WTF are ISAs? (and can they transform education and spark a startup wave?)

Soaring college tuition prices have left Americans drowning in debt without a correspondingly enhanced set of professional skills to show for it. In the past 11 years, US student debt has increased by 157% and 1 in 10 borrowers are over 90 days delinquent.

Universities are incentivized to be unaffordable and don’t have a direct financial interest in the outcomes of their students. The average budget for career services at colleges is $90,000 including salaries, with only one career counselor for every 2,900 students on average.

Income share agreements (ISAs) have been developed as a financing model that could reshape the way education programs operate by aligning interests while expanding access to those programs and limiting payments only to what graduates can afford.

Lambda School may be the most notable startup advancing this model, having closed a $30 million Series B in January. But ISAs are neither simple to implement nor uncontroversial in policy circles.

April 1, 2019

Bringing affiliate marketing and outsourced customer acquisition to Brazil nets Escale $22.6 million

Despite not being Brazilian and having their first exposure to the country only a few years ago, the two co-founders of Escale have managed to raise $22.6 million for their company, which provides customer acquisition services to companies in telecommunications and healthcare across Brazil.

Their secret? A knowledge of search engine optimization technologies honed through side businesses the two ran back in the United States.

The state of online marketing and digital sales was so woefully bad in Brazil that co-founders Matthew Kligerman and Ken Diamond had a green field in front of them on which to build Brazil’s first true online customer acquisition service, according to Diamond.

“We fell in love with Brazil for its warm culture and natural beauty, but as consumers, we had terrible experiences acquiring the most fundamental products and services for our new lives: internet, cell phone plans, health insurance and basic banking needs,” Kligerman said in a statement.

The company’s largest customer, according to Diamond, is NET, the Brazilian cable and telecom operator. NET was the first company to sign on for Escale’s customer acquisition services, but the company’s roster of clients now includes some of Brazil’s largest companies including Bradesco, Sul America, Claro, GNDI, and Amil.

It’s that marquee client list that attracted QED Investors and Invus Opportunities to co-lead the $22.6 million round that Escale just closed. The company’s previous investors Kaszek Ventures, Rocket Internet’s GFC and Redpoint e.Ventures also participated in the funding.

Latin America is in the throes of a startup renaissance at the moment with Brazilian companies like Nubank and iFood and the Colombian company Rappi reaching billion dollar valuations. Meanwhile investors are committing more capital to the region. Softbank, for instance is Softbank committing $5 billion to a new Latin American-focused fund.

With the new funding, Escale intends to move deeper into the development of customer acquisition platforms across verticals like consumer finance, insurance, and education with comparison shopping sites and informational services (a la CreditKarma in the U.S.).

“With millions of web and cloud voice interactions every month, Escale can transform each of those interactions into data points, and continually improve its proprietary acquisition platform, ‘EscaleOS’, to create highly-intelligent, customized marketing and sales funnels, helping consumers at the right moment connect with the products and services they need,” says Nicolas Berman, a partner at Kaszek Ventures. “The more consumer interactions they have, the faster Escale’s data flywheel spins.”

April 1, 2019

Jio Health combines online and offline healthcare in Southeast Asia, starting in Vietnam

The internet is often lauded for the potential to increase the impact of a range of primary services in emerging markets, including education, commerce, banking and healthcare. While many of those platforms are now being built, a few are finding that a hybrid approach combining online and offline is advantageous.

That’s exactly what Jio Health, a ‘full stack’ (forgive the phrase) healthcare startup is bringing to consumers in Southeast Asia, starting in Vietnam.

The company started out as a U.S-based venture that worked with healthcare providers around the ‘Obamacare’ initiative, before sensing the opportunity overseas and relocating to Vietnam, the Southeast Asian market of 95 million people and a fast-growing young population.

Today, it operates an online healthcare app and a physical facility in Saigon, it also has licenses for prescriptions and over the counter drug sales. The serviced launched nearly a year ago, already the company has some 130 staff, including 70 caregivers — including doctors — and a tech team of 30.

The idea is to offer services digitally, but also provide a physical location for when it is needed. Therein, the company ensures that “every element of that journey” is controlled and of the required standard, that’s in contrast to services that partner with hospitals or other care centers.

