated sellers page where they can sign-up and have access to our payment and delivery network, data, and analytic services,” Jumia Nigeria CEO Juliet Anammah told TechCrunch.

The most popular goods on Jumia’s shopping mall site include smartphones (priced in the $80 to $100 range), washing machines, fashion items, women’s hair care products and 32-inch TVs, according to Anammah.

E-commerce ventures, particularly in Nigeria, have captured the attention of VC investors looking to tap into Africa’s growing consumer markets. McKinsey & Company projects consumer spending on the continent to reach $2.1 trillion by 2025, with African e-commerce accounting for up to 10 percent of retail sales.

Jumia has not yet turned a profit, but a snapshot of the company’s performance from shareholder Rocket Internet’s latest annual report shows an improving revenue profile. The company generated €93.8 million in revenues in 2017, up 11 percent from 2016, though its losses widened (with a negative EBITDA of €120 million). Rocket Internet is set to release full 2018 results (with updated Jumia figures) April 4, 2019.

Jumia’s move to list on the NYSE comes during an up and down period for B2C digital commerce in Nigeria. The distressed acquisition of Konga.com, backed by roughly $100 million in VC, created losses for investors, such as South African media, internet and investment company Naspers .

In late 2018, Nigerian online sales platform DealDey shut down. And TechCrunch reported this week that consumer-focused venture Gloo.ng has dropped B2C e-commerce altogether to pivot to e-procurement. The CEO cited better unit economics from B2B sales.

As demonstrated in other global startup markets, consumer-focused online retail can be a game of capital attrition to outpace competitors and reach critical mass before turning a profit. With its unicorn status and pending windfall from an NYSE listing, Jumia could be better positioned than any venture to win on e-commerce at scale in Africa.


Source: The Tech Crunch

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Grab raises $200M from Thailand-based retail conglomerate Central Group

Posted by on Jan 31, 2019 in Asia, booking holdings, carsharing, central group, E-Commerce, funding, Fundings & Exits, go-jek, grab, Indonesia, JD.com, Microsoft, on-demand services, Philippines, Rocket Internet, Singapore, Softbank, Software, Southeast Asia, Thailand, Toyota, transport, vietnam, Vision Fund, yamaha motors, Zalora | 0 comments

Grab’s fundraising push continues unabated after the Southeast Asian ride-hailing firm announced that it has raised $200 million from Central Group, a retail conglomerate based in Thailand.

Central’s business covers restaurants, hotels and more than 30 malls in Thailand, while it has operations in markets that include Vietnam and Indonesia. Its public-listed holding companies alone are worth more than $15 billion.

Singapore-based Grab confirmed that this deal is not part of its ongoing Series H fundraising, but is instead an investment into its Thailand-based business. Rumors of the deal were first reported by Reuters last year.

Following this investment, Central said it will work with Grab in a number of areas in Thailand, including bringing its restaurants into the Grab Food service, adding Grab transportation to its physical outlets and bringing Grab’s logistics service into its businesses.

The investment represents the first time an investor has bought into a local Grab country unit, and the goal is to strengthen Grab’s position in Thailand — a market with 70 million consumers and Southeast Asia’s second-largest economy. Grab is under threat from Go-Jek, which expanded to Thailand at the end of 2018. While Go-Jek’s ‘Get’ service is currently limited to motorbikes on-demand in Thailand, its ambition is to recreate its Indonesia-based business that covers four-wheeled cars, mobile payments, on-demand services and more.

Central is a huge presence in the country, and in recent years it has raised its efforts to translate that offline retail presence into the digital space. Past deals have included the acquisition of Rocket Internet’s Zalora fashion business in 2016, and — more recently — a $500 million joint venture with Chinese e-commerce firm JD.com to create online retail and fintech businesses in Thailand.

Grab, meanwhile, is pushing on with its $3 billion Series H funding round. That deal is anchored by a $1 billion investment from Toyota but it also includes contributions from the likes of Microsoft, Booking Holdings and Yamaha Motors. More capital is waiting in the wings, however, with existing investor SoftBank in the process of transferring its investment to its Vision Fund with a view to investing a further $1.5 billion. The total fundraising effort is targeted at a lofty goal of $5 billion, sources told TechCrunch.

