Walmart’s Flipkart to cover insurance for all sellers in India and waive additional fees

Walmart-owned Flipkart is exempting storage and cancellation fees for sellers on its marketplace and also providing them with insurance coverage as the top e-commerce platform in India looks to maintain cordial relationships with more than 300,000 sellers who are facing severe disruption amid an unprecedented rise in the spread of coronavirus infections in the South Asian nation.

The Bangalore-headquartered firm said Friday evening that it is exempting storage fees to sellers who use the company’s fulfilment centres, and also waiving off the cancellation fees until the end of the month. (Several Indian states, as they did during the first wave of the virus, have imposed restrictions on sale and delivery of non-essential items.)

Flipkart will bear 100% premium of COVID insurance to all sellers that transact on the platform, covering any hospitalization and consultation fees between 50,000 Indian rupees ($685) to 300,000 Indian rupees ($4095).

The news today comes a week after Amazon, Flipkart’s chief rival in India, announced it was waiving 50% of the referral fee sellers are required to pay the e-commerce firm for this month, though not all sellers are qualified to avail this benefit. (The company said earlier this week that it was also postponing Prime Day in India and Canada due to the growing cases of the infection.)

Flipkart said it is also making it easier for sellers to access working capital from the firm without any incremental cost, though it did not specify the steps it had made.

It is also extending the window for the Seller Protection Fund to 30 days (from 14) to make claims on returned products. Flipkart said it will also ease its policies and performance metrics to ensure that they are not impacted by state-led lockdowns.

Flipkart, which as of last year was working to go public this year, said it has partnered with Vriddhi, Walmart’s Supplier Development Program in India, to organize webinars for small businesses to share best practices to ensure safety of workforce and provide insights to stay afloat amid the crisis.

“Through these testing times it is our constant effort to support our seller partners who face immense operational challenges as a result of the pandemic. As a democratic marketplace, we want to ensure that our lakhs [hundreds of thousands] of seller partners are able to continue operations and keep the economic engine running,” said Jagjeet Harode, senior director and head of Marketplace at Flipkart, in a statement.

“With them and their family’s financial and health safety in mind, we have rolled out these initiatives that will bring them the much-needed respite to keep their businesses active.”

India has been reporting over 400,00 daily infections this week, more than any other nation, as the world’s second-most populated nation struggles to contain the second wave of the virus. Scores of firms, startups, investors and people alike are uniting to help the nation fight the virus, which has severely impacted the healthcare facilities.

From bootstrapped to a $2.1B valuation, ReCharge raises $227M for subscription management platform

ReCharge, a provider of subscription management software for e-commerce, announced today that it has raised $227 million in a Series B growth round at a $2.1 billion valuation. 

Summit Partners, ICONIQ Growth and Bain Capital Ventures provided the capital.

Notably, Santa Monica, California-based ReCharge was bootstrapped for several years before raising $50 million in a previously undisclosed Series A from Summit Partners in January of 2020. And, it’s currently cash flow positive, according to company execs. With this round, ReCharge has raised a total of $277 million in funding.

Over the years, the company’s SaaS platform has evolved from a subscription billing/payments platform to include a broader set of offerings aimed at helping e-commerce businesses boost revenues and cut operating costs.

Specifically, ReCharge’s cloud-based software is designed to give e-commerce merchants a way to offer and manage subscriptions for physical products. It also aims to help these brands, primarily direct to consumer companies, grow by providing them with ways to “easily” add subscription offerings to their business with the goal of turning one-time purchasers “into loyal, repeat customers.”

The company has some impressive growth metrics, no doubt in part driven by the COVID-19 pandemic’s push to all things digital. ReCharge’s ARR grew 146% in 2020, while revenue grew over 136% over the same period, according to co-founder and CEO Oisin O’Connor, although he declined to reveal hard numbers. The startup has 15,000 customers and 20 million subscribers across 180 countries on its platform. Customers include Harry’s, Oatly, Fiji Water, Billie and Native. But even prior to the pandemic, it had doubled its processing volume each year for the past five years and has processed over $5.3 billion in transactions since its 2014 inception.

ReCharge also has 328 employees, up from 140 in January of 2020.

“We saw many brick and mortar stores, such as Oatly, offer their products through subscriptions as a result of the pandemic in 2020,” O’Connor told TechCrunch. “Certain categories such as food & beverage and pet foods were some of the fastest growing segments in total subscriber count, with 100% and 147% increases, respectively, as non-discretionary spending shifted online.”

He was surprised to see that growth also extend beyond the most obvious categories. For example, ReCharge saw beauty care products subscribers grow by 120% last year.

“Overall, we saw a 91% subscriber growth in 2020 across the board in all categories of subscriptions,” O’Connor told TechCrunch. “We believe there is a combination of factors at play: the pandemic, the rise of physical subscriptions and the rise of direct-to-consumer buying.”