The scope of Jio Health’s services range from pediatrics to primary care, chronic disease management and ancillary services, which will soon cover areas like eye care, dermatology and cancer.

“Our initial research [before moving] found that healthcare in Vietnam was unlike the U.S,” Raghu Rai, founder and CEO of Jio Health, told TechCrunch in an interview. “Spending is primarily driven by the consumer (out of pocket) and there’s no real digital infrastructure to speak of.”

Rai — a U.S. citizen — said doctors typically “have minutes per patient” and get through “hundreds” of consultations in every morning shift. That gave him an idea to make things more efficient.

“We can probably address north of 80 percent of consumers health needs,” he said of Jio Health,” but we also have referral partnerships with certain hospitals.”

Raghu Rai is CEO and founder of Jio Health

The process begins when a consumer downloads the Jio Health app and inputs primary information. A representative is then dispatched to visit the consumer in person, potentially within “hours” of the submission of information, according to Rai.

He believes that Jio Health can save its users money and time by using remote consultancy for many diagnoses. The company also works with health insurance companies, for areas like annual checkups, and Rai said that McDonald’s and 7-Eleven are among the corporations that offer Jio Health among the providers for their staff, they’re not exclusive.

This week, Jio Health announced that it has closed a $5 million Series A funding from Southeast Asia’s Monk’s Hill Ventures . Rai said the company plans to use the capital for expansion. In particular, he said, the company is adding new care categories this month — including eye care and dermatology — and it is working towards expanding its brand through marketing.

Further down the line, Rai said the company hopes to expand to Hanoi before the end of this year. While there is interest in moving into other markets within Southeast Asia, that isn’t about to happen soon.

“We have begun to investigate other markets but at this point feel the market in Vietnam is substantial in itself,” he told TechCrunch. “It’s very plausible that we’d be looking at international expansion plans in 2020… we’re going to be focused on Southeast Asia.”

March 30, 2019

Ride-hailing, bike and scooter companies probably raised less money than you thought

Jason Rowley Contributor

Jason Rowley is a venture capital and technology reporter for Crunchbase News.

Ride-hailing, bike and scooter companies probably raised less money than you thought

Jason Rowley Contributor

Jason Rowley is a venture capital and technology reporter for Crunchbase News.

Huawei books $8.8B profit for 2018 as consumer devices become top moneymaker

Despite an ongoing tussle with the U.S. government, signs look positive for Huawei. The Chinese firm just released its end of year report for 2018 and profit is up 25 percent to 59.3 billion CNY, or $8.84 billion, thanks to its fast-growing smartphone and devices business.

Huawei isn’t a public company but it does release financial reports that are audited by KPMG. The big takeaway from its latest financials is that it has become a hardware company — that’s to say that revenue from consumer devices overtook Huawei’s core telecom business, which involves selling networking gear to carriers.

Overall revenue for 2018 was 721 billion CNY, or $107.4 billion, which represented a 19.5 increase year-on-year.

Huawei said revenue from its consumer business rose by 45 percent to reach 349 billion CNY ($52 billion), with its carrier business dropping 1.3 percent to 294 billion CNY, or $43.8 billion. Enterprise services is the third revenue bucket, and that accounted for the remaining 74.4 billion CNY.

The company is, unsurprisingly, still reliant on China, which accounted for 52 percent of its revenue in 2018 although Huawei saw stronger growth from other global markets. Its business in the Americas, however, lags that of Europe and The Middle East and Asia Pacific in terms of revenue, and that isn’t likely to change soon.

Huawei’s end of year financials show its consumer devices business is now its main money-maker

Huawei is certainly riding some momentum in the consumer space, having launched its latest P30 and P30 Pro smartphones last week — which come with some very impressive camera specs — and generally climbed the smartphone sales chart. Research firm IDC said Huawei grew its shipment volumes 33.6 percent thanks to its Honor brand. The firm ranked Huawei third with 16.1 percent market share in Q4 2018.

It’s on the carrier front where Huawei is being tested hardest.

