The role of the first product manager by Andrew Moll

In this ProductTank Barcelona talk, Andrew Moll, Head of Product at Abacum explains how the role of the first product manager at a startup can vary wildly from what product managers hired later on or those at larger companies might encounter. Watch the session in full to see the talk or read on for an overview [...] Read more »

The post The role of the first product manager by Andrew Moll appeared first on Mind the Product.

Inside Iyin Aboyeji’s plan to build charter cities for African tech

African cities, particularly sub-Saharan ones, have the fastest global urban growth rate. But with challenges around overcrowding, congestion, infrastructure, power and poor governance, these cities are maxed out in what they can provide to the average African living in urban environments.

Some experts think charter cities offer a solution. They are granted a special jurisdiction to create a new governance system and allow city officials to adopt best practices in commercial regulation.

Typically, charter cities are public-private partnerships between city developers and host countries. There are a few examples of successful charter cities globally — Singapore, Shenzhen and Dubai among them — but most have underperformed or failed, especially in Nigeria.

For instance, Eko Atlantic, a purpose-built city near Lagos, planned to house more than 250,000 people in an area where a large majority of its 15 million population cannot afford housing. The ongoing project, which commenced in 2009, also threatens to displace tens of thousands of people who live in coastal areas around the new development.

Nigeria’s special economic zones (SEZ) — regions with different business and trade laws from the rest of the country, with tax and business incentives coupled with regulatory innovation — have also struggled. For example, the 16,500-hectare Lekki Free Trade Zone hasn’t lived up to expectations.

The precedent set by these two plans showcases a more significant problem: Charter cities and SEZs often can’t escape the crisis and economic stagnation of their host state, particularly in poor countries.

This is why there’s some skepticism surrounding the Talent City project, a futuristic charter city for tech professionals announced in January 2020 by Future Africa, a firm housing rolling funds and collectives that invest in African startups. But the firm believes the planned city will be a success because it will focus on “creating jobs and attracting the talent that drives Africa’s technology, innovation and digital economy.”

Talent City, in a statement, the city will be managed within a free trade zone with its own “productivity-focused, entrepreneurial-centred regulations and bylaws.”

Do African states need charter cities for tech?

It’s been two years since this announcement. And while no single structure has been constructed, Future Africa general partner Iyinoluwa Aboyeji and his partners have continuously touted Talent City’s promise.

Progress has been incremental, but Talent City has acquired land to begin construction of its first location: Talent City Lagos, a 72,000-square-meter plot of land located in Alaro City, a 2-000 hectare city-scale development area in the Lekki Free Zone.

This first prototype city — featuring a central coworking campus and a variety of housing options — will be home to 1,000 residents and 2,500 remote workers. These figures are subject to change, the company said.

On a call with TechCrunch, Aboyeji, who kickstarted the project with Luqman Edu and Coco Liu, points out three main problems Talent City hopes to solve for techies.

During Aboyeji’s time at Andela, the company was still a tech talent incubator and housed engineers in its hubs. Between 2014 to 2017, the company spent heavily on office settings and living quarters because most real estate developers in Lagos didn’t understand how to build real estate for tech people, said the Andela and Flutterwave founder.

Andela, like many others, also faced issues around power, internet and commutes. Furthermore, these startups contend with stifling government policies (2020’s ride-hailing ban and last year’s cryptocurrency ban come to mind), political instability and security issues.

“This was not just an Andela problem,” said Aboyeji, who also co-founded payments unicorn Flutterwave. “Today, I run an investment firm with 60 portfolio companies (mostly technology companies) and over $20 million in assets under management, and they all continue to tell me the infrastructure problem has not only gotten worse but more expensive to solve.

“Over the years, the industry has grown from when I was at Andela. Last year, the technology industry raised over $1.4 billion in venture capital. Yet entrepreneurs in Lagos are still stuck in a subpar environment despite a strong drive to build, deeply frustrated with their living conditions along with a system that is not functional.”

Talent City, he claims, could remedy these problems. 

According to Aboyeji, Talent City is being designed for remote work and built for the niche of tech entrepreneurs and professionals. The charter city will provide infrastructure for tech such as constant power and high-speed internet; favorable policies that enable innovation; and a like-minded community of people who live and work in proximity to each other.

