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Tiger Global and Ant Financial lead $500M investment in China’s shared housing startup Danke

Posted by on Mar 1, 2019 in affordable housing, alibaba, Ant Financial, apartment, Asia, Baidu, Beijing, business intelligence, China, danke apartment, jack ma, LinkedIn, major, property, Real Estate, renting, Tiger Global Management, WeWork, Xi Jinping | 0 comments

A Chinese startup that’s taking a dorm-like approach to urban housing just raised $500 million as its valuation jumped over $2 billion. Danke Apartment, whose name means “eggshell” in Chinese, closed the Series C round led by returning investor Tiger Global Management and newcomer Ant Financial, Alibaba’s e-payment and financial affiliate controlled by Jack Ma.

Four years ago, Beijing-based Danke set out with a mission to provide more affordable housing for young Chinese working in large urban centers. It applies the coworking concept to housing by renting apartments that come renovated and fully furnished, a model not unlike that of WeWork’s WeLive. The idea is by slicing up a flat designed for a family of three to four — the more common type of urban housing in China — into smaller units, young professionals can afford to live in nicer neighborhoods as Danke takes care of hassles like housekeeping and maintenance. To date, the startup has set foot in ten major Chinese cities.

With the new funds, Danke plans to upgrade its data processing system that deals with rental transactions. Housing prices are set by AI-driven algorithms that take into account market forces such as locations rather than rely on the hunches of a real estate agent. The more data it gleans, the smarter the system becomes. That layout is the engine of the startup, which believes an internet platform play is a win-win for both homeowners and tenants because it provides greater transparency and efficiency while allowing the company to scale faster.

“We are focused on business intelligence from day one,” Danke’s angel investor and chairman Derek Shen told TechCrunch in an interview. Shen was the former president of LinkedIn China and was instrumental in helping the professional networking site enter the country. “By doing so we are eliminating the need to set up offline retail outlets and are able to speed up the decision-making process. What landlords normally care is who will be the first to rent out their property. The model is also copiable because it requires less manpower.”

“We’ve proven that the rental housing business can be decentralized and done online,” added Shen.

danke apartment

Photo: Danke Apartment via Weibo

Danke doesn’t just want to digitize the market it’s after. Half of the company’s core members have hailed from Nuomi, the local services startup that Shen founded and was sold to Baidu for $3.2 billion back in 2015. Having worked for a business of which mission was to let users explore and hire offline services from their connected devices, these executives developed a propensity to digitize all business aspects including Danke’s day-to-day operations, a scheme that will also take up some of the new funds. This will allow Danke to “boost operational efficiency and cut costs” as it “actively works with the government to stabilize rental prices in the housing market,” the company says.

The rest of the proceeds will go towards improving the quality of Danke’s apartment amenities and tenant experiences, a segment that Shen believes will see great revenue potential down the road, akin to how WeWork touts software services to enterprises. The money will also enable Danke, which currently zeroes in on office workers and recent college graduates, to explore the emerging housing market for blue-collar workers.

Other investors from the round include new backer Primavera Capital and existing investors CMC Capital, Gaorong Capital and Joy Capital.

China’s rental housing market has boomed in recent years as Beijing pledges to promote affordable apartments in a country where few have the money to buy property. As President Xi Jinping often stresses, “houses are for living in, not for speculation.” As such, investors and entrepreneurs have been piling into the rental flat market, but that fervor has also created unexpected risks.

One much-criticized byproduct is the development of so-called “rental loans.” It goes like this: Housing operators would obtain loans in tenants’ names from banks or other lending institutions allegedly by obscuring relevant details from contracts. So when a tenant signs an agreement that they think binds them to rents, they have in fact agreed to take on loans and their “rent” payments become monthly loan repayments.

Housing operators are keen to embrace such practices for the loans provide working capital for renovation and their pipeline of properties. On the other hand, the capital allows companies like Danke to lower deposits for cash-strapped young tenants. “There’s nothing wrong with the financial instrument itself,” suggested Shen. “The real issue is when the housing operator struggles to repay, so the key is to make sure the business is well-functioning.”

Danke alongside competitors Ziroom and 5I5J has drawn fire for not fully informing tenants when signing contracts. Shen said his company is actively working to increase transparency. “We will make it clear to customers that what they are signing are loans. As long as we give them enough notice, there should be little risk involved.”


Source: The Tech Crunch

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As shared kitchens heat up, a China-based startup, Panda Selected, nabs $50 million led by Tiger Global

Posted by on Feb 21, 2019 in Beijing, China, CloudKitchens, Hangzhou, Luckin Coffee, Panda Selected, Recent Funding, Restaurants, shanghai, shenzhen, Startups, TC, Tiger Global Management | 0 comments

A few weeks ago, we told you that former Uber CEO Travis Kalanick looks to be partnering with the former COO of the bike-sharing startup Ofo, Yanqi Zhang, to bring his new L.A.-based company, CloudKitchens, to China. Kalanick didn’t respond to our request for more information, but according to the South China Morning Post (SCMP), his plan is to provide local food businesses with real estate, facilities management, technology and marketing services.