ReCharge plans to use its fresh capital to accelerate hiring in both R&D (engineering and product) and go-to-market functions such as sales, marketing and customer success. It plans to continue its expansion into other e-commerce platforms such as BigCommerce, Salesforce Commerce Cloud and Magento, and outside of North America into other geographic markets, starting with Europe. ReCharge also plans to “broaden” its acquisition scope so that it can “accelerate” its time-to-market in certain domains, according to O’Connor, and of course build upon its products and services.

Yoonkee Sull, partner at ICONIQ Growth, said his firm has been watching the rapid rise of subscription commerce for several years “as more merchants have looked for ways to deepen relationships with loyal customers and consumers increasingly have sought out more convenient and flexible ways to buy from their favorite brands.”

Ultimately, ICONIQ is betting on its belief that ReCharge “will continue to take significant share in a fast-growing market,” he told TechCrunch.

Sull believes the ReCharge team identified the subscription e-commerce opportunity early on and addresses the numerous nuanced needs of the market with “a fully-featured product that uniquely enables both the smallest merchants and largest brands to easily adopt and scale with their platform.”

Andrew Collins, managing director at Summit Partners, was impressed that the company saw so much growth without external capital for years, due to its “efficiency and discipline.”

The ReCharge team identified a true product-market fit and built a product that customers love — which has fueled strong organic growth as the business has scaled,” Collins added.

Founded by former Carousell and Fave execs, Rainforest gets $36M to consolidate Asia-Pacific Amazon Marketplace brands

A group photo of Rainforest’s team members Elita Subaja, J.J. Chai and Jerry Ng

From left to right: Rainforest business operations and strategy director Elita Subaja; co-founder and CEO J.J. Chai and brand manager Jerry Ng

Singapore-based Rainforest is one of the newest entrants in the wave of startups that “roll-up” small e-commerce brands. Launched in January by alumni from some of Southeast Asia’s top startups, including Carousell, OVO and Fave, Rainforest acquires Amazon marketplace sellers. This is similar to the Amazon-centric approach taken by Thrasio, Branded Group and Berlin Brands Group, three of the highest-profile e-commerce aggregators, but Rainforest is one of the first companies in the space to launch out of Asia and focus specifically on acquiring brands in the region. It is also laser-focused on home goods, personal care and pet items, with the goal of building the e-commerce version of conglomerate Newell Brands, whose portfolio includes Rubbermaid, Sharpie and Yankee Candle.

Rainforest announced today that it has raised seed funding of $36 million led by Nordstar with participation from Insignia Venture Partners. This includes equity financing of $6.5 million and a $30 million debt facility from an undisclosed American debt fund.

Co-founder and chief executive officer J.J. Chai, who previously held senior roles at Carousell and Airbnb, told TechCrunch that Rainforest raised debt financing (like many other e-commerce aggregators) because it is non-dilutive and will be used to acquire about eight to 12 brands sold through Amazon’s B2B service Fulfilled By Amazon (FBA). The startup’s other co-founders are chief financial officer Jason Tan, who held the same roles at OVO and Fave, and chief technology officer Per-Ola Röst, who previously founded Amazon analytics tool provider Seller Matrix and ran a FBA brand worth seven figures.

Rainforest’s portfolio currently includes three brands, which it acquired for about $1 million each. The company wants to wait until its portfolio is larger to disclose what brands it owns, but Chai said they include a mattress brand that is a best seller on Amazon, a cereal maker and a kitchenware brand. Focusing on specific verticals will allow Rainforest to streamline supply chains, product design and marketing as it scales up its brands.

Amazon’s total gross merchandise volume in 2020 was about $490 billion. According to Marketplace Pulse, $300 billion of that came from third-party sellers. Thrasio and Branded Group, which was started by Lazada co-founder and former CEO Pierre Poignant, also acquire Asian brands, but most e-commerce aggregators have so far focus on American, European or Latin American sellers (like Mexico City-based Valoreo, which also recently raised funding). Rainforest will look at sellers in the Asia-Pacific region, including China, Southeast Asia and Australia.

Chai said about 30% of Amazon’s third-party sellers are based in Asia, and he expects more e-commerce aggregators to launch in the region. “All the ingredients are there and I guess it’s just a matter of time when more people figure it out and solve this problem,” he said. “Everything we’ve seen has worked out, and of course the original creators noticed this trend, which is that there is an explosion of microbrands.”

Rainforest looks for home goods, personal care or pet product FBA sellers that are currently doing about $5 million to $10 million in sales per year, and making a minimum 15% profit margin. Most of its pipeline of potential deals are inbound inquiries. Rainforest can give brands a valuation within two days. If they are interested in the offer, due diligence usually takes about a month, and sellers get the first tranche of their payment in about 40 days.