Aboyeji said that constructing the compound within the larger ecosystem of Alaro City will shield Talent City and its inhabitants from knee-jerk government reactions to policy changes, which will be critical to its ultimate success. 

“We’re trying to build for the part that we’re good at, which is the community and the technology piece of things. We’re not trying to reinvent the wheel by negotiating something new with the government,” said Liu, a former designer at Google and Line and Talent City’s head of operations and experience.

“And that’s why we positioned ourselves strategically in the Free Trade Zone within a larger city. So we have de-risked in terms of policy and infrastructure from both sides of the ecosystems we belong to.”

Africa’s new Silicon Valley?

Liu’s comments are telling. Contrary to other charter cities, which are built as public-private partnerships, Talent City’s first project in Lagos would eschew government participation. 

Talent City is taking advantage of Alaro City’s already-formed partnership with the Lagos state government, thus providing some coverage in that aspect, said Edu, adding that the company took this route because it needs to be able to test out ideas in Lagos before using it as a prototype to replicate in other parts of Africa. 

“The plan for Talent City is to scale across Africa… We are already speaking strategically about where we intend to put the second one once we get this one up and running. We have set up charter cities across Africa from the beginning,” said Edu, who also owns real estate services and proptech companies currently operating in 12 states of Nigeria.

It’s understandable why the team thinks highly of its project. But Nigeria’s tech ecosystem–with Lagos at the forefront, even regionally (the city is Africa’s startup capital from the recent StartupBlink report released this month)–has managed to pull in billions of dollars in venture capital funding and minted three unicorns last year, despite battling all of the infrastructure challenges.

So is Talent City even necessary? 

Aboyeji argues that while a lot of money has been pumped into Nigerian tech, real estate prices for offices and housing are becoming prohibitively expensive due to a lack of infrastructure, which Talent City wants to fix.

Also, in the past, founders and tech professionals alike touted Yaba, a suburb of Lagos, as the country’s Silicon Valley. But big company exits by the likes of Andela and Konga in 2017 (and several others over the years) due to infrastructure deficits and a fading sense of community has stained the town’s once-heralded tech reputation.

And though we now operate in a remote-first world, companies cannot guarantee that their employees have what it takes to deliver amenities themselves consistently. So although startups and tech professionals have found different places to thrive within Lagos, especially on the island part of the city, Talent City is hoping to draw in that talent to become “Africa’s Silicon Valley.”

The company said its pricing will be competitive enough for individuals and corporations as it “offers monthly rent and mortgages to match global expectations,” along with communal benefits of working together.

Aboyeji said his venture capital firm, Future Africa, which is remote-first, will also move its headquarters to the new city. Future Africa is the majority owner of the project. With founding residents such as prominent founders and VCs (Yele Bademosi, Timi Ajiboye, Nadayar Enegesi and Kola Aina have already taken pieces of real estate), local tech companies may make similar transitions — if the city takes shape.

Iyinoluwa Aboyeji (Andela and Flutterwave co-founder; Future Africa founding partner and Talent City co-founder)

Talent City will be working with Amsterdam-based design and urbanism firm NLÉ and real estate agency Jones Lang LaSalle for community and development management purposes.

The charter city — backed by Pronomos, Charter Cities Institute, Ventures Platform and LoftyInc has raised more than $13 million for its Lagos project. However, Aboyeji said fundraising efforts are still ongoing. The first construction phase is set to begin by May, with some structures completed by the end of 2023.

“We can’t build a $1.4 billion industry in thin air. I mean, it sounds romantic. And so people want to try it. And I’ve been one of those advocates of attempting it. But the ecosystem must have an address,” said Aboyeji, who referenced a trip to Israel as an influential factor in starting Talent City.

“So I think the important thing is that this becomes that address for the ecosystem, it becomes where people come together to do tech. It has amazing prospects; there’s a seaport opposite our location and an airport about 20 minutes away, so this is undoubtedly going to be the future of Lagos. And I think it would be really fun for tech to get here first.”

Aboyeji isn’t the only tech leader trying to build a private city. Ryan Rzepecki, an ex-Uber executive who sold his electric bike company Jump to the mobility tech giant, said in 2020 that he wanted to fund a politically autonomous charter city to welcome tech workers abandoning Silicon Valley during the pandemic.