The Chinese company has fought back against a ban on its equipment in the U.S. through a lawsuit arguing that federal agencies and contractors have violated due process and acted in a way that is unconstitutional. Still, the U.S. concern around national security has been fortified by a U.K. government report released this week which claimed there are “significant technical issues” around adopting its telecom network kit.

The report, prepared for the National Security Advisor of the UK by the Huawei Cyber Security Evaluation Centre (HCSEC) Oversight Board, said it has “not yet seen anything to give it confidence in Huawei’s capacity to successfully complete the elements of its transformation programme that it has proposed as a means of addressing these underlying defects.”

March 29, 2019

Venezuela is losing a generation of tech talent to its humanitarian crisis

The escalating crisis in Venezuela has seen sky-high hyperinflation, widespread hunger and a large-scale exodus out of the country. The desperate circumstances have led to more than three million Venezuelans leaving the country for a better life. According to recent numbers published by the UN, Latin American countries have doled out around 1.3 million residence permits and other state authorisations to Venezuelans in need.

The impact on the country has been generational and this effect is no different when applied to its tech sector. Once considered one of the centres of wealth and innovation in Latin America, Venezuela’s capital Caracas now stands a shell of its former self, having seen a core of top talent leave for other countries on the continent.

“At the end of the day they’re going to leave,” Daniel Knobelsdorf told us about the situation in Caracas. “Eventually, the market is going to enter a phase of cannibalising itself.”

Knobelsdorf has seen the carnage in Caracas first-hand having spent much of his time within the city’s entrepreneurial circles.

Formerly an advisor to a parliamentary committee on Science, Technology and Innovation in Venezuela, Knobelsdorf is now blockchain strategist for Kruger Corp and has regularly seen Venezuela’s top tech minds–particularly among experienced candidates–find greener pastures elsewhere. “Most of the tech guys here are very junior,” he said, “By the time you get a person going full-stack or getting more senior, they’re going to be leaving for Chile.”

The crisis in Venezuela’s first major symptom was a hyper-inflating currency which not only prevented tech talent migrating from other Latin American nations, it also led to salaries stagnating for local workers; all the way from programmers to executives.

The situation has gotten so extreme that money isn’t counted anymore, it’s weighed, as the sheer amount needed to buy basic goods has lead to widespread poverty within the country.

According to a recent ENCOVI study into living conditions in Venezuela, 87 percent of the country now live under the poverty line. And despite much reporting around the so-called “boom of cryptocurrency” in Venezuela, the country’s inability to find cash for its most experienced workers has led many to look elsewhere.

Venezuela’s economy remains under the shadow of former President Hugo Chavez’s risky policies. Above, a mural in Táchira, Venezuela. Photo by Arjun Harindranath/The Bogotá Post

A 2018 Global Talent Competitiveness Index (GTCI) put out by INSEAD last year lays out the cold facts of Venezuela’s “brain drain”. Out of 119 countries, Venezuela came in at number 105 for the ability to compete for talent in specialised professions. Moreover, the country ranked poorly in its ability to attract talent from elsewhere and was at the very bottom when it came to keeping its brightest minds. The tragedy of this ranking becomes all too acute on realising that this result is despite Venezuela’s high education outcomes and highly-educated workforce.

The report also highlighted another common reality for Venezuelans: that of an uncertain security situation and the rampant rise of crime in the country. From safety while travelling on the city’s public transport, to the constant danger of muggings, many have now decided to move on from their homeland for a more secure future.

This also contributes to a larger problem — the crumbling infrastructure necessary for tech companies and professionals to continue working in the country. Venezuela was known to be one of the Latin American countries with the best internet connectivity in the past. But now, with frequent power outages and irregular coverage, many companies have looked to opt out of the country. A recent study also showed that internet speed within Caracas now stands at less than half of the average speed within Latin American countries.

A family walks towards a better life in Colombia. The crisis has led many families to leave their country, often on foot. Photo by Arjun Harindranath/The Bogotá Post

In addition to companies and multinationals having left the country as a result of the crisis, the country’s top scientific minds too have followed suit

According to a new article in Scientific American, this science “brain drain” has its roots in the Chavez regime when former President Hugo Chavez fired employees of PDVSA, Venezuela’s state-owned petroleum company, after they went on strike against his radical policies. This then led to a first wave of mass migration of the country’s scientists to the US.