The company plans to look at other marketplaces in the future, but is starting with Amazon because its analytics allows quicker valuations. Rainforest looks at the “Three R’s,” or product reviews, ratings and ranking, to see how well a seller is performing. It also wants brands that can expand beyond Amazon into other channels and have unique intellectual property with wide appeal. “We’re looking for products that can traverse global markets,” said Chai. “So, for example, no lawnmower covers, a very American kind of thing that’s maybe less relevant in this part of the world, because our intention is to take these brands to their next level potential.”

Many of the brands in Rainforest’s pipeline are run by sole proprietors who have gotten to the point where they need to hire a team to continue growing, but want to exit instead so they can move on to their next venture.

“Being able to create a physical goods brand and build a sizable business out of it is a relatively new phenomenon. It used to be that you needed a factory, big branding, R&D. The combination of online advertising, marketplaces and supply chains being disrupted has created an opportunity where individuals can create brands in the same way that the App Store allowed people to start distributing software,” said Chai. “Where we play into that trend is that there are a lot of microbrands and many will get stuck, so we can give the entrepreneurs a way to exit and bring a brand to its full potential.”

Una Brands launches with $40M to roll up brands on multiple Asia-Pacific e-commerce platforms

Una Brands' co-founders (from left to right): Tobias Heusch, Kiran Tanna and Kushal Patel

Una Brands’ co-founders (from left to right): Tobias Heusch, Kiren Tanna and Kushal Patel. Una Brands Una Brands

One of the biggest funding trends of the past year is companies that consolidate small e-commerce brands. Many of the most notable startups in the space, like Thrasio, Berlin Brands Group and Branded Group, focus on consolidating Amazon Marketplace sellers. But the e-commerce landscape is more fragmented in the Asia-Pacific region, where sellers use platforms like Tokopedia, Lazada, Shopee, Rakuten or eBay, depending on where they are. That is where Una Brands comes in. Co-founder Kiren Tanna, former chief executive officer of Rocket Internet Asia, said the startup is “platform agnostic,” searching across marketplaces (and platforms like Shopify, Magento or WooCommerce) for potential acquisitions.

Una announced today that it has raised a $40 million equity and debt round. Investors include 500 Startups, Kingsway Capital, 468 Capital, Presight Capital, Global Founders Capital and Maximilian Bitner, the former CEO of Lazada who currently holds the same role at secondhand fashion platform Vestiaire Collective.

Una did not disclose the ratio of equity and debt in the round. Like many other e-commerce aggregators, including Thrasio, Una raised debt financing to buy brands because it is non-dilutive. The round will also be used to hire aggressively in order to evaluate brands in its pipeline. Una currently has teams in Singapore, Malaysia and Australia and plans to expand in Southeast Asia before entering Taiwan, Japan and South Korea.

Tanna, who also founded Foodpanda and ZEN Rooms, launched Una along with Adrian Johnston, Kushal Patel, Tobias Heusch and Srinivasan Shridharan. He estimates that there are more than 10 million third-party sellers spread across different platforms in the Asia-Pacific.

“Every single seller in Asia is looking at multiple platforms and not just Amazon,” Tanna told TechCrunch. “We saw a big gap in the market where e-commerce is growing very quickly, but players in the West are not able to look at every platform, so that is why we decided to focus on APAC, launch the business there and acquire sellers who are selling on multiple platforms.”

Una looks for brands with annual revenue between $300,000 to $20 million and is open to many categories, as long as they have strong SKUs and low seasonality (for example, it avoids fast fashion). Its offering prices range from about $600,000 to $3 million.

Tanna said Una will maintain acquisitions as individual brands “because what’s working, we don’t change it.” How it adds value is by doing things that are difficult for small brands to execute, especially those run by just one or two people, like expanding into more distribution channels and countries.

“For example, in Indonesia there are at least five or six important platforms that you should be on, and many times the sellers aren’t doing that, so that’s something we do,” Tanna explained. “The second is cross-border in Southeast Asia, which sellers often can’t do themselves because of regulations around customs, import restrictions and duties. That’s something our team has experience in and want to bring to all brands.”

Amazon FBA roll-up players have the advantage of Amazon Marketplace analytics that allow them to quickly measure the performance of brands in their pipeline of potential acquisitions. Since it deals with different marketplaces and platforms, Una works with much more fragmented sources of data for revenue, costs, rankings and customer reviews. To scale up, the company is currently building technology to automate its valuation process and will also have local teams in each of its markets. Despite working with multiple e-commerce platforms, Tanna said Una is able to complete a deal within five weeks, with an offer usually happening within two or three days.

In countries where Amazon is the dominant e-commerce player, like the United States, many entrepreneurs launch FBA brands with the goal of flipping them for a profit within a few years, a trend that Thrasio and other Amazon roll-up startups are tapping into. But that concept is less common in Una’s markets, so it offers different team deals to appeal to potential sellers. Though Una acquires 100% of brands, it also does profit-sharing models with sellers, so they get a lump sum payment for the majority of their business first, then collect more money as Una scales up the brand. Tanna said Una usually continues working with sellers on a consulting basis for about three to six months after a sale.