However, his reasons differ from Aboyeji. In an interview with The Telegraph, Rzepecki said his goal was to fix the homelessness crisis in San Francisco.

“The way we have built regions and cities is not fundamentally sustainable and there is a chance to build new places that are better, more sustainable and environmentally friendly,” he said in the interview.

“There is a pretty broad spectrum of people who are interested in this and I think most people, or at least myself, are trying to make a better world in the broadest terms. It’s not like things are working for everybody on the planet at the moment. I think having some people say, ‘let’s try something different, shouldn’t be met with skepticism.’”

And some big-name investors aren’t skeptical: Peter Thiel and Marc Andreessen invested in Pronomos, a backer of Talent City. While successful charter cities have been created with government backing, the tech hubs of the future are attracting private funds, suggesting it’s only a matter of time before a blueprint is drawn for charter cities to be replicated globally.

Zapp snaps up $200M to supersize its instant grocery play

Zapp, the instant grocery delivery startup that launched in 2020 in London, has picked up a substantial round of funding to go head-to-head with Getir, GoPuff, Jiffy, Deliveroo and the many others hungry for a share of the on-demand convenience market. It has raised $200 million, a Series B round of funding that Zapp said it will use both to beef up its presence in its home market, and to expand into what co-founder and de-facto head Joe Falter describes more “mega cities”. In addition to London, Zapp is currently live in Manchester, Cambridge, Bristol, Amsterdam, Rotterdam and is running a soft launch in Paris.

Zapp said the round is being co-led by Lightspeed, 468 Capital, and BroadLight Capital, with Atomico, Burda and Vorwerk Ventures — all previous backers — also participating, alongside Sir Lewis Hamilton, the Formula One champion (and thus, I guess, a pretty apt piece of branding for a company that sells itself on “super fast” service).

But that is not all that has been reported about this round. PitchBook noted that when the first tranche of this investment closed last month in December, “rival Gorillas” was also a part of it. Then last week, Sky News reported that a “Singaporean state fund” was also among the backers. Neither is mentioned in Zapp’s announcement today; we’ve asked the company to confirm if either is actually involved and will update as we learn more.

Update: PitchBook is “plain wrong,” Steve O’Hear tells us. (Note: O’Hear was a longtime writer for TechCrunch before joining Zapp; this had no impact on how we reported this story.)

(But Gorillas would not be an unlikely name to appear here: the German startup raised $1 billion last autumn and like its rival Getir has been using some of that cash to buy up or invest in would-be competitors in other markets, for example Frichti in Paris. And delivery companies have a track record of investing in each other, perhaps the first moves ahead of what might be yet more consolidation. Delivery Hero has backed Gorillas; DoorDash has invested in another German startup, Flink; and so on.)

Zapp is not disclosing its valuation, nor is it talking about how many customers or orders it has processed to date. It has now raised $300 million.

The appetite among startups and more established grocery players to be major players in the convenience market is strong, and considering how big it is — in the UK alone the convenience grocery sector was estimated to be worth some £43 billion in 2021 — there’s likely room for more than one winner in it.

But while lot of questions still hang in the balance over how this story will play out. How many consumers will ultimately use these services, and for how long? How many customers would a typical instant grocery company need to make a profit? And how many of these delivery companies can a single city sustain?

Yet investors remain very hungry to back the more interesting plays in the space. In addition to this round for Zapp and Gorilla’s $1 billion raise last year, Flink raised $750 million in December; Zepto in India raised $100 million; Jokr raised $260 million; GoPuff and Getir have both raised billions; and these are just a few of the biggest deals: there have been many more.

Among all of this, Zapp believes that it’s found a formula that balances customer service; a strategically-placed network of smaller dark stores (“Zappstores”) combined with a massive distribution center to fill out orders; a mix of products that are both deep (50 varieties of ice cream; 21 brands of tequila) but also speak to what its users actually might want at the last minute; and a supply chain that connects directly with brands — not just wholesalers — which keep it in the quick delivery game for the long haul.

This is in contrast to, say GoPuff or Flink, which believe that mass-market consumers can be convinced to switch to shop in more frequent, smaller bursts of instant groceries than larger, weekly baskets.