To date, Grab has raised $6.8 billion from investors, according to data from Crunchbase. That makes it Southeast Asia’s most capitalized tech startup and it was most recently valued at $11 billion. The company recently announced it has completed three billion rides; it claims 130 million downloads across its eight markets.

Go-Jek, meanwhile, closed the first portion of a $2 billion funding round last week, sources told TechCrunch. The new financing is aimed at growing out its presence in new market expansions which, beyond Thailand, include Singapore, Vietnam and the Philippines.


Source: The Tech Crunch

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In emerging markets there are no copycats, just budding entrepreneurs

Posted by on Dec 17, 2018 in Amazon, Business, business incubators, chef, Column, eBay, economy, entrepreneurship, Flipkart, founder, Innovation, Kickstarter, oliver samwer, Postmates, Private Equity, Rocket Internet, stanford, Startup company, Startups, Uber, United States | 0 comments

Every year I teach an MBA course at Stanford about the exciting opportunities for tech investors and entrepreneurs in developing economies. When we designed the syllabus back in 2013, Rocket Internet was still firing on all cylinders on four continents. The unapologetic machine built to copy big American internet companies created billions of dollars for the Samwer brothers and its backers. During Rocket’s golden years, the best startups in the developing economies seemed to inevitably have an original reference in Silicon Valley.

Accordingly, we added a class about the opportunity of replicating business models to seize this information arbitrage. Call it the second-mover advantage.

Despite my conviction about the model, the copycat word  —  short for replicating startups and attached to these ventures  —  annoyed me from the start. More than a term to describe a straightforward recipe to launch, I see it as an unconscious way to belittle an entire group of hard-charging founders and investors.

Indeed, while in foreign eyes, we have been building a Mexican Kickstarter, a Middle Eastern Uber, an Indian Amazon or a Colombian Postmates, I argue visionary founders are taking a simple idea that already exists and creating new worlds.

On the internet, there are Einsteins and there are Bob the Builders. I’m Bob the Builder. Oliver Samwer, founder of Rocket Internet

Gateway to entrepreneurship

While impact is the final goal, founders can approach the journey in different ways. The most common approach in the startup world is to use the business method, or more pompously, the design thinking methodology. “Fall in love with the problem, not the solution,” mentors keep telling a succession of startup clusters in acceleration programs. The best and “leanest” way to product market fit is by starting small then keep iterating the solution until you nail it.

A second way to start is favored by engineers and scientists: Take a new promising technology or a forgotten molecule, then find a big problem. Keep iterating until you find a problem worth solving, like a hammer looking for a nail.

A third way is starting like painters create, building skills by copying classics, or like a new chef cooks by starting with iconic recipes: replicate a proven idea and iterate until you find traction.

Until a few years ago it was ostensibly the only way to scale in developing economies. The model helped raise local capital from risk-averse investors who needed reassurance. The playbook to scale was unfolding a couple of years ahead and served as a guide to founders without previous startup experience and no local role models. The potential acquirer was identified and sometimes contacted in advance. Founders weren’t crazy and investors weren’t dumb.

Replicating a business model has served in emerging ecosystems as the gateway to entrepreneurship and venture investing.

Photo courtesy of Flickr/A_Marga

Riding the next wave

According to conventional wisdom, new ecosystems around the world grow through the following three stages, be them in developing economies or more developed countries. First, local and foreign entrepreneurs replicate successful models focused on local markets. Then as the ecosystem evolves, founders start applying existing technologies to solve local problems. Finally, as the tech space matures, new technologies begin to flourish.

In my opinion, those stages never happen sequentially as stated by ecosystem observers. Successful startups that started with a foreign inspiration can outgrow the master. If they are not bought into submission by the first mover, some of the most famous copycats reinvented the original and made it better: Mercado Libre is much more relevant in the e-commerce space than eBay . Flipkart is hardly an Amazon, not to mention WeChat. These companies are in turn some of the most prolific tech innovators on the globe. Truly ecosystems evolve organically in unique ways reflecting their history, geopolitical environment, economic structure and cultural features.