“Something that Amazon players know very well is that they can find a product, sell it for four to five years, and then ideally make a multi-million deal exit and build another product or go on holiday,” said Tanna. “That’s something Asian sellers are not as familiar with, so we see this as an education phase to explain how the process works, and why it makes sense to sell to us.”

Egypt’s Flextock closes $3.25M in the largest pre-seed yet in MENA

Flextock, one of the 10 African startups from the recent Y Combinator winter batch, has bagged an impressive pre-seed round just two months after graduation

The five-month-old company, which helps consumers and businesses manage e-commerce and fulfillment operations —  from warehousing and logistics to delivery and cash collection — has closed a $3.25 million pre-seed investment.

As it stands, this is a record high for the MENA region, which also had a record-high two months ago in fellow Egyptian and YC winter batch startup Dayra. The fintech company raised $3 million in debt and equity.

Mohamed Mossaad and Enas Siam founded Flextock in September 2020. However, the company didn’t launch until January 2021. When we covered the company in March, it had just raised $850,000 but CEO Mossaad made it clear that more was still to come.

The investors in this round include Egyptian VC Foundation Ventures, Y Combinator, MSA Capital, CRE Ventures, Alter Global, Jameel Investment Management Company (JIMCO), B&Y Ventures Partners and Access Bridge Ventures. The company also received angel investments from an unnamed Sequoia Capital scout, investors in the GCC region and Flexport.

Flextock currently serves the Egyptian market. It leverages proprietary software to offer merchants end-to-end e-commerce fulfillment and logistics solutions on demand. Since its launch, the company claims to have signed more than 100 merchants to its platform, with thousands of stock-keeping units (SKUs). The company also says it is growing 25% week-on-week. 

“In the last two months we launched different products to help merchants grow their brands more efficiently,” Mossaad told TechCrunch.” We’ve built various partnerships with different logistics services providers in the market to offer merchants an E2E experience, quadrupled the number of merchants and doubled the size of our team.”  

Flextock wants to capture a large portion of MENA’s $25 billion e-commerce logistics market, and Mossaad says the funding will help with that ambition. The company plans to put the funding into strengthening its presence in Egypt, technology, recruitment and regional expansion before the end of the year.

In the MENA region, Trella is another Egyptian logistics company backed by YC. The accelerator has now invested in four logistics and digital freight focused startups, including Nigeria’s Kobo and SEND, ever since it successfully backed Flexport in 2014.

Despite having a global operation, the freight forwarder is testing the waters in the MENA region — on the Flexport website, there’s a role for a Partnerships Manager, Turkey & Middle East. Although Flexport has freight forwarding and custom partners in the region, its interest in deepening reach in MENA might have spurred it to examine other opportunities. Flextock which provides e-commerce fulfillment appears to be one following the global freight provider’s “strategic investment” in the Egyptian company.

CEO Mossaad said that having Flexport onboard not only serves as a strong vote of confidence to the company’s growth potential but will help it build a regional interconnected network of e-commerce logistics services providers by leveraging their wide network of partners around the world.  

That said, it will be interesting to see how this investment plays out in the foreseeable future.

For Mazen Nadim, the managing partner at Foundation Ventures, Flextock’s e-commerce fulfillment and logistics play will be key to realizing the regional dominance it craves.

“We recognize the massive opportunity in logistics presented by the rise of e-commerce in the region,” he said. “Flextock is building the underlying infrastructure so that any e-commerce player can scale their operations on-demand.”

Flextock’s investment continues the series of seven-figure pre-seed rounds that have become more prevalent in the African tech scene. No less than six startups (including Flextock) have raised $1 million or more in this round in the past year. They include Egypt’s Zedny, Cassbana and Flick; and Nigeria’s Okra and Autochek, with the latter raising the largest pre-seed investment yet in Africa at $3.4 million.   

A new YouTube feature will make its connected TV ads more shoppable

YouTube today gave advertisers a sneak peek at its plans to make its video platform more shoppable. The company will soon be introducing a new interactive feature aimed at advertisers called brand extensions, which will allow YouTube viewers to learn more about a product they see on the screen with a click of a button.

The new ad format will allow the advertiser to highlight their website link or another call-to-action in their connected TV video ad. The viewer can then click the option “send to phone,” which then sends that promotion or URL directly to their mobile device, without interrupting their viewing experience.

From the mobile device, the consumer could then shop the website as they would normally — browsing products, adding items to the cart, and completing the transaction. But they can do it when they’re ready to engage with that product information, instead of having to stop their video to do so.

The advertisers will also be able to smartly target the ads to the correct audience, based on the video content. For example, a fitness video may feature a brand extension ad that shows a new pair of running shoes.

Advertisers will be able to measure the conversions generated by these brand extensions directly in Google Ads, YouTube says.