“We’re focused on customer experience. That is what is going to win here,” Falter said in an interview. He said he found it “funny” how its competitors have chosen to go after market share by effectively subsidizing orders by offering users multiple discounts. “We don’t offer vouchers or discount products,” he said, qualifying quickly, “except for the first order, which is 50% off, but nothing like the repeat vouchering you’ve seen. We believe in customer experience, a supply chain that delivers much better products and on time, and an assortment that is relevant to connivence more than trying to disrupt the weekly shop.”

Its average order, he said, in the region of “mid-20 pounds”, compared to “sub-£15” per order for Gorillas (a figure Zapp provided). He also noted that two-thirds of Zapp’s orders are profitable.

“I’d be feeling a little nervous if I were them,” he said of those with lower average orders. “It’s not a sustainable foundation.”

A lot of instant grocery companies emerged and came into their own as the Covid-19 pandemic took a grip on the world, so this round is about Zapp gearing up to show that it has a life beyond that.

“Convenience retail is one of the last segments of retail to move fully online, but is really having its moment post-lockdown,” said Rytis Vitkauskas, a partner at Lightspeed Venture Partners, in a statement. “As people return to their busy lives, rapid delivery allows them to ‘live in the moment’ and Zapp has been built from the ground up to harness this consumer behaviour and is seeing exceptional customer loyalty as a result. We’re thrilled to be part of the company’s journey as it brings a totally new experience to customers in the convenience grocery market and continues to invest for the long term.”

Updated with comment on the investors.

Google to invest up to $1 billion in Indian telecom operator Airtel

Google will invest $700 million in Indian telecom operator Airtel, the latest in a series of bets the company has made in the world’s second largest internet market as part of a $10 billion commitment to the country.

Google said it will invest $700 million to acquire a 1.28% stake in Airtel, the second largest telecom operator in India with over 300 million subscribers, and pour up to $300 million more to explore multi-year commercial agreements with the telco.

The two firms said they will work to build on Airtel’s extensive offerings to cover a range of Android-enabled devices to consumers via “innovative affordability programs.” The companies also said they will explore partnerships with smartphone makers to “bring down the barriers of owning a smartphone across a range of price points.”

“Airtel is a leading pioneer shaping India’s digital future, and we are proud to partner on a shared vision for expanding connectivity and ensuring equitable access to the Internet for more Indians,” said Sundar Pichai, chief executive of Google and Alphabet, in a statement.

“Our commercial and equity investment in Airtel is a continuation of our Google for India Digitization Fund’s efforts to increase access to smartphones, enhance connectivity to support new business models, and help companies on their digital transformation journey.”

An Airtel store as seen in Kolkata, India, on 24 November 2021. (Photo by Debarchan Chatterjee/NurPhoto via Getty Images)

Friday’s announcement comes at a time when Airtel and Vodafone have been scrambling for ways to repay billions of dollars they owe to the Indian government. Vodafone gave away over 35% ownership to New Delhi earlier this month, making the Indian government its largest shareholder.

Vodafone and Airtel compete with Jio Platforms, run by Asia’s richest man Mukesh Ambani. Jio Platforms has amassed over 400 million subscribers in India, thanks to its cut rate voice calls and data offerings. Google invested $4.5 billion in Jio Platforms in 2020. Facebook and nearly a dozen more firms backed Ambani-controlled firm that year.

Airtel said on Friday that it will explore “larger strategic goals” with Google and “potentially” co-create India-specific network domain use cases for 5G and other standards. The companies also plan to collaborate on “shaping and growing” the cloud ecosystem in India, they said. Airtel, which already serves over 1 million small and medium-sized businesses with its enterprises connectivity offering, said Friday’s announcement will “help accelerate digital adoption.”

“Airtel and Google share the vision to grow India’s digital dividend through innovative products. With our future ready network, digital platforms, last mile distribution and payments ecosystem, we look forward to working closely with Google to increase the depth and breadth of India’s digital ecosystem,” said Sunil Bharti Mittal, Chairman of Bharti Airtel, in a statement.

With over 600 million internet users — and just as many yet to come online — India is one of the last great growth markets for American technology groups. Both Google and Facebook ran programs in the past decade to bring internet connectivity to tens of millions of Indians.

This is a developing story. More to follow…

India’s Moglix valued at $2.5 billion in new funding

Moglix has more than doubled its valuation to about $2.5 billion in just eight months as the Indian industrial business-to-business marketplace aggressively scales its offering in many parts of the world.