Two ways to defend the status quo: “It’s been done before” and “It’s never been done before.” –Thibault @Kpaxs

In defense of talent

Recently, it’s hard to hear American observers use the word copycat to describe any American company. After all, Guilt replicated VentesPrivees and Lime, Chinese dockless bike sharing and many more examples. All American startups are treated as innovators while the rest as mere followers.

Recently, Chinese or Indian startups seem to be given the benefit of the doubt regarding their originality. Is it because these regions have become more innovative? Maybe. But it’s also because these ecosystems have gained the respect of Silicon Valley. Indeed, Chinese consumer tech surpassed decisively the U.S. as the most important country in terms of investments.

So here’s my humble suggestion to our wealthier and more accomplished colleagues: stop using the c-word with founders. It’s offensive. Most probably, these founders are facing more challenges to build their companies and lower odds for success that the first mover. If anything, they have more merit than the originals.

As for founders, when they call you a me-too, remember all teams started somewhere, somehow. In fact, most started like Bob the Builder before turning into Einsteins. The truth is, it doesn’t matter where you start. You can start by applying a new technology or protocol. You can start with a problem you feel passionate about. You can start by replicating a business model. It doesn’t really matter if you take a big swing at the future and trust you will figure out how to make it happen. It doesn’t matter what label they use while you change the world for the better.


Source: The Tech Crunch

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Lazada, Alibaba’s Southeast Asia e-commerce business, gets a new CEO

Posted by on Dec 13, 2018 in alibaba, Ant Financial, Asia, ceo, coo, E-Commerce, economy, executive, Lazada, lucy peng, max bittner, online marketplaces, Rocket Internet, singles' day, Southeast Asia | 0 comments

Alibaba has reshuffled the leadership at Lazada, its e-commerce firm in Southeast Asia, after CEO Lucy Peng — an original Alibaba co-founder — stepped down to be replaced by Lazada executive president Pierre Poignant after just nine months in the role.

Alibaba owns more than 90 percent of Lazada but it has been involved in the business since April 2016 when it bought 51 percent of Lazada for $1 billion from Rocket Internet. It invested a further $1 billion last year to increase its equity to around 83 percent and earlier this year it raised its stake even higher with an additional $2 billion injection.

That last investment saw Peng, formerly executive chairman of Ant Financial, become Lazada CEO in place of Max Bittner, who had been installed by former owner Rocket Internet back in 2012. Poignant also arrived at the company in 2012 and he worked alongside Bittner as Lazada’s COO. Since then, he has been head of its logistics division before a brief five-month stint as executive president prior to this new role.

Lazada operates in six countries across Southeast Asia, but there are very few indicators of how the business is performing.

Alibaba’s own financial reports bundle Lazada with the firm’s other international businesses. Collectively, they grossed RMB 4.5 billion ($650 million) in the last quarter. That’s an impressive 55 percent revenue jump but it accounts for a small portion of Alibaba’s total revenue of RMB 85.15 billion ($12.4 billion) in Q2 2019.

Lazada took part in the recent 11/11 Singles’ Day sale mega day. Alibaba as a whole grossed $31 billion in GMV during the 24-hour period but the company did not break out numbers for Lazada. Lazada itself said it broke records, but the only data it provided was that 20 million shoppers were “browsing and grabbing” deals on its site — you’ll note that statement doesn’t explicitly provide sales. We did ask at the time but Lazada declined to give sales or revenue numbers.

Against that backdrop, it is hard to say whether Peng was brought in as a stop-gap while Lazada searched for a new CEO, or whether her original remit was to preside over a revamp of the business. Lazada has certainly gone about installing new executive teams in many local markets, according to sources within the company, but it isn’t clear whether Peng is being recalled as planned or whether things didn’t work out as expected.

The news follows Alibaba’s second investment in Tokopedia, Indonesia’s leading e-commerce platform, yesterday.

Speaking on the rivalry, Tokopedia CEO William Tanuwijaya told TechCrunch that he sees differences between the two.

“We see Lazada having a different business model than us: Lazada is a hybrid of retail and marketplace model, whereas Tokopedia is a pure marketplace. Lazada is [a] regional player, we are a national player in Indonesia,” he said.