In a related e-commerce ad effort, brands can now also add browsable product images to their direct response video ads, in order to encourage interested shoppers to click to visit their website or app.

These are only a few of the efforts YouTube has been working on with the goal of expand further into e-commerce.

Consumers, and particularly younger Gen Z users, today like to watch videos and engage while they shop, leading to the emergence of numerous video shopping services — like Popshop Live, NTWRK, ShopShops, TalkShopLive, Bambuser, and others. Facebook has also invested in live shopping and video-based shopping across both Facebook and Instagram.

Meanwhile, TikTok has become a home to video-based e-commerce, with Walmart (which also tried to acquire a stake in the app when Trump was trying to force a sale) hosting multiple shopping livestreams in recent months. TikTok also found success with e-commerce as it has rolled out more tools to direct video viewers to websites through integrated links and integrations with Shopify, for example.

But YouTube still has a sizable potential audience for video shopping, as it represents 40% of watch time of all ad-supported streaming services, per Comscore data. And of the top five streaming services in the U.S. that account for 80% of the connected TV market, only two are ad-supported, YouTube noted.

Ads are only one way YouTube will drive e-commerce traffic. Creators will also play a role.

A report from Bloomberg this past fall said YouTube was asking creators to tag and track the products they were featuring in their clips. YouTube later revealed more about this effort in February, saying it was beta testing a shopping experience that lets viewers shop from their favorite creators, and that this would roll out more broadly in 2021.

Brand extensions are separate from that effort, however, as they’re focused on giving the advertiser their own means to drive a shopping experience from a video.

YouTube says the new brand extensions ads are only the first of more interactive features the company has in store. The feature will roll out globally later this year.

Berlin’s Razor Group raises $400M to buy and scale Amazon Marketplace merchants

The market remains very hot for startups building e-commerce empires by consolidating independent third-party merchants that have gained traction on Amazon’s Marketplace, and in the latest development, Razor Group — a Berlin-based startup buying up promising Amazon sellers and scaling them into bigger, multi-channel businesses — has closed financing of $400 million to scale its own efforts in the space.

Around $25 million is coming in the form of equity to grow its business and $375 million is in debt to make acquisitions, with target businesses typically already pulling in between $1 million and $15 million in annual revenues.

Razor Group itself is not even a year old but has been building out its business at a fast pace. Founded in August 2020, in the last eight months, CEO Tushar Ahluwalia said the startup has grown to 107 employees across four offices and is currently on track to cross $120 million (€100 million) in sales from the 30 brands it has already amassed in its stable in categories like personal wellness, sports and home and living. Assuming the debt capital it’s now raised is put to use, Ahluwalia believes Razor Group will cross $480 million (€400 million) in sales in the next 12 to 15 months.

As a point of comparison, Thrasio, one of the older players in this current market, was founded in 2018 and has 100 brands in its stable.

Indeed, there are, as you might have seen, a lot of others in the market pursuing the “FBA rollup” model — consolidating businesses that have been built on the back of Fulfillment by Amazon, with the pitch being they can apply more sophisticated economies of scale, analytics and management to grow great cottage industries into high rises, so to speak. But Razor believes its point of differentiation is its focus on technology to improve its responsiveness to the market, both when it comes to identifying and buying brands, and then growing them.

It’s a big opportunity. By one estimate there are about 5 million third-party sellers on Amazon today, and their ranks are growing exponentially, with more than 1 million sellers joining the platform in 2020 alone. Thrasio has in the past estimated to me that there are probably 50,000 businesses selling on Amazon via FBA making $1 million or more per year in revenues.

“It’s perfectly acceptable to build an FBA-based business, but at some point you can move beyond that,” Ahluwalia said in an interview. “We want to transform what we see as the levers of business operations in this space. We don’t see ourselves as the next P&G, but a new version of it, building microchampions in micromarkets, identifying underpriced digital real estate. Just thinking about it as abritrage is not enough.”

The funding, a mixture of equity to invest in the startup itself and debt to use for acquisitions (and it is mostly debt), is being led by funds and accounts managed by BlackRock and Victory Park Capital (“VPC”) as well as its existing shareholders, a list that includes a number of individuals as well as VCs such as Redalpine, FJ Labs and Global Founders Capital, the VC firm co-founded by the Samwer Brothers, also behind the well-known Berlin e-commerce incubator Rocket Internet.

Ahluwalia and Razor’s head of finance Christoph Gamon — who together co-founded Razor with CTO Shrestha Chowdury — are both Rocket Internet alums, and Ahluwalia and Chowdury also worked on a previous e-commerce business in India called StalkBuyLove (a clone of Wanelo — short for “Want Need Love” — for India, I think) that ran out of cash and shut down.

All of that speaks to both the inroads that the founders may have had into gaining some early financing from other Rocket alums and others, as well as their experiences, both good and bad, of what it takes to grow and scale e-commerce businesses.