Alpha Wave Global (formerly known as Falcon Edge Capital), which led seven-year-old startup’s previous funding, has returned alongside Tiger Global to co-lead the startup’s Series F financing round, Moglix disclosed in a regulatory filing with Singapore’s Accounting and Corporate Regulatory Authority.

News outlet DealStreetAsia, which first reported about about the round, estimates that Moglix’s valuation has surged to about $2.5 billion.

Hong Kong-based Ward Ferry also participated in the $249 million round, a figure that is larger than the capital Moglix has amassed in all its previous funding rounds put together.

Founded by IIT Kanpur and ISB alumnus Rahul Garg, Moglix operates a B2B marketplace and procurement platform for manufacturing goods that could be anything from a centrifugal pump to a fan to routers and pulse oximeters

The startup says it serves hundreds of thousands of small, medium-sized businesses and enterprises.

It has established over 3,000 manufacturing plants across India, Singapore, the UK and the UAE and counts manufacturing giants such as Hero MotoCorp, Vedanta, Tata Steel, Unilever and Air India and NTPC among its customers.

The startup, which counts Sequoia Capital India among its backers, runs a supply chain network of 16,000 suppliers, over 35 warehouses and logistics infrastructure. With close to 500,000+ SKUs on its platform, the startup claims to be the largest e-commerce platform of industrial goods in India.

Edtech startups flock to the promise and potential of personalized learning

The rise of remote instruction left many parents freshly aware of (and annoyed by) the shortcomings of Zoom school, but for Letha McLaren, COVID-19 brought an epiphany: the importance of a headset.

McLaren’s son, who deals with executive dysfunction, was better able to focus through the screen because he used a headset that blocked out some other noises. With the device, he could hear what the teacher was saying at all times, and better yet, was keener on paying attention. McLaren, in turn, learned what her son, a straight-A student, responds best to.

The broader takeaway for McLaren was that traditional classrooms don’t serve all students due to learning and thinking differences. So, she teamed up with longtime friend Suchi Deshpande to help a market of parents who found themselves in a similar boat, trying to find a better format for educating their children. Learnfully is a personalized learning platform that connects neurodiverse students, who have conditions such as ADHD or dyslexia, with specialists to pinpoint strengths and weaknesses.

Personalized learning has long had a halo around it. After all, an adaptive curriculum that changes based on a student’s emotional or educational state feels pretty sensible. Why not adapt learning on a student-by-student basis, instead of applying the same curriculum to everyone within a class? The easy answer, of course, is that it’s easier to scale the latter, and the former requires more money and time from end-users.

Startups such as Learnfully, along with Wayfinder and Empowerly, are breaking into the market with fresh takes on what it means to prioritize a student’s emotions in personalizing education. While consumers and venture capitalists certainly understand the vitality of personalized education like never before, these startups are navigating the longstanding challenges of true integration.

 

Closing the feedback loop

Innovating on traditional learning often requires retooling supplemental services for students outside of the classroom. McLaren explained that Learnfully is focusing less on the “what” of learning and more on the “how.”

“Students may struggle in math, but it’s because they don’t understand the building blocks which permit them to do some math programs – and so we really focus on the foundation, which oftentimes boils down to literacy.” The co-founder said the “educational therapy” approach helps Learnfully differentiate from classic tutoring platforms like Wyzant — part of the reason it was able to close a $1.25 million seed round a few weeks ago.

Edtech startups flock to the promise and potential of personalized learning

The rise of remote instruction left many parents freshly aware of (and annoyed by) the shortcomings of Zoom school, but for Letha McLaren, COVID-19 brought an epiphany: the importance of a headset.

McLaren’s son, who deals with executive dysfunction, was better able to focus through the screen because he used a headset that blocked out some other noises. With the device, he could hear what the teacher was saying at all times, and better yet, was keener on paying attention. McLaren, in turn, learned what her son, a straight-A student, responds best to.

The broader takeaway for McLaren was that traditional classrooms don’t serve all students due to learning and thinking differences. So, she teamed up with longtime friend Suchi Deshpande to help a market of parents who found themselves in a similar boat, trying to find a better format for educating their children. Learnfully is a personalized learning platform that connects neurodiverse students, who have conditions such as ADHD or dyslexia, with specialists to pinpoint strengths and weaknesses.