Source: The Tech Crunch

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Korean hotel firm Yanolja moves into Southeast Asia with $15M investment in Zen Rooms

Posted by on Jul 26, 2018 in alibaba, Asia, Asia Pacific Internet Group, Brazil, budget hotels, E-Commerce, Fundings & Exits, India, korea, Rocket Internet, Softbank, Southeast Asia, sri lanka, zen rooms | 0 comments

Zen Rooms, the budget hotel network startup founded by Rocket Internet, had faced the deadpool earlier this year after a prospective funding deal collapsed, but now the business appears to have found a home. Korea’s Yanolja, a popular motel brand that has branched out into app-based hotel bookings, has made a strategic investment that could see it fully acquire the business.

Ten-year-old Yanolja is initially paying $15 million for an undisclosed “strategic non-controlling stake,” but it will retain the rights to buy 100 percent of the Zen Rooms business. Zen Rooms clarified that the acquisition is an option and not based on performance or financial metrics.

Founded by a former hotel worker, Lee Su-jin, Yanolja is best known for its lovel hotels although it is trying to clean up the general image of short-stay hotels by promoting them as destinations for business travelers, tourists and families, as noted by a Bloomberg profile story. The company has also grown its own app-based booking service which among the most used in its homeland with 20,000 rooms.

The company is reportedly planning an IPO, so expansion is on its mind.

For those reasons, Zen Rooms fits that new focus. The company borrowed the budget hotel model, first pioneered by SoftBank-backed Oyo in India, and brought it to Southeast Asia when it launched three years ago. The concept is simple, Zen Rooms guarantees minimum standards at all hotels including free WiFi, fresh towels and bedding, hot showers, etc all of which is controlled via a mobile app. Those standards are normal to most hotel stayers, but when traveling in the East, standards can vary wildly especially at budget hotels, which Zen Rooms is focused on.

For hotels, Zen Rooms manages the brand — and sometimes more — and it allows helps them tap the internet to find customers and bookings.

Today, Zen Rooms is active in six cities in Southeast Asia — it had previously also run operations in Brazil, Hong Kong and Sri Lanka — across which it claims to operate 1,000 hotel franchisees with an inventory of more than 7,000 rooms. Its rivals in Southeast Asia include Red Doorz, which raised $11 million earlier this year.

The startup has raised $8 million from investors to date, including a $4.1 million Series A last April that was led by Korea’s Redbadge Pacific and SBI Investment Korea with participation Asia Pacific Internet Group (APACIG), the joint venture fund in Asia between Rocket Internet and Qatari operator Ooredoo.

However, TechCrunch understands that a major funding deal of over $10 million fell apart in Q1 2018 which left the company with a rapidly depleting runway. As a result and as TechCrunch reported in March, the company was aggressively shopped to potential buyers, investors and rival companies in order to keep the business afloat.

Yanolja has come to the rescue but a full buy-out looks like it will be dependent on the company’s future performance, such is often the arrangement with strategic deals made with a view to full ownership. Rocket Internet, which remains a major investor in Zen Rooms, will hope that the deal goes as smoothly as Lazada, its e-commerce service that is now owned by Alibaba.

Lazada ran out of capital in similar circumstances in early 2016 and Alibaba, the Chinese internet giant, came to its aid with a $1 billion investment. Although that was a majority investment it wasn’t a full-on buyoutAlibaba later increased its holdings until it fully owned the business, and today it is a key part of the firm’s overseas expansion strategy.

Already, TechCrunch understands from one source that Zen Rooms has gone on a hiring spree in recent weeks after it closed the deal. It had earlier been forced to make cutbacks to its team as a result of cost-cutting following the collapse of the funding deal earlier in the year.

“We now have the capital to invest,” ZenRooms co-founder Kiren Tanna told TechCrunch. “The deal has been in discussion since earlier this year…. we are treating like an acquisition but this is step one.”

Tanna added that the company plans to focus on five markets in Southeast Asia, and an expansion to Vietnam may be in the pipeline soon.


Source: The Tech Crunch

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