Under his successor Nicolás Maduro things didn’t pick up for scientific research either, with funding all but evaporating. This trend also applied to universities where low salaries–as low as US$18 a month–have led to large scale walkouts in both public and private institutions in Venezuela.

Although many of the earlier waves of migration left for the US. Others chose Latin American countries that were more developed and willing to take in Venezuelan professionals. Jorge Pacheco was one such worker having joined as a developer at intive-FDV in Buenos Aires, as part of the company’s active recruitment of Venezuelan labour. “The level of formation is much higher in Argentina and much more technical. It really gives us a chance to learn more by being here as all the larger companies are from Argentina,” Pacheco said.

The Argentine company, that creates software-based solutions for enterprise companies, now has 10% of its workforce originating from Venezuela and, looking more specifically for programmers for their office in Buenos Aires, intive-FDV has found the program a success in increasing the diversity of their workforce.

Although Pacheco was one of the luckier ones, others can’t immediately walk into tech jobs on leaving the country. Across the continent, many tech and science grads have had to look for what work they can find, be it teaching, driving ride-shares working at restaurants or smaller jobs like cleaning houses to get by.

Colombia, having taken the lion’s share of Venezuelan nationals following the crisis, has seen a large influx into their informal economy. With over a million Venezuelans choosing to call their western neighbour home, it also comes as little surprise that Venezuelans would also be among Colombia’s tech ecosystem as well.

Francisco Fernandez came to, Medellin, Colombia around 18 months ago. His heart condition along with Venezuela’s failing healthcare system made the choice to leave a difficult but necessary step. His fortune came in the fact that The History Channel (Español) took him on as an animator on a remote contract, allowing him to work anywhere in the world. Like many media professionals and companies–including Latina Productions and VC Media–Fernandez chose Colombia for its ease of access to his home country.

“I’d like to go back soon,” Fernandez says. “There’s a generation that’s probably lost but I think many people in the tech sector will want to return. I know a lot of people in good positions at good companies that want to return when Venezuela gets better.”

Which is perhaps why it’s so crucial that Venezuela’s brightest minds do find firmer, safer footholds elsewhere to give Venezuela a fighting chance when it finally finds political and economic stability. Recent worrying events are likely to ramp up the mass flight from Venezuela, with their technological sector looking to suffer along with it. A turning point, when it finally arrives, will no doubt look to Venezuela’s diaspora to rebuild what has been destroyed.

March 28, 2019

Boundless gets $7.8M to help immigrants navigate the convoluted green card process

Two years ago, former Amazon product manager Xiao Wang stood on the stage at TechCrunch Disrupt San Francisco and made the case for a platform meant to help couples apply for marriage green cards, a complex process made worse by bureaucracy and red tape.

Called Boundless, the startup had spun out of Seattle startup studio Pioneer Square Labs and raised a $3.5 million seed round. Now, Foundry Group’s Brad Feld has led a $7.8 million Series A in the startup, with participation from existing investors Trilogy Equity Partners, PSL, Two Sigma Ventures and Founders’ Co-Op.

“Families have really only had two choices, they could spend weeks or months trying to figure this out on their own, or they can spend thousands and thousands of dollars on an immigration attorney,” Wang, Boundless co-founder and chief executive officer, told TechCrunch. “What we are trying to do is basically give everyone access to the information, the tools and the support that was previously only available to those that could afford high-priced attorneys.”

Boundless charges $750 for its online green card application support services, which includes ensuring families correctly complete applications and have access to an immigration lawyer to review those applications. The fee comes at a major discount to the costs of an immigration lawyer and streamlines a process that can be delayed months when errors are made. The startup also offers a recently launched $395 naturalization product meant to assist eligible green card holders with their U.S. citizenship applications.

Wang founded Boundless in 2017 after helping build Amazon Go, the e-commerce giant’s line of cashierless convenience stores. Wang is an immigrant, having relocated to the U.S. from China when he was a child.