Including the $25 million in this latest tranche, the funding brings the total raised in equity by Razor Group to about $40 million — with the previous money being used to get the ball rolling and “validate the model”, Ahluwalia said. It’s not disclosing its valuation today but he confirmed it’s also raising another, larger equity round when it will be speaking more about that.

Meanwhile, the huge injection of debt financing it is getting for acquisitions — doubled after its original plan to raise $200 million got a lot of interest — is a sign not just of what investors and Razor Group itself see as an opportunity, but also of the encroaching competition from other roll-up players that are also well capitalized also setting their sights on buying up the most promising independent businesses selling via Amazon and other marketplace providers.

That list of competitors is getting longer by the day. It includes Thrasio, one of the first startups to identify and build out this space, which has raised very large rounds in rapid succession totaling hundreds of millions of dollars in the last year, and is profitable; Branded; Heroes; SellerX; Perch; Berlin Brands Group (X2); Benitago; and Valoreo (with its backers including Razor’s CEO).

The opportunity is also breeding other e-commerce startups like Jungle Scout, which has also raised $110 million recently, providing tools to some of those third-party sellers to help them stay, in fact, independent (or at least grow more to be more valuable to acquirers)

Razor believes that its ability to stand out in this crowd will not just be based on how much money it has to spend, but on the technology that it is using to identify the best third-party sellers faster in order to roll them up first, and then to leverage that early move by giving those companies better tools to grow faster.

Chowdhury describes the platform that she has built as “M&A 2.0”, a system that performs “massive due dilligence” at machine scale by evaluating some 1 million companies each week as they perform on platforms like Amazon’s. “Technology runs through the whole business,” she said, started with the acquisitions, where Razor is identifying the most interesting companies faster than others, she said. “We look at thousands of data points,” building algorithms, she continued, “to flag what we want to acquire. It means that our acquisitions funnel is 99% sourced directly and we don’t rely on brokers.” Brokers, she said, are something of a unspoken part of this area, but bypassing them means less competition and better pricing.

Being early also means building better relationships with the owners of these businesses, with less time pressure.

“Dealmaking is something extremely personal,” Ahluwalia said. “A seller needs to like you. Our calculations have allowed us to be the first in these deal conversations”

Further along, that data will also help Razor build those businesses and figure out where else brands can be sold beyond Amazon and how to sell them better.

That is a plan that has yet to be proven out, given the age of the company, but investors — adding up the numbers and track record of these founders, and the tech they have built — are willing to bet on this one.

“We are excited to partner with Tushar, Chris, and the rest of the Razor Group team. The ability to identify, underwrite, integrate and ultimately create tangible value across a broad suite of eCommerce assets is a real competitive advantage in the marketplace,” said Tom Welch, partner at VPC, in a statement.

“We are pleased to make this investment in Razor Group to support the company’s strong growth momentum as it continues to diversify its portfolio of brands and expand into new markets,” added Dan Worrell, MD at BlackRock.

As concerns rise over forest carbon offsets, Pachama’s verified offset marketplace gets $15 million

Restoring and preserving the world’s forests has long been considered one of the easiest, lowest cost, and simplest ways to reduce the amount of greenhouse gases in the atmosphere.

It’s by far the most popular method for corporations looking to take an easy first step on the long road to decarbonizing or offsetting their industrial operations. But in recent months the efficacy, validity, and reliability of a number of forest offsets have been called into question thanks to some blockbuster reporting from Bloomberg.

It’s against this uncertain backdrop that investors are coming in to shore up financing for Pachama, a company building a marketplace for forest carbon credits that it says is more transparent and verifiable thanks to its use of satellite imagery and machine learning technologies.

That pitch has brought in $15 million in new financing for the company, which co-founder and chief executive Diego Saez Gil said would be used for product development and the continued expansion of the company’s marketplace.

Launched only one year ago, Pachama has managed to land some impressive customers and backers. No less an authority on things environmental than Jeff Bezos (given how much of a negative impact Amazon operations have on the planet), gave the company a shoutout in his last letter to shareholders as Amazon’s outgoing chief executive. And the largest ecommerce company in Latin America, Mercado Libre, tapped the company to manage an $8 million offset project that’s part of a broader commitment to sustainability by the retailing giant.

Amazon’s Climate Pledge Fund is an investor in the latest round, which was led by Bill Gates’ investment firm Breakthrough Energy Ventures. Other investors included Lowercarbon Capital (the climate-focused fund from über-successful angel investor, Chris Sacca), former Über executive Ryan Graves’ Saltwater, the MCJ Collective, and new backers like Tim O’Reilly’s OATV, Ram Fhiram, Joe gebbia, Marcos Galperin, NBA All-star Manu Ginobilli, James Beshara, Fabrice Grinda, Sahil Lavignia, and Tomi Pierucci.