He might want to move quickly. Kitchens that invite restaurants to share their space to focus on take-out orders is a concept that’s picking up momentum fast in China. And one company looks to have just assumed pole position in that race: Panda Selected, a Beijing-based shared-kitchen company that just raised $50 million in Series C funding led by Tiger Global Management, with participation from earlier backers DCM and Glenridge Capital. The round brings its total funding to $80 million.

Little wonder there’s a contest afoot. China’s food-delivery market is already worth $37 billion dollars, according to the SCMP, which says 256 million people in China used online food ordering services in 2016, and the number is expected to grow to 346 million this year.

And that’s still a little less than a quarter of the country’s population of 1.4 billion people.

Panda Selected is wasting little time in trying to reach them. While SCMP says that online delivery services already blanket 1,300 cities. Panda Selected, founded just three years ago, says it already operates 120 locations that cover China’s biggest centers, including Shanghai, Beijing, Shenzhen and Hangzhou. It claims to work with more than 800 domestic catering brands, including Luckin Coffee, Kungfu and TubeStation. The company also says that its kitchens are typically 5,000-square-feet in size and can accommodate up to 20 restaurants in each space.

With its new funding, it expects to double that number over the next eight months, too, its  founder, Haipeng Li, tells Bloomberg. That’s going to make it difficult to challenge, especially by any U.S.-based company, given overall relations between the two countries and the ever-changing regulatory environment in China.

Then again, this may be just the first inning. Stay tuned.


Source: The Tech Crunch

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Eventbrite just made some pricing changes as it moves toward an IPO

Posted by on Aug 27, 2018 in eventbrite, Exit, IPO, Startups, TC, Tiger Global Management | 0 comments

Reaching event organizers to help them sell tickets isn’t cheap. Eventbrite — the 12-year-old, San Francisco-based ticketing company that announced plans last week to go public and sell $200 million worth of shares on the NYSE — has been losing money since 2016, posting losses of $40.4 million in 2016, $38.5 million for 2017 and $15.6 million so far this year.

Now the company is trying to make up for some of those losses by announcing a new pricing scheme. Today, it sent customers a note explaining that for those using its “Essentials” package (unlike its “Professional” package, whose bells and whistles include customer support, customer questions for attendees and more), reduced prices are coming for many. Specifically, payment processing fees are dropping from 3 percent to 2.5 percent. Fees for tickets are falling from .99 cents to .70 cents.

The moves don’t really mean that Eventbrite is charging less. In fact, instead of charging one percent of every ticket price as a service fee, Eventbrite will now take a 2 percent cut, which should add up for organizers that use the service for bigger events. It’s also removing a service fee cap of $19.99 that it used to institute no matter how much an event organizer was charging.

Asked about the pricing changes, a spokesperson sent us a fairly bland statement: “At Eventbrite we have always been committed to enabling event creators to deliver a diverse range of live experiences by offering a superior product at a fair price. The changes we announced today will mean lower ticket fees for the vast majority of our creators, and the millions of people that attend the events they plan, promote and produce each year. We succeed when our creators succeed and this change is indicative of a focus on ensuring we make the best decisions for the majority of our customers.”

It isn’t surprising that Eventbrite is looking for ways to fight rising acquisition costs owing to the competition it faces from all corners. In addition to platforms for smaller get-togethers like Paperless Post and competition for bigger events like Ticketmaster (which owns Live Nation), Eventbrite acknowledged in its S-1 filing that it could face competition from large internet companies like Facebook, Google and Twitter, too.

Eventbrite had reportedly filed confidentially for an IPO back in July. As noted on TechCrunch’s “Equity” podcast last week by Susan Mac Cormac, a partner at the global law firm Morrison Foerster, companies often file confidentially first if they are exploring other options, including, most notably, M&A.

“These unicorns,” says Mac Cormac, “it’s difficult for them to go public because they have such a huge valuation to begin with that M&A is often a better option. You don’t want to go out and have your stock fall 30, 40, 50 percent as sometimes happens.”

Partly through acquisitions, Eventbrite saw its revenue rise from $133 million in 2016 to $201 million last year. Last year, for example, Eventbrite acquired Ticketfly, a ticketing company that focused largely on the live entertainment industry and which had sold to the streaming music company Pandora in 2015 for a reported $335 million but Eventbrite was able to nab last year at the discounted price of $200 million.

Eventbrite has also made a broader international push in recent years, acquiring Ticketea, one of Spain’s leading ticketing providers, back in April, and acquiring Amsterdam-based Ticketscript back in January of last year. And those deals followed roughly half a dozen others.

Over the years, the company has raised roughly $330 million from investors, according to Crunchbase. Its biggest shareholders, shows its S-1, are Tiger Global Management, Sequoia Capital and T. Rowe Price. Collectively, the three entities own roughly half of Eventbrite’s pre-IPO shares.