“We spent almost five months of rent money on an immigration attorney because the stakes were so high and we only had one shot,” Wang said. “We wanted to make sure we were doing it right. This is a story that is echoed by millions of families every year; this is such an important part of them starting a new life in a new country.”

Wang, after three years at Amazon, realized he could use his technology background and data prowess to build an information platform supportive of these millions of families.

“This is exactly what tech and data is meant to do,” he said. “I believe there is a moral obligation for tech to be used in meaningfully improving people’s lives.”

Boundless plans to use this investment to expand its team and product offerings, as well as build out its content library, which Wang said is rapidly becoming the go-to place for immigrants navigating the legal labyrinth that is the U.S. green card and citizenship process. Its resources page, which includes straightforward guides, a number of forms and more, counts 300,000 unique visitors per month.

“We hold their hand through the entire process,” Wang said. “We want to be the single source of information and tools for all family-based immigration.”

Wang and his team also hope to shine a brighter light on immigration policy. In late 2018, as part of its effort to be louder advocates for immigrants, Boundless, alongside Warby Parker, Foursquare, Foundation Capital and more, published an open letter to the U.S. Department of Homeland Security opposing its proposed “public charge” immigration regulation, which would allow for non-citizens who are in the country legally to be denied a visa or a green card if they have a medical condition, financial liabilities and other disqualifiers.

“The stakes for making sure your application is correct have never been higher; the government has far more leeway to be able to deny applications,” Wang said. “While we can’t speed up the government processing times, we can make meaningful improvements to helping families gather all the materials they need to send in the right information.”

Pioneer Square Labs is invigorating Seattle’s startup ecosystem

March 28, 2019

Forge acquires IRA Services to expand offering for private company shares

Forge, the marketplace for trading private company shares formerly known as Equidate, announced that it will be acquiring custodial trust company IRA Services for a purchase price of $55 million.

IRA Services is a trust company that provides custodial services for retirement accounts managed by individuals and mid-to-large sized Institutions. Stripped of financial jargon, the primary function of a custodian is to hold on to (or maintain “custody” of) its clients’ securities and keep them safe from potential external complications such as theft or otherwise.

Many custodians, like IRA Services, also provide administrative services such as collecting the actual dividend payments made to the owner of a stock, and advisory services such as helping clients understand what they can and should invest in.

Since its founding in 2014, Forge has been one of the primary marketplaces where employees and early investors of leading startups can monetize privately-held shares without having to wait years for an IPO, exit or liquidity event.

Forge also creates value by providing some of the world’s leading private equity and institutional investors with high-demand access to some of the top pre-IPO companies, having worked with companies like Spotify, Airbnb and others.

By acquiring IRA Services, Forge can expand its support offerings for private market securities, and more importantly, can move closer to becoming a one-stop shop for private market investors who will no longer have to transfer shares acquired with Forge to an external custodial trust.

“Investors across asset classes want the ease, transparency, and security provided by a seamless investing experience from trading through to settlement to custody,” said IRA Services president Patrick Hughes. “In bringing together Forge and IRA Services, we look to deliver an unparalleled end-to-end investing experience for private markets investors.”

What differentiates IRA Services from other custody providers, and what makes the company particularly attractive to Forge, is that it specialized in deals involving alternative and non-traded asset classes. As a result, the company already maintains systems and workflows that are structured to deal with private securities and associated complexities.

Additionally, IRA Services’ API, which automates and supports the process of connecting custody accounts directly to investment platforms, is becoming increasingly valuable as the exchange market for private company shares, as well as average transaction size and volume, continues to swell.

Pending necessary agency approvals, the combined entity also intends to become both a registered broker-dealer and separate non-fiduciary trust company, meaning the company will be able to provide custodial services for clients even when they’re investing in assets outside of the Forge platform.

Satisfying growing needs of a budding market

The acquisition fits squarely into Forge’s long-term vision of being a leading institution in the rapidly growing private markets. “We believe that the private markets are where innovation is happening and there needs to be an institution that provides services that enable that whole ecosystem,” Forge CEO Kelly Rodriques said in a conversation with TechCrunch.

Rodriques believes that creating secure and transparent custody services for private market securities can provide millions of new investors with access to a space that is currently limited to around 400,000 private equity players, early-stage investors and early employees.