Personalized learning has long had a halo around it. After all, an adaptive curriculum that changes based on a student’s emotional or educational state feels pretty sensible. Why not adapt learning on a student-by-student basis, instead of applying the same curriculum to everyone within a class? The easy answer, of course, is that it’s easier to scale the latter, and the former requires more money and time from end-users.

Startups such as Learnfully, along with Wayfinder and Empowerly, are breaking into the market with fresh takes on what it means to prioritize a student’s emotions in personalizing education. While consumers and venture capitalists certainly understand the vitality of personalized education like never before, these startups are navigating the longstanding challenges of true integration.

 

Closing the feedback loop

Innovating on traditional learning often requires retooling supplemental services for students outside of the classroom. McLaren explained that Learnfully is focusing less on the “what” of learning and more on the “how.”

“Students may struggle in math, but it’s because they don’t understand the building blocks which permit them to do some math programs – and so we really focus on the foundation, which oftentimes boils down to literacy.” The co-founder said the “educational therapy” approach helps Learnfully differentiate from classic tutoring platforms like Wyzant — part of the reason it was able to close a $1.25 million seed round a few weeks ago.

Crossover investors are turning their focus to public stocks, says crossover investor

A lot of public market investors began elbowing their way into the world of venture-backed startups roughly a decade ago, and the ripple effects have been obvious. Think faster funding rounds across the board, higher valuations, and venture firms that have raised increasingly bigger funds rather than cede territory to their newer rivals.

Of course, a pullback by that same, now massive, group of crossover investors could have dramatic ripple effects, too. Already, the markets’ sudden downturn has knocked off billions of dollars in market cap for a variety of publicly traded tech stocks, making richly valued startups just a little less compelling right now in comparison. One term sheet that was offered to a London-based crypto infrastructure company was pulled last week by one of the most prolific investors in recent years. Surely, it won’t be the last term sheet that gets pulled back absent another abrupt market U-turn.

“You can bet your bottom dollar that every investor in the Coatue, Dragoneer, D1 [Capital Partners], Tiger — those crossover funds — are finding more value right now in the public markets right now than they are the private markets,” says Mitchell Green, the founder of his own, 12-year-old crossover firm, Lead Edge Capital. “Their allocation of time, I’m sure, has also shifted accordingly.”

Green’s team is itself shifting focus. Lead Edge is mainly a growth equity fund — one with $3 billion in assets under management currently. It’s only permitted to invest up to a quarter of its capital into public equities, per its agreement with its investors, and these outfits “tend to be sub $10 billion market cap companies,” says Green. (Some of the firm’s highest-profile portfolio companies have included Spotify, Alibaba, Duo Security, and Bytedance.)

Normally, that doesn’t feel like a constraint, but right now, the market is “giving us better value values in the public markets than in the private markets,” he notes, which is driving Lead Edge to buy up shares in public companies where it already holds positions, as well as to initiate new positions.

For additional firepower, it is also turning increasingly to a public-only fund that it runs on the side and raised last year to give its limited partners — many of them wealthy former and current operators — more public market exposure. That vehicle, which has garnered roughly $150 million in capital commitments, says Green, had four positions a month ago; now it owns shares in “six or seven companies; we’ve been been buying stuff.”

The big question is how long public market shares are on sale, and how long private companies hold their ground. While public and private market prices are correlated, it usually takes time for the private market to catch up. During the last public market downturn, in March of 2020, stock prices rebounded so quickly that they ultimately had little impact on startup valuations, save for those that might have had the misfortune of trying to fundraise through that period.

While major U.S. stock indexes have dropped between 6% and 13% this month, “prices really haven’t come down yet,” says Green.

Well, they mostly haven’t come down, seemingly. Green adds he’s aware of “negotiations” beginning to play out between investors and growth-stage companies in some cases. “I’ve heard rumblings,” he says. Meanwhile, according to The Information, Tiger Global has already been actively managing expectations downward. The outlet reports, for example, that before it wired money recently to Blockdaemon, a New York-based blockchain infrastructure company for node management and staking, Blockdaemon was asked, and conceded, to a 20% valuation drop. (Blockdaemon denies that the deal was repriced.)