That’s not even the full list of the company’s backers. What’s made Pachama so successful, and given the company the ability to attract top talent from companies like Google, Facebook, SapceX, Tesla, OpenAI, Microsoft, Impossible Foods and Orbital Insights, is the combination of its climate mission applied to the well-understood forest offset market, said Saez Gil.

“Restoring nature is one of the most important solutions to climate change. Forests, oceans and other ecosystems not only sequester enormous amounts of CO2from the atmosphere, but they also provide critical habitat for biodiversity and are sources of livelihood for communities worldwide. We are building the technology stack required to be able to drive funding to the restoration and conservation of these ecosystems with integrity, transparency and efficiency” said Diego Saez Gil, Co-founder and CEO at Pachama. “We feel honored and excited to have the support of such an incredible group of investors who believe in our mission and are demonstrating their willingness to support our growth for the long term”. 

Customers outside of Latin America are also clamoring for access to Pachama’s offset marketplace. Microsoft, Shopify, and Softbank are also among the company’s paying buyers.

It’s another reason that investors like Y Combinator, Social Capital, Tobi Lutke, Serena Williams, Aglaé Ventures (LVMH’s tech investment arm), Paul Graham, AirAngels, Global Founders, ThirdKind Ventures, Sweet Capital, Xplorer Capital, Scott Belsky, Tim Schumacher, Gustaf Alstromer, Facundo Garreton, and Terrence Rohan, were able to commit to backing the company’s nearly $24 million haul since its 2020 launch. 

“Pachama is working on unlocking the full potential of nature to remove CO2 from the atmosphere,” said Carmichael Roberts from BEV, in a statement. “Their technology-based approach will have an enormous multiplier effect by using machine learning models for forest analysis to validate, monitor and measure impactful carbon neutrality initiatives. We are impressed by the progress that the team has made in a short period of time and look forward to working with them to scale their unique solution globally.” 

 

India’s ElasticRun raises $75 million to grow its commerce platform for neighborhood stores

A startup that is helping over 125,000 neighborhood stores in India secure working capital, inventory from top brands, and work with e-commerce firms to boost revenues said on Thursday it has raised a new financing round as it looks to further its reach in the world’s second largest internet market.

Pune-based ElasticRun said it has raised $75 million in its Series D financing round co-led by existing investors Avataar Ventures and Prosus Ventures. Existing investor Kalaari Capital also participated in the round, which takes the four-year-old startup’s to-date raise to $130.5 million.

Millions of neighborhood stores that dot large and small cities, towns and villages in India and have proven tough to beat for e-commerce giants and super-chain retailers are at the center of a new play in the country.

A score of e-commerce companies, offline retail chains and fintech startups are now racing to work with these mom and pop stores as they look to tap a massive untapped opportunity.

Screen Shot 2019 10 30 at 2.18.53 PM

Sandeep Deshmukh, co-founder and CEO of ElasticRun, talking about the startup’s business at a conference in 2019.

ElasticRun helps merchants operating these stores, who typically have to spend a few days a month visiting bigger cities to secure inventory, get reliable and more affordable goods directly from big brands. (Big brands love this because this enables them to significantly expand their reach.)

These store owners also spend a number of hours a day not doing much when the business is slow. ElasticRun is also addressing this by partnering with some of the biggest e-commerce firms including Amazon and Flipkart to utilize this workforce to make deliveries to customers. (E-commerce firms find value in this because neighborhood stores have a larger presence in the country, can reach a customer much faster, and also often have their own inventory.)

Ashutosh Sharma, Head of Investments for India at Prosus Ventures, told TechCrunch that ElasticRun has built a variable capacity, crowdsourced delivery model, which distinguishes the startup from other players in the market that have a fixed number of people on payrolls making these deliveries. He said as the startup has developed the railroads, a number of new opportunities has unlocked.

One such opportunity is providing working capital to these neighborhood stores. Their operators typically don’t have savings, and need to sell the existing inventory to secure funds to refill the stock. In recent years, ElasticRun has struck partnerships with banks and NBFCs to provide credit to these merchants.

ElasticRun today operates in over 300 cities in nearly all Indian states. The startup works with over 125,000 neighborhood stores, and plans to expand to reach 1 million in 18 to 24 months, said Shitiz Bansal, co-founder and chief technology officer of ElasticRun, in an interview with TechCrunch.

The startup’s current run rate is about $350 million, a figure it plans to grow to over $1 billion in the next 12 months, he said.

Saurabh Nigam, co-founder and chief operating officer, said the new financing round has also enabled the startup to offer early employees access to “tangible benefits” of the firm’s growth over the last five years.

The SPAC boom isn’t just here to stay, it’s changing consumer tech

Consumer technology is an inherently risky investment sector: even the best idea can fall flat if the story of the product is not sold properly to the end user. The stats can only take you so far, and, eventually, customers want to believe in the product.