In Rodriques’ view, broadening the marketplace to more investors creates serious network effects and a significant positive flywheel. Having more participating private company investors creates more liquidity, which not only entices other investors to play in the space but also attracts more private companies to partner with Forge and provide access to their shares.

At the same time, innovative startups are continuing to grow larger in size, with more than 250 private companies around the world boasting valuations of $1 billion or greater. Companies are also opting to stay private for longer due to the growing availability of late-stage capital, the desire to operate strategically without the scrutiny of the public markets and quarterly performance requirements, or otherwise.

As a result, locating sources of secure daily liquidity is becoming a bigger need for more private companies. Forge believes that with its growing set of offerings and the credibility it has earned from working with key regulators and several of the world’s largest financial institutions, Forge is well-positioned to be the go-to solution for secondary market investors and companies alike.

“Our long-term hope is that our technology will be used to make the private market ecosystem stable, safe and sound,” Rodriques told TechCrunch.

The near-term outlook for Forge doesn’t look too bad either. Forge almost doubled its trading volume in 2018, surpassing just shy of $2 billion worth of transactions, with the company expecting another billion dollars in transactions by the end of the year.

As with any large acquisition, particularly in the financial services sector and particularly in the US, the companies will have to receive the requisite regulatory approvals to complete the deal in full. While the companies haven’t expressed an official expected close date for the deal, Forge expects the regulatory process will take anywhere from two-to-four months.

Forge will go through yet another name change once the deal closes. The combined entity will go by the name Forge Trust to better reflect the custodial services gained through IRA Services and the new company’s full suite of capabilities. Additionally, IRA Services CEO, Edwin Blue, will retire from the company, though current IRA Services employees will continue to operate from the firm’s existing offices.

To date, Forge has raised around $88.5 million in venture capital, according to data from Crunchbase, with backing from a number of Silicon Valley heavy hitters including Peter Thiel, Tim Draper, Scott Bannister, Charlie Cheever, and others.

March 28, 2019

Kong raises $43M Series C for its API platform

Kong, the open core API management and lifecycle management company previously known as Mashape, today announced that it has raised a $43 million Series C round led by Index Ventures. Previous investors Andreessen Horowitz and Charles River Ventures (CRV), as well as new investors GGV Capital and World Innovation Lab also participated. With this round, Kong has now raised a total of $71 million.

The company’s CEO and co-founder Augusto Marietti tells me that the company plans to use the funds to build out its service control platform. He likened this service to the “nervous system for an organization’s software architecture.”

Right now, Kong is just offering the first pieces of this, though. One area the company plans to especially focus on is security, in addition to its existing management tools, where Kong plans to add more machine learning capabilities over time, too. “It’s obviously a 10-year journey but those two things — immunity with security and machine learning with [Kong] Brain are really a 10-year journey of building an intelligent platform that can manage all the traffic in and out of an organization,” he said.

In addition, the company also plans to invest heavily in its expansion in both Europe and the Asia Pacific market. This also explains the addition of World Innovation Lab as an investor. The firm, after all, focuses heavily on connecting companies in the US with partners in Asia — and especially Japan. As Marietti told me, the company is seeing a lot of demand in Japan and China right now, so it makes sense to capitalize on this, especially as the Chinese market is about to become more easily accessible for foreign companies.

Kong notes that it doubled its headcount in 2018 and now has over 100 enterprise customers, including Yahoo! Japan, Ferrari, SoulCycle and WeWork.

It’s worth noting that while this is officially a Series C investment, Marietti is thinking of it more like a Series B round given that the company went through a major pivot when it moved from being Mashape to its focus on Kong, which was already its most popular open source tool.

“Modern software is now built in the cloud, with applications consuming other applications, service to service,” said Martin Casado, general partner at Andreessen Horowitz . “We’re at the tipping point of enterprise adoption of microservices architectures, and companies are turning to new open source-based developer tools and platforms to fuel their next wave of innovation. Kong is uniquely suited to help enterprises as they make this shift by supporting an organization’s entire service architecture, from centralized or decentralized, monolith or microservices.”