The outlet says that late last year, Tiger also asked to lower the price of a Series C deal for Estonia-based identity verification startup Veriff after noting the sell-off in public tech stocks.

If public prices keep falling, more growth-stage companies look to get squeezed.

“I think a lot of growth equity funds probably can’t do a lot more stuff in public [investing], but wish they could,” says Green. “I do think that those that can do more” — and that’s now a lot of firms, between the hedge funds, mutual funds, family offices, and deep-pocketed venture firms like Andreessen Horowitz — “are looking at a lot of stuff right now.”

Amazon must pay $2M and end program after price-fixing investigation by Washington AG

Amazon must pay $2.25 million and permanently shut down a previously suspended sales program, following an investigation and lawsuit by the Attorney General of Washington alleging it was essentially price-fixing.

“Sold By Amazon” basically worked like this. Amazon would contact a third party seller and they would agree on a minimum price for an item. If Amazon sold the item for more, they would split the profits. In a way it’s not so different from buying a bunch of stuff wholesale and reselling it. But due to how Amazon dynamically prices and presents items in the store, that’s not quite what happened.

As the AG’s office explains, Amazon ended up increasing the price of the items to match other retailers, and prevented sellers from offering discounts. As a result, buyers were frequently driven to purchase Amazon’s own brands, which it could price however it chose:

Prices for the vast majority of the remaining products enrolled in the “Sold by Amazon” program stabilized at artificially high levels.

…When prices increased, some sellers experienced a marked decline in the sales and resulting profits from products enrolled in the program. Faced with price increases, online customers sometimes opted to buy Amazon’s own branded products — particularly its private label products. This resulted in Amazon maximizing its own profits regardless of whether consumers paid a higher price for sales of products enrolled in the “Sold by Amazon” program or settled for buying the same or similar product offered through Amazon.

Sounds like a bad deal for sellers, but more fundamentally, Washington AG Bob Ferguson alleged that the practice was in violation of state antitrust laws. Amazon may be a store, but it also sells its own goods, making it a competitor with the third party sellers in question. And two competitors making a secret agreement controlling the cost of goods is pretty much the definition of price fixing.

Amazon disputed the AG’s characterization, saying it was all for the good of the customer and completely on the level. It also claimed to have shut down the program for “business reasons unrelated to the AG’s investigation.” “While we strongly believe the program was legal, we’re glad to have this matter resolved,” the company said in a statement to TechCrunch.

It’s an extraordinary coincidence, then, that a program that had been expanding since 2018 would shut down almost immediately after antitrust authorities started sniffing around. “We launched the investigation in March 2020 and Amazon suspended the program in June,” said the AG office’s Dan Jackson.

At any rate, rather than fight it in court, Amazon agreed to a consent decree requiring the $2.25M payment (which will go directly to funding the AG’s antitrust division) and prohibiting Amazon from reactivating the program in any way, shape, or form.

Daily Crunch: 4 years after launch, fintech platform Esusu saddles unicorn with $130M Series B

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Hello and welcome to Daily Crunch for January 27, 2022! Today’s news is a pretty positive roundup. New fund? Oh yeah. Huge rounds? You bet. We even have new unicorns to discuss. On the other side of the coin, the IPO market appears more ossified than open. – Alex

The TechCrunch Top 3

  • Facebook’s stablecoin bet proves unstable: So much for Facebook – er, Meta – taking over the blockchain world with its own stablecoin. The assets of Diem, for which Meta was a key consortium member, are reportedly being sold for a few hundred million dollars. Cheap? No. But also a fraction of the hopes that the project once had.
  • The new seed, Series A and Series B benchmarks: How far have the standards shifted for early-stage startups when it comes to revenues? The good news is that we have the data. The bad news is that it’s mostly what you expected – startups are raising larger, later rounds with less revenue than before. Growth, it turned out, was the more surprising delta to examine.
  • New funds! TechCrunch has notes on a number of new funds out today that are worth digging into. This Week in Fintech has a fund now, and Portugal’s Indico Capital Partners has €50 million for its ocean tech fund. There are others. South Korean internet conglomerate Naver Group has a $100 million fund for what TechCrunch described as “metaverse creators.” It’s amazing how fast that word became ubiquitous, and therefore passé.