Traditionally, companies that have successfully told their story and become market leaders have taken the initial public offering route — pitching their story to institutional investors on banker-led roadshows rather than to the people that buy their products.

But the last 18 months have seen a new door open for companies seeking to skip the bankers, partner with good managers, and gain a more direct route to public capital: merging with a Special Purpose Acquisition Company, or SPAC.

For the right consumer technology companies — for which the story is often just as, if not more, important than the financial figures — a SPAC deal offers a more direct access to public capital. Instead of walking institutional investors through the P&L, these companies can spend more time telling investors, including the retail investors using the products, what the company can be long-term.

There is no denying the growing popularity of this avenue to public exchanges: more than 200 companies went public via a SPAC deal in 2020. But as with any asset that grows hot, there will be parties out there expecting it to blow up.

Lessons have been learned and we probably have more coming, but those who treat SPACs as a sign of the end-days of economic recovery are wrong. These vehicles offer a legitimate route to the public markets while stripping out traditional gatekeepers and allowing individual investors to decide if they want to buy — or sell — a company’s story.

The SPAC bubble claim

First, it is important to address the naysayers’ concerns. Given the meteoric rise in SPAC activity, analysts speculate that the trend is overblown; they argue that companies are listing too early and that money losers are getting access to public capital before they deserve it.

But when is it “too early” to enter the public market? DraftKings, one of the most successful SPAC stories of 2020, went public about eight years after it was founded, and Facebook was private for a similar length of time before its IPO. Meanwhile, Apple, the most profitable company in the world, listed less than four years after its founding. Tenure may be a factor in investors’ minds, but lack thereof has never stopped a company from listing on the public markets.

Profitability has also rarely been a requirement for an IPO. Uber, Tesla, and Amazon are all prime examples of unprofitable businesses that listed while reporting losses.

In all these examples, clear, coherent visions, strong leadership teams, and patience from investors to see leaders execute on their vision overcame the traditional financial barometers of success.

The market knows how to value a story

The public markets are obsessed with quarterly results. A company can miss analysts’ expectations for earnings per share by just a cent and its stock will be sent tumbling. However, not all companies are assessed this way: Many companies are valued on their vision for the future and their progress towards their goals. SPACs are an effective way to invest in a strong team or vision even when there’s not enough financial data to back a traditional investment.

Biotech firms are an excellent and timely example of the way investors are looking at the market, especially post-pandemic. Biotechs usually describe a treatment they are developing and the patients it could help; they provide estimates of the addressable market, the price they could charge, and the timeline they could expect to get through clinical trials. However, an early-phase biotech could be years away from selling any drugs, let alone turning a profit. The FDA estimates the time to complete Phase II and Phase III trials, the final phases before applying for approval, can total up to six years.

Yet, investors pour money into these companies. Analysts estimate the likelihood of a drug advancing in its trials after detailed scrutiny, but these companies can see their stocks rise for years while losing money. The markets will expect high returns for taking these risks, but they can arrive at a price nonetheless.

The storytellers of consumer tech

The SPAC route is a match made in heaven for consumer tech companies: SPACs put more of a focus on the management team and the vision than traditional IPOs, which is a boon for the sector, as this industry has always been dominated by visionaries.

Looking ahead, the savviest investors in SPACs will be paying close attention to direct-to-consumer technology, but not in the traditional, limited sense of D2C.

Consumers are looking for goods and services that they can access more quickly and reliably than ever before. Conveniently, the companies that tend to succeed in ramping up these options through technology are natural storytellers that know how to bring their product directly to the end-user. Inevitably, these firms are going to be on the radar of SPAC investors.

For example, fintech, in many ways, has become direct-to-consumer because it offers customers banking features directly on their phones. In just the last year, innovation in telemedicine has brought most health appointments from the waiting room to the living room, and forced outdated healthcare administration practices to embrace digital systems.

Products you could only buy at physical stores, like mattresses, can now be delivered straight to your door with companies like Casper and Purple. Certain auto companies will allow you to even design and buy a car as easily as ordering a pizza.

The COVID-19 pandemic has only accelerated this trend by exposing the need for faster, tech-driven access to services, and our “return to normal” means this trend is only going upwards. SPACs will be around to bring these ideas to market faster and provide the capital these companies need to meet the demand.

The road ahead

Despite the speculation, naysaying and “bubble” talk, SPACs have been around for decades and aren’t going to disappear in a flash. Indeed, the pace of SPAC deals might cool down and carry a higher risk premium as the trend continues, but just like the changes in consumer technology, SPACs themselves will evolve to best serve their consumers.

In many ways, the SPAC model is very similar to the way consumer technology has developed: It encourages disruption of established constructs. What’s more, investors in pre-acquisition SPACs get access to venture-like opportunities without the capital traditionally required for such investments.

In the end, a company’s success will depend on it meeting or exceeding targets, or if something pulls demand forward. The rules have not changed, and neither has the risk or the reward.