Source: The Tech Crunch

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A new unicorn is born: Root Insurance raises $100 million for a $1 billion valuation

Posted by on Aug 22, 2018 in auto insurance, Automotive, Drive Capital, Recent Funding, Ribbit Capital, root insurance, scale venture partners, silicon valley bank, Startups, TC, Tiger Global Management, Transportation | 0 comments

Root Insurance, an Ohio-based car insurance startup with a tech twist, said Wednesday it has raised $100 million in a Series D funding round led by Tiger Global Management, pushing the company’s valuation to $1 billion. 

Redpoint Ventures, Ribbit Capital and Scale Venture Partners all participated as follow-on investors in this latest round.

The car insurance company, founded in 2015, plans to use the funds to expand into existing markets and make inroads into new states, as well as hire more employees such as engineers, actuaries, claims and customer service to support increased scale. 

Root provides car insurance to drivers. Not exactly a new concept. But it establishes the premium customers based on their driving along with other factors. Drivers download the app and take a test drive that typically lasts two or three weeks. Then Root provides a quote that rewards good driving behavior and allows customers to switch their insurance policy. Customers can purchase and manage their policy through the mobile phone Root app.

Root says its approach allows good drivers to save more than 50 percent on their policies compared to traditional insurance carriers.

The company uses AI algorithms to adjust risk and sometimes provide discounts. For example, a vehicle with an advanced driver assistance system that it deems improves safety might receive further discounts.

“Root Insurance is leading digital innovation in U.S. auto insurance,” Lee Fixel, a partner at Tiger Global Management said in a statement. “This industry is ripe for change, and we are excited to invest in a team that has the expertise, vision, and momentum to deliver real results. We look forward to growing our partnership with Root and helping them expand their footprint across the United States.”

The company has grown from its home market of Ohio into 20 other states in the past two years. The company plans to expand to all 50 states and Washington, D.C., by the end of 2019.

Drive Capital and Silicon Valley Bank are also investors in the company.


Source: The Tech Crunch

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Eventbrite is reportedly going public in the second half of this year

Posted by on Jul 22, 2018 in eventbrite, IPO, Julia Hartz, sequoia capital, TC, Tiger Global Management | 0 comments

Eventbrite, the 12-year-old, San Francisco-based event-planning company, has filed confidentially for an IPO and plans to go public later this year, according to a new report in the WSJ. The company’s lead underwriters are Goldman Sachs and JPMorgan Chase & Co., it says.

The offering must seem a long time in coming for Eventbrite founders Julia Hartz; her husband, Kevin Hartz; and the company’s technical cofounder and CTO, Renaud Visage.

Originally created for individuals wanting to host smaller events and private parties, but who faced few few options aside creating Excel spreadsheets — remember, the ticketing world formerly revolved around stadiums and major sporting events —  Eventbrite has grown steadily over the years into a corporate giant. It now powers ticketing for millions of events in more than 180 countries, and it has rung up more than $10 billion in cumulative tickets sales since its founding.

According to Forbes, in 2017, Eventbrite processed more than three million tickets per week to events, including conferences and festivals.

Part of the company’s growth has come through acquisitions. Last year, for example, Eventbrite acquired Ticketfly, a ticketing company that focused largely on the live entertainment industry and which had sold to the streaming music company Pandora in 2015 for a reported $335 million but Eventbrite was able to nab last year at the discounted price of $200 million.

Eventbrite has also made a broader international push in recent years, acquiring Ticketea, one of Spain’s leading ticketing providers, back in April, and acquiring Amsterdam-based Ticketscript back in January of last year. And those deals followed roughly half a dozen others.

Indeed, the company — which has raised roughly $330 over the years, including from Sequoia Capital, Tiger Global Management, and DAG Ventures  — has long been expected to go public, thanks in large part to its momentum, as well as its fairly turnkey and (we’d guess) lucrative business model.

Though we won’t see its numbers until closer to its IPO apparently, Eventbrite makes money off every transaction. For event organizers charging for ticket sales, Eventbrite’s fees vary by package, but one of its most popular packages collects 1 percent of the ticket price and $0.99 per paid ticket, plus another 3 percent for payment processing per transaction. It also sells a “professional package” wherein it collects 2.5 percent of the ticket price and $1.99 per paid ticket, plus a 3 percent payment processing fee per transaction. Last but not least, Eventbrite sells “premium package” with customized pricing.

Eventbrite is led by Julia Hartz, who took over the position of CEO in 2016, roughly six months after husband Kevin stepped down from his chief executive duties owing to a “non-life-threatening medical condition.” Until that point, Julia Hartz had primarily been tasked with overseeing marketing, customer support, sales, and human resources.

Both cofounders appeared earlier this month at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, an event that attracts many of the wealthiest and most powerful people in U.S. media, technology, and sports, and whose attendees are often on the cusp of taking their companies public — if they haven’t already.

When Eventbrite does complete its IPO, Hartz will join a tiny but growing list of female founders to steer their companies onto the public markets. Last October, when the mail-ordering clothing service Stitch Fix went public, its founder and CEO, Katrina Lake, became the first woman to take an internet company public in all of 2017.


Source: The Tech Crunch

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