Startups/VC

We have a host of mega-rounds to chat through today, but first some words of warning: It appears that the IPO climate is frozen shut.

What that will mean for companies like Esusu, which just raised $130 million, or Ascend, which just raised $280 million in equity and debt for its BNPL-flavored approach to insurance, is that there is a mountain of private-market wealth out there that needs an exit. The question is just when those checks can be cashed. And if they will get more than a dollar back per dollar invested.

IPO issues or not, the crypto world is busy taking on more external capital. One particular play in the blockchain world is the infrastructure effort, building products that will support other products. This is often a good bet. Twilio is an example of the infra game coming up trumps. AWS is another. So when another crypto backend player like Fireblocks pushes its valuation to $8 billion, we know what’s going on. (And speaking of crypto, don’t forget the impending tax issue or the startups working to keep folks off the government’s naughty list.)

And now, our regular funding round rundown:

  • Quan wants to take on employee churn: There are two kinds of employee exits, from the corporate perspective: regretted churn and unregretted churn. The former is when someone you wanted to keep quits, and the latter is when someone you wanted to fire does you a favor. Quan, which just raised capital, wants to tackle the former by, we report, bridging the “gap between engagement surveys and well-being perks.”
  • Bloss is building a company for expecting parents: With birth rates in decline in many parts of the world, it’s clear that we’re in a new era when it comes to parenting. A time when it’s more choice than default. Bloss wants to link expecting parents with experts, which makes good sense, given that babies don’t precisely come with a handbook when they enter the world. The company just raised a pre-seed round.
  • Parthean will teach you personal finance whether you like it or not: That’s slightly unfair, but the idea behind Parthean is that most folks aren’t great with money and need help. So, it is going to teach users concepts and then prompt them to take a particular action toward, in theory, financial health. Natasha’s story here is great, and worth reading if you are curious about the intersection of edtech and fintech. The company just raised $1.1 million.
  • The.com is a website builder with a great URL: Short URLs were mega-hype back in the day when you had to have a .com or live a life apart from the consumer spotlight. Things have since changed. But The.com is taking us back to the ’90s with its great name and product: website building. But unlike the template-focused builders of the past, this time the company is using “blocks.” As someone with both websites and no coding skills, this appeals to me.
  • The Vets is a bet that you want the vet to come to your step: Flush with $40 million in new capital, The Vets wants to make animal care an at-home affair. As someone who has spent far too much time in the last year standing outside his local vet, waiting for a certain puppy to finish her checkup while, variously, burning up in the summer and freezing in the winter, I love this idea.

And there was more. France’s Sigfox, which raised more than $300 million, is dead. A Quizup founder is building an MMO, and PortalOne raised $60 million for its “immersive” gaming platform. Whew! What a day!

Dear Sophie: 3 questions about immigration and naturalization

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Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My F-1 OPT will run out this June. My employer has agreed to register me in the H-1B lottery in March.

What are my options if I’m not selected in the lottery?

—Gritty Grad

Dear Sophie,

I’m in the U.S. with an L-1A visa that will max out later this year. My wife has been with me during the whole period on an L-2. Can my wife apply for H-1B this year?

Would she need to leave the country to activate it?

—Helpful Hubby

Dear Sophie,

I have a 10-year green card that will expire later this year. I’ve been married to a U.S. citizen for 11 years, but we are in the process of divorcing.

Can I apply for U.S. citizenship even after my divorce?

—New Year, New Life

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

  • LG Energy Solution goes public: The IPO market is closed, but there are always exceptions. Such is the case with LG’s electric vehicle battery maker. For obvious reasons – the global car industry is racing toward an all-electric future as quickly as its aging leaders can manage. And all those cars are going to need batteries. The company is now worth a little more than $98 billion.
  • Messenger updates its E2E encryption: While governments around the world continue to try to find enough backbone to make the comically bad choice of banning encryption, Meta is moving along with its work to make its Messenger service more secure. Good!
  • And if you have longed to pay for yet another streaming service, the good news is that Disney+ is coming to 42 more countries later this year.

TechCrunch Experts

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Testimonial: “Their UX expert review (i.e., user observations) of our application showed that the average time on one of the tasks was around 50 seconds. The resulting recommendation was to introduce a shortcut, which after implementation reduced the average time-on-task to 20 seconds.”